In my opinion, purchasing individual TIPS/I bonds as a ladder to get to age 70 social security makes the most sense. In reality, from age 62-69 you are essentially "buying" the higher annuity value which most people on this forum seem to think is a good idea. Since as far as I'm aware, one cannot purchase a true inflation indexed SPIA, this seems to be a reasonable exchange. Once the 62-69 ladder is in place, I think the answer gets foggy and depends on the size of your asset base.TheTimeLord wrote: ↑Wed Jun 29, 2022 11:30 am TIPS and I-Bonds now make up about 13% of my portfolio. I plan to continue to purchase TIPS for liability matching purposes. Is there a limit to the percentage of my portfolio that should be in these inflation protected instruments?
My thinking on this was to come up with the income I desire through retirement, determine how much I will get from social security at age 70, determine how much it costs to build a inflation indexed ladder to age 70 social security, and then determine (using a SWR) how much the residual portfolio (minus the ladder cost) could likely generate in additional withdrawals. If the (SWR)*(Residual_portfolio)+ladder_rung = desired_income, I'm in good shape.
Note that if you create this ladder and stocks soar as your rungs mature, you can spend from your equity side to help keep things in balance and re-invest the TIPS rung in a intermediate term bond fund, or whatever in the fixed income space to try to hold your AA relatively level, otherwise you will be dealing with a rising equity glide path which may or may not be what you want.
I created this thread and got some good feedback:
viewtopic.php?t=379274
Good luck!