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I'm wondering how many are using TIPS (treasury inflation protected securities) for retirement?

I now some people use them significantly but I have not. Lately (last year or two) I have bought some to partially tide us over until we reach 70.

I suppose if they do what they are supposed to (track inflation) and you can get 2% real return (sometimes you can) then I think that would mean if you had saved 25X expenses for retirement and were planning to use a 4% WD then it would extend your money to 33 years (if my math is close to correct).

As I mentioned elsewhere, I'm hedging on most investments now. A mixture of US, international, and treasuries (TIPS and nominals). Overall maybe about 25/25/50. And about 5% in gold since inflation seems likely.

Good luck.
Rich

I remember on TMF that came up. I originally read about it on "retireearlyhomepage", and since the author posted on TMF, I asked him. He said at the time he wrote on his blog that TIPS were useful, and he was utilizing them. But they had since lost much of their advantage, so he wasn't using them anymore.

Frankly, with all the chaos and questionable finance policy due to the Felon, I wouldn't invest in anything tied to the US government. Not bonds, TIPS, or nothin'. The Felon and Musk (and their various cronies) are too erratic and unpredictable. They could decide that they're canceling all the bonds**, and "sucks to be you, we're keeping the money".

Does Canada or Switzerland have an equivalent? They seem more stable for the moment.




**Highly unlikely, and it would probably be overturned in the courts...but that could take years.

Frankly, with all the chaos and questionable finance policy due to the Felon, I wouldn't invest in anything tied to the US government. Not bonds, TIPS, or nothin'. The Felon and Musk (and their various cronies) are too erratic and unpredictable. They could decide that they're canceling all the bonds**, and "sucks to be you, we're keeping the money".

Don't think there's much chance of that; it would crash the global financial markets.

How they measure inflation *could* be manipulated in an unfavorable way for the TIPS holder, I guess.

I’m getting much more interested in TIPS now that the coupons are paying close to 2%.
Currently I have 75% in stocks, 5% TIPS, 20% other short term fixed-type investments.

Don't think there's much chance of that; it would crash the global financial markets.

What makes you think the Felon or Musk care? Especially if they can make money from it (which the wealthy often do during disasters that wipe out little people investments and pensions).

Not trying to get political on a finance board, but these politics directly affect finances. So I think it is relevant.

BTW, there are non-government vehicles that pay more than 2%. I think the Fidelity money market fund pays 4-5%. At least it did when I moved my Fido cash into that vehicle (maybe a year ago?).

SPAXX -- Fidelity® Government Money Market Fund currently pays 4.00%
VUSXX -- Vanguard Treasury Money Market Fund Investor pays 4.2592%

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And how about keeping political shit-calling and name calling OFF of this board. Manilobbi just kicked a similar thread off the BRK board.
If you must vent on Shrewd'm, take it to the Political Asylum board, which he set up just for that purpose.

BTW, there are non-government vehicles that pay more than 2%.

I think you misunderstood something. TIPS pay a fixed percentage PLUS an inflation percentage. Yesterday, 10-year TIPS were trading at 1.975%. That means that every Jan 15th and every July 15th, the "interest" is calculated as half of the fixed rate (the coupon) PLUS the CPI difference over the 6 month period covered. The interest isn't paid that way though, the coupon portion is paid, and the inflation portion is used to increase the face value of the TIPS. The 10-year TIPS auction on 1/23/25 had a coupon of 2.125%. If you had bought $1000 of that issue, today it would be now valued at $1006.39 and it will pay 2.125% of $1000 on July 15th. Keep in mind that these are "face value", when interest rates change in the market, as they do all the time, the actual trading value of bonds changes as well. Even at auction a new TIPS won't necessarily result in a yield of the exact coupon. In fact, the January auction ended up with a yield of 2.243%, higher than the coupon yield.

You can read more about TIPS here - https://www.treasurydirect.gov/marketable-securiti...

And here is a pretty good analysis with all the details (price actually paid at auction, true yield, accrued interest, etc) of the most recent 10-year TIPS auction results - https://tipswatch.com/2025/01/23/new-10-year-tips-...

BTW, there are non-government vehicles that pay more than 2%. I think the Fidelity money market fund pays 4-5%.

What Mark wrote, plus your money market is likely invested in government bills and such.

SPAXX -- Fidelity® Government Money Market Fund currently pays 4.00%

My solo 401k uses FDRXX (old version of SPAXX):
FDRXX - Fidelity® Government Cash Reserves 4.04%

TIPS pay a fixed percentage PLUS an inflation percentage.
... That means that every Jan 15th and every July 15th, the "interest" is calculated as half of the fixed rate (the coupon) PLUS the CPI difference over the 6 month period covered. The interest isn't paid that way though, the coupon portion is paid, and the inflation portion is used to increase the face value of the TIPS.

I am reminded of something that Warren Buffet said, about avoiding investing in things that were too complex and too hard to understand.

I would bet that 95% of non-professional people who buy TIPS have no idea how TIPS work in detail. The "interest" isn't actually interest, it's actual interest plus something that is cobbled up and called interest.
They are the "safe principal" analog of buying high yield junk bonds.

I would bet that 95% of non-professional people who buy TIPS have no idea how TIPS work in detail.

I bonds are easier to understand, but you can't put much money into them. We buy our $20k allotment each year. The ones we still have from 2001 are doing well.

I Bonds can be used to pay for college, and no tax is due on the interest, a nice perk if you can use it. Kid#1 heads to med school in the summer. Those I bonds might come in handy.

I Bonds can be used to pay for college, and no tax is due on the interest, a nice perk if you can use it.

Subject to income limitations.

2025 limits
For joint returns, the exclusion begins to phase out for MAGIs above $149,250...

IP

There is a tool online that allows the user to create a TIPS ladder.
https://www.tipsladder.com/

Some of the comments are rather amusing since they clearly show why the country is so broken. No real ability to think for themselves only to spout hatred one way or the other.

TIPS aren't that complicated except to those uninterested in them. I've never been a big bond person but now in retirement I certainly have a number of treasuries.

Thanks, Mark, for that excellent summary. I looked at TIPS when I was going through the retireearlyhomepage site, but forgot about them when the author said they weren't the smoking deal they once were. This was probably 5 years ago now (when I was looking at TIPS, not when he originally posted the article). The "smoking deal" aspect can change from one year to the next, apparently. So one would have to reevaluate regularly.

Unless one could get better returns on them, what advantage do you think they would have? 1poorlady has a Discover bank account that returns 3.7% right now. And that's just a vanilla savings account. Not advertising Discover, just stating the current rate. Which is way above my credit union. I like my credit union, but am considering moving the account because they pay so very little (<1%). I have all my auto-pays from there, but that's a different subject.

SPAXX -- Fidelity® Government Money Market Fund currently pays 4.00%

You're right. Just looked, and mom's inherited IRA is in SPAXX. I'll be liquidating that relatively quickly**. What cash I have also is in SPAXX (though most of my assets with FIDO are invested in equity funds). If I have a viable alternative to SPAXX, I may have to do something about that.




**I had 10 years, two years ago. I won't be affected by IRMAA, but I need to balance ACA eligibility and future Social Security taxes. So my plan is to have that account gone before I turn 64 (just over two years). Eventually I will have to distribute my own retirement accounts, but nothing I can do about that. That's almost 10 years away.

I Bonds can be used to pay for college, and no tax is due on the interest, a nice perk if you can use it.

Subject to income limitations.

2025 limits
For joint returns, the exclusion begins to phase out for MAGIs above $149,250...

Yes. I plan on being retired sometime during the kid's med school, so it could work out.

Funnily enough, she's in the last semester of undergrad and her 529 plan currently has more money in it than when she started, thanks to this bull market we have enjoyed (and a cheap in-state school with merit scholarships).

Funnily enough, she's in the last semester of undergrad and her 529 plan currently has more money in it than when she started, thanks to this bull market we have enjoyed (and a cheap in-state school with merit scholarships).

That's a good place to be. We started the 529 late, so there wasn't as much money in it. But it still helped. We didn't have it in a bond fund (I forget which Vanguard options we had it in). She exhausted it by 2016 or so (about two years' expenses, as I recall).

That should help with med school, I would think. Very expensive. Seems you planned very well.

“Yes. I plan on being retired sometime during the kid's med school, so it could work out.

Funnily enough, she's in the last semester of undergrad and her 529 plan currently has more money in it than when she started, thanks to this bull market we have enjoyed (and a cheap in-state school with merit scholarships).”

Wow, Congrats to her and you & the growth of her 529 plan! It’s of course a long road with some opportunity cost. I enjoyed a 30-year career in medicine and now enjoying the less stressful next chapter.

Luckily I front-loaded my couple middle schoolers’ Fidelity 529 (NH s&p Index) and markets have been pretty good over this time I’ve only continued to fund them in a limited way the last couple of years.

Crazy- our school’s tuition has nearly doubled over 7 years, way exceeding the standard rate of inflation, of course. Hard to know how big to grow the 529s nowadays given how tuition is soaring and uncertainty wrt grad school.

Crazy- our school’s tuition has nearly doubled over 7 years, way exceeding the standard rate of inflation, of course.

As I recall, that is primarily because government funding has been reduced over the past ~20 years (give or take). So the schools have had to raise tuitions to make up the difference.

Hard to know how big to grow the 529s nowadays given how tuition is soaring and uncertainty wrt grad school.

I wouldn't want to have to fund a 529 from retirement. As you say, difficult to know how large to grow it. We put in enough money for ~4 years of in-state tuition (while still working), and let it go. We just stuck it in an index fund. We did it a bit late, so it didn't have as much time to grow as we would have liked. She still exhausted it in about 2 years (in-state school), mostly because of tuition hikes before she got there.

I bonds are easier to understand, but you can't put much money into them. We buy our $20k allotment each year. The ones we still have from 2001 are doing well.

I-bonds have a substantially lower overall yield than TIPS have right now. And indeed, the 1998 through 2001 I-bonds are excellent with the 3 to 3.6% fixed portion of the yield added to CPI each year. But I definitely wouldn't be buying I-bonds nowadays, if I wanted to buy inflation linked instruments, I would buy TIPS instead.

I Bonds can be used to pay for college, and no tax is due on the interest, a nice perk if you can use it.

Yes, but there are income limitations, and that limitation is somewhat low. I retired a few years ago and each year so far, my income has been surprisingly high, so I haven't been eligible. Besides, I don't want to give up my 2000/2001 vintage I-bonds early, I'd rather wait till they mature and accrue that sweet CPI+3% for as long as possible.

There are some very good threads on the BH board concerning TIPS and TipsWatch is an excellent source of information. Personally I've become a fan of liability matching with TIPs held to maturity and have invested a portion of my portfolio accordingly.

There are some very good threads on the BH board concerning TIPS and TipsWatch is an excellent source of information. Personally I've become a fan of liability matching with TIPs held to maturity and have invested a portion of my portfolio accordingly.


I'm sure on days like today, those they are covered by TIPS, CDs, MYGAs, etc. are not too stressed with the market. Those with a lot of stocks are in another boat, especially if they are retired and not covered by pensions.

Maybe this is not the best place to post this but one of the issues in society is the dichotomy between the "old" people with generous pensions and where their 401K savings is just "play" money and those whose retirement is (or will be) largely dependent on 401K savings and social security. You can see here and over at bogleheads, the flippant comments about money that come from those people who just happened to be born at the right time when pensions and working with one company was common place.

Back to the TIPS, they probably should be part of most portfolios. How much would depend on a lot of factors.

We are heavily dependent on equities, both in and out of 401K (now IRA, since we rolled over after retirement). Not yet eligible for SS.

We have probably three years' of expenses in cash. So we can ride it out for at least that long. I suspect change will be forced upon the Felon in the from of Congressional action if it is allowed to go that long. Too many people will be hurting, and the House faces an election in 2 years (plus part of the Senate).

I've been interested in markets and investing for decades so I'm in the "old" people category for sure. A super helpful thing to get one's head around and study is what phase of life one is in and its relationship to dollar cost averaging when investing and sequence of returns when withdrawing from your investments. If one is buttressed by a a good pension then the latter doesn't matter as much, but it still matters if one is withdrawing for any reason.

Agree on Bogleheads...my favorite is a first line that goes something like...I have $25M from my tech job founders shares I cashed out and I'm afraid of running out of money. What should I do?

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