New I-Bond Rates

[RWG1950]

The U.S. Treasury has announced the 6-month rate on series "I" savings bonds will be 3.98% for the six-month period of 5-1-25 thru 10-31-25.
Included in this rate is a 1.1% fixed component.
For more information on I-Bonds go to TREASURYDIRECT.GOV

[FEDUKE404]

While the rates are adjusted every six months, just remember you are buying what is essentially a ~30-year bond, with costs if you exit "early."
FWIW, a six-month Treasury bill can offer similar rates with no strings attached.

[Rapid Robert]

After some searching, I found a reasonable discussion that concludes that for the long term, I-bonds are a better choice than short term T-bills.

https://tipswatch.com/2024/04/21/lets-weigh-in-on-the-i-bonds-vs-t-bills-debate/

I recall there was some discussion of this here the last time or two that the inflation rates were updated (every six months). Once someone transfers (due to age) from making retirement contributions to taking retirement distributions, it's advisable to keep a year or more of cash investments on hand, to avoid the need to sell equities in pre-tax accounts in a major market downturn. I find that i-bonds are a simple, easy part of this strategy. Unlike with a bank, I don't have to go through stupid rigamarole ever 5-13 months just to renew a CD at the best available rate, it is truly set it and forget it. For a married couple, I think keeping $20K in I-bonds indefinitely is a good move (additional cash funds are kept in more accessible form).

My main concern is having trouble convincing the IRS down the road that an election was made to report the interest annually on the tax return, instead of waiting until the bond is redeemed. (Or possibly, heirs not being aware of the prior taxation).