For those who want to enjoy retirement, there are two primary goals. First, you must protect your money. Second, you want to create passive income that helps pay your living expenses without selling your investments.

Exchange-traded funds (ETFs) are a great tool to achieve both goals. These funds are buckets of individual investments lumped under one ticker symbol. It's an easy way to diversify your nest egg, and you can build your portfolio around the funds that match your needs and risk tolerance.

Here are four diverse ETFs that retirees should consider for their retirement strategy.

1. Follow the broader market

Just because you're retired, it doesn't mean you should give up on building wealth. Feel free to dedicate some of your nest egg to keeping pace with the broader stock market. The Vanguard 500 Index Fund (VOO 1.00%) holds stocks in the S&P 500 index, a group of 500 prominent U.S. companies. The S&P 500 may sometimes be volatile, but it has always gone on to new highs.

The Vanguard 500 Index Fund's top 10 holdings include hefty exposure to the "Magnificent Seven" stocks as well as blue chip stocks like Berkshire Hathaway. The fund also pays a modest dividend that yields 1.4%. The S&P 500 historically returns an average of 9% to 10% annually, which is what you can roughly expect from the funds following it, like this one.

2. A fund for dividend income

Passive income is crucial for retirees who don't want to live off strictly selling their investments over time. A significant market downturn could exhaust savings faster if retirees must sell large amounts of stock to afford living costs. The Schwab U.S. Dividend Equity ETF (SCHD -0.10%) is a great income-focused fund retirees can buy and hold.

It has many high-yielding dividend stocks, including a top 10 filled with energy companies, consumer staples companies, and pharmaceutical stocks. The fund's dividend yield is 3.5%. The fund holds 104 stocks, so investors holding the fund are instantly diversified and don't have to worry about one company cutting its payout.

3. How to get AI exposure

Big technology companies have dominated Wall Street for the past 10 years. Among them is the Magnificent Seven, a group that includes Nvidia, Apple, Microsoft, Tesla, Meta Platforms, Amazon, and Alphabet. But rather than pick and choose which horses to bet on, consider buying the Invesco QQQ Trust (QQQ 1.54%) instead. The fund focuses on innovative growth trends in artificial intelligence, augmented reality, payments, and more.

The Magnificent Seven comprise 40% of the fund. That concentration makes the fund riskier than more diversified ETFs, but it's a simple way to include tech leaders in your long-term portfolio. These companies have the deep pockets and dominant businesses to continue creating wealth for investors, even if they slow down from the success they've had in recent years.

4. Enjoy steadily growing passive income

Dividend growth is a rock-solid investment strategy. Not only are dividends passive income, but companies that grow their dividend over time can also create strong total returns. After all, a company can't keep growing its dividend without growing profits to fund it. The Vanguard Dividend Appreciation ETF (VIG 0.10%) is an excellent fund with this goal in mind.

It holds companies with long histories of dividend growth. Its top holdings include stocks like Johnson & Johnson, Procter & Gamble, JPMorgan Chase, and ExxonMobil. Naturally, the fund itself has raised its payout over time as well. Its dividend yield is 1.8%, but don't underestimate the compounding power of dividend growth. The Vanguard Dividend Appreciation ETF has grown its dividend by 178% over the past decade alone. Buy and hold, and let that dividend income grow.