Building a ladder of individual TIPS—the Treasury’s Inflation-Protected Securities—with a different bond maturing in each year of your retirement can help investors take advantage of the current high real yields.
I’m referring to the famous research from William Bengen in 1994 that focused on how much a retiree could withdraw from his portfolio every year and be sure not run out of money over a 30-year retirement. Based on U.S. stock and bond data from 1926 to 1991, he found that a 50% stock/50% bond portfolio could support withdrawing each year an amount equal to 4% of the portfolio’s net worth at the beginning of retirement .
The strategy is in concept very simple, though as I will describe further in a minute, it is not a panacea and executing it takes some effort. The strategy calls for building a ladder of individual TIPS—the Treasury’s Inflation-Protected Securities—with a different bond maturing in each year of your retirement. TIPS, of course, are similar to traditional Treasury notes and bonds except that their quoted yields are above and beyond changes in the Consumer Price Index.
Since this 4.3% guaranteed spending rate is so attractive, you might consider this TIPS ladder strategy to be a no-brainer. But there are several things to keep in mind about it:
Indonesia Berita Terbaru, Indonesia Berita utama
Similar News:Anda juga dapat membaca berita serupa dengan ini yang kami kumpulkan dari sumber berita lain.
7 Tips for Building Friendships to Last a LifetimeLasting friendships are special, but they don't happen by chance. Here’s what it takes to build one.
Baca lebih lajut »
How to Get Someone with Schizoid Personality Disorder to Open UpPeople who develop schizoid personality disorder are usually very private, self-sufficient, and reluctant to trust others. Here are some do’s and don’ts if you want to connect.
Baca lebih lajut »
54% of workers can’t fully disconnect during PTO—3 tips for avoiding a ‘workcation’Are you able to fully disconnect while on vacation? Here are 3 tips to avoid a 'workcation.' (via CNBCMakeIt)
Baca lebih lajut »
Cold weather: Here are some safety tips to ride out the chilly weather at homeCOLD WEATHER SAFETY: Before you break out the sweaters and coats this weekend, make sure your heater is in tip-top shape. KPRC2Rilwan
Baca lebih lajut »
Some financial tips as you think about retirement plansUncertainty in the markets shouldn’t force you into quick decisions about what to do with your money.
Baca lebih lajut »
Holiday Travel Tips: 8 Ways to Find Peace at the Parking LotFrom our sponsor: Flying into or out of Los Angeles can be stressful any time of year. If you need to park your car, here are a few pointers for a smoother trip.
Baca lebih lajut »