iShares ETF Has A ‘Set And Forget’ Investment For Retirees You Don’t Need To Overthink

iShares ETF Has A ‘Set And Forget’ Investment For Retirees You Don’t Need To Overthink Austin Smith Mon, January 12, 2026 at 11:20 PM GMT+8 4 min read In this article:

VITSX -0.18% VSMPX -0.18% VSTSX -0.18% VTI -0.20% VTSAX -0.18%

Quick Read

• ITOT tracks 3,000 U.S. stocks for 0.03% annually and returned 285% over the past decade.

• The fund yields 1% with dividends growing 6% to 7% annually but provides no downside protection.

• VTI offers nearly identical exposure and performance with the same 0.03% expense ratio.

• Investors rethink ‘hands off’ investing and decide to start making real money

The hardest part of retirement investing isn't picking stocks or timing the market - it's resisting the urge to do either. iShares Core S&P Total U.S. Stock Market ETF (NYSEARCA:ITOT) solves this by offering exposure to the entire U.S. equity market in a single position, charging just 0.03% annually, and requiring no ongoing decisions beyond occasional rebalancing with bonds.

What ITOT Actually Does in a Retirement Portfolio

ITOT tracks roughly 3,000 U.S. stocks across all market capitalizations, from mega-cap technology companies to small regional banks. The fund delivers the return of the total U.S. stock market, minus a 0.03% expense ratio. For retirees, this means automatic diversification across sectors, company sizes, and economic cycles without researching individual companies or rebalancing between growth and value styles.

The fund holds 33% in information technology, 11% in financials, and meaningful exposure across all ten major sectors. Top positions include NVIDIA Corporation (NASDAQ:NVDA) (7.3%), Apple Inc. (NASDAQ:AAPL) (6%), and Microsoft Corporation (NASDAQ:MSFT) (5.7%), plus thousands of smaller companies representing the full breadth of American business.

With a current dividend yield around 1%, ITOT pays quarterly distributions that have grown approximately 6% to 7% annually. The fund's 3% portfolio turnover keeps tax drag minimal for taxable retirement accounts.

Does It Deliver on the 'Set and Forget' Promise?

Over the past decade, ITOT returned approximately 285%, turning $10,000 into roughly $38,500—an annualized return in the mid-teens. The fund slightly outpaced its primary competitor VTI despite nearly identical holdings and expense ratios.

ITOT has weathered multiple market disruptions. It survived the 2020 COVID crash, endured the 2022 bear market (falling roughly 34% before rebounding), and navigated April 2025 turbulence, dropping about 20% intraday before recovering within months.

The fund achieves broad market exposure efficiently. But whether it delivers adequate returns for retirees depends entirely on their equity allocation and time horizon. A 60-year-old with 30% in equities will experience very different outcomes than a 70-year-old with 70% in equities.

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The Tradeoffs Retirees Must Accept

ITOT offers no downside protection. When the market falls 20% or 30%, the fund falls with it. Retirees living off portfolio withdrawals during a bear market face sequence-of-returns risk: selling shares at depressed prices to fund living expenses permanently impairs long-term wealth. Financial planners typically recommend pairing equity ETFs like ITOT with bonds, cash, or other stabilizing assets.

The fund provides no income boost beyond what the underlying market delivers. The 1% yield covers only a fraction of typical retirement spending needs, meaning retirees must supplement with other income sources or sell shares regularly. Unlike covered call or high-dividend strategies, ITOT prioritizes total return over current income.

ITOT is 100% U.S.-focused. Retirees gain no direct exposure to international developed markets or emerging economies. While many ITOT holdings generate significant international revenue, the fund provides no currency diversification or access to non-U.S. growth opportunities.

Who Should Avoid This ETF

Retirees who need stable, predictable monthly income should look elsewhere. ITOT's quarterly distributions fluctuate with market conditions, and the modest yield won't support typical withdrawal rates without selling shares.

Those with less than 10 years until they need to access funds should also reconsider. A decade isn't long enough to reliably recover from a severe bear market, particularly if it occurs early in retirement.

The Alternative: VTI Offers Nearly Identical Exposure

Vanguard Total Stock Market ETF (NYSEARCA:VTI) tracks a nearly identical index with the same 0.03% expense ratio. VTI manages significantly more assets and trades with higher daily volume, potentially offering slightly tighter bid-ask spreads for very large transactions. Performance differences over the past decade are negligible.

The choice between ITOT and VTI matters less than the decision to use a total market approach at all. Both provide comprehensive U.S. equity exposure without managing multiple sector or style funds.

ITOT works best as the equity core of a diversified retirement portfolio, paired with bonds and cash to manage volatility, but retirees must accept market-level drawdowns and modest income in exchange for simplicity and ultra-low costs.

It’s Time To Rethink Passive Investing

For more than a decade, the investing advice aimed at everyday Americans followed a familiar script: automate everything, keep costs low, and don’t touch a thing. And increasingly, investors are realizing that being completely hands-off also means being completely disengaged.

That realization hits like a lightning bolt when you realize not just how much better your returns could be, but that there are amazing offers like one app where new self-directed investing accounts funded with as little as $50 can receive stock worth up to $1,000.

Take back your investing and start earning real returns, your way.

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