Treasury yields have remained above 4% across the curve for most of 2026. Retirees who parked cash in money market funds are now considering whether a Treasury bond ladder can capture those rates for five to ten years without the reinvestment risk of short-term instruments.
How a Treasury ladder works
A bond ladder spreads purchases across maturities, typically one to ten years. As each bond matures, the proceeds roll into a new bond at the longest rung of the ladder. This structure provides predictable income, reduces interest rate risk compared with holding a single long bond, and maintains some liquidity because a maturity arrives every year.
For example, an investor with $500,000 might buy $50,000 each of 1-year, 2-year, 3-year, 4-year, 5-year, 6-year, 7-year, 8-year, 9-year, and 10-year Treasuries. Every twelve months, $50,000 principal becomes available. The investor can spend it or reinvest at the then-current 10-year rate.
Current yield snapshot across maturities
| Maturity | Approximate yield | Annual income on $50,000 |
|---|---|---|
| 1-year | 4.45% | $2,225 |
| 2-year | 4.52% | $2,260 |
| 3-year | 4.58% | $2,290 |
| 5-year | 4.62% | $2,310 |
| 10-year | 4.71% | $2,355 |
These yields are estimates based on early June 2026 Treasury market levels. Actual yields fluctuate daily. The combined weighted yield on a ten-rung ladder constructed at these levels would approach 4.6% annually before taxes.
Tax considerations for retirees
U.S. Treasury interest is exempt from state and local income tax, which benefits residents of high-tax states. Federal income tax still applies. Treasuries held in taxable accounts generate taxable interest annually, even if the bond has not matured. Holding them in an IRA defers taxation but limits the state-tax advantage.
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