Still Living by the 4% Rule Written in 1994? These 4 ETFs Are the 2026 Version

Still Living by the 4% Rule Written in 1994? These 4 ETFs Are the 2026 Version

Ryne Mauck

Sat, August 29, 2026 at 12:35 AM GMT+3 5 min read

Quick Read

• The 4% rule remains a useful retirement benchmark, but today's retirees have more tools for generating portfolio cash flow. JEPQ, QQQI, SCHD, and PFFD combine options income, dividend growth, and preferred-stock distributions rather than relying entirely on scheduled asset sales.

• JEPQ and QQQI provide the highest current income potential through Nasdaq-focused options strategies. Both pay monthly, but their distributions fluctuate and the options overlays can sacrifice upside when technology stocks rally sharply.

• SCHD and PFFD balance the portfolio with different types of income. SCHD emphasizes dividend growth and long-term appreciation, while PFFD provides steady monthly preferred-stock distributions, giving retirees multiple sources of cash rather than depending on a single withdrawal rate.

• Read More: Learn 7 ways to generate income with a $1,000,000+ portfolio (sponsor)

Bill Bengen published the 4% rule in 1994, when 10-year Treasuries paid roughly double what they do today, and retirees expected 30 years of spending, not 40. If you are still budgeting your retirement paycheck off that single number, your plan is running on assumptions older than Windows 95. Four ETFs offer a more current toolkit for pulling income out of a portfolio: JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ), NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI), Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD), and Global X U.S. Preferred ETF (NYSEARCA:PFFD). None of them guarantee anything, but together they let cash flow do more of the heavy lifting than a static withdrawal percentage ever could.

A $1,000,000 Income Portfolio

If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.

Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)

Why the 1994 Math Feels Off in 2026

Bengen's original study assumed a 50/50 stock and bond portfolio and steady 4% withdrawals adjusted for inflation. The bond leg produced serious income back then. Today, the 10-year Treasury yields 4.64%, and the national average 12-month CD pays just 1.71%. Meanwhile, 51% of adults think they will outlive their savings. We made the full case against the static 4% number, and what to run in its place, in a free report on the income-first alternative. Building an income sleeve out of specialized ETFs lets you target higher current distributions without abandoning stock-market exposure entirely.

JEPQ: A Monthly Paycheck From Nasdaq Volatility

JEPQ sells covered calls on a Nasdaq-100-like stock basket, converting option premium into monthly cash. The 0.35% expense ratio means about $9,965 of every $10,000 stays invested each year. Distributions are monthly and variable: the August 2026 payment was $0.70497, the trailing 12-month total came in at $6.52319, and the annualized forward figure sits at $8.45964 per share. On a $60.31 share price, that is a meaningful income yield alongside a 20.69% one-year total return. Payouts fluctuate with option volatility, so treat any single month as a data point rather than a promise.

QQQI: Tax-Aware Sibling With Bigger Distributions

QQQI runs a similar Nasdaq-100 options-income playbook but leans on index options structured for potential Section 1256 tax treatment. Top positions include NVIDIA at 7.65% of net assets, Apple at 6.63%, and Micron at 5.61%, so the equity exposure is unapologetically large-cap tech. The fund manages roughly $13.1 billion in net assets. Recent monthly distributions include a $0.6518 payment on August 21, 2026, with a trailing 12-month total of $7.648285 and an annualized forward amount of $7.8216. Shares closed at $54.76 with an 11.68% year-to-date return. If you already own JEPQ, treat this as a partial substitute rather than an additional stacked position.

SCHD: The Growth-of-Income Anchor

SCHD tracks the Dow Jones U.S. Dividend 100 Index, screening for quality dividend payers with strong balance sheets. Top weights include QUALCOMM at 6.74%, Texas Instruments at 5.90%, and UnitedHealth Group at 5.09%, with $94.9 billion in net assets. The distribution is quarterly and modest by comparison: the June 2026 payment was $0.2525, with a trailing 12-month total of $1.048 and an annualized forward amount of $1.01. But this is the growth engine of your income sleeve. Shares are up 29.52% over the last year and 241.87% over ten years, meaning both your dividend and your principal have compounded.

PFFD: Boring on Purpose

PFFD holds U.S. preferred stocks from banks, insurers, utilities, and telecoms: Boeing at 4.70%, Hewlett Packard at 2.71%, Wells Fargo at 2.25%, Citigroup Capital XIII at 2.20%. Preferreds sit above common stock in the capital stack and pay fixed distributions, which is why PFFD's payout barely moves. The fund has distributed $0.10 monthly for every ex-dividend date from April 2025 through August 2026, totaling $1.20 over the trailing 12 months. Price action mirrors that stability: shares are up 1.49% year to date and 1.23% over one year. This is the sleeve that acts like a bond substitute without the government-bond duration risk that hurt 60/40 portfolios in the last hiking cycle.

Trade-Offs to Weigh

Higher current distributions come with real costs. JEPQ and QQQI cap upside during strong Nasdaq rallies. SCHD's payout is smaller and lumpier. PFFD's principal has drifted down 3.36% over five years, which is the price of stable coupons in a rising-rate environment. None of these funds neutralize sequence-of-returns risk or replace the discipline behind Bengen's math. What they do is give you flexibility, monthly cash flow, and dividend growth in one wrapper, which is exactly what the 1994 toolkit was missing.

A $1,000,000 Income Portfolio

If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.

Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)

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