Retirement Plan: Build a Bond Ladder

If you are not one to play the risky stock market with your retirement savings and you just want to keep what you have and maybe grow it a little to keep pace, then a bond ladder may be for you.

Say you have done a good job saving for retirement and may have enough if you can just keep it, then a bond a ladder my appeal to you.

Even if you are a stock investor and follow the asset allocation model many advisers suggest for retirees, you probably have some of your savings in bonds as part of your larger portfolio. A bond ladder could help in that case too.

A bond ladder is a great sleep well at night investment approach.

I say bond ladder, but it could be a CD ladder as well or a mixture of both. Fixed income ladder maybe is a better word, but I will use bond ladder in this discussion.

What is a Bond Ladder?

As an example, say you have $100,000 that you can invest to build your bond ladder with and you want to build a 5 year bond ladder. You would buy five bonds, one expiring five years from now for $20,000, another bond expiring four years from now for $20,000 and so on down to one year from now.

So now your bond ladder would look like this:

Expiration Date      Amount
End on year one     $20,000
End of year two      $20,000
End on year Three $20,000
End on year four    $20,000
End on year five     $20,000
Total                        $100,000

This is a five rung bond ladder.  You may make as many rungs as you want.  Many who have sufficient funds build a 10 year bond ladder.

You may have a million dollars and want to have a 10 year bond ladder with $100,000 of bonds expiring every year for the next 10 years. How nice would that be!

How A Bond Ladder Works

You collect interest from all the bonds in the bond ladder. Usually most bonds pay interest twice a year but it could be more often.  When the bonds in year one expire, the principal will show up in your account. Then you buy a new bond expiring five years from then.  Every year as bonds expire, you purchase a new replacement bond five years out.  This way you get the best interest rate on bond purchases and you always have bonds expiring for the next five years.

Once you have your bond ladder built, this takes the guess work out (and worry) about what interest rates will do in the future. If interest rates go up after you have your bond ladder, then great you will get a higher return when you buy the next replacement bond.

What Kind of Bonds Are Good For Retirement Savings Bond Ladder

US Treasury Bonds, Municipal Bonds,  US Government Agency Bonds, Investment Grade US Corporate Bonds, TIPS and even CDs (Certificates of Deposit). A great source of current rates of bonds of all types is

What’s Good About Bond Ladders

  1. Bond Ladders are one of the safest investment strategies. It takes the worry out and let’s you sleep well at night (SWAT).
  2. You always have money coming in with bond interest payments coming in and also bonds expiring every year.
  3. It takes the guessing out. No one knows what either the stock market or interest rates will do.  Don’t try to guess, just invest in a bond ladder.
  4. A Bond Ladder can offer steady income, stability of principal, and diversification
  5. A bond ladder can be used to help preserve retirement savings and generate income with less interest-rate risk if rates change.

Things to Be Aware of With A Bond Ladder

  1. In this article, we are talking about buying individual bonds or CDs not buying a bond fund.  There is a difference you need to research. Here is some info individual bonds vs bond funds.
  2. The market value of the bonds in your ladder will go down if interest rates go up, but if you hold the bond to maturity, which is our plan, then you get all your principal back and don’t loose anything. So build your bond ladder with funds you can leave in the bond until it expires.

How to Get Started Building a Bond Ladder

Do your research first.  There are plenty of on line resources about building bond ladders. Read Charles Schwab’s article about Building Bond Ladders for Income.

Bond Ladder Resources

Bondsonline – Your source for fixed income investing.
Individual Bonds vs Bond Funds
Bondsquawk – This site is not being kept current but still has a lot of good info
TIPSwatch – all about Treasury Inflation Protection Securities
TreasuryDirect – Photo for Learn About U.S. Treasury Auctions


Retirees will be spending plenty of money this holiday season so this information from our friends at AARP is timely because it can save you money.

I and other retirees love saving money. I love these discounts because it is for stuff we are buying anyway. -Robert Fowler

Many AARP members already know of the discounts available to them on travel-related goods and services, such as car rentals, hotels, vacation packages and cruises. However, they might be surprised to learn they qualify for additional discounts on everyday costs, such as groceries, car maintenance and movie tickets.

“AARP members often tell us they enjoy the popular travel and dining discounts that are available to them,” said Angela Jones, senior vice president, business development and lifestyle products at AARP Services, Inc. “In fact, since Denny’s launched their promotion in 2010, AARP members have utilized the discount more than 48 million times.”

However, they might not know they are missing out on additional opportunities to save every day, Jones added. With an AARP membership, Americans 50 and over can unlock the potential to save on electronics, concerts, pet insurance plans, shipping costs and even regular car maintenance.

In addition to popular travel offers, AARP members can save on the following products and services:

1. Movie Tickets: Regal Entertainment Group offers AARP members up to 25 percent off Regal movie tickets as well as $3.00 off a small or larger-size popcorn and soft drink combo.

2. E-readers and Books: AARP members save 10 percent on Amazon Kindle e-readers, 50 percent on a selection of Kindle eBooks and 10 percent on a selection of print and audio books on from popular genres such as romance, mystery, thriller, and historical fiction.

3. Car Maintenance: By presenting their AARP membership card at time of service, AARP members pay just $17.99 every day for an oil change, tire rotation and maintenance inspection at any Monro Muffler Brake & Service or Mr. Tire location. They also save 10 percent on auto repairs at any RepairPal certified shop.

4. Shoes: AARP members save 20 percent on their entire purchase at any Reebok and Rockport Outlet Store or on

5. Dining: AARP members receive 15 percent off every day at Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill; 15 percent off the entire check at Denny’s; 10 percent off at any of the 500 Landry’s Inc. restaurants nationwide, including McCormick & Schmick’s, Claim Jumper, Chart House and more.

6. Shipping: AARP members receive 15 percent off eligible products and services and 5 percent off domestic and international UPS® shipping services when using their AARP membership card at over 4,500 retail The UPS Store locations.

7. Pet Insurance: Pet owners save 10 percent or more insurance plans with Petplan pet insurance when they sign up online. They also receive up to a $35 Petplan Visa® Prepaid Card (restrictions may apply) to help with pet wellness expenses like flea/tick preventives, vaccines, dental cleanings and more.

8. Grocery and Household Items: AARP members receive instant savings on featured products by swiping their AARP membership card at select Meijer, Family Dollar and Fred’s Super Dollar locations, and earn 10 percent back on every order of delicious foods delivered right to their door by Schwan’s Home Service.

9. Concerts and Shows: AARP members save 25 percent or more when buying event tickets in groups of four from Ticketmaster, and save up to 30 percent on Cirque du Soleil shows.

10. Mobile Phone Service: AARP members can choose from a variety of wireless service providers, including Consumer Cellular, AT&T and Cricket Wireless. Consumer Cellular offers AARP members a 5 percent discount on monthly service charges and a 30 percent discount on eligible accessories, AT&T offers AARP members a 10 percent discount on the monthly service charge of qualifying wireless plans and a 15 percent discount on eligible accessories, and Cricket Wireless offers a $20 mail-in rebate for each line of service with the purchase of a phone.

AARP memberships cost just $16 a year and can often be recouped by using just a few of the many discounts available. To take advantage of any discount or service offered to AARP members, or to find out about all the ways AARP members can save, download the free AARP Member Advantages Offer Finder mobile app for iOS and Android devices or visit

Retirement Planning: Are Financial Advisers Helpful

The financial industry bombards us with retirement planning advertisements.

We need the help of financial professionals to properly save for our retirement, according to them. The TV ads showing the happy retired couple riding the bikes with the picnic basket while laughing and smiling shows us they are having the times of their lives in retirement, thanks for their financial plan provided by the advisor/advertiser.

That’s the positive way they try to attract us to their services and there are negatives ways too.  How many times have you heard “How do you know how much you need for retirement?”.  Don’t run out of money. How much do you need to save for retirement? We can help you along the path of retirement planning. What are the best investments for retirement? Then finally how much can you safely withdraw from your retirement savings to live on?

I don’t know about you, but I get tied of hearing all of this. It creates a feeling of anxiety about retirement that does not need to be. It is self serving to the huge financial planning industry. Consider the source. Besides how much do they really help.

I am a sort of independent thinker and try observe things I see in my own life experiences to form my opinions. With that in mind, I think most of these financial planners do more harm than good. Most of the financial “experts” are wrong in their predictions and advice. They try to asset allocate us, annunity-ize us, and insure us, while taking their commissions.

When I started building a bond ladder about 8 years ago, the fixed income department at one of the largest brokers told me not to go out on maturities more than 3 or 4 years, because surely interest rates would be going up. Wrong, they went down and are still going down.

On the radio you hear from people who were sold something and they have no idea what it is. Other advisers push people into stocks when they don’t have the temperament only to see their retirement savings plummet in a crash. They end up selling and loosing just about everything. These advisers seem to push people into the same investments while they are doing good and when they turn sour, then the exit door gets real crowded and they loose money.

The financial advisers usually make their income from Wall Street. I made more money owning real estate and starting my own businesses. You really have to watch turning all your money over to a financial adviser as you will miss other opportunities not in their scope.

Besides how useful are their predictions? The Federal Reserve can’t even predict where things are going or even get a handle on the where we are in the economy. I remember Ben Stein the TV financial adviser pushing China stocks only to see them crashing. He was so certain buying Chinese stocks was the way to go.  I see Ben Stein spoke to the AARP convention recently giving out more of his advice. These people just change their story and keep peddling. Financial guru Suze Orman is completely wrong about this retirement myth so says this article.

One place you really need to beware taking advise from is the talking heads on financial TV shows like CNBC which is notorious for Pump and Dump, that is an expert saying to buy while he is selling the same stock.

There is some basic financial retirement planning advice that would be helpful if followed, like starting to save early, like on your first job.  Pay yourself first, meaning take out some for your saving account first. Open up tax advantaged accounts like IRAs and don’t borrow against them or cash them out. Don’t refinance your mortgage and take cash out, try to pay off the mortgage instead. Avoid debt when you can. Don’t live beyond your means. In your working years, develop and improve your skills and you will not have a problem keeping a job. Don’t give all your money to your kids or grand kids. Don’t trade stocks.  Giving yourself a financial education by reading and studying.  Most of these ideas are just practical things you already know, or should know.

In the end financial planning only facilities your having a happy retirement, it is not your retirement. There are a lot more fun things to do in retirement than worrying about money. People who are retired know that. I think these financial planning ads are geared towards people in their 40s and 50s who are worrying about their retirement.

Have your been helped or hurt by financial advisers?  Let me know in the comments.

Robert Fowler
Retired and Loving It!