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One year into retirement, time to roll the treasury that just matured into a new five year [Fixed Income Something].

Talked to the brokerage fixed instrument guy. Nothing of massive note, but for those that are not as wise in the ways of fixed instruments, like myself...a few matters I scribbled down.

- yields of course have been declining some (my addition - as have 30 year mortgage rates, etc, all lower than they were a year ago). Treasury market charging a slight premium currently. Five years are at about 3.6% now. Coincidentally about what Goldman Sachs pays in mm accounts.

- Where I am one would have to earn about 3.8 or 3.85% on a CD to get the same end result, with state taxes added into the mix.

- In the CD world he's seeing 3.85, 3.95, and 3.95 on three, four, and five year CDs respectively. Maybe a slightly better choice for a new five year rung.

- We talked about annuities some - they're my current two, three, and four year rungs as a year ago they were at about a 0.8% premium to treasuries and CDs and such. Maybe not quite as good now, and for a bit of diversification I don't think they will be the choice for the new rung.

- corporate bonds - almost all are being issued now with callable features. One somewhat interesting option was the National Bank of Canada is offering 4.4% for a five year CD. But, it is callable after two years.



Nothing of massive note. SWVXX (Schwab's money market mutual0 is paying about 3.58% as well, for yet another choice.

And most importantly, the bourbon ladder is well-provisioned.

You could look into MYGAs. Multi-year guaranteed annuity. They are CD like in many ways in that they accumulate interest for "x" years and then you can transfer the money into whatever account you want. They are NOT insured by the FDIC although state insurance will cover them up to a certain dollar level so it is best to invest in higher quality companies.

I'm not fond of insurance companies so I reluctantly invest in a few of these and usually for 3 yrs although I do have one 5 yr term all paying 5%+ per year.

You can see rates at places like immediateannuities.com

At the bogleheads forum they have a long thread with a lot of useful info and an ex-insurance executive who answers questions and he isn't someone who pushes most insurance products (he is anti-variable annuities for example).

Definitely worth looking at depending how much you are investing. You can still get 5% from some A- rated companies for 3 yrs. I used them along with a bunch of treasuries (nominals as well as TIPs) for my fixed income investing.


Rich

Yup, those are years 2/3/4 of the ladder currently.

Im a bit lazy in that I want to touch these things for about 15 min, once a year (rebuild when a rung matures) and the annuities are more work. Some of them also require an active communication before maturity so they don't automatically roll it into some other less palatable annuity, and I have that on the calendar for those rungs.

So...I ended up going with an MYGA anyway (I was leaning CD when I wrote about this a couple weeks ago), to rebuild the 5 year rung of the ladder.
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There are A.M. Best rated issuers at the A- level (which translates to an expected rate of failure of 0.15% in the first year) that were paying as much as 6.3% when I locked in the other week. I went with one at that credit rating that paid 5.7% as they had been doing business longer, and had been upgraded about 8 years ago, and were reaffirmed a couple years ago. The 6.3% guys just started in the business in late 2024, so I took a pass for now. Who knows, maybe next year?

And boy did I research the issuer. I google map drove around their building (they've done some beautification), looked at their office party pictures, looked at their capitalization ratio, looked at how long their parent company had been in business, etc.

Also, if anyone does something like this - or should I say more specifically, sends a wire these days, call the company. Voice verify their information. There's a cyberattack vector here: a really clever, malicious actor will try to get into the email boxes of companies like this - or real estate title companies - anyone who asks for wires. The actor will send out emails that *look* like they're from the company, with wiring instructions, but that wire may as well be gone forever if you send it to their bullshit account.

This was all digital, this year. Last year I got some big folders from the issuers, with pretty brochures, and such.

What company did you go with?

Currently I have:

1. Pacific Guardian - Old school company in Hawaii and tend to move slowly and their website is a bit old.
2. Aspida - Much newer website, things went smoothly.
3. Axonic - Similar to Aspida.

In the past I had:

North American - Older company, fairly basic but ok website.
American Annuity - Similar to NA.

At the time I bought them, they all were A- or better rated.

Personally I wouldn't feel comfortable going with anything lower. I also prefer 3 yrs but I do have one that is 5 yrs.

My first 2 were bought through a CPA/FA I know and the last 3 were bought through Immediate Annuities which were very good to deal with.

Good luck.
Rich

I used Blueprint Income as the broker (painless so far but not quite 100% complete so will reserve some judgement for the moment) and lo and behold bought from Axonic. Blueprintincome.com - great comparison site that was similar to immediateannuities.com in providing a thorough list of choices.

I bought two from Midland National and one from New York life last yer when I built this at retirement time. They were not as beefy in rate as what is showing up today via searching about, and that may be because they’re more likely A+ rated by A.M. Best. Schwab facilitated those, and I staked out on my own this year. I don’t think Schwab offers more risky stuff. I was cool with A-m this round.

My wife asked a lot about risk and failure of the issuing companies. I was illiterate on this before, so some basics for you all. There is no FDIC for these, but every state has a similar organization - they’re usually called guaranty associations. Most states offer $250k per annuitant, some a bit less or more. I was cool with that; there is little press about these types of failures.

Poking through bogleheads, before I bought, I found multiple positive mentions of both immediate annuities and Blueprint.

The interesting, lofty rate new kid in town, that showed up on Blueprint in the search but was too new for me to pull the trigger this year is Knighthood. I think they were still offering 6.3% on 5 year MYGAs.

BTW, can't recall if I mentioned this before but over at bogleheads.org there is a member (Stinky) who was an insurance executive and has answered a ton of questions on annuities (MYGA, immediate, variable, etc.) and has a very long thread entitled "Purchasing MYGAs (multi year guaranteed annuities) - mega thread".

Stinky does his best to get people to avoid variable annuities.

Anyhow if you have questions on them, it is a good place to post.

I have about 10% of my money in MYGAs and that is enough for me. Personally I don't like dealing with insurance companies so I do it reluctantly.

Thanks
Rich

I think I read that thread. A wealth of knowledge there.

We are in that ~10% club also.

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