In retirement, investors should probably turn to income-focused investments that also have good capital preservation characteristics. While drawdowns in riskier investments won't hurt you badly if you're young and have a lifetime to make up losses, retirees don't have that luxury.

Hopefully, by retirement, your savings are large enough that a prudent allocation between dividend stocks and fixed income securities are enough to cover your living expenses, when combined with Social Security payments.

2022 has been a very unique year in which just about every type of income security has lost value, as interest rates have rapidly risen. However, now is a much better time than a year ago to invest in these types of instruments.

For those looking to create a low-cost, diversified portfolio of stocks and bonds, the following six exchange-traded funds (ETFs) should be on your list. Depending on your income growth needs, risk tolerance, and tax bracket, retirees should weight these six funds according to their own unique circumstances.

Vanguard Total Bond Market Index Fund (BND)

The Vanguard Total Bond Market Index Fund (BND 0.11%) is solid low-cost ETF diversified across a number of "safer" fixed income securities. These securities range from longer-maturity U.S. Treasury Bonds, to sovereign debt securities, investment-grade corporate bonds, and mortgage-backed securities. Currently, the index fund is made up of more than 10,000 different securities, two-thirds of which are U.S. government bonds.

These bonds are primarily longer-duration bonds, with an average effective maturity of 8.9 years. While the average coupon for bonds in tis index is just 2.7%, the yield-to-maturity is currently 4.7%, as many bonds are at a discount to par.

This fund has had a very unusual year and is actually down nearly 16% for 2022. This has been due to the rapid rise in interest rates and an uncharacteristically overheated economy. However, in the 2008 downturn, BND had a positive 5.2% return. That's because long-duration, low-risk assets will probably protect investors in the scenario of a significant economic downturn during which interest rates would be likely to fall.

If long-term bond yields go up further from here, more decline is likely. However, if one thinks long-term rates are peaking right now and may decline, this ETF will hold up quite well, even in a recession scenario.

iShares iBoxx $High Yield Corporate Bond ETF (HYG)

While Treasuries and investment-grade corporates should offer some protection in a downturn, they don't yield much. Moving up the risk curve, fixed income investors can get much higher yields with "junk" bonds that trade below investment grade.

The iShares iBoxx $High Yield Corporate Bond ETF (HYG 0.35%) offers exposure to higher-yielding bonds, with a weighted average coupon of 5.5%, a yield-to-maturity of 8.68%, and a weighted-average maturity of 5.4 years.

High-yield bonds give investors greater yield but are also perceived as "riskier" by ratings agencies, and junk bonds can be more volatile than Treasuries. Interestingly, however, this index is down only 13.2%, less than that of the "safer" Total Market Bond Index, perhaps as the higher yields have helped offset the rapid rise in rates. However, if we go into a recession and default risk rises, it's quite likely this ETF will sell off, whereas Treasuries may gain and investment-grade bonds are likely to sell off less.

iShares National Muni Bond ETF (MUB)

For retirees in a high-income tax bracket, taxes are also a consideration. In addition, the preservation of capital is paramount for high earners, with perhaps less need for a high yield. That's why municipal bonds may be an attractive alternative for these investors, as municipal bonds are exempt from federal taxes.

The iShares National Muni Bond ETF (MUB -0.09%) yields just 2.07%, but it's highly diversified, with over 5,400 holdings across both short- and long-term bonds, and 95% of its municipal bonds rated A or higher. The passively managed MUB also has low management costs of just 0.07%.

The fund is down 11.5% on the year, which is still better than most stock funds and even the "risk-off" Total Bond Market index. For those with a high amount of assets looking to preserve those securities while earning a low but tax-free rate of return, the National Muni Bond fund could be a nice option.

SPDR Portfolio S&P 500 High Dividend ETF (SPYD)

Stocks may carry higher risk in the short term but typically offer investors better protection against inflation that bonds over the long term, because of companies' ability to raise prices to customers. The SPDR Portfolio S&P 500 High Dividend ETF (SPYD 0.40%) is another low-cost index fund that tracks 80 of the highest-yielding large-cap stocks in the S&P 500. Large dividend payers not only give investors solid yields with the potential to for modest growth but also tend to be less volatile than the overall market -- another great benefit for retirees.

In fact, the total return for the SPYD this year is (5.6%), a much milder decline than the 18% total downturn for the S&P 500 overall. This ETF also has a juicy 4.52% dividend yield and a rock-bottom expense ratio of just 0.07%.

Large high dividend payers likely won't reap the biggest gains during market booms, but this solid portfolio of high-yielding stocks should mitigate losses in a downturn, all while providing solid dividends along the way.

Vanguard Dividend Appreciation Index Fund (VIG)

Of course, just because you're at or near retirement doesn't mean growth is off the table. Given that your retirement could last 25 or 35 years, it is probably a good idea to have some of your portfolio in securities with payouts that can grow with inflation, and hopefully, at an even higher rate than inflation.

The Vanguard Dividend Appreciation Index Fund (VIG 0.19%) offers a happy medium between yield and growth. This low-cost ETF is a passively managed index that consists of 289 stocks with long records of dividend growth, and weighted by market cap.

Top holdings include blue-chip dividend growers such as United Health, Johnson & Johnson, and Microsoft. The fund currently yields 2.13%, or about half of the high-dividend index; however, if these stocks can grow at a higher rate, investors have the potential to gain even more in payouts over the course of five to 10 years, and likely with more capital appreciation. In 2022, this index is also down less than the overall S&P, declining just 14.2% -- nearly four percentage points better than the S&P 500.

Vanguard International High Dividend Yield Fund (VYMI)

The U.S dollar has strengthened against most other global currencies by a significant amount this year. Therefore, it may be a good idea to buy some international stocks, which now look quite cheap. While international stocks carry some higher risk, if the dollar reverses this year's gains, international stocks could do well for U.S. investors.

The Vanguard International High Dividend Yield Fund (VYMI 0.78%) is a diversified fund consisting of 1,326 dividend paying stocks across Europe, developed Asia-Pacific countries, and emerging markets. As international stocks have sold off heavily this year amid the strong dollar and geopolitical tensions, the fund appears quite cheap, with a weighted average P/E ratio of just 7.9, and a dividend yield of nearly 6%. Top holdings include pharmaceutical giant Roche, oil giant Shell, and carmaker Toyota.

That high yield has helped cushion the blow of price declines this year, and the fund's total return in 2022 is a decline of 15.72%, more than two points ahead of the S&P 500.