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TIPS are US Government securities that currently pay two to three percent real return depending on the maturity selected. You can buy them from your broker, Treasury Direct account, Exchange Traded Funds (ETFs) and mutual funds. So, if inflation for a time period is three percent, your bonds earn five to six percent depending on the time period. These real returns are guaranteed by the US Treasury. I will not give all the details here and am not giving advice. Any retiree who needs bonds in their portfolio should look into TIPs. Talk to your financial advisor or wealth manager. This opportunity will not last forever. I welcome polite comments.
A few commenters said they do not understand how TIPS work, so here is a brief review. If you own a $1,000 valued TIP and annual inflation is 2%, the value of the TIP will increase t0 $1,020. Interest is paid every six months and is calculated on the adjusted value. So, the value of your bond increases with inflation and the interest paid increases as well due to the higher value of the TIP. Keep in mind that the value of the TIPs fluctuates just like it does for regular bonds, but if you keep them to maturity, the fluctuations do not matter. Also, the TIPS interest rate is lower than regular Treasury bonds. Buying TIPS instead of regular Treasuries maintains your purchasing power. Your purchasing power declines with regular Treasuries. I hope this is clear.
Howard, very good explanation about TIPs and the current “positive for investors “ auction. I did some research on Tipswatch.com (as suggested here by others) and found this very good article by David Enna explaining the benefits/ risks and workings of the current TIPS auction. I sent this to my FA who I have a call with this week to discuss if it might be appropriate for our portfolio.
thanks again.
https://tipswatch.com/2026/07/23/10-year-tips-auction-gets-real-yield-of-2-438-a-great-result-for-investors/
As a data point, I’ve been checking Vanguard and they do not currently have any of the July 15, 2036 TIPS available for purchase. ChatGPT recommends I check Vanguard several times a day, and if none become available, look at the September reopening. I’m a TIPS neophyte – does this make sense to our more experienced TIPS mavens?
One advantage of buying at auction in September is there’s no bid/ask spread.
Thanks Randy.
Hey Rick,
My experience has been with Vanguard. I do not think they sell on the secondary market until the issue date (I originally typed settlement date in error) after the original auction which for the the TIPS you reference is tomorrow.
Best, Bill
Bill,
As always, thanks for the useful information. I’ll keep an eye on
vanguard.
Best,
Rick
CUSIP 91282CRE3 10 year TIPS issued 7/31/2026 appeared with both buy and sell options on today’s, 8/1/26, Vanguard broker website after signing in where it was limited to sells yesterday for the secondary market.
Of course TIPS on the secondary market need to be purchased or sold during the period the markets are open where purchases at the original and subsequent reopening auctions orders may be placed after the announcement of the auction is posted.
A six month Tentative Auction Schedule of U.S. Treasury Securities is available at Treasury Direct.
Bill,
thanks – great info as usual.
Best,
Rick
Thanks for posting! I’m looking at retiring soon, at age 60, and have been planning to buy a 10-year annuity to give me guaranteed income until age 70, when I plan to take Social Security. But it sounds as though a TIPS ladder might be a better option, given the inflation outlook. Although I could probably find an annuity with a 2 or 3 percent annual increase, even that might not keep up with inflation.
Emily, note that once you spend your TIPS as they mature, once they have all matured, you have nothing left. Meanwhile while the annuity loses purchasing power to inflation over time, it keeps paying as long as you live (assuming you didn’t choose a type of annuity that doesn’t).
Hi Emily, A 10-year TIPs ladder may be a better bet than the annuity, but keep in mind that: 1) if you keep the TIPS to maturity, you get the inflation adjusted return, however, the TIPs pay interest (which is less than regular Treasuries) twice annually and you can’t spend the increase in the value of the TIPs until they mature or you sell them. If you need regular cash flow, TIPs may not work for you. 2) You pay income taxes in the current year for the increase in value of the TIPs even though you don’t get that cash until they mature or you sell them. 3) TIPs work best taxwise if they are held in an IRA. 4) I don’t think you can buy an inflation adjusted annuity these days. Let us know if you find one. Also, good luck in your retirement!
Thank you! Yes, the TIPS would be held in my IRA, and the plan would be to hold them until maturity. I haven’t found any inflation-adjusted annuities, but it looks like I could buy an SPIA with a 2 or 3 percent annual increase. Helpful but not an impregnable defense against 3.5 percent inflation.
Your considering a TIPS ladder makes more sense Emily as you will receive semiannual interest payments that will keep pace with inflation.
If you purchase an annuity most of what you get back will just be your own money not guaranteed to keep pace with inflation, and if you do get an inflation rider your payments will be smaller.
The previous sentence is the old, “you can pay men now or pay me later.”
Howard, thanks for posting this information. Like others, I don’t have much experience with individual TIPS, and I have been doing some research recently. In addition to using some of the sources already mentioned (TIPSWATCH), I spent an interesting hour on ChatGPT doing some detailed comparisons of an Oct 26 TIPS, a Jan 27 TIPS, and my Vanguard federal money market account (VMFXX). The analysis was very detailed and very clear, and provided insight into how to assess the returns in both yield and dollar terms, and tax implications to consider. I was very impressed. I plan to try the same comparison in Claude.
I second the resources below given by others. My tips on TIPS:
TIPS are complex, so simplify them by:
If you can do that, the bond will return X% more than inflation over life of the bond (real return). X will vary depending when you buy the bond and generally increases as maturity date increases.
If you buy now, X is an attractive number compared to many years in the past. Currently, X is around 2-3%
I had read a few months ago on HD regarding the use of iBonds Target date ETF’s, which include TIPS. The IBIG which is a 2030 ETF has a current yield of about 5.53%. Would this be a suitable alternative to buying specific TIPS maturing in 2030, or mutual funds? Are there significant downsides to using a target date ETF for the conservative bond holdings portion of a retirement account?
I think Rob Berger mentioned this in a recent YouTube video if you want to look that up.
I agree Howard and have been a buyer of TIPS for some time. 2% or 3% real return is a solid return for my fixed income allocation. It takes the guessing about inflation off the table.
Despite my best efforts and a lot of reading on TIPSWATCH.com, I still don’t understand TIPS, so my bond allocation is invested Short Term Treasury Bond ETF. Am I alone? I am counting on stocks and social security to hedge inflation risks. Setting up a TIPS ladder seems daunting.
S, I am with you that I can’t totally explain, nor do myself, all the math calculations related to TIPS on TIPSWATCH.com. But I do understand TIPS are a good tool to address inflation risk. A recent retire with style episode #235 stated, “Inflation protection is strongest when layered across multiple tools—including delayed Social Security, TIPS, I Bonds, and appropriately sized equity exposure”. I already had money in a short term TIPS fund, but my understanding was that holding individual TIPS to maturity in a tax sheltered account in a ladder that matched future yearly liabilities (i.e. expenses) was superior to just a TIPS fund which can go down in value like any bond fund can. But I was also daunted with HOW to set up a TIPS ladder, as a person who had never bought individual bonds or stocks. Fortunately, Laura Kelly explained what I needed to know in a HD posting (humbledollar.com/2024/09/laying-down-a-floor/), then I supplemented with the Berger video previously mentioned. So I started with a short smallish 5-year bridge ladder. All went well in the purchasing, the rungs have not started to expire yet. Subsequently, this spring I built a larger longer ladder. Some people buy their TIPS from TreasuryDirect, but I chose to buy my TIPS from Vanguard. The purchase interface steps have a few quirks for a novice, but they are easily figured out.
S — I agree that reading about TIPS or a TIPS ladder is not always clear or straightforward. TIPS are a specific subset of the bond market. I had experience with CD ladders and treasury ladders but still didn’t understand TIPS until recently.
There is a YouTube video titled “How and Why To Build a TIPS Ladder In Retirement” by a guy names Rod Berger. I found it to be a good reference that explains how the bonds function and how to go about setting up a bond ladder. It does not address the current market or any specific situation. Just content for learning that I found helpful.
I do not know who your broker is, but executing the trades to build a ladder at Schwab is very simple and straightforward.
Disclaimer — no endorsement on Rod Berger or any other content he has created. I just thought this video was well done and I learned more about the bonds and he addressed the process for setting up a bond ladder.
Short Bio – Rob Berger is a former securities lawyer and former founding editor of Forbes Money Advisor. He hosts a live show he named “Financial Freedom Show” on YouTube which usually broadcasts every two weeks plus other broadcasts on hot topics in the news.
I have subscribed to his free weekly newsletter which is usually full of links to articles and books he has read and found informative and links to his videos since his last newsletter.
I think of Rob Berger as one of the white hat bunch.
Schwab doesnt show a tips ladder but http://www.tipsladder.com shows specific cusips to build one. Then buy at Schwab.com.
On Schwab — go to building a treasury ladder then select the TIPS among the options for each rung. It will have several Treasury bonds and 1 TIPS to select from at each maturity rung. They are only visible during trading hours.
When TIPS had real yields to maturity of 0% or 1% they made no sense. Now that yields can be 2% or 3% they are much more interesting. I have been buying individual holdings with a 2% yield to maturity minimum in my deferred accounts and can hold to maturity. If they get cheaper can buy more. Im worried how high longer dated yields can go if Treasury has to attract investors so focusing on shorter maturity. Very easy to buy at Schwab.
I have invested my tax deferred IRA investments in TIPS. I have aligned individual bond maturities with my RMDs in the coming 15 years. The balance is in VTIP…a Vanguard 1-5 year ETF made up of TIPS with minimal fees. I also will invest the interest on the bonds in VTIP. This was all done painlessly through my Fidelity IRA account. As the years 2037-2039 do not currently have TIPS maturities, those years are covered by VTIP, for now. David Enna is the best at learning more about TIPS or I-Bonds…TIPSWATCH.COM.
Thanks for the post. I’ve been considering gradually moving a portion of our bond holdings (including a TIPS fund) to a TIPS ladder. The big draw of individual TIPS is matching individual bond maturities to future liabilities, which in our case we don’t really know. However, we do know we’ll have RMDs and can project what those will be, so maybe it makes sense to consider those our liabilities and ladder TIPS in those amounts. Maybe…
Btw, if one is taking from other bonds which are also down in price to buy TIPS, are they as good a deal? I don’t know.
Good afternoon Michael,
When I became active in buying TIPS I had a similar concern about the direction of the value the investments I was selling to fund our TIPS purchases. What has helped me in my decisions was the comment David Enna has made on his website as to the primary purpose of TIPS-
I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.
I like the embedded feature that a 10 year rolling TIPS ladder provides me in that I believe I will have created a reasonable additional inflation protected income stream, as risk-less as I have found, that will to a large extent replace my spouse’s social security benefit that will drop off (and be replaced by a higher survivor spouse benefit) when I pass. I have a single one year rung left to complete on my 10 year ladder mostly held currently in our traditional IRAs and plan to move the rungs of the ladder from our traditional IRAs to our Roth IRAs over the next decade to also make the TIPS future income stream tax free in addition to the inflation protection they provide. Upon my death, other than to assume/transfer the TIPS in my traditional IRA and Roth IRA into her own IRA’s, no action on her part is necessary other than withdrawing the proceeds when each TIPS mature each year. Should my wife’s finances be such that if she does not need the value of the TIPS when I die then she could choose to disclaim as primary beneficiary and the TIPS ownership would then pass to my contingent beneficiaries, our children.
I also considered a joint deferred annuity that would begin when the first spouse dies but the lack of inflation protection and the inability to access the principal if needed resulted in my deciding not to buy such an annuity even though we are giving up the fixed nominal income stream for life that an annuity offers.
Best, Bill
I was again a purchaser of 10 years TIPS at the most recent 6 month auction earlier this month where the real yield at auction was the highest since 2008. If someone is new to considering buying TIPS I have found David Enna’s comments on his website TIPSwatch.com to be a great resource.
Like most things financial your individual circumstances will be key to the decision if owning TIPS and the quantity owned are right for you.
Thanks for your post Howard.
Thank you,Bill, for the link. I will check it out. I don’t know anything about TIPS, but I trust your recommendations b/c you are always trying to help those of us who don’t know as much. I will also see what Jonathan had to write about them in the Guide. Chris
Excellent suggestion Howard. I have 10+ years worth of future withdrawals held in a mix of TIPs and regular Treasurys. I’m wondering whether it should be all in TIPs!