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by: Tom Adams

Thu, 05 Nov 2009 16:07:37 +0000

Jen - Savings Bonds are a good place to put away money for emergencies. If you never have an emergency, you can spend the money on your retirement.

The reason Savings Bonds are good for this is that after one year you can get the money back out again. Before the bonds are five years old there's a penalty of the most recent three months interest, but after that there are no penalties at all.

If you have to take money out of a 401K or other retirement plan for an emergency before you retire, on the other hand, there can be significant penalties.

For your retirement you should open what's called a Roth IRA with a reputable company like www.vanguard.com or www.tiaa-cref.com. Inside the Roth you can pick one or more mutual funds to invest the retirement savings in. Both companies offer an inflation-linked bond fund, which is like investing in Series I Savings Bonds.

When you take the money out of a Roth IRA, there is no tax on the money.

Compare this to a traditional IRA, which allows you to put in money before it's taxed, but all of the money you take out is taxed.

So a Roth IRA is the way to go in your situation.

Tom Adams

by: Jen

Thu, 05 Nov 2009 04:03:21 +0000

I'm thinking I might buy some US I and EE Savings Bonds for my retirement plan. My job doesn't offer a 401K or IRA and I don't own a home. I was in the stock market over 15 years, finally got out last year in Oct.

Q.1) What is the best way to save for retirement? As I said, my company doesn't offer a 401K, so each pay check is taxed. If I use the taxed money to buy US Savings Bonds for my retirement, by the time I withdrawal my Savings Bonds, the interest will taxed again (double taxed)?

Q.2) How can I avoid double tax?

by: Tom Adams

Wed, 14 Oct 2009 15:29:29 +0000

Josh - yes, your assumption is incorrect. The fixed rate never changes. For further clarification, see how I bond interest rates work and my page on I bond fixed rates.

Tom Adams

by: josh

Tue, 13 Oct 2009 21:57:54 +0000

Hi Tom.Appreciate your book. RE; IBOND FIXED RATE COMPOUNDING: SAY FOR ARGUMENT SAKE, FIXED RATE ON BOND IS 1.0% AND FOR 10 YEARS (NOT PERIODS) THE CPI IS 3.0%. DOES IT MEAN THAT AT END OF 10 YRS THE FIXED RATE WOULD BE 1.31% (APPROX) ? PLEASE CORRECT ME IF ASSUMPTION IS INCORRECT. THANKS

by: Tom Adams

Thu, 19 Mar 2009 15:08:51 +0000

Robert - the SSN on the bond isn't used for anything but tracking the bond down if it's lost. See this post for the answer to your tax question.

Tom Adams

by: Robert Meech

Wed, 18 Mar 2009 22:52:10 +0000

If an I Bond is issued in my name but shows a different Social Security Number, Can I cash it or does the person who's SS# appears on the bond have to cash it? Who would be responsable for the tax?