How Long Does It Take for Series EE Bonds to Mature?

Three United States Savings Bonds
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While purchasing U.S. Treasury bonds, you may have noticed some Series EE savings bonds mature on different dates. For example, the U.S. Treasury's EE bonds issued in 1981 and 1982 only took eight years to reach full face value, while the same EE bonds issued in 2003 took 20 years to reach their full face value.

Maturity Dates for Series EE Bonds

These drastically different maturity dates result from the differing rates of interest built into each Series EE bond when it is issued. These savings bonds work as zero-coupon bonds in which bond coupons, or interest payments, are added to the bond's principal value rather than paid out periodically.

If you purchase an EE bond, you'll get it at a discount from face value. Until the bond matures, it grows in value by the amount of interest, or coupons, accrued each year until it reaches its face or redemption value.

Waiting to Cash Series EE Bonds

The U.S. Treasury Department gives you a guarantee that your EE bonds will reach maturity in 20 years. However, some reach maturity sooner depending on their built-in interest rate; and once you've held the bond for at least five years, you can cash it in at any time without penalty.

If you hold your bonds for 20 years and they still haven't reached their full face value, the Treasury will perform a one-time adjustment to bring up the bond's value so that you can cash it in for its full amount. For example, the paper certificate versions of Series EE savings bonds are issued at half of the face value. A $100 Series EE bond would cost you $50 at the time of purchase and could take up to 20 years to mature to $100. This is different from electronically-purchased Series EE bonds purchased through the TreasuryDirect program, which you buy at its principal value.

The Treasury guarantees that electronic EE bonds will be worth double their principal amount in 20 years. If you don't cash in your bond, it will continue to earn interest for another 10 years. The Treasury Department periodically changes the rules for how they calculate interest on new savings bonds issued after a certain date.

Calculating the Time to Maturity

You can calculate the time to maturity using the Rule of 72. This simple rule lets you calculate how long it would take to double your investment at a given rate of return.

For instance, if you spent $500 to buy a new Series EE savings bond with a $1,000 face value and a fixed rate of 1.2%, you could find out how long would it take to reach its maturity value by dividing 72 by 1.2. The answer, 60, reveals the total number of years necessary for the bond to double in value. If the Series EE savings bond earned 0.5%, it would take 144 years to double in value.

By understanding Series EE savings bonds time to maturity better, you have more information to help you decide if they make sense for your portfolio. You could choose another alternative, such as broadly-diversified blue-chip stocks that earn at least 3–4% on your money.

If you have the fortitude to watch your account value fluctuate, or if you are in it purely for the cash income and you don't mind volatility, stocks may be a much better option. You and your professional adviser can decide what works best based on your own needs, resources, and personality.