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How a High-Yield ETF Can Give Your Social Security Check a Boost

  //travel-leisure.news-articles.net/content/2025/ .. can-give-your-social-security-check-a-boost.html
  Published in Travel and Leisure on Monday, December 8th 2025 at 10:52 GMT by 24/7 Wall St

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How a High‑Yield ETF Can Give Your Social Security Check a Boost

For many retirees, Social Security is the backbone of a lifetime of savings. Yet as living costs climb and traditional fixed‑income securities offer diminishing returns, many seniors are looking for a way to increase that paycheck without taking on the high risk of stocks. A recent piece on 24/7 Wall Street (December 8, 2025) highlights a high‑yield ETF that could provide a steady, inflation‑protected stream of income to supplement a Social Security check—while keeping the overall risk manageable.

1. The Premise: Income‑Focused Investing in a Changing World

The article begins by outlining a key reality for retirees in 2025: the “inflation‑hedge” offered by cash, short‑term Treasury bills, and municipal bonds is shrinking. Even the best‑rated corporate bonds now yield roughly 1.5–2 % in a low‑rate environment. By contrast, high‑yield (also called “junk”) bonds—corporate debt with a credit rating below “investment grade”—often deliver 4–7 % before fees. The trade‑off is that these securities carry a higher default risk, especially in a period of rising rates.

Retirees, the article notes, are not a monolithic group. Some have large lump sums to deploy, while others prefer “lifestyle” portfolios that prioritize liquidity and steady income. The highlighted ETF provides a way to combine the best of both worlds: diversified exposure to a broad spectrum of high‑yield bonds, a moderate expense ratio, and the convenience of an exchange‑traded product.

2. Meet the Featured ETF: The iShares iShares Core High‑Yield Bond ETF (HYG)

The author spotlights the iShares iShares Core High‑Yield Bond ETF (HYG), an ETF that tracks the Bloomberg U.S. High‑Yield Bond Index. While the article names a few alternatives—such as the SPDR Bloomberg Barclays High‑Yield Bond ETF (JNK) or the Invesco Senior Loan ETF (BKLN)—HYG emerges as the recommended pick due to its combination of low expense ratio (0.25 %) and strong liquidity.

Key characteristics:

The article links directly to the ETF’s official page on the BlackRock website for readers who want the most up‑to‑date fact sheet, the prospectus, and the latest NAV.

3. Performance & Yield: A Historical Snapshot

HYG’s performance is illustrated through a 5‑year chart (2019‑2024) that shows a mean annual return of 5.8 % after fees, with an annualized volatility of roughly 18 %. The article emphasizes that this volatility is noticeably lower than that of individual corporate bonds but higher than that of Treasuries. The ETF’s spread over the U.S. Treasury curve remained roughly 4–5 % throughout the period, indicating that the risk‑premium is robust even in a tightening monetary regime.

The article also notes that HYG’s dividend distribution—typically paid on a monthly basis—has a current yield of 5.9 %. When combined with Social Security, this yield can generate an additional $250–$350 in monthly income for a typical $50,000 retiree.

4. How the ETF Fits Into a Social Security Strategy

The article’s core argument is that retirees should not rely solely on Social Security, but that adding a high‑yield ETF can smooth out income and keep pace with inflation. A sample calculation is provided:

• Base scenario: $2,500 monthly Social Security check
• With HYG investment of $100,000:
  • Annual yield (5.9 %) → $5,900
  • Monthly dividend → $491
  • Total monthly income → $2,991

In practice, the article suggests starting with a smaller position—perhaps 10–15 % of the overall portfolio—and scaling up as the investor becomes comfortable with the volatility. The article also links to a calculator that helps retirees estimate the impact of HYG on their cash flow needs.

5. Risk Management: Why It’s Not a Free Lunch

While the article praises the potential for higher income, it also reminds readers of the inherent risks:

• Credit risk: The ETF’s top holdings include many “junk” companies, some of which have defaulted in the past. A downturn in corporate earnings or a sharp rise in rates can trigger a wave of defaults.
• Interest‑rate risk: Rising rates typically cause bond prices to fall. The ETF’s weighted average duration is about 5 years; a 25‑basis‑point rate hike could lead to a ~6 % drop in NAV.
• Liquidity risk: Although HYG is highly liquid, during extreme market stress liquidity can dry up.
• Tax considerations: High‑yield bonds generate taxable interest, which can be a significant consideration for retirees on a flat‑tax bracket.

The article suggests diversification across multiple high‑yield ETFs or a mix of high‑yield and investment‑grade bonds to mitigate some of these risks. It also links to a separate 24/7 Wall Street piece that explains how to calculate the tax‑effect of a high‑yield bond’s yield versus its “after‑tax” yield.

6. Practical Steps to Get Started

The article concludes with a step‑by‑step guide:

1. Assess your cash‑flow needs and determine what percentage of your portfolio you’re willing to allocate to higher‑yield, higher‑risk assets.
2. Open a brokerage account that offers commission‑free trading on ETFs (many platforms now provide zero‑commission trading for large U.S. ETFs).
3. Buy HYG in lots of 50–100 shares to keep transaction costs low.
4. Set up a dollar‑cost averaging plan—e.g., monthly purchases of $500—to smooth out entry points.
5. Rebalance annually: If your HYG allocation drifts above 15 % of your portfolio, consider pulling back slightly.
6. Monitor performance: Review the ETF’s quarterly statements and watch for any credit‑rating downgrades of major holdings.

For readers interested in the mechanics of a high‑yield bond, the article includes a link to a short explainer on the “bond market basics” that covers yield curves, duration, and credit ratings.

7. Takeaway

In an era where traditional fixed income is under pressure, a well‑chosen high‑yield ETF can provide retirees with a meaningful boost to their Social Security income. The 24/7 Wall Street article showcases HYG as a low‑cost, liquid, and historically solid vehicle that can deliver roughly 6 % gross yield—enough to increase monthly cash flow without exposing the retiree to the volatility of individual stocks.

As with any investment, the key is to weigh the upside against the downside. The article encourages retirees to start modestly, remain diversified, and keep a close eye on credit quality and interest‑rate movements. When managed prudently, a high‑yield ETF can be a valuable tool to make retirement income more resilient—and to give that monthly Social Security check a little extra sparkle.