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How Do I Build A Tips Bond Ladder For Retirement Income? By Anthony Pellegrino

Retirement Income

A “tip ladder” is a series of bonds that mature at different dates, providing a stream of income in retirement. Building a tips bond ladder can be an effective way to generate retirement income, says Anthony Pellegrino, and there are a few different ways to do it.

Anthony Pellegrino On How To Build a Tips Bond Ladder For Retirement Income

According to Anthony Pellegrino, building a tips bond ladder is an excellent way to establish retirement income that will help you reach your goals while also providing some protection against inflation. By constructing a ladder with TIPS bonds, you can create a steady stream of cash flow into your retirement portfolio and enjoy the benefits of tax-free interest payments for years to come.

When building a TIPS bond ladder, the key is to choose which maturity dates are best for your needs. When looking at the available options, it’s important to remember that the longer maturity dates tend to offer higher yields, but not all maturities are ideal for every investor. For example, shorter maturity dates may be better suited for those who want more liquidity in their portfolio as they are easier to sell before they reach maturity, and the interest rate is lower than it would be with longer maturity dates.

When constructing your ladder, you should look at a variety of maturities in order to maximize the benefits of TIPS bonds while providing you with the most suitable cash flow for retirement. You may want to consider investing in short-term TIPS bonds such as 5-year, 7-year, and 10-year maturities in order to provide some liquidity and steady income into your portfolio. Additionally, you can also invest in medium-term (15-year) or long-term (20-year+) bonds if you are more comfortable with having less liquidity but higher yields over time.

Once you have determined which maturities to invest in, it’s important to look at the current market rates. The US Treasury provides daily and monthly reports on TIPS bond yields, which can be accessed online or through financial advisors. This information is essential when deciding on your ladder, as you want to make sure that you are getting the best returns possible.

Another factor to consider when building a TIPS bond ladder, as per Anthony Pellegrino, is taxes. Interest payments from TIPS bonds issued by the U.S. government are exempt from state and local income taxes, but federal income tax may still apply depending on your individual situation. You should speak with a qualified tax advisor if you have any questions about how taxes will affect your investments.

Finally, one example of an effective TIPS bond ladder could be to invest in 5-year, 7-year, 10-year, and 15-year TIPS bonds. This would provide a steady cash flow into your retirement portfolio for many years to come.

Anthony Pellegrino’s Concluding Thoughts

According to Anthony Pellegrino, building a tips bond ladder can be a great way to generate retirement income, but there are a few things to keep in mind before getting started. Be sure to research the different options and choose the approach that best fits your needs and goals.