Dimensional Fund Advisors (DFA) takes a more direct approach to immunizing retirement liabilities through their target-date retirement income funds. These funds provide a useful case study for understanding the role bond funds play in meeting retirement expenses. One of the defining distinctions for retirement income planning as opposed to traditional wealth management is that the…

Though reverse mortgages have long held a bad reputation, research and public policy in recent years are shedding new light on their potential uses in retirement. The vast majority of reverse mortgages in the United States are Home Equity Conversion Mortgage (HECM – commonly pronounced “heck-um”) reverse mortgages, which are regulated and insured through the…

Any discussion of TIPS requires an additional mention of Series I Savings Bonds. I Bonds can be purchased in taxable accounts from Treasury Direct without paying any fees or commissions. They work like a CD as they are not tradable on secondary markets. I Bond yields are quoted in terms of a real interest rate,…

For a lot of people, retirement planning is a team sport. Unfortunately, it’s incredibly common for folks in the same household to have very different ideas of both what they want out of retirement, and what their retirement will actually look like. It’s never intentional – they just never actually talk about it. Not to…

Normally with these reviews, we look at something related to investing, or some direct financial planning issue. But we’re going to switch it up this week. More and more of our life, especially our financial life, is happening online now. This is massively more convenient for almost everyone, but there are real risks. There are…

To economists, especially finance folks, prices are near magical things. There’s a near infinite amount of information packed into that number. Prices make the economy work. And they work in the real world, too. Absent other information, prices are usually a decent proxy for value. It’s pretty safe to assume that a $100 steak will…

Traditional bonds are priced around the objective of getting a return that exceeds expected inflation. If inflation is unexpectedly high, then the real return on nominal bonds is less. TIPS, on the other hand, keep pace with higher inflation, because it triggers a higher nominal return above their underlying real interest rate. Essentially, TIPS provide…

Today, I want to talk about what TIPS can tell us about inflation. Exhibit 1 shows the TIPS yield curve for January 3, 2017. Yields are negative for TIPS maturing prior to 2022, and positive beyond that, although the longest ones do not even reach 1%. The Treasury stopped issuing thirty-year TIPS in the early…