In retirement, many investors strive for a blend of income, stability, and smart growth. Vanguard’s reputation for low-cost, broadly diversified ETFs makes it a top pick for retirees who need their savings to work hard—without exposing themselves to unnecessary risk. Here’s a look at five widely held Vanguard ETFs that are favored by those who want portfolio peace of mind, dependable income streams, and solid long-term returns.

Vanguard Dividend Appreciation ETF (VIG): Quality and Growing Income

The Vanguard Dividend Appreciation ETF, or VIG, has become a staple for retirees who want reliable, steadily increasing payouts. VIG tracks large, established U.S. companies that have raised their dividends for at least ten consecutive years—a sign of financial strength and resilience. Major holdings often include Johnson & Johnson, Microsoft, and Procter & Gamble.

Why retirees like it: Companies that consistently increase their dividends tend to have prudent management and a robust balance sheet, making them less sensitive to economic cycles. VIG’s quarterly distributions, combined with possible share price appreciation, provide a hedge against inflation. Its expense ratio is among the lowest for dividend-focused ETFs (about 0.06%), keeping more returns in your pocket. Importantly, the fund skews toward defensive sectors and avoids companies whose payouts may be unsustainable.

Vanguard Total Stock Market ETF (VTI): Diversified Growth for the Long Haul

VTI is one of the broadest and most cost-effective ways to own the U.S. stock market. The ETF tracks the CRSP U.S. Total Market Index, which covers thousands of securities across all capitalization levels—large cap to micro-cap—and all sectors.

Why retirees like it: Broad diversification lessens risk from sector-specific downturns, while the low expense ratio (approx. 0.03%) and automatic rebalancing enable retirees to invest for growth with minimal overhead. Historically, stocks have provided attractive long-term returns, and holding the entire market is a way to “set and forget” part of your portfolio. While subject to market fluctuations, VTI has proven resilient for retirees with a moderate risk tolerance and a long-term horizon.

Vanguard Total Bond Market ETF (BND): Steady Income and Portfolio Stability

Retirees concerned with protecting principal and securing steady income rely on BND as a foundational holding. BND tracks the Bloomberg U.S. Aggregate Float Adjusted Index, which comprises a wide mix of investment-grade U.S. government, corporate, and mortgage-backed bonds.

Why retirees like it: Bonds offer regular income streams via monthly distributions, stability during stock downturns, and help cushion portfolios against sharp equity price drops. BND’s broad approach means exposure to thousands of bonds, helping spread credit and interest rate risk. Its low annual fee (~0.03%) ensures income isn’t eroded by costs, and the fund’s liquidity makes it easy to buy and sell. As interest rates rise or fall, BND’s wide net helps provide balanced performance.

Vanguard Real Estate ETF (VNQ): Real Asset Exposure and Inflation Protection

VNQ invests in real estate investment trusts (REITs) listed on U.S. exchanges, providing access to office buildings, hospitals, shopping centers, and apartment complexes.

Why retirees like it: Real estate historically acts as a buffer against inflation since property values and rents often increase with prices. REITs must distribute at least 90% of taxable income to shareholders, so VNQ typically offers attractive dividends—even during volatile markets. The ETF adds diversification, since real estate performance isn’t always correlated with stocks and bonds. At 0.12% expense ratio, VNQ provides hands-off ownership of a hard asset class. Retirees value both the income and the portfolio risk reduction real estate can bring.

Vanguard High Dividend Yield ETF (VYM): Maximizing Income with Diversification

VYM is tailored to retirees who desire steady, high-yield income from their investments. The ETF tracks the FTSE High Dividend Yield Index and includes a broad spectrum of U.S. companies with higher-than-average dividend yields, from consumer staple giants to utilities to pharmaceutical companies.

Why retirees like it: VYM delivers larger quarterly distributions, often exceeding those of VIG, though with slightly more risk. The ETF’s diversification protects against any one sector or company’s downturn. With an expense ratio of about 0.06% and hundreds of holdings, VYM is a simple way to get high income without concentrated risk. Retirees use VYM to enhance portfolio payouts and help fund daily living expenses in retirement.


Cost Considerations: Fees, Taxes, and Withdrawals

One of Vanguard’s greatest strengths is low cost. Most ETFs above charge expenses of less than 0.12% per year, compared to 0.5% or higher for many mutual funds and active managers. Over a decade or more, this difference can add up to thousands in extra returns for retirees.

However, consider:

  • Taxes: Qualified dividends (VIG, VYM) are usually taxed more favorably than ordinary income, while REIT or bond income may fall into higher tax brackets.

  • Required Minimum Distributions (RMDs): In IRAs, retirees over age 73 must take annual withdrawals, which may create taxable income.

  • Withdrawal Strategy: Balance regular ETF income (dividends, interest) with a safe withdrawal rate from principal to avoid outliving your savings.

  • Trading Fees: Most brokers now trade Vanguard ETFs commission-free, but always confirm costs.

  • Rebalancing: Maintain your risk level by adjusting your allocations annually or as needed.


How Retirees Can Build a Balanced ETF Portfolio

A typical portfolio for steady retirement investing blends the above ETFs, for example:

  • 20–40% in dividend growth (VIG) and high yield (VYM) for income

  • 30–50% in the total market (VTI) for growth

  • 20–40% in bonds (BND) for capital preservation and cash flow

  • 5–15% in real estate (VNQ) as an inflation hedge

Exact proportions depend on your risk profile, spending needs, health, and income sources. Many retirees also keep a portion in cash or short-term bond funds for emergencies or larger future purchases.

Working with a trusted financial planner or using Vanguard’s retirement planning tools can help tailor your asset mix, drawdown strategy, and tax planning to your personal goals.


Tips For Managing Your ETF Retirement Portfolio

  • Emphasize Total Return: Don’t just chase the highest yield. Focus on overall returns (appreciation, income, stability).

  • Keep Fees Low: Review your platform for any hidden fees, custodial costs, or transfer charges.

  • Diversify Broadly: Spread risk across sectors, asset classes, and geographies for more resilience.

  • Review Annually: Adjust allocations for age, expenses, or major life changes.

  • Monitor for Sequence Risk: Have a withdrawal plan in case of bad markets early in retirement; keep a year or two of spending in bonds or cash.

Conclusion

Vanguard ETFs offer retirees exceptional solutions for building resilient, steady, and cost-effective portfolios. VIG, VTI, BND, VNQ, and VYM together cover dividend growth, total market exposure, bond safety, real estate income, and high-yield opportunities—all with low fees and wide diversification. By mixing these funds to match health, spending, and risk preferences, retirees can achieve reliable income, preserve their savings, and navigate market ups and downs with greater confidence and control. With regular review and a commitment to disciplined investing, the Vanguard approach helps retirees secure the financial peace and lifestyle they’ve worked for.