A 10.6% Yield That Beats Social Security Comes With a Shrinking Portfolio and $155M in Losses

A $300,000 portfolio must earn at least 8% to surpass the average Social Security retirement check of $22,884. Ares Capital Corporation (ARCC) clears that bar, yielding 10.6% and generating $31,800 a year on that amount. That income exceeds Social Security’s benchmark by more than $8,900. But the cost of that yield is already showing. ARCC’s portfolio weighted average yield has compressed from 11.1% to 10.3% over the past year. In Q4 2025, the company posted $155 million in net realized losses. The income stream remains intact for now — ARCC has held its quarterly payout at $0.48 per share for 13 consecutive quarters — but the underlying portfolio is deteriorating. A 10.6% yield may look like a win on paper, yet when paired with principal erosion and a declining yield base, it delivers less real income over time. A static $31,800 buys less each year under elevated inflation, and if the asset base shrinks, future payouts become harder to sustain. The tradeoff is not hypothetical. It is already priced into the fund’s performance.