All things equal, we believe long-duration Treasury Inflation-Protected Securities (TIPS) should play an important role in the asset allocation of workers who are within 10 to 20 years of retirement. Long TIPS effectively help hedge retirees against fluctuations in the real wealth required to sustain a given level of consumption in their retirement years. As such, long-duration TIPS act as the “risk-free asset” in the context of retirement savings, and, for investors on a reasonable savings path, an allocation to this asset class may increase the likelihood of a successful retirement outcome.

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The Author

Steven Sapra

Quantitative Research Analyst, Client Analytics

Niels K. Pedersen

Quantitative Research Analyst, Asset Allocation Research