At a time when the nation's savings rate is abysmal, the Treasury Department's Bureau of the Public Debt has decided to lower the annual amount of U.S. savings bonds that an individual can purchase in paper and electronic form.

Beginning this month, the limitation on annual purchases of savings bonds is set at $5,000 — meaning that individuals can only purchase $5,000 worth of Series EE bonds and another $5,000 for Series I savings bonds.

For those who want to exceed the limit for each series, there is a way. The $5,000 limit applies separately to bonds issued in paper and electronic form. You could buy $5,000 worth of EE bonds in paper form and another $5,000 in electronic form from www.treasurydirect.gov. The same purchasing limits apply for I bonds. In total, you can purchase $20,000 worth of EE and I bonds.

Before New Year's Day, the limit was $30,000 per series ($30,000 each for paper or electronic, for a total of $120,000 a year for EE and I bonds) and had been that way since 2003.

If you currently have money taken out of your paycheck to buy savings bonds and it exceeds this annual limit per series, you will have to change the withdrawal to comply with the new restriction.

WHY THE CHANGE?

"To refocus the savings bond program on its original purpose of making these nonmarketable Treasury securities available to individuals with relatively small sums to invest," the Treasury Department said in a release.

Richard Berman of Maryland was irate over the change, wondering if there was some sort of conspiracy to prevent middle-income investors from stocking up on savings bonds. Berman says he often buys I bonds.

"Could it be that they want to reduce or eliminate one of the best inflation-indexed, safe, no-commission investments?" he wrote to me. "Could it be a favor to Wall Street, since middle-class investors don't need a broker or bank to buy I-bonds?"

While the decision does seem ridiculous at a time when people need to save more, most of those buying bonds don't exceed the new limit. About 98 percent of all annual purchases of savings bonds by individuals are for $5,000 or less, according to Treasury spokeswoman Jennifer Zuccarelli.

Savings bonds have been subject to purchasing limits before. In the 1940s, the annual limit was $3,750 for Series E bonds, the predecessor to today's EE bonds. The last time the limit was as low as $5,000 was in 1973.

Paper EE bonds are purchased for 50 percent of their face value. On the other hand, electronically purchased EE bonds are sold at their full face value. It doesn't matter which version you buy, the rate is the same. But the Treasury Department has been pushing investors to go electronic, arguing that it is a more convenient way for people to buy and keep track of their bonds.

Series EE bonds purchased on or after May 1, 2005, earn a fixed rate of return. The current rate is 3 percent.

The I bond is sold at face value so you pay $100 for a $100 bond. With the change, the $10,000 denomination paper Series I bond, which bears the image of the late Sen. Spark Matsunaga, a Democrat, is no longer available.

Many risk-averse investors prefer I bonds because they provide a guaranteed rate of return on the principal amount invested and most importantly, inflation protection.

The Series I inflation-indexed savings bond was introduced in 1998. The I bond is an accrual-type security, meaning interest is added to the bond monthly and paid when the bond is cashed. The earnings rate is a combination of a fixed interest rate plus the rate of inflation, adjusted semi-annually. The fixed rate remains the same throughout the life of the bond, while the semiannual inflation rate can be changed every six months.

Both the fixed rate of return and the semi-annual inflation rate are announced by the Treasury Department each May and November. Currently, the rate for the I bond through April is 4.28 percent.

At least the limits aren't a lifetime cap. The $5,000 limit per series and $20,000 total cap (when buying paper and electronic forms) apply only to a calendar year purchase of savings bonds.

While you may be in a snit about the recent change, I wouldn't be too irritated. Although it seems pointless for the Treasury Department to impose savings bond limits now, I would question the financial wisdom of investing more than $20,000 a year in savings bonds anyway.

For some people, protecting their principal is their primary focus. Bonds backed by the U.S. government give them peace.

But I would just caution if this is your investment strategy, keep in mind that the cost of many goods and services often exceed inflation. With that kind of money to invest on a yearly basis, at least consider diversifying so that your money not only keeps pace with inflation but has the opportunity to beat it.

Michelle Singletary writes for The Washington Post. Reach her at singletarym@washpost.com.