Serious investors know to pass up investments that sound too good to be true -- say, for example, a 9.62% return in today's market.

It just so happens that the U.S. Treasury is offering precisely that: A bond issued by the Treasury, backed by the U.S. government, available for purchase now, with a quoted "current rate" of 9.62% annualized (see tinyurl.com/3rnmsunt). The instrument is the Series I savings bond.

According to TreasuryDirect, a website run by the U.S. Department of the Treasury's Bureau of the Fiscal Service, the rate is good for six months starting with the time you purchase the bond -- if you buy the savings bond on July 1, 2022, the annualized rate of 9.62% is applied through Dec. 31, 2022. Then, the rate is reset for another six months, and every six months for as long as you own the bond.

How is the return rate calculated? It is a combination of a fixed rate of return and an inflation rate calculated twice a year. For the current I bond, the fixed rate is 0.00%. The semiannual inflation rate is 4.81%, which is doubled, bringing the overall composite rate to 9.62%.

If you are hankering to pick up some I bonds, study the historical rates first (tinyurl.com/2tyed5ks). Notice that the fixed rate applies for the life of the bond, while the inflation rate resets every six months for "all I bonds ever issued."

In addition, study the inflation rates in the table. The May 1, 2022, rate at 4.81% compares to 1.77% a year before (May 1, 2021) and 0.53% a year before that (May 1, 2020).

Then, review the "composite" rates (fixed plus inflation) going back to 1998. With 30-year maturities, those initial I bonds from September-October 1998 that are still in the hands of savers are currently receiving 13.18% composite rates. (If we enter a deflationary period, the combined rate can be lower than the fixed rate, but by design, the composite rate will not go below zero.)

When I say "receiving," let me explain: These savings bonds don't pay out a distribution. Instead, the composite rate increases the value of the bond.

While the bonds have maturities of 30 years, you can surrender them earlier -- after one year. There is a penalty if you cash them before five years: You will lose the previous three months of interest. For example, if you cash an I bond after 24 months, you will only get the interest for the first 21 months.

To buy I bonds electronically, first create an account at TreasuryDirect.gov (see the guided how-to tour at tinyurl.com/569wyu76).

You can then make your purchase using BuyDirect. Savings bonds generally are issued to your account within two business days of the purchase date.

There are limits to how much you can buy for yourself: up to $10,000 in electronic I bonds each calendar year, and up to $5,000 in paper I bonds (by using your federal income tax refund -- see tinyurl.com/mbnm6k9v), for a total of $15,000. To read more, go to TreasuryDirect's "How Do I ...?" section at tinyurl.com/m7mjmrk7. You can also buy I bonds for others. See, Savings Bonds as Gifts (tinyurl.com/2p8vucfs).

Finally, what about taxes? The interest on I bonds is subject to federal (but not state or local) income tax. You can either report interest yearly (use the Savings Bond Calculator at tinyurl.com/2p9xseuu to find the amount for paper bonds; for electronic bonds, check your TreasuryDirect account), or when you cash in the bond. You'll receive an IRS Form 1099-INT from the Treasury reporting taxable interest earned on the bond.

What's the bottom line? As with all investments, there are essential elements to understand. With these savings bonds, you need to accept that the composite rate will change every six months. Today's 9.62% annualized rate will almost certainly be a different rate for the next six months and beyond. With that in mind, I bonds should definitely be of interest to many people who have $10,000 to sock away.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

May 29 is known as National 529 Day, putting a spotlight on saving for higher education through tax-advantaged investment plans known as 529s.

You can't ignore another May headline. New federal student loan fixed interest rates were released for the 2022-23 academic year, with a jump from 3.73% to 4.99% for federal undergraduate loans beginning July 1, 2022.

Other increases include from 5.28% to 6.54% for unsubsidized loans to graduate students, and from 6.28% to 7.54% for PLUS loans (for graduate or professional students, and parents of dependent undergraduate students).

The change is tied to the Treasury Department's May auction of 10-year notes (2.943%) (tinyurl.com/2rdn9tb). This figure is used to set federal student loans: 10-year note plus 2.05% (capped at 8.25%) for subsidized and unsubsidized loans to undergraduate students; 10-year note plus 3.60% (9.50% cap) for unsubsidized loans to graduate students; and 10-year note plus 4.60% (10.50% cap) for PLUS loans. See the Congressional Budget Office's Federal Student Loans Programs at tinyurl.com/5cvkzw3e.

How much of a difference can the change in interest rates have? Using the new loan rate of 4.99% and Bankrate's Student Loan Calculator (tinyurl.com/ykh67wrw), an undergraduate student who takes out a $10,000 loan with 10 years to pay it back will incur about $2,722 in interest (assuming regular monthly payments). That's up from $1,996, the "old" rate, which was factored at 3.73%.

Keep in mind that these are the federal student loan rates. Loans from private lenders can be different. The current private student loan interest rates range from 1% to 13%, according to Bankrate.com (tinyurl.com/2p97m33u).

Is borrowing worth the cost?

There is no question that a college degree means the potential for higher earnings -- substantially higher. According to J.P. Morgan Asset Management's 2022 edition of College Planning Essentials (CPE) (tinyurl.com/2s46pbpd), for U.S. workers 18 and older, the average annual earnings are 86% higher for someone with a bachelor's degree than someone who is a high school graduate.

Given that a college degree is valuable, the question for parents and students is, "At what cost?"

If you have a newborn, consider this: The CPE projected the cost of a four-year college education at a public school for a newborn to be more than $235,000. For context, from 1983 to 2021, college tuition increased by 840%; in comparison, medical care rose 446% during that time, and housing 196%.

Carrying student loan debt is part of the cost equation. An estimated 2 in 5 families borrow more than $50,000 for college. No problem, until you consider the effect of student loan debt on other financial decisions: The CPE found that 62% of those with college student loans said the payments affected their ability to save for retirement; 48% said they affected their ability to buy a home.

Advance preparation remains the key, especially if you have younger children. If you are a parent considering a 529 plan or another method to save for college, be sure to do your homework and understand all the details.

For those on the cusp of college, what can be done, especially if student loans are a part of your funding equation? Make sure to take everything into consideration. Continue to apply for grants and scholarships to improve your financial circumstances. Consider if it would be a better value to go to an in-state community college for two years to complete your general courses before heading to a state college. The CPE indicates that you can save 40% on costs by attending two years of community college.

If you would like to read about College Scorecard (collegescorecard.ed.gov), which offers tools to compare the costs and potential benefits of colleges, write to readers@juliejason.com and ask for my April column on the subject.

The point is to use all the resources and wisdom you can to create the best college experience at the best price, so that your return on investment is worthwhile when all the costs and benefits are considered.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

Are you thinking about retiring? Considering the stock market is very close to bear market territory, should you be?

That depends, of course, on how well you've prepared -- that is, whether you've figured out how to pay for your financial future. With inflation rising dramatically (8% year over year, according to the most recent Consumer Price Index report) after years of calm, savings and investing become even more important to understand and manage.

The task at hand is reaching a level of financial confidence before leaping into retirement -- if you have a choice, of course. It turns out that people actually retire earlier than planned. Nearly 1 out of 2 retirees retired earlier than they expected, according to the recently released 32nd annual Retirement Confidence Survey tinyurl.com/2e28wxw3) conducted by the Employee Benefit Research Institute and Greenwald Research. The 2022 survey of 2,677 Americans (1,545 workers aged 25 or older and 1,132 retirees) was conducted online Jan. 4 through Jan. 26, 2022.

While the median expected age for retirement is 65, according to the survey, retiring earlier (age 62) is the reality. Four in 10 retirees retired early because they could afford to do so. Two out of 3 retired early because of something outside of their control, such as a health problem or disability, company downsizing or reorganizations, or caregiving for a loved one.

If you have control of when you retire, how will you reach a confidence level in which you feel that you are ready? Let's look at a few points: the effect of a possible transition into retirement, dealing with the unexpected, homework and getting help.

TRANSITION: How realistic is your vision for timing your transition from work into retirement? Many workers (44%) saw themselves making a gradual transition into retirement. However, most retirees (73%) just stopped working on a particular day without a gradual transition into retirement.

ADDRESSING THE UNEXPECTED: What happens if unexpected events intervene? Who could have anticipated COVID or the Russian invasion of Ukraine or the quickly rising cost of living?

It's interesting to note that most surveyed retirees and workers (about 70%) did not lose confidence in their retirement plans due to the pandemic. Would they be concerned in today's market environment? That would depend, again, on preparation.

PREPARATION: As you might expect, retirees who are confident about their futures did their homework (tinyurl.com/unfdvcfm).

What was most important? Knowing the sources of their retirement income and how much they needed to live comfortably in retirement. A large number of retirees (68%) estimated how much income was needed each month, 52% thought about how much to withdraw from funds in retirement and 49% calculated how much money is needed to live comfortably in retirement.

A significant number of workers and retirees (roughly 40%) got help from advisers, in contrast to those workers who are not confident -- only 9% had advisers.

What does this tell us about getting ready to retire? You may or may not have control over timing. As a result, if you haven't done your homework, there is no better time than the present.

As someone who has more than 30 years of experience working with successful retirees and pre-retirees, I have a few observations and suggestions.

If you want to retire someday, make a list of concerns you do not want to face when you are retired. Work through the list one by one to come up with a plan to avoid disappointment in the future.

If you are happily retired, carefully watch what is in your control -- spending being most important. While you can't control the markets, you can confirm that you and your financial adviser are in sync on 1) how to produce the cash flow you need to pay your bills, now, and in the future, and 2) how to produce capital appreciation. If you consider yourself a confident retiree, let me know what has worked (or hasn't) for you. Email me at readers@juliejason.com.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION