No. of Recommendations: 2
Why buy EE bonds that pay 90% of the 5-year Treasury rate when you can buy the 5-year Treasuries and get paid 100% of the 5-year rate?

Because, in a taxable account, compounding before paying taxes will make up for the 90% given enough time (around 23 years for someone in the 25% bracket if I remember correctly).

More importantly, for people who drop into a lower federal bracket after retirement, delaying taxes makes a big difference. With 90% EE bonds it was pretty easy. With the new lower rates on EE and I bonds, they are so uncompetitive it even makes it hard for them to win with a big drop in taxes after retirement.

State taxes are irrelevant, since neither Treasuries not US Savings bonds are taxed at state and local levels.
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