read quickly
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The $275,000 portfolio averages a 9% yield to replicate the $24,852 annual Social Security check — a mathematically achievable but strategically risky goal.
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JPMorgan Equity Premium Income (JEPI) and similar covered-call funds yield 9% today, but distributions remain stagnant while growth dividends have been rising for decades.
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The average retiree will collect about $2,071 a month from Social Security in 2026, the result of a 2.8% cost-of-living adjustment announced last October. Annually, this income amounts to approximately $24,852. Generating the equivalent amount solely from portfolio income with a $275,000 account requires a much higher yield target than many retirees initially expect. At that portfolio size, a yield close to 9% is required to generate income of about $25,000 per year. That single number shapes almost every investment deal that follows.
Conservative level: 3% to 4% yield
A broad dividend-growth category, supported by funds such as Schwab US Dividend Equity ETF (NYSEARCA: SCHD), currently sits near the top of this band. SCHD has $71.6 billion in names like Bristol-Myers Squibb, Merck, ConocoPhillips, Lockheed Martin and Chevron and charges 0.06%. Total returns have been strong, with the ETF up 31% over the past year and 242% over the past decade.
At a 3.5% yield, replacing the average Social Security check requires dividing $24,852 by 0.035, or approximately $710,000. At 4%, that figure drops to about $621,000. The byproduct of that higher capital requirement is dividend growth that has historically been greater than the principal’s addition to inflation and earnings.
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Medium level: 5% to 7% yield
It is a middle ground between low-yield dividend growth and aggressive income investing. High-dividend ETFs, REITs, utility funds, preferred stocks, and some covered-call strategies typically fall into this category.
At a 6% yield, replacement of the average Social Security benefit requires approximately $414,000 of investment. At 7%, the required portfolio falls to around $355,000. Many retirees are attracted to this level because of the low capital requirements.
The tradeoff is slower long-term growth. Covered-call funds generate additional income by giving up some of the market’s upside, while REITs and utilities prioritize current payouts over fast dividend growth. Income is strong today, but the portfolio may not grow this fast in decades.
Here taxes also become more important. REIT income and many covered-call distributions are often taxed as ordinary income rather than qualified dividends, making account placement more important. Placing portions of these strategies inside IRA or Roth accounts can materially improve after-tax yields.
Aggressive Level: 8% to 11% Yield, and What $275,000 Really Buys
This is where a $275,000 portfolio can match a Social Security check, and it’s the only place. Math: $24,852 divided by 0.0904 equals approximately $275,000.
A representative allocation that impacts this yield blends covered-call equity income with a dividend-growth anchor:
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for $100,000 JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) at about an 8% yield, producing about $8,000. The fund sells calls on a defensive equity sleeve and charges a fee of 0.35%.
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for $75,000 NEOS S&P 500 High Income ETF (NYSEARCA:SPYI) at about 11%, producing $8,250. SPYI uses an index-options overlay designed to provide tax-efficient distributions.
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for $50,000 JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) at about 9.5%, producing $4,750. JEPQ wrote calls on the Nasdaq-100 basket led by NVIDIA 7.9%, Apple 6.4% and Alphabet 6.4%.
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$50,000 in SCHD, at about 3.4%, producing $1,700, a growth inhibitor.
That mix yields close to the target, with a slight tilt toward SPYI or JEPQ requiring an exit of $24,852. The cost of getting there is real: Covered-call distributions are largely ordinary income, which is taxed at the investor’s marginal rate, which jumps to 22% on single-filer income above $50,400 and 24% above $105,700 under the 2026 bracket. That same income saved in a Roth account avoids that drag entirely.
Why does dividend growth change the math?
A 9% yield with a flat or shrinking net asset value behaves very differently from a 3.5% yield that grows steadily over time. Dividend-growth funds like SCHD have historically combined both distributions and principal appreciation, while many high-yield covered-call strategies prioritize big payouts today at the expense of future growth potential.
This difference matters more in longer retirements. A portfolio producing 9% annually may already generate strong cash flows, but if distributions never increase, inflation gradually reduces its purchasing power. Conversely, a low-yield portfolio growing income at 7% to 8% annually may eventually outperform the high-yield strategy in real, inflation-adjusted income.
The comparison should also be measured with the current interest rates. With the 10-year Treasury yield hovering around 4.6% and the federal funds rate near 3.8%, the risk-free baseline remains relatively high. Over a 20-year retirement horizon, the difference between a growing 4% dividend stream and a steady 9% payout narrows much faster than many income investors initially anticipated.
what to do with it now
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Calculate the actual gap you need to bridge. Many retirees find that average profits cover a larger portion of required expenses than they anticipated, reducing the required yield and required capital.
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Compare 10-year total returns between SCHD and a high-yield covered-call fund using similar starting capital. The main trajectory tells the real story.
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If a 9% yield is necessary to bridge the gap, place the covered-call sleeve inside a Roth IRA. Eliminating the ordinary-income tax on distributions could yield several hundred basis points of after-tax yield gains.
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