6 key things to know about inflation-indexed bonds paying 9.62%

The inflation-indexed Series I savings bonds are red hot right now.

With the stock market down and savings account rates rising a bit but still paying pitiful rates, a savings bond backed by the federal government paying 9.62% is like coming inside from an oppressive heat wave into an air-conditioned room.

The I bond was created as a hedge against inflation. Now that inflation is at a 40-year high, the bonds are a haven for people with funds they don't need immediately. The 9.62% rate is good until the end of October.

But the instructions and procedures for buying I bonds are not so simple. Here's what you need to know in navigating I bonds.

How do I add a beneficiary for my I bonds?

I laughed out loud when I read this on TreasuryDirect.gov about naming a secondary owner or beneficiary: "Adding a secondary owner or beneficiary to securities registered in single ownership form is simple."

Clearly, the folks who write the instructions for navigating TreasuryDirect have a sense of humor.

The directions tell you to click on the "ManageDirect" tab at the top of the page. It's in this area you will find registration information.

Under "Manage My Securities," click the link for "Edit a registration." Choose the bond or bonds you want to edit on the next page. To add to the registration, your choices will be sole owner, primary owner or beneficiary. If you want a secondary owner, select the option for the primary owner.

If you plan to buy more bonds and name the same secondary owner or beneficiary, you can select "Make this my preferred registration."

When you name a beneficiary, the registration says "Payable on Death," or "POD." When the primary owner dies, the other becomes the sole owner of the bond.

When you name a secondary owner, the registration says you own the bond "with."

You can change the secondary owner or beneficiary at any time

Are spouses who file joint tax returns restricted to the $10,000 annual purchase limit?

Individuals can purchase up to $10,000 in electronic I bonds in a calendar year. This means you and your spouse can each purchase up to $10,000.

You can also purchase up to $5,000 in paper I bonds using your federal income tax refund, bringing the possible total to $15,000 for individuals for the calendar year.

Can I buy I bonds in my kids' names?

You can set up a minor account that is linked to your TreasuryDirect account. The only way to access the minor's account is through your account.

Log into your own primary TreasuryDirect account. Click the "ManageDirect" tab. Under the heading "Manage My Linked Accounts," click "Establish a Minor Linked Account."

On TreasuryDirect, search for "How Do I Open an Account for a Minor?" for further information about accounts for children.

How do I verify my identity before buying an I bond?

Like many others I've heard from, I couldn't immediately set up a TreasuryDirect account because of verification issues. Instead, I had to print out an authorization form (Form 5444) and take it to my credit union.

An e-mail from TreasuryDirect said "the average approval takes 10-15 days but may be longer based on the volume of forms we receive."

Will I still get the 9.62 percent rate if I run into glitches?

Others experiencing issues with buying I bonds are concerned they may miss out on the 9.62 percent rate.

Not to worry, I bonds can be purchased through October at the current 9.62 percent rate. That rate is applied to the six months after your purchase date.

Should I invest my monthly Social Security check in the stock market or an I bond?

The fixed rate stays the same for the life of the bond. But the inflation rate changes every six months. If or when inflation begins to drop, the inflation-protection rate portion of the I bond will drop.