A ladder solves the rate-timing problem. Buy a single 5-year Treasury at 4.98% (September 25, 2026) and you've locked that yield for 5 years. Good if rates fall, bad if they rise. Buy a strip of 1, 2, 3, 4, and 5-year Treasuries and you've effectively dollar-cost-averaged into the yield curve. As each rung matures, you reinvest at then-current 5-year rates. Over a full rate cycle, ladders deliver close-to-average yields with significantly lower regret risk than concentrated single-maturity bets.
$250K capital, equal 5 rungs:
| Rung | Maturity | Yield (Sept 25, 2026) | Allocation |
|---|---|---|---|
| 1 | 1-year T-bill (52-week) | 4.48% | $50,000 |
| 2 | 2-year T-note | 4.81% | $50,000 |
| 3 | 3-year T-note | 4.94% | $50,000 |
| 4 | 4-year (older 5-year note, secondary market) | Between 4.94% and 4.98% | $50,000 |
| 5 | 5-year T-note (purchased annually as rungs mature) | 4.98% initial; resets each year | $50,000 |
Blended initial yield: about 4.8%. Each year, the maturing rung gets reinvested into a fresh 5-year, so the ladder rolls forward perpetually.
This is where Treasury ladders specifically beat CD ladders. The ~4.8% Treasury ladder yield is state-tax exempt. The best nationally available 1- and 5-year CDs paid 4.35-4.50% APY (DepositAccounts, September 24-25, 2026), fully state-taxable.
For a California top-bracket resident (10.3% state):
At September 2026 yields the Treasury ladder leads before tax and by roughly 65 bps after tax. The Treasury ladder also adds: no FDIC cap, sellable on any business day, no penalty for early sale (just mark-to-market exposure).
Concentrate in 1-year T-bills and 10-year T-notes, skip the middle. Captures the highest short-end yields plus long-end yield premium. Works when the curve is humped (middle yields lower than ends).
All capital in one maturity matching a known cash need (e.g., $500K in 5-year T-notes for an exact-date college expense). Eliminates reinvestment risk for that specific date.
Pure short-end ladder for emergency cash or business reserves. Buy 4 weeks of 4-week bills (one maturing per week), or 13 weeks of 13-week bills. Each week one matures and gets reinvested. Effectively a self-rolling cash management facility.
Five rungs at 1, 3, 5, 7, 10 years, then reinvest each maturity at the long end. Average duration ~5 years. Higher yield (about 4.9% blended at September 25, 2026 par yields) but more interest-rate volatility on the secondary market.
The same principle applies to MYGAs. A ladder of A-rated 5-year MYGAs paid about 5.50-6.05% (public carrier rate sheets, October 14, 2026), locked, with full federal AND state tax deferral. Compared to a 5-year Treasury ladder at about 4.8% blended:
For 3-10 year retirement money you can confidently leave, MYGA ladders deliver materially better economics. For cash you might need within 12 months, Treasury ladders win on flexibility.
The MYGA wins by roughly $6,000. That's meaningful at $250K over 5 years, and the gap widens at longer horizons.
5 is standard for a 5-year ladder. 7 rungs for a 7-year ladder. 10 rungs for a 10-year ladder. More rungs = smoother yield averaging but more administrative complexity. Fewer than 5 rungs is barely diversified.
Yes. A rolling 4-week, 13-week, or 52-week T-bill ladder works for short-end cash. Many corporate treasurers use rolling 13-week ladders as their primary cash management.
Defined-maturity Treasury ETFs (Invesco BulletShares Treasury ETFs: BSCO, BSCP, etc.) give you laddered exposure in one fund per maturity year. Lower minimums than building manually, with small expense ratios.
Depends on your view. Equal-weight is the default. Long-end weight maximizes yield in normal upward-sloping curves; short-end weight maximizes liquidity and captures rising-rate environments. On September 25, 2026 the curve sloped upward (1-year 4.50%, 5-year 4.98%, 10-year 5.17%), so a modest long-end tilt picks up some yield; equal-weight is still fine.
Stay disciplined. The ladder's whole point is to dollar-cost-average yield exposure across the cycle. Don't 'pause' the ladder because rates seem high or low. Keep reinvesting at the long end as rungs mature.
Short-end yields above long-end yields. As of September 25, 2026 it was not inverted: the 1-year par yield was 4.50% and the 5-year 4.98%. The ladder still works. You're just locking less yield on long-end rungs. Many investors shorten the ladder in inverted-curve environments.
Yes. Just buy proportional amounts into each rung, or weight the new money into the rung you most want to bulk up. Easier to manage with brokerage tools than TreasuryDirect.
Same mechanics. CDs have higher headline yield but lose to Treasuries after state tax in CA/NY/NJ/OR. Treasuries have no FDIC cap. For 3-10 year retirement money, MYGA ladders beat both.
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.
Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS. General education, not tax or legal advice for your situation.