TIPS Ladder Calculator (Inflation-Protected Income Floor, Cost & Rungs)
Price a ladder of Treasury Inflation-Protected Securities that pays a fixed real income every year for a set number of years: the total cost today at the current real yield, the face value to buy for each maturity rung, how coupons reduce what each rung must return, the equivalent safe withdrawal rate, and how the cost changes with real yields.
How it works
ladder cost = Σ income ÷ (1 + real yield)^t for t = 1…N (real annuity present value) · rung faces solved backwards: F_k (1 + c) + c × Σ later faces = income · implied withdrawal rate = income ÷ cost · TIPS principal and coupons scale with CPI, so all figures are in today's dollars
A TIPS ladder is the closest thing to a do-it-yourself inflation-indexed pension: buy an inflation-protected Treasury maturing in each year of the plan, and every year one bond returns its inflation-adjusted principal while the rest pay inflation-adjusted coupons, together delivering a fixed real income no matter what markets or prices do. Its cost is simply the present value of that income at today's real yield, which is why a two-percent real yield makes a thirty-year floor affordable and a zero real yield makes it cost every dollar it will ever pay out; the rungs are sized backwards so that coupons from the longer bonds cover part of the earlier years.
Worked example
Forty thousand real dollars a year for 30 years costs about $896,000 at a 2.0% real yield — a 4.46% withdrawal rate with no market or inflation risk — against $1,200,000 of payments. With 1.25% coupons the total face is about $996,000, from $27,600 in year 1 to $39,500 in year 30. On a $1.5 million portfolio the floor takes about 60%, leaving $604,000 free for growth; at a 1.5% real yield the same ladder would cost about $961,000.
Frequently asked questions
Why not just buy a TIPS fund?
A fund never matures, so its value swings with real yields and it cannot promise a specific payment in a specific year. A ladder held to maturity delivers exact real amounts on exact dates; funds suit the growth bucket, ladders suit the floor.
What about years with no TIPS maturity?
There are gaps (currently a few years in the 2035–2039 range). Bridge them by buying more of the nearest maturities and holding the proceeds a year in short TIPS or I-bonds, or by buying the gap-year bond when the Treasury issues it. Ladder-building tools handle this automatically.
Related calculators
Educational finance mathematics. Models such as Black-Scholes, parametric VaR and lognormal Monte Carlo rest on simplifying assumptions (constant volatility, normal returns, no fat tails) that real markets violate. Nothing here is investment advice — consult a licensed professional for decisions about your money.