Hope,

Assuming you are talking about your savings in a taxable account, I would look at Vanguard Limited Term Municipal Fund (VMLTX/VMLUX). The Admiral version is paying monthly at an annual rate of 3.38% (distribution yield) which is eqivalent to 4.50% for someone paying 25% Federal Tax. VMLUX has only about a two year "duration" average bond term, so rising rates will not hurt the prinicpal very much as it will in longer duration bonds funds.

If you were talking about a tax-deferred (IRA, 401K) account, I'd look at VSGBX/VSGDX Short Term Federal Fund. The Admiral version is paying monthly at an annual rate 4% (distribution yield). Again this is about two years duration as well.

Vanguard Wellesley VWINX/VWIAX is also good for your purposes if you defintely want some stock exposure. It pays quarterly.

I own  VMLUX, VSGDX, and VWIAX in various family accounts.

Tom D

PS: I'm not an investment advisor, "just" a private retired investor.