How Much Treasury Bonds Should I Own in Retirement?
The wrong question and the right one
"How much in Treasuries" is the wrong frame. The right frame is two-step:
- How much in fixed income - depends on income needs, risk tolerance, time horizon, and other sources (pension, Social Security, rental income).
- How to split that fixed income - among Treasuries, MYGAs, TIPS, corporate/muni bonds, and cash equivalents.
Most retirement portfolios have 30-70% fixed income depending on the household. Of that fixed income, Treasuries are one piece - usually the smallest piece for taxable retirement money once you factor in MYGA yield premiums.
Step 1: Total fixed-income allocation
Standard frameworks:
- Age-based ("100 minus age" or "110 minus age"): A 65-year-old holds 35-45% fixed income. Rough but useful starting point.
- Bucket strategy: 5-7 years of expected withdrawals in fixed income (Bucket 1), the rest in equities. For a couple withdrawing $80K/year, that's $400K-$560K in fixed income.
- Income-flooring: Fixed income matches your "must-have" expenses (housing, food, healthcare, fixed bills). Discretionary expenses go to equities. Usually translates to 40-60% fixed income for typical retirees.
- Risk-tolerance: If a 30% equity drawdown would force you to change lifestyle, your equity allocation is too high. Most retirees should hold enough fixed income to cover 5-10 years of withdrawals without selling equities in a bad market.
Step 2: Within fixed income, split among Treasuries, MYGAs, TIPS
Conservative retiree (70/30 fixed-income/equity)
$1M portfolio, $700K fixed income:
- $300K MYGA ladder (3, 5, 7-year) - locked yield premium, tax-deferred
- $200K Treasury ladder (1-5 year) - liquidity + state-tax exemption
- $100K TIPS (in IRA) - inflation protection
- $50K I-Bonds (built over years to annual cap) - inflation tier
- $50K HYSA/T-bills - emergency reserve
Moderate retiree (50/50)
$1M portfolio, $500K fixed income:
- $200K MYGA ladder
- $150K Treasury ladder
- $75K TIPS (IRA)
- $25K I-Bonds
- $50K cash reserve
Aggressive retiree (30/70)
$1M portfolio, $300K fixed income:
- $100K MYGA (single 5-year contract)
- $100K Treasury ladder
- $50K TIPS (IRA)
- $50K cash/HYSA
Why Treasuries alone aren't enough
If you're a retiree thinking "I'll just put 50% of my portfolio in 10-year Treasuries at 4.25%," consider:
- 140-bp yield gap to MYGA. Same 10-year horizon, MYGA pays 5.65% locked, tax-deferred. On $500K over 10 years that's $50K-$80K of additional after-tax dollars depending on state.
- No inflation hedge. 10-year nominal Treasury at 4.25% is a real-yield loser at 4%+ sustained inflation. Pair with TIPS or I-Bonds.
- Sequence-of-returns timing. Treasuries have price volatility (especially long-dated). If you might sell to cover withdrawals during a rate spike, you take a real loss.
- Annual tax friction. Treasury coupons are 1099-INT'd every year - even if you don't need the income, you pay the tax. MYGA deferral compounds gross.
By specific situation
$500K-$1M portfolio, 65 years old, taxable + IRA mix
40-50% fixed income. Of that, 50% MYGA, 25% Treasury, 15% TIPS, 10% cash. Total Treasury position: 10-12% of overall portfolio.
$2M+ portfolio, conservative, 70+ years old
60-70% fixed income. Of that, 40% MYGA, 30% Treasury (laddered short-to-medium), 20% TIPS, 10% cash. Total Treasury position: 18-21% of overall portfolio.
High-income still-working pre-retiree (55-65), $2M+, accumulating
30-40% fixed income. Of that, 60% MYGA (locking current high rates), 20% Treasury (short-end ladder for known near-term needs), 15% TIPS (inflation insurance), 5% cash. Total Treasury position: 6-8% of overall portfolio.
Pension-heavy retiree with $500K liquid
Lower fixed-income allocation OK because pension is bond-like. 30% fixed income, of which 40% MYGA, 30% Treasury ladder, 20% TIPS, 10% cash. Total Treasury: 9% of portfolio.
How Treasury allocation interacts with annuities
If you've already locked in a SPIA (Single Premium Immediate Annuity) for guaranteed lifetime income, the SPIA itself functions like a bond - it's part of your fixed-income allocation in spirit even if it doesn't sit in your brokerage statement. A retiree with $300K SPIA-funded income + $700K liquid portfolio doesn't need 70% of the $700K in fixed income - the SPIA already provides income flooring. The liquid portfolio can be more equity-heavy.
This is why the answer to "how much in Treasuries" is contextual. A retiree with strong defined-benefit income (pension + Social Security + SPIA) needs less Treasury allocation than a retiree relying entirely on a 401(k)/IRA portfolio.
Common allocation mistakes
- 100% Treasury "for safety." Treasuries lose to inflation over 30-year retirements unless paired with growth assets. Pure Treasury portfolios have empirically underperformed even very conservative balanced allocations.
- Avoiding MYGAs because "annuities are bad." The annuity-skeptic argument applies to commissioned variable annuities with high fees. MYGAs are essentially CDs from insurance carriers - no fees, locked yield, no commission impact on the contractholder.
- Holding only short Treasuries. 4-26 week bills are great for cash management but expose you to reinvestment risk if rates fall. A ladder spreads this risk.
- Ignoring inflation entirely. Nominal Treasuries (no TIPS or I-Bond overlay) leave you exposed if CPI surges. 15-25% TIPS allocation hedges this cheaply.
- Concentrating in one issuer. Not a problem with Treasuries (one issuer = U.S. government), but is a problem with corporate bonds and single-carrier MYGAs above state guaranty limits.
FAQ
Is 100% bonds in retirement safe?
Counterintuitively, no. 100% nominal bonds locks in inflation risk over 20-30 year retirements. Most retirement research shows 30-60% equity allocation outperforms 100% bonds in nearly all 30-year periods, even for risk-averse retirees, because of inflation.
Should I shift more to bonds as I age?
Most frameworks (target-date funds, glide paths) say yes. But the 'age-based' rules assume Treasuries; if you substitute MYGAs for some Treasuries, you get higher yield per unit of safety - so a 'fixed income heavy' portfolio doesn't require the yield sacrifice it used to.
How does Social Security affect my Treasury allocation?
Social Security is essentially an inflation-adjusted lifetime annuity - a powerful bond substitute. A retiree with $40K/year SS doesn't need as much fixed income as someone with $0 SS, all else equal. Often translates to 5-15 percentage points lower bond allocation.
Should I own 30-year Treasuries?
Only for specific purposes: portfolio-duration matching (offset to equity exposure), rate-cut speculation (capital gain potential), or in an IRA for income-flooring without tax friction. 30-year Treasuries are not 'cash equivalents' - they're highly rate-sensitive.
Are TIPS a substitute for cash?
No. TIPS are inflation-protected but have real-rate price volatility (5-10-year TIPS can move 5-15% in price on rate moves). Cash equivalents need stable principal. Use HYSAs, T-bills, or money market funds for cash; TIPS for inflation insurance.
Should I hold Treasuries in my Roth IRA?
Roth is your highest-growth tax wrapper - generally optimized for equities, REITs, or other high-growth assets. Treasuries inside Roth give up the wrapper's tax-free growth benefit. Better location: hold Treasuries in traditional IRA or taxable account.
What about international bonds?
Optional. Diversification benefit is modest and currency-hedged international bond ETFs have small expense advantages. Most U.S. retirees skip this layer entirely - keeps the portfolio simpler.
How do I rebalance Treasury allocation?
If your target is 30% Treasuries and current allocation drifts to 35% (because equities fell), rebalance by selling some Treasuries and buying equities. Standard portfolio discipline. For tax-loss harvesting opportunities, sell highest-cost-basis Treasury lots first.
Related reading
- Treasury laddering
- 5-year Treasury vs 5-year MYGA
- TIPS vs MYGA
- 30-year Treasury review
- Best MYGA Rates 2026
Get an allocation review that includes MYGAs - not just Treasuries
Hans Goldstein, independent licensed insurance producer.
Most retirees over-allocate to Treasuries because their advisors don't sell MYGAs. For 3-10 year retirement money, MYGAs from A-rated carriers pay 100-140 basis points more than Treasuries, with full tax deferral. Worth seeing the side-by-side at your portfolio size before deciding the split.
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Disclosure
This review reflects publicly available Treasury auction results, TreasuryDirect documentation, and approximate market yields as of the date stated above. Treasury yields change daily; current yields differ from prior auctions and may differ from those shown here. This article is general information for educational purposes; it is not a personalized recommendation, solicitation, or offer of any specific security or insurance product. U.S. Treasury securities are backed by the full faith and credit of the United States Government. MYGA references compare Treasury yields against approximate rates from A-rated insurance carriers as of the date stated; carrier rates change monthly. State guaranty fund coverage on annuities is provided by the state insurance department and varies by state (typically $250,000-$300,000 per owner per carrier). Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated annuity carriers; he is NOT a registered investment advisor, broker-dealer, or registered representative, and is not paid by the U.S. Treasury, TreasuryDirect, or any brokerage for this review. No compensation has been received from any third party in connection with this content. Always read the actual offering documents and consult a licensed advisor before purchasing any security or annuity. Tax discussion of 31 U.S.C. §3124 and Internal Revenue Code provisions reflects law as of 2026 and is subject to change.