For decades, retirement planning has been dominated by probability-based models—models that estimate safe withdrawal rates based on a variety of assumptions—and the hope that the assumptions are right and your luck isn’t bad. But what if there were a way to reduce the guesswork and to build a more predictable income stream? That’s where Treasury bond ladders come in.

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Let’s explore how this simple yet powerful strategy can give you a clearer view of how much you really need to retire comfortably.

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1. Retirement Planning Often Involves a Lot of Guessing

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Most traditional retirement income tools—like Monte Carlo simulations or “4% rule” calculators—are based on assumptions. Will stocks return 6% or 9%? Will you retire into a bull market or a bear one?

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These are critical assumptions in the models, and if the assumptions are wrong, then the model outputs are wrong.

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So while these models can be useful, they also require making bets about things no one can truly predict.

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This uncertainty makes it difficult to know how much you really need to save, since you don’t know how much spending power your savings will ultimately provide you.

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2. Bond Ladders Offer Predictable Cash Flow Without Guesswork

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A Treasury bond ladder flips the script by offering something few retirement income strategies can: high reliability. With a Treasury bond ladder, you know exactly what your future cash flow will be, because you’re simply going to collect coupon and principal payments on a known schedule, and the only risk to that cash flow is if the U.S. government defaults.

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Unlike other retirement income strategies, this doesn’t require you to guess future returns. Instead, you’re simply locking in current interest rates from the most credit-worthy issuer on the planet.

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Put simply, bond laddering is a bet on bond coupons, not bond prices.

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3. Bond Ladders Make Retirement Math Simpler

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A traditional portfolio withdrawal strategy relies on so many variables and assumptions that it can leave you wondering, "How much can I actually withdraw from my portfolio?" And without knowing how much you can safely withdraw, you can’t know if you’ve saved enough.

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In contrast, a bond ladder gives you clarity: a known amount of cash flow on a known schedule.

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Let’s look at an example of a $100,000 investment in a 10-year bond ladder, spread equally across 10 bonds.

Each year, one bond will mature, providing $10,000 of cash flow, or 10% of your initial investment (a 10%“distribution rate”). If you need to generate $50,000 of spending power per year, you could consider a $500,000 bond ladder ($50,000 divided by that 10% distribution rate).

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But that math only accounts for the principal payments of the bonds, not the coupon payments. After incorporating interest income, the actual cash flow (and distribution rate) will be even higher.

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To see the current distribution rate on a 10-year bond ladder, inclusive of interest (and a simple way to invest in one), check out LDDR, LifeX’s 2035 bond ladder ETF. Or if you’re looking for a bond ladder with a different time horizon, check out our full list of ETFs to see the distribution rates for other options.

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4. Mix and Match: Combining Bond Ladders with Traditional Portfolios

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Most retirees don’t need to choose between a bond ladder and a traditional investment portfolio—they can use both. You might use a bond ladder to cover your essential spending needs (housing, food, insurance), while using a diversified portfolio to pursue long-term growth for discretionary spending or legacy goals.

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Suppose you have $2 million dollars saved for retirement and want to spend $100,000 per year.

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If you wanted to lock in that spending goal for the next decade, you could invest in a bond ladder designed to generate $100,000 annual cash flow. For a single ticker implementation of that goal, you could use LDDR, LifeX’s 2035 bond ladder ETF. You’d purchase 10,000 shares, which would cost ~$868,000, or roughly ~40% of your portfolio.¹  That leaves you ~$1.1 million, the other ~60% of your portfolio, to invest for growth over the next decade.

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If you invest $1.1 million and earn a 7% annual return for 10 years, it nearly doubles to $2.16 million. You can then use those assets to cover the decade that follows.

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Of course, that 7% annual return isn’t guaranteed, and we can’t know what the return will be in advance. Investors that are concerned about future returns could consider using a longer-horizon bond ladder—perhaps one long enough to be expected to last for the rest of their lifetime. For example, a 65-year-old might consider a 30-year bond ladder like LFAO designed to last through age 95.

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The good news is that the bond ladder solution is both predictable and flexible. You get to pick how much cash flow you want to target and how long you want it to last.

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Conclusion: Take the Guesswork Out of Retirement Income

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Treasury bond ladders provide a rare opportunity to anchor your retirement plan in reliability. And in today’s higher interest rate environment, they’re more attractive than they’ve been in years.

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By understanding how much cash flow your savings can generate through a ladder, you can answer the most fundamental question in retirement planning: Do I have enough?