SnowBog wrote: ↑Sun Jun 06, 2021 2:30 pm
kmanjir wrote: ↑Sun Jun 06, 2021 2:18 pm
Is there an age at which it is recommended to stop purchasing I Bonds / EE Bonds (that is, do people have any concerns about the bond redemptions interfering with Social Security benefits and RMDs as people enter their 70s from an overall income and tax perspective)? Or is that not a material consideration?
For context, I am nearly 40 and just made my first I Bonds purchase this year. I wish I had been conversant with this a decade before.
I think it depends on what you are using then for and why...
Personally, I'm using EE Bonds to help bridge until delayed pensions/SS kick in at 70. So my last purchase will be when I'm 49. But I've heard others use EE Bonds as a DIY Annuity through later years as well. Although at some point, the odds of being around 20 years later for them to double likely mean many will stop purchasing them at some point.
Similarly, my current plan is to buy I Bonds while still working (also part of a bridge to replace pensions/SS income during early retirement years.
At this point, I don't have
plans to buy them after we retire. But I'm not opposed to buying them after retirement, if we have excess "income" (as they help me maintain my AA, as they would be the primary source of "new" bonds when we can no longer contribute to tax-deferred accounts (we could always rebalance).
I think the largest "concern" is that they add complexity to an estate, so I think some people write buying them to simplify the estate at some point. Personally I don't have that concern. The heirs will figure it out.
Thanks, Snowbog, that is helpful.
My reason for the I Bonds / EE Bonds is similar to yours, that is, for the supplemental income bridging between 62-70 years of age when I expect to be working part-time/retired, and prior to Social Security and RMDs kicking in after 70 years of age.
Given that this set of I bonds I have purchased this year will fully mature at the end of 30 years (when I am nearly 70), I wonder if I should consider continuing to buy them in the next few years, OR go with EE bonds.
I was thinking that with those bumps to the income after age 70, I should plan to finish all Treasury Bond redemptions prior to 70 - is this a valid way of thinking about this?
If so, then instead of I Bonds, I am thinking I should go with EE bonds because they effectively mature after 20 years, so that would allow me to redeem them in the 60-70 age range.
I say this, knowing the limitations that:
1. EE bonds can only ever double in value, and that too only after 20 years, so basically they are locked from me for 20 years, and if for some reason, I have to redeem before 20 years, basically it's a wasted investment
2. I can't consider these as emergency funds anymore, at least not for 20 years
3. I could potentially redeem the I Bonds after 20 years, but if interest rates are doing well 20 years from now, I am not confident in my discipline of cashing them after 20 years, instead I might let them sit the entire 30 years and create a larger tax issue for myself starting at age 70
Looking for advice on how I should think about this situation, if not in the way above?
I think it boils down to my lack of confidence in myself that I will not redeem the I Bonds before full maturity.