From 24/7 Wall St. · Ryne Mauck · · 2m
When Social Security Falls $600 Short
Retirees face a monthly shortfall. The account you tap first, and the ETFs you pick, determine whether you preserve wealth or erode it.
In brief
Retirees face a monthly shortfall. The account you tap first, and the ETFs you pick, determine whether you preserve wealth or erode it. Withdraw from your traditional IRA first to stay in low tax brackets, then your taxable brokerage, then savings. Use income-focused ETFs to close the gap without selling at the wrong…
The $600 monthly shortfall
Average Social Security checks hit $2,082 in May 2026. Even with a 3.3% cost-of-living bump in 2027, most retirees still fall short each month and must tap savings, IRAs, or brokerage accounts.
Tap the IRA first
Withdrawing from a traditional IRA fills your lowest tax brackets first. With a 2026 standard deduction of $16,100 (or $32,200 married), modest IRA draws stay in the 10% or 12% bracket, minimizing tax damage.
Then tap the brokerage
Withdraw from your taxable brokerage account second, especially when you have large embedded gains. This preserves your emergency savings for true shocks like a furnace replacement.
DIVO: covered calls on blue chips
Amplify CWP Enhanced Dividend Income ETF holds 24 blue chips like Caterpillar, Apple, Microsoft, and JPMorgan, writing covered calls for monthly income. August 2026 paid $0.19468 per share with a 15.52% one-year total return.
SPYI: S&P 500 with index calls
NEOS S&P 500 High Income ETF holds S&P 500 stocks and sells index calls using SPX contracts for tax efficiency. September 2026 paid $0.5338 with a trailing 12-month total of $6.867, yielding well above traditional dividend funds.
MUB: tax-free income in taxable accounts
iShares National Muni Bond ETF pays tax-free federal interest, making it ideal for taxable accounts. With a 0.05% expense ratio and monthly distributions of $0.289873, the tax-equivalent yield beats taxable bonds for retirees in the 12% or 22% bracket.
SHV: emergency cash that earns
iShares Short Treasury Bond ETF holds T-bills maturing within a year, behaving like cash while earning 4.08% yield. September 2026 paid $0.338321 with minimal price movement, making it perfect for emergency reserves and next-month withdrawals.
The trade-off you're making
DIVO and SPYI cap upside during bull markets. MUB and SHV carry rate risk: MUB lost 1.65% year-to-date on price, and SHV payouts fall when the Fed cuts rates. You trade growth potential for a predictable monthly check.
“You are giving up a slice of growth potential and rate certainty for a predictable check that closes the $600 gap without forcing you to sell shares at the wrong moment.”
What matters most
Withdraw from your traditional IRA first to stay in low tax brackets, then your taxable brokerage, then savings. Use income-focused ETFs to close the gap without selling at the wrong time.
