Your guide to a better future

This savings method is low-risk with a higher return than traditional savings methods, but they may not be right for everyone.

Farnoosh Torabi is Editor-at-Large of CNET Money and host of the award-winning podcast So Money.

This story is part of Recession Help Desk , CNET's coverage of how to make smart money moves in an uncertain economy.

With inflation still high at 8.5%, Americans are rushing to buy I bonds. A government-issued investment, Series I Savings Bonds can help you hedge against inflation. But is an I bond the best savings option for you?

I bonds have both a fixed rate and an inflation rate that's adjusted every six months. Right now, I bonds will deliver a 9.62% annualized interest rate , which means that they'll get you higher returns than any other federally backed bank account or brokerage. 

The attractive yield has spurred Americans to open more than 1.5 million accounts since last November. Before that period, there were fewer than a million I bond accounts in total, according to Treasury data cited in The Wall Street Journal.

With widespread concern about the current economic downturn and anxiety over layoffs, many of us are considering savings strategies to add some cushion to our financial future. Depending on your needs and goals, an I bond may work best… or not. Here are my recommendations based on a few common hypothetical scenarios. 

In today's savings market, I bonds stand out for their top-yielding returns and relatively low risk. Because they're investments backed by the US Treasury, you're guaranteed to secure your principal at the very least, so they'll never lose value. With a potential recession ahead, I bonds can offer you some financial security. And while you do have to pay federal income tax on the gains, I bonds are exempt from state and local taxes. If the savings are used for higher education purposes, the IRS may let you skip taxes on them altogether.

Read more: Best CD Rates for 2022

I bonds do come with strings attached. For example, you must keep your cash locked up for the first year. There's also a five-year holding period during which if you take money out, you risk forfeiting the final three months of earned interest. You're also limited to buying no more than $10,000 worth of electronic I bonds per year. You can buy I bonds straight from the Treasury's website, but the process has reportedly been difficult for some. In several cases, the Treasury hasn't been able to confirm people's identities, requiring added steps and cutting through bureaucratic tape.

In summary: Whether an I bond is worth it is a personal question. Earning a high rate of return is great, but it's important to consider the trade-offs that come with the 12-month holding restriction or not investing those savings for your retirement.