If you own U.S. Treasury bonds, you may have noticed that some Series EE savings bonds mature on different dates. The EE bonds issued from May 1981 through October 1982 took eight years to reach full face value. The same EE bonds issued in 2020 will take 20 years to reach their full face value.
It can pay to know how long it takes Series EE savings bonds to mature and to be able to calculate their maturity dates. Learn how to zero in on the bonds that are right for you.
Series EE Bond Maturity Dates
Savings bonds work as zero-coupon bonds. Bond coupons, or interest payments, are added to a bond's principal value rather than paid out periodically.
The difference in maturity dates for these bonds results from the differing rates of interest built into each Series EE bond when it's issued. Bonds issued in 2021 come with a fixed rate for up to 30 years. Older bonds issued between 1997 and 2005 have a variable rate that changes twice a year. Bonds older than that have rates that depend on what year they were purchased.
EE bonds have been purchased at a discount in the past, and they reached face value at maturity. You pay face value and the bond accrues interest as you hold it if you purchase an EE bond in 2021. It grows in value by the amount of interest, or coupons, accrued each year until you either cash it in or it reaches 30 years from its date of issue.
The maturity dates for Series EE bonds are:
- January to October 1980: 11 years
- November 1980 to April 1981: 9 years
- May 198 to October 1982: 8 years
- November 1982 to October 1986: 10 years
- November 1986 to February 1993: 12 years
- March 1993 to April 1995: 18 years
- May 1995 to May 2003: 17 years
- June 2003 and after: 20 years
How Long Should You Wait?
The U.S. Treasury guarantees that your EE bonds will reach maturity in 20 years, but some reach maturity sooner. It depends on their built-in interest rate.
Check the issue dates before you cash in your bonds. You can't cash them in within one year of issue.
You must hold the bond for at least five years to avoid a penalty. You'll forfeit the last three months' interest if you cash in before five years.
Some bonds may have an interest rate that's quite low. Bonds issued from November 2020 through April 2021 earn interest at a rate of just 0.10%.
The Treasury will sometimes perform a one-time adjustment to bring up the bond's value so you can cash it in for its full amount. This can happen if you hold your bond for 20 years, and it still hasn't reached its full face value.
How Interest Accrues and Compounds
Interest on a bond is fixed. It accrues monthly for bonds issued in May 2005 and after.
The interest rate is added every month to bonds issued between May 1997 and April 2005. It's compounded semi-annually. Interest is added every six months for most bonds issued before May 1997.
Your bond will continue to accrue interest until 30 years have passed from the date of issue, even though it may have reached maturity.
Check the compounding date first if you're thinking about cashing out a savings bond. You're leaving money on the table if you cash out before interest accrues again.
The following table of interest accrual dates applies to Series EE bonds issued before March 1993, Series EE bonds issued from May 1995 through April 1997, and Series EE bonds issued from March 1993 through April 1995:
|Series EE Bond Semiannual Interest Accrual Dates|
|If Month of issue is:||Interest will be added on the first day of:|
|January or July||January and July|
|February or August||February and August|
|March or September||March and September|
|April or October||April and October|
|May or November||May and November|
|June or December||June and December|
Alternatives to Series EE Bonds
You can decide whether these bonds make sense for your portfolio when you understand how long it takes Series EE savings bonds to mature. You can choose another option if savings bonds aren't the right fit for you. Broadly diversified blue chip stocks that earn 3% to 4% returns might be one option.
Stocks may be a much better option, considering the trend in low interest rates, if you can tolerate higher levels of risk and don’t mind seeing your account value go up and down. You're in it purely for the cash income and don't mind some volatility. You and your adviser can decide what works best based on your own needs, goals, and resources.