Costs vs. Retirement: The Case for TIPS ETFs

Back in March, Fidelity Investments released its 2026 State of Retirement Planning Study. The report took a deep dive into how different age groups of Americans are viewing retirement preparations.

Fidelity’s study produced some particularly interesting takeaways on retirement planning. One of the most significant findings is that nearly 1/3 of survey respondents said they were unsure when they would be able to retire, or whether they would be able to retire at all. Not surprisingly, 42% of this group indicated that they don’t think they can afford retirement.

Of course, part of the challenge of affordability stems from competing savings priorities. The study found that the top competing savings priority, across all age groups, was the rising cost of living. In fact, 50% or more of Gen Z, Gen X, and Baby Boomers indicated that it was a key competing savings priority. For Millennials, that number was 49%. These percentages will continue to grow as inflation persists, and ongoing geopolitical pressures may prevent costs from going down any time soon.

However, the study also found that retirement planning can create a more positive outlook. Respondents with a retirement plan were twice as likely to feel confident about their retirement possibilities. Furthermore, 81% of this demographic reported having enough money to cover expenses for the rest of their lives. Meanwhile, only 45% of those without a retirement plan felt the same way.

One key takeaway from this report is that planning for retirement can yield significant long-term returns. This is especially true as affordability and cost-of-living concerns remain major hurdles. These two factors also demonstrate how an innovative ETF approach can help bolster one’s retirement strategy.

For instance, investors may want to consider the distributing ladder ETFs from Northern Trust Asset Management. More specifically, a fund like the Northern Trust 2055 Inflation-Linked Distributing Ladder ETF (TIPD ) is specifically designed as a long-term inflation solution.

TIPD’s strategy is to provide exposure to U.S. Treasury Inflation-Protected Securities (TIPS) in a laddered format. TIPS see their principal adjusted for inflation, making them a valuable choice for navigating both the near- and long-term impacts of inflation. Each of the 30 rungs in the fund’s laddered portfolio is separated by calendar years from 2025 to 2055. All the rungs are filled with bonds that mature within their designated calendar year.

Part of what differentiates TIPD from other bond ladder ETFs is how it handles principal. When a bond reaches maturity, traditional bond-ladder ETFs reinvest the principal and usually allocate it to the next rung. However, TIPD distributes it annually. This provides an additional avenue for cash flow, which can help to achieve long-term goals such as retirement.

Retirement planning is one of the most critical financial goals of our lifetime, and inflation will likely continue to be a constant detractor for those looking to retire in comfort. But for investors looking to plan for and generate income that can help mitigate the brunt of inflation, adding a fund like TIPD to their retirement strategy could be the way to go.

For more news, information, and analysis, visit the Bond Ladders Content Hub.

ETF investing involves risk, and principal loss is possible.  Shares of any ETF are bought and sold at market price (not NAV). They are not individually redeemed from the ETF. Brokerage commissions will reduce returns.  The net asset value of the Northern Trust ETFs will decline over time as income is distributed to shareholders.  Individual bonds carry an obligation to return principal to investors at maturity fully, however ETFs have no such obligation.

Before investing, carefully consider the investment objectives, risks, charges, and expenses. This and other information is in the prospectus and a summary prospectus, copies of which may be obtained by visiting "www.flexshares.com":https://www.flexshares.com/. Read the prospectus carefully before you invest.

Northern Funds Distributors, LLC, distributor. Northern Funds Distributors, LLC and FlexShares are not affiliated with Northern Trust.

All investments are subject to investment risk, including the possible loss of principal amount invested. Investments do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.

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