How Much Is a Savings Bond Worth After 20 Years?

Savings bonds are a secure, low-risk investment option backed by the U.S. Treasury. They help individuals save money over time, offering a predictable return. These financial instruments allow the government to borrow from the public, providing a safe avenue for personal savings. They appeal to those seeking capital preservation and modest growth.

How Savings Bonds Grow in Value

Savings bonds accrue interest over time, with the calculation method depending on the bond series. The two primary types for most investors are Series EE and Series I bonds, each with distinct features for earning potential.

Series EE bonds issued since May 2005 earn a fixed interest rate set at purchase, which applies for the first 20 years. Interest accrues monthly and compounds semiannually, meaning earned interest is added to the principal, and subsequent interest calculations are based on this new, larger amount. The U.S. Treasury guarantees Series EE bonds will at least double in value after 20 years. If the fixed interest rate doesn’t achieve this, the Treasury makes a one-time adjustment at the 20-year mark to ensure doubling.

Series I bonds feature a composite interest rate that combines a fixed rate and a variable inflation rate. The fixed rate remains constant for the life of the bond, while the inflation rate adjusts every six months based on changes in the Consumer Price Index. Interest accrues monthly and compounds semiannually, contributing to the bond’s value growth. This structure helps protect the purchasing power of the investment against inflation.

Checking Your Bond’s Current Worth

Determining the current value of a savings bond involves using specific tools and knowing key information about the bond itself. The U.S. Treasury provides resources to help bondholders track their investments accurately.

The most common method for checking a bond’s value is through the TreasuryDirect website, which offers an online Bond Value Calculator for paper bonds. To use this tool, individuals need to input the bond’s series, denomination, and issue date. The bond’s serial number can also be helpful for record-keeping.

For paper savings bonds, the series can typically be found in the upper right corner, the denomination in the upper left, and the issue date (month and year) on the right side below the series. The serial number is usually located in the lower right corner. Electronic bonds held within a TreasuryDirect account have their current value readily available by logging into the account and navigating to the “Current Holdings” section.

What Happens After 20 Years

The 20-year mark holds particular significance for savings bonds, especially Series EE bonds, as it often correlates with a guaranteed doubling of the initial investment. The exact behavior of a bond after this period, including its continued interest accrual and final maturity, depends on its series and issue date.

For Series EE bonds, those issued after May 2003 are guaranteed to double in value at 20 years and continue to earn interest for a total of 30 years from their issue date. The government ensures the doubling by making an adjustment if the accrued interest does not meet this threshold by the 20-year point.

Series I bonds, designed with inflation protection, continue to earn interest for a full 30 years from their original issue date. Unlike Series EE bonds, there is no specific doubling guarantee at the 20-year mark for Series I bonds, as their value growth is tied to both a fixed rate and a fluctuating inflation rate. For both Series EE and Series I bonds, final maturity signifies the point at which the bond stops accruing interest entirely, regardless of whether it has been redeemed.

Cashing In Your Savings Bond

Redeeming a savings bond involves a specific process, with variations depending on whether the bond is held electronically or in paper form. There are also important considerations regarding minimum holding periods and potential interest penalties that bondholders should be aware of before initiating a redemption.

Savings bonds generally have a minimum holding period of one year from their issue date before they can be redeemed. If a bond is cashed within the first five years, the holder will forfeit the last three months of interest earned. After five years, bonds can be redeemed without this interest forfeiture.

For electronic bonds held in a TreasuryDirect account, the redemption process is completed online. The bondholder logs into their account, navigates to the “ManageDirect” section, and selects the securities they wish to redeem. Funds are then typically deposited directly into a linked U.S. bank account within one to two business days. Electronic bonds allow for partial redemption, provided a minimum of $25 remains in the bond’s value.

Paper savings bonds can be redeemed at many financial institutions, such as banks or credit unions, though it is advisable to contact the institution beforehand to confirm their policy and requirements. Banks may require the bondholder to be an account holder and might have limits on the amount cashed at one time.

Alternatively, paper bonds can be redeemed by mail directly with TreasuryDirect using FS Form 1522. This form requires providing bond details, taxpayer identification, and bank information for direct deposit. If the redemption value exceeds $1,000, the bondholder’s signature on FS Form 1522 must be certified by a notary or authorized certifying officer. Paper bonds must be cashed for their entire value, unlike electronic bonds.