Income isn’t just for retirement

Gareth Hughes | BlackRock 

Investing for income is no longer just for retirees, with more Australians seeking extra earnings earlier in life. ETFs offer a simple way to harvest income across bonds, equities and active management, helping to support investors’ changing income needs.

Rising living costs, changing work patterns and a desire for greater financial flexibility are encouraging more investors to look for ways to generate regular income while they're still working.

The inaugural iShares ETF Insights Report -  based on a survey of 3133 Australian adults in March 2026 - shows that rather than investors in or nearing retirement, those aged 24–55 are the most likely to have started investing to generate a regular income. 

Around 36% of existing ETF investors already use income ETFs, and a further 44% of prospective ETF investors are considering purchasing an income ETF over the next 12 months. 

The findings of the report reflect a broader shift in how Australians are thinking about investing. Rather than simply accumulating wealth for retirement, many are looking to build investment portfolios that can help supplement wages today.

Why income matters more than ever

Cost-of-living pressures have fundamentally changed household budgets over recent years.

According to the Australian Bureau of Statistics, consumer prices have increased by more than 20% cumulatively since 2020, while wages have risen by around 16–18% over the same period (see chart below). 

Although inflation has moderated from its 2022 peak, many essential expenses—including housing, insurance and utilities—remain materially higher than five years ago.¹

Source: Australian Bureau of Statistics, 31 March 2026

For investors in their 30s, 40s and 50s, this has created a growing focus on generating an additional source of income that can help offset higher living costs without relying solely on salary increases.

The ETF Insights Report found that among ETF investors, the two biggest motivations for investing are taking greater control of their financial future (46%) and growing money more effectively than cash savings (43%). 

Why ETFs?

Income investing has traditionally involved selecting individual dividend-paying shares or purchasing investment properties. ETFs now provide investors with a simpler way to access diversified sources of income across multiple asset classes.

Rather than relying on single companies, income ETFs can generate distributions from diversified portfolios of bonds, equities or income-focused investment strategies.

For working-age investors, regular distributions may also provide behavioural benefits. Receiving income during periods of market volatility can help investors remain invested for longer, while diversified portfolios may reduce reliance on any single source of income.

BlackRock's research also identified changing retirement patterns, greater income variability and portfolio confidence as key drivers behind increasing demand for income strategies among working-age investors. 

As of early 2026, Australian jobs data indicates growth in part-time and casual work is far outstripping full time work², pointing to a potential shift in how working professionals earn their income – and an important role for investing in helping to fill that gap.

Building an income portfolio

Different income strategies can serve different roles within a portfolio depending on an investor's objectives.

Managing cash more efficiently

For investors looking to earn income from cash while maintaining liquidity, the iShares Enhanced Cash ETF (ISEC) invests in a diversified portfolio of high-quality short-duration securities.

As interest rates remain above pre-pandemic levels, enhanced cash ETFs may provide an attractive alternative to holding larger balances in traditional transaction accounts, while offering more flexibility than term deposits or goal-based savings accounts.

Seeking higher income from bonds

Investors prepared to take additional credit exposure may consider the iShares Credit Income Active ETF (ICME). The fund actively invests across Australian corporate bond markets, with the objective of generating higher income while managing risk through active security selection. 

ICME’s monthly distributions also offer a more consistent pattern of income versus many traditional quarterly distributing ETFs.

Generating equity income

For invstors looking to move up the risk curve to income-generating shares, income-focused ETFs may offer a more diversified approach versus single high-dividend stocks.

The iShares World Equity High Income Complex ETF (WYNC) combines global equity exposure with an options strategy designed to generate regular income while remaining invested in international share markets.

Investors seeking Australian equity income may also consider dividend-optimised strategies such as the iShares S&P/ASX Dividend Opportunities ETF (IHD), which provides diversified exposure to Australian companies with high yielding characteristics.

Diversifying income sources

While no single investment strategy is suitable for every investor, combining multiple income sources can help create a more resilient portfolio and support investors’ needs.

For example, investors may choose to blend:

• enhanced cash for liquidity 
• active bonds for regular income 
• high-dividend Australian equities 
• global equity income strategies 

This type of approach may help reduce reliance on any one asset class while providing exposure to different drivers of portfolio income.

Income investing evolves

As Australians continue to work longer, transition more gradually into retirement and seek greater financial flexibility throughout their lives, investment income is becoming an increasingly important part of portfolio construction.

Many investors have a need for income and ETFs are increasingly helping investors build more additional sources of income. For many mid-life Australians, that means income investing is no longer just about retirement—it's about building greater financial resilience today.