Retirement planners and retirees themselves are constantly looking to fill income gaps, particularly when Social Security just doesn’t cut it. The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can help fills these income voids.

NUSI can act as a complement to traditional equity and fixed income allocations or as the ideal protective hedge for investors with heavy exposure to technology and growth stocks because the fund is a “rules-based options trading strategy that seeks to produce high income using the Nasdaq-100 Index,” according to Nationwide.

The Nationwide Risk-Managed Income ETF incorporates options exposure to help generate income and mitigate risk as a way to enhance total returns. Investors have long capitalized on covered call options strategies for income generation, or protective put options strategies to protect against and limit losses.

“The rule of thumb is that Social Security benefits replace around 40% of pre-retirement income. But that’s not very accurate because they don’t replace the same amount of income for people across all income levels,” according to Kenosha News. “In fact, they replace a far larger percentage for lower- and middle-income workers than for high earners. It’s important to understand just how much of your pre-retirement wages Social Security benefits will replace so you know how much you need to supplement them.”

The NUSI ETF for Higher Income Brackets

NUSI is an actively managed portfolio of stocks included in the Nasdaq-100 Index and an options collar. Per index rules, the fund only invests in the top 100 largest (by market cap) nonfinancial stocks listed on NASDAQ. A collar strategy involves selling or writing call options and buying put options, thus generating income to hedge some downside risk. The strategy seeks to generate high current income monthly from any dividends received from the underlying stock and the option premiums retained.

In fact, NUSI is a relevant consideration for retirees in higher income brackets.

“Those who pay the maximum in Social Security taxes will get benefits equaling an even smaller percentage of their pre-retirement income. In fact, although they’ll get benefits to replace just over a quarter of the wages they paid Social Security tax on, there’s a good chance that many who had the maximum taxable earnings actually earned more money than the amount they were taxed on,” according to Kenosha News.

NUSI YTD Performance

The Nationwide Risk-Managed Income ETF incorporates options exposure to help generate income and mitigate risk as a way to enhance total returns. Investors have long capitalized on covered call options strategies for income generation or protective put options strategies to protect against and limit losses.

For more on income strategies, visit our Retirement Income Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.