Ask Terry Questions Retirement Investments

Retirement Investments

By Terry Savage on September 27, 2015 | Chicken Money

Hi, Terry.
I’m retired and have a pension and some investments. One of them is a $10,000 Treasury Direct I-Bond now worth around $15k. It’s part of my chicken money. It has dependably gained around $30 each month. However, this month it gained $0. I also have about $29k of chicken money in a VALIC tax sheltered annuity in a fixed account. That has grown around $70 monthly, including this month.. My questions are: 1. Should I redeem the bonds and put the money into my VALIC account? 2. If I did that would there be any tax consequences?
Thank you.

Terry Says:  You didn’t “gain” because there is no inflation, and I–bonds are designed to keep up with inflation!  While I wouldn’t buy them today, I would hang on to older I-bonds because they have a higher “floor” rate, and are likely “earning” more than you could in a CD, even though you don’t see the additional portion that reflects the inflation adjustment.  And if you sold them you would pay taxes on the appreciated value of the I-bonds.

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