High TIPS Yields are a retiree's best friend - John Reckenthaler

[kevink]

Good article in Morningstar on using a TIPS ladder at today's rates plus a slug of equities to guarantee a SWR that (according to Reckenthaler) a conventional stock:bond portfolio is unlikely to match.

https://www.morningstar.com/bonds/high-tips-yields-are-retirees-best-friend

 

[GravitySucks]

Interesting idea in that article - ending up with mostly equities as you get older isn’t for me though.

I do like TIPS in this environment though.

 

[Exchme]

Every time I read about TIPS, I get interested. I like the tipsladder.com planning tool, but then I look at the difficulties involved, like multiple years in a row when no TIPS mature, and I end up not following through. It's hard to rely on a ladder with things like three missing years in a row.

 

[kevink]

Every time I read about TIPS, I get interested. I like the tipsladder.com planning tool, but then I look at the difficulties involved, like multiple years in a row when no TIPS mature, and I end up not following through. It's hard to rely on a ladder with things like three missing years in a row.

Not hard at all to deal with the three missing years:

http://https://www.tipsladder.com

 

[tulak]

I’m a big fan of TIPS and plan to use them to deal with SORR.

I don’t mind the maturity gap so much. I’ve only filled a couple of years that don’t have maturity and I’m not too worried if I get the money a year or two early. It’s not ideal, but I get the benefit of inflation protection at least for maturities 10 years out.

 

[RetiredAt49]

TIPS and CD’s (as of late) are interesting/decent (I’m helping my sister use them because she’s living paycheck to paycheck in retirement) but I’ll stick with my 100% equities portfolio, which has averaged around 10% annually and has grown so large that my SWR could be 1%.

 

[flyingaway]

How many of you really want to optimize every parts of your portfolio? In the fixed income part, do you bother to make regular changes among CD, money market, bonds, TIPS?

 

[ShokWaveRider]

Not hard at all to deal with the three missing years:

Fixed the link:

www.tipsladder.com

 

[Montecfo]

Every time I read about TIPS, I get interested. I like the tipsladder.com planning tool, but then I look at the difficulties involved, like multiple years in a row when no TIPS mature, and I end up not following through. It's hard to rely on a ladder with things like three missing years in a row.

Yes. TIPS ladder is easy to say but more difficult to execute.

You can straddle the issue by filling in missing rungs with noncallable agencies, high quality corporates and CDs.

 

[Montecfo]

How many of you really want to optimize every parts of your portfolio? In the fixed income part, do you bother to make regular changes among CD, money market, bonds, TIPS?

I do. But I don't generally find I need wholesale changes, other than in 2020 and 2021 (preparing for rate hikes).

 

[kevink]

As the OP here I kind of feel obliged to share this contrarian post about the strategy Reckenthaler (and Allan Roth, who seems to be the main well-known FA advocating and publicizing this approach) are recommending:

https://www.advisorperspectives.com/articles/2022/12/20/the-4-rule-did-not-become-a-whole-lot-easier

 

[gauss]

I have been in the process of purchasing a 9 rung/year ladder in zero-coupon USTreasuries to add to my spending between the ages of 75and 84. With a greater than 5% YTM hopefully I won't loose much, if anything, to inflation. This should add to/increase what we plan to receive from Social Security by about 50%.

I basically wanted to lock in today's high yields for the long term.

The zero-coupon Treasuries were fairly easy to purchase. I did the yearly ones that mature in November.

This is about 1/3 of my fixed income allocation. The rest is either in cash or a 7 year ladder of corporate bond target maturity ETFs.

-gauss