There Are All Flavors of ETFs. So Why Hasn’t an Issuer Made This Type of Fund for Retirement Income?

For nearly four years, I’ve been helping clients build bond ladders out of Treasury inflation-protected securities to be a supplement to Social Security. It creates a spending floor, or a minimum level of portfolio withdrawals that cover basic needs, that is inflation adjusted. That cash flow gives clients the peace of mind that allows them to spend the rest of the portfolio more freely.

Income from a TIPS ladder can provide retirees with peace of mind. Photo: Dreamstime.com

As of Oct. 5, 2026, according to TIPSLadder.com, a 30-year TIPS ladder delivers a 5.2% annual cash flow over the three decades, blowing away the old 4% safe withdrawal rate—the retirement planning guideline that you can withdraw about 4% a year in retirement and your savings should last 30 years. I contend that a combination of a TIPS ladder and a stock index fund can earn well over 4% and the stock component can provide longevity protection beyond the three decades.

My clients love the TIPS ladder and I get many emails from non-clients thanking me for writing about how to build a TIPS ladder. It’s one of those rare strategies in investing that both feels good in that it helps solve the safe withdrawal rate dilemma and makes great economic sense. But I make sure they understand that an individual TIPS ladder, whether DIY or within a separately managed account (SMA), has some serious flaws that could be solved in a fund of pooled assets, such as an ETF.

I’m surprised, given all the ETFs launching in the past few years that no major fund companies have created a TIPS ladder ETF that doesn’t liquidate at a set date. Here are some flaws with creating an individual TIPS ladder and how a well constructed, low fee ETF could solve them.

Annual cash flow isn’t consistent. As mentioned above, a TIPS ladder can provide annual cash flow averaging 5.2%. The problem is that TIPS must be bought in whole numbers of bonds ($1,000 initial par value) rather than buying fractional bonds as in an ETF. So while a $100,000 TIPS ladder can yield $5,200 a year on average, the annual variation in returns can be large, as shown below.

Created with Highcharts 9.0.1Some Years Are Better Than OthersCash flows from a $100,000 TIPS ladder can vary from year to year, but average around​$5,000, or 5%. Source: TIPSladder.com, Oct. 2, 2026

Created with Highcharts 9.0.1YEAR2027'30'35'40'45'50'5535004000450050005500600065007000$7500

In this example, the highest annual payment was $7,069 and the lowest was $3,714. The difference of $3,355 represents a 65% dispersion from the mean annual payment. A $250,000 TIPS ladder still has more than a 25% variation, and even a $1 million TIPS ladder has over a 5% variation. In my trials, it took $10 million to bring that dispersion below 1%. Thus a pooled vehicle could provide a much steadier stream of cash flow.

A TIPS Ladder requires some maintenance. There are no TIPS that mature during the years 2037-2039. Those three gap years will be filled in early in the next three years as the Treasury issues new 10-year TIPS. Thus, the cash flows in the previous section are averaging the maturities of TIPS immediately before or after those gap years. This means the client or the SMA manager will have to sell some bonds and buy the recently issued bonds to fill in those gap years. The other alternative is that the client can accept even more variation between the highest and lowest annual cash flow. An ETF portfolio manager could do this for the ETF holders seamlessly.

Adding to a TIPS ladder is complex. It’s hard to add additional bonds to create steady cash flow to the TIPS ladder once it has been built. After I built my first TIPS ladder, I added to it twice to get a higher floor on my annual spending. While TIPSLadder.com makes it fairly easy to initially build a TIPS ladder, adding to it is much more complex because one has to take into account the current TIPS already held. With a TIPS ETF, one could simply buy more shares in the fund.

Retail trades have larger spreads. As with any bond, there are spreads to buy and sell. Municipal bonds, for example, had an average 0.5% spread in 2024, according to the Municipal Securities Rulemaking Board (MSRB). Smaller retail trades have even higher spreads. TIPS have spreads too, averaging between 0.01% to 0.08%. I’ve seen averages of about 0.05% for smaller trades which would be needed for individual TIPS ladders including in an SMA. Larger institutional traders have smaller spreads, another argument for a pooled ETF.

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One argument against an ETF that I’ve heard multiple times is that spreads are higher for longer term TIPS due to fewer bonds outstanding. Thus, trading the ETF would create costs for those holding for the long term.

To test the argument that holders would pay trading costs of buyers and sellers, I looked at the Pimco 15+ Year U.S. TIPS Index ETF (LTPZ) an index fund which owns only long-term TIPS maturing between 2042 and 2056. The fund follows the ICE BofA U.S. Inflation-Linked Treasury (15+ Y) index and has a 15% annual turnover, according to Morningstar. Did it underperform the index significantly more than the expense ratio? No, it actually made up one basis point (.01%) more annually than its benchmark since inception.

I spoke to Daniel He, one of the Pimco portfolio managers of that fund. He confirmed my understanding and explained why individuals selling the fund wouldn’t impact the remaining holders. It’s the authorized participants (APs) that create the basket of the TIPS and the APs pass the spread to the seller. There is no impact on those staying the course. Regarding spreads in a fund not meant for trading, he told me “Don’t judge a TIPS ETF’s liquidity by its screen volume alone.” He explained that because shares can be created and redeemed against the underlying bonds, the ETF ultimately draws on the liquidity of the roughly $2.2 trillion TIPS market. The trades are institutional in size so they are at tighter spreads than individuals experience, creating a cost advantage for ETF holders.

Evaluating current TIPS ladder ETFs. There are two self-liquidating TIPS ladder ETFs (they liquidate as the underlying bonds mature and aren’t reinvested in newer issues). Northern Trust Inflation-Linked Distributing Ladder ETFs have a fairly low 0.1% annual expense ratio. A spokesperson told me that each portfolio is invested evenly across the maturities in the ladder. That results in a declining cash flow rather than a constant real cash flow since there are fewer TIPS to provide interest in later years. With my ladders, the annual cash flow doesn’t decline as they are built to have more interest in the early years and more principal in later years.

Stone Ridge Asset Management has funds such as the LifeX 2055 Inflation-Protected Longevity Income ETF (LIAM). It only has $4.8 million in assets according to Morningstar. This fund hasn’t caught on in my opinion because of the 0.25% annual expense ratio and because the brand isn’t well-known.

Conclusion. A breakthrough in investing was addressed a half-century ago when John C. Bogle launched the first publicly available index fund. It wasn’t an instant success and was first known as Bogle’s Folly. He pressed on regardless and helped millions of people to accumulate more assets to achieve financial independence.

Now is the time to address the problem of decumulation by eliminating the complexities of individual TIPS ladders. A well-known low-cost asset manager should launch a simple, ultra-low-cost ETF that provides a steady real cash flow so retirees can enjoy the fruits of their lifetime of labor without worrying about running out of money. While I appreciate clients paying me to navigate the complexities of building imperfect real cash flows, I’d rather more investors have the option of simply making a few clicks to buy a fund that offers a steady stream of inflation-adjusted cash.

Allan Roth

Allan Roth is founder of the planning firm Wealth Logic in Colorado Springs, Colorado. He is a licensed CPA and CFP, and has an M.B.A. from Northwestern University (Kellogg), but still claims he can keep investing simple.

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