For most of the last decade, CDs were a punchline.
You'd lock up $50,000 for a year and walk away with $500 in interest — barely enough to cover two tanks of gas.
So people stopped using them.
They chased yield in the stock market, took on more risk than they were comfortable with, and quietly hoped nothing blew up at the wrong time.
That era is over.
Rates have moved — and CDs are now generating real, meaningful income for people who know how to use them correctly.
The question isn't whether CDs are worth looking at again. They are.
The question is: how do you use them the right way inside a retirement income plan — without getting trapped at a single rate, locking up money you need, or missing something better around the corner?
That's exactly what we're covering today.
FROM OUR PARTNERS
A CD ladder handles the "safe money" side of your retirement income plan.
But CDs alone can't solve the full picture — they don't grow with inflation, they don't provide income for life, and they don't have the tax advantages that annuities or Roth accounts do.
For retirees who want guaranteed income from their savings, there are now multiple options that work alongside CDs — including Fixed Indexed Annuities and Multi-Year Guaranteed Annuities (MYGAs) — and the right choice depends entirely on your age, your other income sources, and how long you need the money to last.
Rates and product options vary widely. Most people don't know what's actually available to them.
DEEP DIVE
Here's the problem with the way most people buy CDs.
They see a 4.5% rate on a 5-year CD, think "that's great," and put everything in at once.
Then rates move — or they need access to the money — and they're stuck.
There's a smarter approach.
The Strategy: CD Laddering for Predictable Retirement Income
A CD ladder means you split your money across multiple CDs with different maturity dates — typically 1, 2, 3, 4, and 5 years — instead of putting it all in one place at once.
Here's why it works for retirees specifically:
You get guaranteed income at regular intervals. Every 12 months, one rung of your ladder matures and you have a decision: spend it, reinvest it, or redirect it. You're never fully locked up.
You stay flexible as rates change. If rates are higher in two years, you reinvest that maturing CD at the new rate. If rates drop, your longer-term CDs are still locked in at today's higher yield.
There's zero market risk. Every CD is FDIC-insured up to $250,000 per bank. The value doesn't fluctuate. You know exactly what you'll receive and when.
Here's a simple example of what a $100,000 CD ladder looks like:
CD Rung | Amount | Term | Matures |
|---|---|---|---|
Rung 1 | $20,000 | 1-Year | Mid-2027 |
Rung 2 | $20,000 | 2-Year | Mid-2028 |
Rung 3 | $20,000 | 3-Year | Mid-2029 |
Rung 4 | $20,000 | 4-Year | Mid-2030 |
Rung 5 | $20,000 | 5-Year | Mid-2031 |
Every year, $20,000 comes back to you — guaranteed, on schedule, with no broker, no advisor fee, and no market exposure.
Now, a CD ladder works best for the portion of your retirement savings you'd call "safe money" — the bucket designed for predictable income, not long-term growth.
It's not meant to replace your entire portfolio.
But for the $50,000 to $200,000 that many retirees keep in cash or low-yield savings accounts right now — earning close to nothing — a ladder is a straightforward upgrade.
A quick note on alternatives worth comparing:
Treasury Bills are backed directly by the U.S. government (vs. FDIC backing on CDs) and their interest is state-tax-exempt — which matters if you live in California, New York, or another high-tax state.
I-Bonds are inflation-linked savings bonds that adjust twice a year based on CPI. The catch: you can only buy $10,000 per year, and you can't touch them for 12 months. Better as a complement to a ladder, not a replacement.
Bottom line: CDs are simple, guaranteed, and paying rates that were unthinkable five years ago. If you have money sitting in a savings account earning 0.5%, the comparison isn't even close.
WEEKLY MAILBAG
"Should I lock up my savings in a 5-year CD or keep it accessible?" — Don K., Michigan
Don, this is exactly the right question to be asking — and the honest answer is: neither extreme is right.
Putting everything in a 5-year CD means you're fully exposed if rates move higher, and you lose flexibility if an unexpected expense comes up.
But keeping everything accessible in a savings account earning 0.5% means inflation is quietly eroding your purchasing power every single month.
The ladder approach I described above is the answer to your question.
Split the money across 1- through 5-year maturities. You get a CD maturing every 12 months — which means access to a chunk of your funds regularly — while your longer-term money earns higher rates the whole time.
Start with whatever amount you're comfortable not touching for 12 months, and build from there.
MARKET MINUTE
The 10-year U.S. Treasury yield is currently hovering around 4.3%, and 1-year CD rates at major banks are ranging from 4.4% to 5.1% depending on the institution — the highest sustained window for safe fixed income in over 15 years.
Stay safe, stay invested, and I'll see you in your inbox next Tuesday.
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