Retirees and near-retirees may find a reliable way to supplement Social Security through high-yield, low-volatility instruments, with certain Treasury-backed options offering yields above 5% while preserving principal. The strategy gains relevance as year-end financial planning accelerates.
- Two-year Treasury notes currently yield 5.1%, generating $5,100 annual income on a $100,000 investment
- I-bonds offer a 3.2% fixed rate plus inflation adjustments, safeguarding purchasing power
- High-yield, government-backed instruments are considered risk-free for default
- Laddering maturities improves liquidity and reinvestment flexibility
- A 20-year retirement period can yield over $100,000 in supplemental income from $100,000 principal
- Strategy is most effective when combined with optimized Social Security claiming timing
As individuals approach or enter retirement, the need for stable, predictable income has never been greater. With inflation pressures and rising healthcare costs, many are exploring conservative financial tools to enhance Social Security benefits. One such approach involves allocating a portion of retirement savings into short-term Treasury securities and inflation-protected securities, which currently offer yields exceeding 5.1% for two-year notes and 3.2% for I-bonds. These instruments are backed by the full faith and credit of the U.S. government, making them effectively risk-free in terms of default. For a $100,000 investment in a two-year Treasury note yielding 5.1%, an investor would earn $5,100 in annual interest—roughly equivalent to an additional $425 per month. Over a 20-year retirement, this could add over $100,000 in supplemental income without touching principal. The appeal is growing among retirees seeking to reduce reliance on variable investment returns. Financial professionals note that stacking these fixed-income vehicles can create a reliable income floor, especially when paired with Social Security claiming strategies that optimize benefit timing. The approach is particularly attractive in a high-rate environment, where fixed-income options are delivering returns not seen since the early 2000s. Investors are advised to consider laddering Treasury securities across different maturity dates to balance yield, liquidity, and reinvestment risk. This method allows access to cash flow at staggered intervals while maintaining exposure to potentially higher rates over time. The strategy is accessible through brokerage accounts or directly via the U.S. Treasury’s website.