As we get closer to year-end, 2022 has made consumers look once, twice, or even a third time at their retirement accounts due to inflation increases and stock market fluctuation. Who hasn’t lost money from one of their retirement funds this year?

Insurance carriers created annuities for this reason. Annuities provide guaranteed lifetime income, and most products are protected from downturns and fluctuations in the market. You cannot lose your original premium placed into an annuity product and some have a guaranteed rate throughout the annuity’s term.

Some consumers are hoping the economy will bounce back in 2023, so they are unsure about placing their money in a longer term (5 to 10 years) like a fixed indexed annuity. They may prefer to place money into a retirement vehicle with more accumulation potential but still worry about the risk of losing more dollars in a market-driven product.

Inflation rate increases have opened up more opportunities for specific annuities. A multi-year guaranteed annuity, or MYGA, is a type of fixed annuity that offers a guaranteed fixed interest rate for a certain period, usually from three to 10 years. A MYGA is appropriate for someone who is closer to retirement and prefers tax deferral and a guarantee of investment return.

Why consider a MYGA for your short-term retirement accumulation needs?

• For the first time in decades, some carriers currently have a 5% rate (or higher) for five-year term MYGAs. Shorter term MYGAs are still hovering around 4% or higher for a shorter term (two or three years)
• CDs, bank savings accounts, and bonds are nowhere near these rates. When inflation rates increase, these products’ rates tend to decline. Is it worth tying up your money for 1% return over three years?
• No matter what happens within the market, you are guaranteed the selected MYGA product’s rate throughout the term.
• MYGAs provide tax deferral for your retirement dollars placed within this product

Insurance carriers are updating their rates and products on a daily basis as the economy has opened up a competitive marketplace for MYGAs and other annuities. Consumers also will notice the flexibility in today’s market as more carriers are adapting by offering shorter terms (i.e., two years vs. minimum three years) and other incentives.

This competitive environment may not last long as we encourage consumers to take advantage of these higher than usual annuity rates. You can lock in a higher rate before year end and placing retirement funds into your selected annuity could help with tax deferral too!

Annuity Alliance can provide an insurance professional to discuss potential MYGA options that align with your retirement planning goals for the next couple of years (MYGAs) or for longer terms (fixed indexed annuities) based on your strategy. Contact Annuity Alliance for more information.