Stocks have delivered strong long-term returns, but they come with swings that can be hard to stomach once a paycheck stops arriving.
For retirees who need steady income and can’t afford to wait out a downturn, other options on the market right now offer competitive yields without the same volatility.
This article walks through the fixed-income and insurance-based tools that are paying well in 2026 and where each one fits into a retirement plan.
Key Takeaways
- Treasury bonds, CDs, and money market funds are currently paying between 4% and 4.7%, some of the highest safe yields in nearly two decades.
- Annuities convert savings into a paycheck that lasts for life, which stocks and bonds cannot guarantee on their own.
- Diversifying income sources reduces the risk of having to sell investments at a loss during a market downturn.
Why Retirees Look Beyond Stocks
The S&P 500’s dividend yield sits at roughly 1.07% as of late July 2026, well below its 10-year average of 1.63%. That means a $500,000 stock portfolio might generate only $5,000 to $5,500 a year in dividends, forcing retirees to sell shares for the rest of their income needs.
Selling shares during a market slide locks in losses and shrinks the portfolio’s ability to recover. This is the sequence-of-returns risk that financial planners talk about, and it’s the main reason retirees look for income sources that don’t depend on stock prices.
Treasury Bonds and TIPS
The 10-year Treasury note yielded 4.71% as of July 23, 2026, the highest level since January 2025. Treasury securities are backed by the federal government, making them about as safe as an investment can get in terms of default risk.
Treasury Inflation-Protected Securities (TIPS) add a layer of protection against rising prices, since their principal adjusts with the Consumer Price Index. A retiree building a bond ladder today can lock in yields well above 4% across several maturities, spreading out reinvestment risk while still collecting a predictable income stream.
Certificates of Deposit
CD rates have held up even as the Federal Reserve kept its benchmark rate steady between 3.50% and 3.75% through most of 2026.
The top nationally available one-year CDs are paying between 4.15% and 4.30% APY, compared to a national average of just 1.65% to 2.01%. That gap matters. A retiree who shops around instead of settling for their local bank’s default rate can more than double their return on the same amount of principal.
CDs are FDIC-insured up to $250,000 per depositor, per bank, which makes them a safe parking spot for money needed within the next one to five years.
| Product | Typical Yield (July 2026) | FDIC/Government Backed | Liquidity |
|---|---|---|---|
| 1-Year CD (top rate) | 4.15% – 4.30% | Yes | Locked until maturity |
| 10-Year Treasury Note | ~4.71% | Yes | Sellable, price fluctuates |
| High-Yield Savings | 3.75% – 4.25% | Yes | Immediate |
| Fixed Annuity | 4.5% – 6% (varies by term) | State guaranty fund | Locked, surrender charges apply |
| Dividend REITs | 3% – 5.3% average | No | Sellable, price fluctuates |
| Municipal Bonds | 3.5% – 4.5% (tax-free) | Varies | Sellable, price fluctuates |
High-Yield Savings and Money Market Accounts
For money that needs to stay liquid, online high-yield savings accounts and money market funds are still paying between 3.75% and 4.25% in most cases.
These accounts won’t lock up cash the way a CD does, so they work well for an emergency fund or short-term spending needs. The tradeoff is that rates on these accounts float, so a Fed rate cut would bring the yield down within a billing cycle or two.
Fixed and Immediate Annuities
Annuities solve a problem that no stock or bond can: the risk of outliving your money. A fixed annuity pays a guaranteed rate for a set period, often in the 4.5% to 6% range depending on the term and the issuing insurer.
An immediate annuity converts a lump sum into a monthly paycheck that continues for as long as you live, regardless of how long that turns out to be.
Annuities aren’t for every dollar in a portfolio. They typically carry surrender charges for early withdrawal and the guarantee is only as strong as the insurance company behind it, which is why it’s worth checking an insurer’s financial strength rating before buying.
For retirees who worry most about running out of money in their 90s, an annuity covering basic living expenses alongside Social Security can remove a significant amount of anxiety from the plan.
Municipal Bonds
Municipal bonds, issued by states, cities, and local agencies, currently offer yields in the 3.5% to 4.5% range, and the interest is generally exempt from federal income tax (and sometimes state tax if you buy bonds from your home state).
For a retiree in a higher tax bracket, the after-tax return on a muni bond can beat a taxable bond or CD paying a higher headline rate. Munis do carry some credit risk depending on the issuer’s financial health, so diversifying across multiple bonds or using a muni bond fund spreads that risk out.
Dividend-Paying REITs
Real estate investment trusts are still equities, so they carry more price volatility than bonds or CDs. But they’re worth mentioning because their income profile looks very different from the broader stock market. Publicly traded U.S. equity REITs posted an average dividend yield of 3.98% as of March 2026, roughly triple the yield on the S&P 500 overall. Some individual REITs pay considerably more.
Realty Income, for example, has raised its dividend for 31 consecutive years and currently yields around 5.3%, paid out monthly rather than quarterly.
REITs work best as a smaller slice of a retirement portfolio rather than a full substitute for bonds or annuities, since they can still lose value in a downturn the way other stocks do.
Building a Mix That Fits Your Needs
No single product covers every need in retirement. A common approach splits money across a few buckets: cash and CDs for the next one to two years of expenses, bonds or a bond ladder for years three through ten, and an annuity to cover baseline living costs for life.
Municipal bonds and REITs can round out the mix for retirees who want extra yield or tax efficiency and can tolerate a bit more risk. The right combination depends on your tax bracket, how much guaranteed income you already have from Social Security or a pension, and how much price fluctuation you’re willing to accept.
Conclusion
Retirees don’t have to choose between stock market risk and rock-bottom returns.
With Treasury yields near 4.7%, top CDs above 4%, and annuities offering guaranteed lifetime income, there are more ways than usual right now to build a retirement paycheck that doesn’t depend on the stock market’s mood.