For most of the last fifteen years, safe money paid you almost nothing. A savings account, a money market, a one-year CD — all of it hovered near zero. Retirees who wanted income had to reach for risk to get it.
That flipped. And today’s Journal quietly printed the proof, buried in the small-type rate tables most people skip.
The back-page numbers
A top money-market account pays about 4.2% right now. One-year CDs pay roughly 4.2% too, and some five-year CDs stretch toward 4.3%. Short Treasury bills — the safest IOU on earth — sit in the same neighborhood.
Those five-year CDs deserve a second look. They let you lock today’s rate straight through several possible Fed cuts.
Read that again. You can be paid over 4% to take essentially no market risk. For fifteen years, retirees had to reach into risky territory to see a number like that.
A retiree with $500,000 in safe money is looking at more than $20,000 a year in interest. For doing nothing braver than opening the right account.
Floating vs. locked
The Federal Reserve sets the short-term rate that drives all of this, and it currently sits between 3.50% and 3.75%. The minutes from its last meeting come out today, and Wall Street’s whole debate is when it cuts next, not whether.
Here is the catch every retiree needs to understand. Your money market and savings account reset the day the Fed cuts. That 4.2% can become 3.7% overnight, and you never signed anything.
A CD or a Treasury, on the other hand, locks your rate for its full term. That difference is the whole game right now.
Floating money — savings and money markets — is perfect for cash you might need this year. Locked money — CDs, Treasurys, some annuities — nails down today’s 4%-plus for the income you know you will need in 2027, 2028, and 2029.
The mistake is leaving all your safe money floating, then watching your income quietly shrink after the first cut.
The ladder
This is where a simple ladder earns its keep. Instead of one big CD, split the money across several that mature in staggered years — some in one year, some in three, some in five.
The long rungs lock in today’s high rates. The short rungs keep coming due, so you are never trapped if rates rise again.
For the grocery-and-utilities layer of retirement income, a fixed annuity can lock a paycheck-style rate for life. Not for all your money — for the floor you never want to think about again.
So pull up what your safe money is actually earning. Many big-bank savings accounts still pay around half a percent while T-bills pay 4%.
That gap is real money, and it is yours for the asking. Nobody mails you a notice about it.
Then decide, deliberately, how much to lock before the Fed makes the decision for you. That is a fifteen-minute conversation — the highest-paid fifteen minutes in your week.