Roth: Do you know I-Bonds as inflation protection? Should I retire?

When I appear with Glenn Beck on his radio program, I get a lot of financial questions from listeners. I answer a few on the air but as I can’t reach all of them I thought I’d take this opportunity to answer a few that might be helpful to you as well.

Note that the questions may have been edited slightly for clarity.

**Important Disclaimer: This is not financial advice. It is intended to give you information that will help you with further research. You should consider your own goals and financial situation and, if possible, speak to a financial advisor.**

From Stefan:

Q: What are your thoughts on buying I Treasury bonds at this point?

CR: Stephen, I’m glad you asked about this because I-Bonds aren’t as well known as they should be! Series I U.S. Treasury bonds (“I-Bonds”) are government-issued savings bonds that combine both a fixed rate and a floating rate, the latter of which is calculated twice a year based on changes in the CPI inflation rate. Interest is earned monthly and compounded semi-annually.

Electronic bonds can be in any amount from $25 to $10,000, but there is a hard cap totaling $10,000 per calendar year. Paper bonds have fixed denominations and are capped at a total of $5,000 per calendar year. The bonds have a term of 30 years, but you are only obligated to hold them for one year. However, there’s a catch: If you redeem your bonds before the five-year mark, you’ll lose your interest for the last three months.

To buy these electronically you need to open an account through the Treasury tax office directly Website. The IRS also has a paper bond program (which has a lower purchase limit per year) that you can purchase with your IRS refund. The Treasury has announced that the compound interest rate for I-Bonds is currently 9.62%, and states: “The compound interest rate of 9.62% for I-Bonds purchased from May 2022 to October 2022 applies to the first six months after the issue date.” It will then be recalculated on the basis of the next semi-annual statement.

If you have the opportunity to tie up some of your savings and don’t mind the paperwork of opening a new account, I-Bonds can be used along with your other portfolio strategies as a partial inflation hedge.

For more information, see tax office directly Website.

From John in Colorado:

Q: Is this a good year to retire? I’ll be 69 this August and am already collecting Social Security while still working. I have paid off my property and all my revolving debts. I am now working to bring my house down to a reasonable amount with $47,000 remaining to pay off. So, economically, is this a bad time to retire?

CR: John, while I don’t know you or your full circumstances, there’s a lot to digest here. First of all, congratulations on your accomplishments in tackling some of your debt!

However, other than an unknown amount of equity in your home, you haven’t addressed whether you have other retirement plans. Nor did you address how much you need to live on, whether Social Security will cover those expenses, including the balance of your mortgage and ongoing property taxes, and whether your Social Security income gives you a buffer for emergencies, retirement care, and the like.

This year is economically challenging due to inflation, which means the goods and services you can buy with your money have declined. This is an added burden for those on fixed incomes (especially since Social Security’s cost-of-living adjustments are unlikely to cover the true cost of these increases). If you have some type of invested retirement or retirement plan, it may have been impacted by falling market valuations recently.

With so many jobs to choose from, consider changing jobs or retiring. You can keep yourself busy and stay away from extra leisure expenses – which can be a real problem – and also spend your working hours doing something more in line with your interests.

You should also consider hiring a financial planner who can look at your income, financial situation, and retirement goals and give you a personal recommendation.

I hope these additional factors to consider help you make the right decision for you and good luck! Roth: Do you know I-Bonds as inflation protection? Should I retire?

Laura Coffey

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