Retirees who depend on their savings for monthly income cannot afford the swings that stock-heavy portfolios produce.
Guaranteed income investments trade upside potential for certainty, and in mid-2026 that trade looks better than it has in years, with CDs, Treasury securities, and fixed annuities all paying well above their historical averages.
Key Takeaways
- Top CD and Treasury yields currently sit between 4% and 5%, and top fixed annuity rates run higher still.
- No single guaranteed product covers every need; most retirees blend two or three to balance liquidity, tax treatment, and rate lock-in.
- Rates are historically high but drifting, so timing and laddering matter more than usual right now.
Why Guaranteed Income Matters More After 60
A 25-year-old who loses 20% of a portfolio in a bad year has decades to recover. A 72-year-old drawing down savings for living expenses does not get that luxury.
Sequence-of-returns risk, the danger of withdrawing money from a shrinking account during a downturn, can permanently damage a retirement plan even if the market eventually recovers. Guaranteed income investments sidestep that problem.
The tradeoff is lower long-term growth, which is why most planners recommend using them for a portion of a portfolio rather than the whole thing.
Certificates of Deposit (CDs)
CDs remain the simplest guaranteed income tool available to retirees. A bank or credit union pays a fixed rate for a set term, and the FDIC (or NCUA for credit unions) insures deposits up to $250,000 per depositor, per institution. Top rates by term as of late July 2026:
| Term | Top Available APY | Typical Range |
|---|---|---|
| 6-month | ~4.94% (jumbo) | 4.0% to 4.5% |
| 1-year | ~4.10% to 4.20% | 3.8% to 4.2% |
| 2-year | ~4.20% | 3.7% to 4.1% |
| 3-year | ~4.20% | 3.5% to 4.0% |
| 5-year | ~4.25% to 4.35% | 3.2% to 4.0% |
Short-term CDs are currently paying about the same as, or slightly more than, longer-term ones. That’s an inverted setup compared to the historical norm, and it means retirees don’t have to lock up money for years to capture today’s better rates.
A CD ladder, where money is split across several maturities that come due at staggered intervals, lets a retiree reinvest at whatever rate is available every few months without giving up access to all their cash at once.
CD interest is taxed as ordinary income the year it’s earned, even in a no-penalty CD where the money technically stays locked up. That’s different from how a deferred annuity works, and it matters for retirees in a higher tax bracket.
Treasury Securities
Treasury bills, notes, and bonds are backed by the full faith and credit of the U.S. government, which makes them the closest thing to a truly risk-free rate available to individual investors.
The 10-year Treasury yield has been climbing through July 2026, trading around 4.65% to 4.71% during the week of July 20, driven partly by rising oil prices and geopolitical tension in the Middle East. That’s the highest level since January 2025.
A few practical notes: interest is exempt from state and local income tax, though still taxed federally. T-bills under one year can be bought directly through TreasuryDirect with no fees.
TIPS adjust principal with inflation, protecting purchasing power but adding complexity around how that adjustment gets taxed.
Retirees who want Treasury exposure without buying individual bonds can use a Treasury money market fund or short-term Treasury ETF instead, both of which pass along yield with more flexibility than owning individual notes.
Series I Savings Bonds
I bonds combine a fixed rate that never changes with a variable rate that resets every six months based on inflation. For bonds issued between May 1 and October 31, 2026, the composite rate is 4.26%: a 0.90% fixed rate plus a 3.34% inflation-adjusted variable rate.
I bonds have real limitations. Purchases are capped at $10,000 per person per calendar year through TreasuryDirect, plus up to $5,000 more via tax refund for paper bonds.
Money is locked up for a full year with no access at all, and cashing out before five years costs three months of interest as a penalty. I bonds work well as a slice of a plan. They don’t work as the whole plan, given the caps.
Fixed Annuities (MYGAs)
A multi-year guaranteed annuity, or MYGA, functions much like a CD but is issued by an insurance company instead of a bank. The insurer guarantees a fixed rate for a set term, commonly 3, 5, 7, or 10 years, with interest growing tax-deferred until withdrawal.
Current MYGA rates run noticeably ahead of CDs. As of late July 2026, top 5-year MYGA rates from competitive carriers range from roughly 5.70% up to 6.45%, and some 7-year contracts quote as high as 6.80%. Compare that to a top 5-year CD around 4.25%.
There’s a catch. Annuities are not FDIC-insured. They’re backed by the claims-paying ability of the issuing insurance company, with a state guaranty association safety net that varies by state and typically caps coverage well below what FDIC provides on CDs.
Sticking to insurers rated A- or better by AM Best is standard advice from fee-only planners, even though lower-rated carriers sometimes advertise higher headline rates.
Early withdrawal from a MYGA before the surrender period ends can trigger a substantial penalty, on top of the usual 10% IRS penalty for withdrawals before age 59½ if the money isn’t in a qualified account.
Tax deferral is the other piece of the pitch. Because interest isn’t taxed until withdrawal, a retiree in the 22% federal bracket holding $200,000 in a 5-year MYGA can come out several thousand dollars ahead of the same amount in a CD, purely from deferral, before even counting the higher headline rate.
Single Premium Immediate Annuities (SPIAs)
Where a MYGA behaves like a CD, a SPIA behaves like a personal pension. A retiree hands an insurer a lump sum in exchange for a guaranteed monthly payment that starts right away and continues for life.
Payment size depends on age, gender, interest rates, and whether payments should continue to a spouse.
SPIAs solve a different problem than CDs or MYGAs. They’re not about growing a pile of money, they’re about converting a pile of money into income that can’t be outlived.
That’s a poor fit for a retiree who wants flexibility or plans to leave a large inheritance, and a strong fit for someone worried mainly about running out of money in their 90s.
Many retirees who use a SPIA put only a portion of their savings into it, enough to cover essential fixed expenses like housing and food, and keep the rest liquid.
Dividend Stocks Are Not Guaranteed Income
Some retirees lump dividend stocks in with guaranteed income, and that’s worth correcting. Dividend payments from even the most established companies are not guaranteed, boards can and do cut them during downturns, and share prices fluctuate regardless of the income stream.
A modest allocation to dividend stocks, layered on top of a guaranteed core, can help a portfolio keep pace with inflation over a 20 or 30-year retirement. But it’s a complement to guaranteed income, not a substitute.
How Conservative Retirees Combine These Tools
There’s no single formula, but a common pattern looks like this:
- Emergency cash: high-yield savings or a short-term CD ladder
- Money needed in 1 to 5 years: CD or Treasury ladder, matched to when it will be spent
- Inflation protection: I bonds up to the annual limit, plus TIPS for larger amounts
- Growth on money not needed for 5+ years: MYGA, for the tax deferral and higher current rates
- Lifetime income for essentials: SPIA, sized to cover the gap between Social Security and fixed monthly costs
Rates across these categories have been elevated since the Fed’s 2022-2023 hiking cycle, but they’ve started drifting as the Fed cut rates three times in 2025 and geopolitical volatility added uncertainty to the 2026 outlook.
Locking in a term now, rather than waiting for a rate that may not materialize, is the logic most planners point to.
A Word on Risk That Isn’t Zero
“Guaranteed” doesn’t mean risk-free. FDIC and NCUA insurance cover CDs up to $250,000 per depositor per institution, so retirees with larger balances need to spread deposits across institutions to stay fully covered.
Annuity guarantees rely on the insurer’s solvency, backed by a state guaranty safety net most people never research until they need it.
Every fixed-rate product also carries reinvestment risk: lock in a 5-year CD today, and if rates fall by 2029, that income may not be replaceable at the same level. None of this makes these products unsuitable. It just means “guaranteed” describes the rate, not the absence of every risk.
Conclusion
CDs, Treasuries, I bonds, MYGAs, and SPIAs each solve a different piece of a conservative retiree’s income puzzle, and current rates make several of them more attractive than they’ve been in over a decade.
The right mix depends on how soon the money is needed, the retiree’s tax bracket, and how much flexibility matters compared to locking in today’s rate.