Can Annuities Boost Retiree Returns?
March 29, 2021 by Ben Mattlin
Although interest rates are rising they’re still pretty low by historical measures, so it’s hard to get a safe, reliable return on savings—especially for retirees who may have a relatively short timeframe. Variable annuities, which invest in mutual fund-like sub-accounts, can post decent gains depending on the vagaries of the market, but they’re also subject to market volatility. What about the more secure portion of a retirement plan? Can fixed-rate annuities help build returns?
There are fixed annuities that are funded with multiple premiums, in addition to those that accept a single premium. In fact, FPDAs account for more than 17% of all fixed annuities.
There are fixed annuities that do not guarantee the fixed rate for multiple years, like MYGAs do; these one-year rate guarantee fixed annuities account for more than 10% of all fixed annuities available today.
In regards to “many [MYGAs] come from carriers with high credit ratings,” actually more than 81% of all fixed annuities are offered by companies with an A- A.M. Best financial strength rating, or higher. -sjm