This is not your father's retirement portfolio. Baby boomers, as well as others who have reached retirement age, have a few problems. The Federal Reserve is making it hard to earn interest from banks and ultra-safe treasury products. Even if your parents did not have a pension, they could stash their money away in savings accounts, certificates of deposit, or Treasury bonds and make enough in annual interest and dividend payments to makes ends meet.

In 1990, for example, treasuries were yielding 9%, but today the rate is under 2%. A one-year certificate of deposit yields 1% and a savings account yields nearly the same. With the average rate of inflation near 3%, these ultra-safe options don't pay enough in interest and dividends to keep up with the yearly erosion of the value of their money.

Recent retirees, who have traditionally relied on investment options like these, will have to rethink their strategy. Finding options that return enough in dividends without taking on too much risk is key. One of the best ways to do this is through exchange traded funds (ETFs). There are more than 1,400 ETFs on the market, yet most are not suitable for a retiree's portfolio. Many ETFs, however, can solve the problem of yield while providing a reasonable assurance of safety.

iShares Dow Jones US Utilities (NYSE: IDU)
Investment-savvy retirees know that the best stocks for the golden years are the boring ones. These stocks aren't affected by big market moves. They are like watching paint dry in many cases, but boring often equals yield. Where do you find many of these stocks? Well, everybody needs power and the utilities sector offers a chance to profit from that. This ETF is one of the best plays for utilities. It has an expense ratio of 0.5%, roughly in line with the category average, and pays a dividend of 3.47%. Smart long-term investing involves keeping fees to a minimum.

iShares Investment Grade Corporate Bond (NYSE: LQD)
Every retirement portfolio needs bonds but unless you are well-versed in bond investing, using an ETF to buy multiple bonds is better. Purchasing shares in this ETF makes you a shareholder in more than 1,000 bonds at one time. The expense ratio is 0.15% and you'll see annual dividend payments of 3.83%.

iShares High Yield Corporate Bond (NYSE: HYG)
Not all bonds come with the same level of risk. The bonds in the ETF above are investment grade. They have a high degree of safety, meaning the risk that a company would default is very low. This ETF invests in bonds of higher risk. Because there are 726 bonds in this fund, even if one did default, the effect on the fund would be small. Ratcheting up the level of risk, however, increases the yield. The yield on HYG is 6.63% and the expense ratio is 0.50%.

PowerShares Financial Preferred (NYSE: PGF)
Another financial product appropriate for retirees is preferred stock. Essentially a cross between stock and bonds, preferred stock responds more to interest rates than company news and often pays a higher yield than a company's common stock. This ETF holds a basket of preferred stock in the financial sector. Much like the high-yield bond ETF above, it comes with more risk, but pays a handsome 6.35% dividend in response to the risk. Its expense ratio is slightly higher than the average at 0.66%.

Vanguard High Dividend Yield Index ETF (NYSE: VYM)
There's no reason retirees can't have a portion of their portfolios in the stock market. For those who cannot afford to take on a lot of risk, using an ETF that invests in stocks that have high dividend yields keeps the risk to a minimum, while also paying a 3.23% dividend. The expenses are low: in this case, 0.1%.

The Bottom Line
The five funds listed here are for the retirees looking for a conservative portfolio while gaining yield that is better than the fixed income portfolio of the generation before. For some of your retirement accounts you may not have the option of using these funds, but for your individual brokerage account or other accounts where you aren't restricted to certain investment choices, consider these options.

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