Oil is around $100 a barrel, long-term Treasury yields are at their highest in years, inflation has exceeded the Federal Reserve's 2% target for more than five years and the government is spending like a drunken sailor who just won Powerball.

No wonder readers of The Wall Street Journal want to know more about Treasury inflation-protected securities, the government bonds whose income payments rise with the cost of living. Real yields on some TIPS-their payouts above inflation-recently surpassed 3%.

The bottom line: TIPS are complex, but for many investors they're an ideal way to combat inflation. Here are answers to readers' most common questions.

How do TIPS work, and what are they good for?

The principal value of TIPS adjusts up with inflation (or down with deflation), as measured by the consumer-price index for all urban consumers. TIPS also pay a fixed interest rate, but it's applied to the changing principal value, enabling the dollar amounts of the interest payments to track the official changes in the cost of living.

Because TIPS protect your purchasing power, rather than making your wealth grow vigorously, most younger investors shouldn't favor them over stocks. If you're in or near retirement, though, TIPS are great.

You can use them to create an inflation-adjusted annuity for up to 30 years, says David Enna, editor of tipswatch.com. If you withdraw a generous 5% a year to provide income in your retirement, your TIPS money won't run dry, even after inflation, until 2056-no matter what, unless Uncle Sam defaults.

If you're 62 and want to delay taking Social Security until you turn 70, buying a bundle of TIPS maturing over the next eight years will guarantee you an inflation-protected income stream over that period.

If you want to buy a house in two years, put the down payment in TIPS maturing in 2028. TIPS will help safeguard your purchasing power until you have to shell out the money.

Should you buy a TIPS fund or individual TIPS directly?

A TIPS fund is a convenient, easy way to invest in inflation-protected bonds. But, in most cases, TIPS funds have dynamic portfolios with many holdings, so their future cash flows will vary. If other investors yank money out in a downturn, some funds may have to sell, locking in losses.

An exception: the iBonds series from iShares, 11 exchange-traded funds that each hold only TIPS maturing in a single year between 2026 and 2036. As with TIPS themselves, these ETFs' real returns are knowable in advance.

One catch: These funds distribute all of each year's inflation adjustments as income. This means you need to reinvest that money to have the same inflation protection over time. In individual TIPS, those adjustments accrue until you sell or they mature.

By purchasing individual TIPS and holding them to maturity, retirees and near-retirees can build what's called a ladder, with each rung consisting of TIPS maturing in a successive year.

With a TIPS ladder, you can pre-fund your spending year by year, all the way out to 2056, after inflation. As financial historian Edward McQuarrie puts it, "Only with TIPS do you know, at all times, how many loaves of bread you can put on the table to feed your family."

Each year, you use the proceeds of the maturing rung to supplement your retirement income-or to buy more TIPS that mature later.

Using the tools at TIPSLadder.com and aerokam.github.io/Treasuries/, building a TIPS ladder is easy. It takes a little work, but I did it, and I'm no technology whiz.

Should you buy directly from the government or in the secondary market?

If you're building a TIPS ladder, it isn't practical to buy in the primary market, says Allan Roth of Wealth Logic, a financial-planning firm in Colorado Springs, Colo. That's because the Treasury doesn't auction all maturities of TIPS at the same time.

In the secondary market, you may pay more than $1,000 for each $1,000 in original principal or par value. Your purchase price will also include any inflation accruals since the TIPS were issued.

If you pay a premium price for TIPS in the secondary market and deflation develops instead of inflation, you could lose money. But deflation seems unlikely at this point.

Should you trust Uncle Sam to pay as promised?

Many readers are worried that the government will rig its reported inflation numbers-or, worse, become a junky borrower or even default on the national debt.

"The threat of more than 70 million angry Social Security recipients likely protects [the integrity of] the CPI," says Ellen Safir, chief executive of New Century Advisors, an investment firm in Chevy Chase, Md. "The easier way for a government to erode its debt is inflation itself, and that is exactly what TIPS protect against."

TIPS would be hurt if interest rates spike (in 2022, the longest-term issues lost more than 40%). Of course, if you own individual TIPS rather than a fund, you should be made whole when they mature. TIPS would also suffer if the credit quality of the U.S. declines or the government defaults. But most other assets, including stocks, would be hurt even worse.

What about retirement distributions?

IRS rules mandate that retirees withdraw predetermined amounts from their retirement accounts each year beginning at age 73 (or 75, for people born 1960 or later), triggering taxes at ordinary income rates.

That's one reason I didn't put all my retirement money into TIPS. If need be, I can sell other investments to fulfill the required minimum distribution rules and pay the resulting tax bills.

But, says Mike Piper, an accountant and financial planner in St. Louis, you can have TIPS moved from your retirement account to a taxable account as an in-kind distribution, satisfying the RMD without having to sell them before maturity. What's more, all the TIPS in a ladder pay interest, and some will mature every year-generating ample cash to meet RMDs.

How are they taxed?

As inflation increases your TIPS' value, that growth is federally taxable, even though you won't receive it as cash until the TIPS mature or you sell.

That applies equally to most TIPS funds and all individual TIPS, except in a tax-deferred retirement account.

However, because they're exempt from state and local income tax, TIPS can be advantageous outside a retirement account for high earners in high-tax jurisdictions such as California, New Jersey or New York, says Jonathan Treussard, founder of Treussard Capital Management in Newport Beach, Calif.

In short, TIPS aren't risk free. Nothing is. For now, they offer unusually attractive returns after inflation for the people inflation would hurt the most.