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If my objective is to have 4 years living expenses in CDs' and 1 year in cash to live on via a MMA/savings account, I would simply buy one 4 year CD, one 3 year CD, one 2 year CD and keep the current years expenses in a MMA/Savings account. At the beginning of each year subsequent year I would sell off enough equities to purchase a new 4 year CD and let the cycle repeat.

I'm probably the person who wrote the confusing paragraph you referenced. The answer to your question is that you probably can't find 3 or 4 year CDs. The majority of CDs are only offered in certain holding periods and 3 or 4 year CDs are rare. OTOH, through bankrate.com, I was unable to find even a 2 year CD. It seems the current offerings are various periods below 1 year and then 1, 2.5 and 5 year.

It sounds like you only want a 4 year ladder, but this is a matter of semantics. At the beginning of a year, you will have 1 year of expenses in a MMF and 4 years in CDs. At the end of a year, you will only have 4 years expenses in CDs instead of the 5 years that many people target. In your situation, you would probably want to just let your CDs renew each year (unless you find better rates) and sell enough equities to cover your next years expenses.

4goneFool

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