Retirees who aren’t comfortable leaving their retirement spending to the whims of the capital markets can generate consistent income by using their investment portfolio to buy bonds. By building a ladder of Treasury Inflation-Protected Securities, retirees can reduce exposure to both market volatility and inflation risk while creating a more predictable stream of real income.

A TIPS ladder is a self-liquidating portfolio designed to provide inflation-adjusted income over a defined time horizon. In this article, we focus on a 30-year ladder, matching the assumed retirement period in our annual retirement income study to highlight the pros and cons of this strategy.

Our Research on Retirement Income

In our latest study, my colleagues Tao Guo, Amy Arnott, Christine Benz, and I explored different ways retirees can turn their savings into dependable cash flows. Along the way, we estimated a sustainable starting withdrawal rate of 3.9%, assessed flexible withdrawal strategies for spending more in retirement, and looked at the role of guaranteed income. In this article, the focus is on TIPS ladders.

The safe-spending methodology in our study is deliberately conservative, targeting a 90% probability that a portfolio will last 30 years, with annual inflation adjustments to the initial withdrawal amount. We assume retirement at age 67, and total spending reflects both portfolio withdrawals and full Social Security benefits.

Note that this article uses updated TIPS yields and Morningstar Investment Management capital market assumptions as of mid-January and Dec. 31, 2025.

Estimate How Much You Can Spend in RetirementThe Pros and Cons of TIPS Ladders

A 30-year TIPS ladder comprises individual TIPS with staggered maturities ranging from one year to 30 years. Together, the bonds’ real yields and the return of principal as each rung matures are used to fund a consistent real withdrawal rate. When the final bond matures at the end of the 30-year period, the portfolio is fully depleted.

This self-liquidating structure distinguishes TIPS ladders from most of the other withdrawal strategies examined in our study, with the exception of the required minimum distribution approach, which also largely exhausts the portfolio over time. For retirees who prioritize leaving assets behind, this characteristic may be a meaningful drawback.

Another potential drawback of TIPS ladders is that they are entirely inflexible. The base-case scenario in our study is modeled as being inflexible, assuming that retirees will not adjust their spending strategies along the way. It can, however, be altered in practice. Not so with TIPS ladders. Retirees who start down that path must either finish it as planned or accept that changes they make along the way, like selling off portions of the ladder prematurely, will irrevocably ripple for the rest of the retirement period.

TIPS ladders deliver two major offsetting benefits: First, they provide a 100% success rate. Second, their safe withdrawal rates can exceed those of other portfolios when TIPS yields are attractive.

To the first point, while the withdrawal rates for every other strategy cited in our study are calculated to succeed in 90% of occasions, per the simulation model, payments from TIPS ladders are fully secured. They are not only guaranteed by the US government but are also immune to inflation’s ravages, as their payments are structured in real terms. To be sure, the prices of TIPS bonds can fluctuate sharply in response to inflation, as demonstrated in 2022, when long-term TIPS suffered steep capital losses and short-term TIPS suffered minor losses. But changes in market prices are irrelevant for holders of TIPS ladders, because they own all their investments until their maturity dates.

TIPS Ladders Look Attractive for Income Now

As of January 2026, TIPS yields can support higher portfolio withdrawals: A 30-year TIPS ladder supported an inflation-adjusted withdrawal rate of 4.8%, compared with 3.9% for the highest base-case portfolio. The current 30-year TIPS ladder rate is near the high end of the past 10 years as inflation expectations have ticked slightly upward over the past year.

When the benefits of claiming Social Security at age 67 are added to the TIPS ladder, the lifetime spending rate and spending amount both appear attractive compared with our base case of a 3.9% initial withdrawal rate combined with claiming Social Security at age 67.

As shown in the table below, having $2.5 million of lifetime spending with 100% safety certainly appears better than the $2.25 million of spending with a 90% success rate that arises from the study’s base case plus Social Security.

The drawbacks, however, are worth restating.

Whereas the TIPS ladder possesses no ending value, by definition, the base-case strategy with Social Security finishes Year 30 with a positive balance in 90% of the simulations. The median ending balance for the 40% equity portfolio with a Social Security start date at age 67, in fact, is $1.47 million. The base-case strategy plus Social Security is therefore much better suited for retirees who want their investments to last more than 30 years, either for their own use, should they outlive that period, or to leave as a bequest.

TIPS ladders are also inherently inflexible. Retirees who start down that path must either ride it out as planned, or accept that changes they make along the way, like selling off portions of the ladder prematurely, will have a lasting impact.

Pairing TIPS Ladders With Equities Can Offset Major Drawbacks

One way to alleviate these concerns is to supplement a TIPS ladder with an equity kicker. With that strategy, retirees would place a portion of the portfolio into a TIPS ladder and invest the remaining assets into equities. They would spend down the TIPS ladder through annual withdrawals while leaving the equity position undisturbed. When the 30 years conclude, the equity position may have substantially appreciated, thereby replacing some or perhaps even all the assets that were spent on the TIPS ladder.

The chart below shows lifetime spending and median ending balance after Year 30 for this TIPS-ladder-plus-equities strategy with Social Security, assuming various effective withdrawal rates and the same long-term equity return assumption that is employed throughout our study. The chart shows equity ranges in 5% increments up to 60% equity.

The purpose of including equity allocations as high as 60% is to provide a complete view of potential outcomes, even those that fall outside typical recommendations. In practice, 40% equity is likely the upper limit for this strategy, unless the retiree has a very large starting portfolio or minimal lifetime spending needs.

Based on current TIPS yields and expected equity returns, the ladder with a 15% equity kicker stands out as being the most competitive with our base case plus Social Security. Ladders with larger equity kickers tend to produce lower lifetime spending but higher median ending balances.

In the 15% example, lifetime spending totals $2.29 million, edging out the base case’s $2.25 million with a 100% chance of success, and the untouched equity portion compounds over the full 30 years, resulting in a higher median ending balance of $1.49 million versus $1.47 million for the base case. However, this approach still offers far less flexibility later in retirement than the base case or a dynamic withdrawal strategy.