Long-term TIPS Yield now 3%; 4.9% Guaranteed 30-Year Withdrawal Rate

Keeping track of TIPS yields is useful because it provides a baseline of the return you can get by taking minimal risk. Beyond just the reliability of US Treasury bonds paying out their interest and return of principal at maturity, TIPS are US government-backed bonds that also address the risk of unexpectedly high inflation.

The real yield on 30-year TIPS has been at ~3% for weeks now as of August 2026, which is the first time since 2008, nearly 20 years ago. At the same time, the 30-year regular Treasury is at 5.3%, making the break-even annual inflation rate roughly 2.3%. This situation has motivated a new article by Edward F. McQuarrie and William J. Bernstein, Long TIPS Yield 3%. Time to Buy?. Only 2.3% inflation for the next 30 years? As the authors state, “Good luck with that.”

I would recommend reading it in full for their blunt and snarky writing style, but here are my major takeaways:

• Long-term TIPS real yields at 3% or above are not common, and they usually don’t last long when they do show up.
• “Regular” nominal bonds are more likely than not to have a 30-year rolling average real return below 3%. One long-term average provided is only 1.5% real (above inflation). They do sometimes, but it’s not guaranteed and it can be a lot lower than 3%.
• Stocks historically do provide 30-year rolling average real returns above 3% (see chart below). But your time horizon must be that long, as the short-term returns can be very different.
• As a result, this may be a good opportunity for a near-retiree or retiree to lock in some guaranteed, inflation-protected income via a ladder of individual, long-term TIPS. Near-retirees might sell other bonds and buy TIPS. Younger folks should still own mostly stocks.
• Per TIPSLadder.com, you can currently get a 4.9% real withdrawal rate by building such a ladder. That means with $1,000,000 invested, you can get $49,000 every year in today’s dollars every year for the next 30 years, adjusted upwards each year exactly to match CPI inflation.

What if you live past 30 more years? Remember, you don’t need to put every penny you have into a TIPS ladder. For example, if you carve out just 10% and put it into stocks instead, after 30 years those stocks will have grown quite a lot, most likely enough to fund another 7-10 years of annual income. Or you could split your portfolio up between stocks and TIPS however you like, knowing that the TIPS will provide a stable sleeve of income.