Financial Basics · Savings & Cash

Treasury Bonds

Definition

Treasury securities are debt obligations of the US federal government. T-bills mature in 1 year or less, T-notes in 2–10 years, T-bonds in 20–30 years, and TIPS (Treasury Inflation-Protected Securities) adjust principal with inflation. I-bonds are savings bonds with an inflation-linked component.

Why it matters in retirement

Treasuries are the closest thing to a risk-free asset in investing — backed by the full faith and credit of the US government. They're also exempt from state and local income tax, which makes them more valuable in high-tax states than most retirees realize.

Key Numbers — 2026

4-week T-bill (recent)
~4.4%
10-year T-note
~4.3%
TIPS 10-year real yield
~1.8%
I-bond annual purchase limit
$10,000 + $5K via refund

Pros

  • Virtually zero credit risk
  • State/local tax exempt
  • Highly liquid
  • Direct purchase via TreasuryDirect

Cons

  • Interest-rate risk on long durations
  • Below-inflation real returns at times
  • I-bond purchase limits and 12-month lockup
  • Federal tax on interest

Common mistakes

  • Buying long-duration Treasuries in a rising-rate environment
  • Ignoring T-bills when they out-yield CDs
  • Not holding TIPS in tax-advantaged accounts (phantom income)
  • Selling Treasuries before maturity in a downturn

Related

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