What’s Really Guaranteed With Fixed Rate Annuities?
November 4, 2020 by David Blanchett
Recent yields on fixed rate annuities, also called multi-year guaranteed annuities (MYGAs), have become increasingly attractive for investors as interest rates have declined. While other similar 5-year “guaranteed” investments like Treasuries and CDs are yielding up to about 1%, a number of insurance companies are offering 5-year fixed rate annuities today that have yields just over 3%.
You read that right: You can get a MYGA yielding about eight times more than a more traditional guaranteed investment. While MYGAs are generally less liquid than Treasuries and CDs since they typically have high surrender charges on early withdrawals, MYGA rates seem almost too good to be true.