As retirement approaches, government employees often find themselves with a significant amount of short-term cash they’re not sure how to invest… so it just sits in the bank.

While keeping this money in a savings account may seem like the safest option, it may not be the most lucrative — oftentimes even losing purchasing power due to inflation.

Today we’ll go over three primary investment strategies that can help government employees earn more interest on their short-term cash while keeping your investments safe.

#1: Laddering

Laddering is a technique used to manage investments and minimize risk. 

It involves dividing your investments into multiple short-term instruments, such as certificates of deposit (CDs) or Treasury Bills, with staggered maturity dates. By doing so, you create a “ladder” of investments that mature at different times.

This way, you can benefit from higher interest rates offered by longer-term investments while still maintaining access to a portion of your cash in the short term.

Here’s how it works:

  1. Divide your short-term cash into equal portions
  2. Invest each portion in fixed-income investments such as certificates of deposit (CDs) or Treasury bills with different maturity dates
  3. As each investment matures, reinvest the proceeds into a new longer-term investment

This strategy allows you to take advantage of higher interest rates on longer-term investments and ensures a steady stream of cash becomes available at regular intervals.

With the Laddering strategy, you can:

  • Mitigate interest rate risk: Laddering allows you to take advantage of rising interest rates. As interest rates increase, you can reinvest the maturing investments at higher rates, potentially earning more income over time.
  • Have more liquidity and flexibility: With a laddering strategy, you have access to a portion of your investments at regular intervals. This provides liquidity and flexibility, allowing you to meet short-term financial needs or take advantage of investment opportunities as they arise.
  • Diversify risk: By spreading your investments across different maturity dates, you reduce the risk associated with putting all your eggs in one basket. If interest rates decline, only a portion of your investments will be affected, while the rest continue to earn higher rates.

Pros of Laddering

  • Consistent Income Stream: Laddering can provide a steady income stream during retirement. As each investment matures, you can reinvest the proceeds or use them to cover living expenses.
  • Capital Preservation: By investing in fixed-term instruments backed by the FDIC or the US Treasury, you have a higher level of capital preservation compared to riskier investments. This can be particularly appealing for government employees who prioritize stability and security.

Cons of Laddering

  • Lower Potential Returns: While laddering offers stability, it may not provide the same level of returns as market oriented investment strategies. It’s worth exploring other investment options that have the potential for higher returns for your longer term money.
  • Opportunity Cost: Laddering requires tying up your funds in fixed-term investments. This means you may miss out on other investment opportunities that could yield higher returns in the short term.

#2: Brokered CDs

Brokered CDs are another investment option worth considering for your short-term cash. Unlike traditional bank CDs, brokered CDs are bought and sold through brokerage firms, offering access to a wider range of issuers and potentially higher yields.

Pros of Brokered CDs:

  • Diversification: Brokered CDs allow you to invest in multiple banks without the need to shop around yourself. This helps to diversify your holdings and reduce the risk of having all your deposits in one bank.
  • FDIC Coverage: Brokered CDs are insured by FDIC in line with FDIC limits, and can provide FDIC coverage if you have over $250,000 per depositor in any one bank. This means that even if one bank fails, your deposits are protected up to the FDIC limit.
  • Short-Term Strategy: Brokered CDs are not a long-term strategy. They are designed to help you make the most of your short-term deposits and earn better returns. This can be particularly beneficial if you have excess funds that you don’t need immediate access to.

Cons of Brokered CDs:

  • Lack of Liquidity: Unlike regular CDs, brokered CDs may have limited liquidity. This means that if you need to access your funds before the maturity date, you may face penalties or restrictions. It’s important to consider your liquidity needs before investing in brokered CDs.
  • Complexity: Investing in brokered CDs can be more complex than traditional CDs. You may need to work with a broker or financial advisor to navigate the process and find the best options for your financial situation. This can add an extra layer of complexity and potentially incur additional fees.
  • Market Risk: While brokered CDs are considered safe investments, they are still subject to market risk. The value of the CDs can fluctuate based on changes in interest rates. It’s important to understand the potential impact of market fluctuations on your investment.

#3: Treasury Bills

Treasury bills (T-bills) are short-term debt securities issued by the U.S. government. They are considered one of the safest investments available and can be an excellent option for government employees looking to preserve capital while earning a modest return.

While T-bills may offer lower yields compared to other investments, their safety and liquidity make them an ideal choice for short-term cash.

Here’s what you should know about Treasury Bills:

  • Risk-Free Investment: Treasury bills are considered a risk-free asset if held to maturity. This means that the U.S. government guarantees the repayment of the principal amount invested, making it a safe investment option for government employees planning to retire.
  • Guaranteed Rate of Return: When you buy a treasury bill and hold it to maturity, you can be certain of the rate of return you will receive. This provides stability and predictability in your investment strategy, allowing you to plan for your retirement with confidence.
  • Short-Term Cash Management: Treasury bills are a suitable option for short-term cash management. If you have money that you don’t need for a specific period, such as six months to two years, investing in treasury bills can help you lock in higher rates and protect your principal.
  • Liquidity: Treasury bills are highly liquid investments, meaning that they can be easily bought and sold in the secondary market. This provides flexibility if you need to access your funds before the maturity date.

Pros of Treasury Bills: 

  • Safety: Treasury bills are backed by the U.S. government, making them one of the safest investment options available.
  • Predictable Returns: Holding treasury bills to maturity ensures a guaranteed rate of return, allowing for better financial planning.
  • Flexibility: Treasury bills offer short-term investment options, providing flexibility for cash management needs.
  • Tax Breaks: Interest on Treasury bills is not subject to state income tax


  • Lower Returns: Compared to other investment options, treasury bills generally offer lower returns. This is because they are considered risk-free investments (if held to maturity).
  • Interest Rate Risk: If interest rates rise after purchasing treasury bills, the opportunity cost of not investing in higher-yielding assets may be a disadvantage.
  • Inflation Risk: Treasury bills may not provide sufficient returns to keep up with inflation, potentially eroding the purchasing power of your investment 

Consider Your Individual Financial Situation

Before implementing any investment strategy, you need to consider your individual financial situation, risk tolerance, and investment goals. What works for one retiree may not be suitable for another. Consulting with a financial advisor can help you determine the best investment strategy based on your unique circumstances.

In Conclusion

As government employees plan for retirement, it is essential to make the most of your short-term cash by exploring investment strategies that offer higher returns while maintaining safety. Laddering, brokered CDs, and Treasury bills are all viable options that can help you work towards your retirement goals.

Want help from a team of financial planners who specialize in helping government employees, contractors and military members plan for retirement?

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

No strategy assures success or protects against loss. 

Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.

Certificates of Deposit are FDIC insured and offer a fixed rate of return if held to maturity. Brokered CDs sold prior to maturity in the secondary market may result in loss of principal due to fluctuations in the interest rate or lack of liquidity. Brokered CDs are registered with the Depository Trust Corp. (“DTC”). Brokered CDs with step-down and/or call provisions may be less favorable than traditional CDs without these features.