You’re planning to retire in the next year or two, so it’s time to get your ducks in a row.
You’ve got a pile of cash salted away in a money market account, and you’re thinking of investing in a multi-year guaranteed annuity (MYGA) to create a guaranteed return while getting a better rate than a money market.
Rates on the best five-year MYGAs are sitting near or above 6%. That’s the highest guaranteed yield savers have seen in about 20 years.
But there’s one wrinkle that you’re concerned about: Missing out on the best interest rate. With the next Federal Open Market Committee (FOMC) meeting just around the corner, on July 29, is it worth jumping in now, ahead of a possible rate move?
While it may seem prudent to act sooner rather than later, that’s not really how MYGA rates work.
By the time you hear about the Fed’s rate decision, the insurance companies that sell MYGAs may have already moved their rates either up or down, depending on the Fed’s anticipated move. You’re already late to the party, with the bond market as the earliest arrival.
“Trying to perfectly time a MYGA is usually a losing game because by the time the headlines catch up, the pricing has often already changed,” says Steven Crane, financial advisor at Financial Legacy Builders in Fairborn, Ohio.
Where the Fed’s Rate Actually Stands
The current federal funds target range is between 3.50% and 3.75%, a range that’s held for the past four FOMC meetings. Fed Chair Kevin Warsh’s June meeting sent a signal that rates might go up instead of down, and the Fed stopped telling markets in advance where it expects to head next.
But would-be annuity buyers might still find themselves facing an agent urging clients to lock in a higher rate before the Fed cuts, as if a MYGA rate moves exactly in tandem with the FOMC.
But Jeff Judge, a certified financial planner (CFP) and managing partner at Chesapeake Financial Planners in Forest Hill, Maryland, says investors shouldn’t be so easily swayed.
It’s important to understand that there’s not a direct link between a Fed rate cut and a MYGA’s rate. An agent should be able to convey that to a client.
“So when someone says lock in before the Fed cuts, ask them to explain the transmission. Most can’t,” Judge says.
How MYGA Rates Are Actually Set
The Fed funds rate is what banks charge each other for overnight loans, so it’s extremely short term. However, MYGA rates follow five- and 10-year Treasury yields.
That means there’s no direct relationship to a change in the Fed funds rates and MYGA rates, says Angie Welsh, founder and president of My Annuity Agents in Henderson, Nevada.
“Of course, it does influence overall interest rates, which can change trends over time, and MYGA rates will follow these trends,” she adds.
Why MYGA Demand Is Surging
MYGA demand is high, with client money pouring in. Annuity sales hit a record $464.1 billion in 2025, reaching a new high for the fourth consecutive year. Fixed-rate deferred annuities, the MYGA bucket, accounted for $165.3 billion of that amount, according to March 2026 data from LIMRA.
“There are also many new carriers and products that are increasing competition in this space,” says Aaron Brask, financial planner at Aaron Brask Capital in Lake Worth Beach, Florida.
That competition, or increased supply, helps to keep rates attractive. Carriers duking it out for deal flow have to offer better rates than the guy next door, which in turn fuels demand.
That explains why investors may feel pressure to act quickly. Rates are high, there are plenty of attractive MYGAs on the market and the Fed meeting is just days away.
What Really Moves MYGA Pricing
But the instinct to treat July 29 as a deadline is a misunderstanding of MYGA mechanics.
The rate isn’t set at by the FOMC; it’s set by the bond market movements and by the carriers themselves.
“A five-year MYGA tracks the belly of the curve and credit spreads, not the overnight rate,” Judge says.
What actually moves a declared rate, he adds, is the carriers’ own math in determining the yield they can earn reinvesting clients’ premiums. Other factors in determining MYGA rates include the strength of the company’s capital position and how badly they want a new influx of money in any given quarter.
That last factor explains why a carrier’s product can jump to the top of the rate tables for a few weeks before slipping back down.
Brask, who expects the Fed to hold steady on July 29, adds that what markets hear from policymakers matters more than what they actually do. “Their thoughts about the future trajectory of inflation will likely be more important than any actions they take,” he says.
A retirement saver fixated on the rate announcement, in other words, is watching the wrong signal.
What a MYGA Is Designed to Do
Of course, MYGA rates don’t stay static. But they don’t move on the Fed’s schedule, and rarely by enough to make it worthwhile to leave your money parked in cash while you wait.
So prospective annuity buyers have to ask themselves: With 6% on the table now, do you lock in, or hold out for something better?
Judge frames it in terms of what job a MYGA is supposed to do.
A MYGA, he says, “does exactly one thing well, which is turn a defined pot of money into a known number on a known date.”
That makes it the right tool when the money has a real assignment, such as being a bridge to Social Security for an early retiree or simply money to cover living expenses that a client doesn’t want to put at market risk.
In that lens, today’s rates are more than adequate.
“If the money has no job,” Judge says, “no rate is the right rate.”
He’s watched the mistake up close. One of his clients wanted to protect five years of liquidity to capture a rate she didn’t actually need, on money with no plan attached.
“She optimized the yield and degraded the plan,” Judge says.
See How Much You Could Earn With Today’s Best Rates
The Risk of Locking In Too Much Money
While it’s easy to understand the risk of not protecting money, there’s also the risk of jumping on a good rate and locking up too much.
“High rates create scarcity, scarcity makes people over-lock, and then year three brings a roof or a health event,” Judge says.
That can result in surrendering the contract, and under age 59 ½, “there’s a 10% penalty on the interest on top of the surrender charge. The 6% becomes something much less,” Judge says.
For money that does have a job, though, Brask sees little reason to wait. Rates are near their highest in decades, and new carriers are bringing new products to market.
“On balance,” he says, “I think it is a good time for many investors to lock in the current rates.”
Why You Shouldn’t Time a MYGA to Rate Forecasts
Viewing a rate forecast as a buy signal is where many buyers go wrong, says Tom Buckingham, chief growth officer at Nassau Financial Group in Hartford, Connecticut.
“The biggest mistake is making a long-term retirement decision based on where interest rates might go next,” Buckingham says.
It’s natural to watch Fed headlines, he adds, but trying to time purchases based on where rates might go is a distraction from what actually matters: Whether a MYGA fits a retirement saver’s overall plan.
A related trap, Buckingham says, is zeroing in on the advertised rate while overlooking contract terms, surrender charges and liquidity provisions that can vary widely from one product to the next.
“Not every retirement dollar needs to do the same job,” he says.
Some money is meant for liquidity and some for guaranteed income. The “best” MYGA is the one that fits any individual saver’s time horizon and goals, not what tops the rate tables this week.
What Happens When Your MYGA Matures
There’s one more trap that gets almost no attention, Judge says. That’s what occurs at the end of the contract period. A MYGA that reaches maturity may renew automatically at whatever rate the carrier declares. That rate is frequently well below what the annuity owner could find by doing a little shopping.
“Every MYGA needs a decision scheduled for the day it matures, made before it does,” Judge says.
For a retirement saver who’s considering whether to buy now, that’s the real takeaway.
The Fed meeting on July 29 will come and go. The rate locked in today will do its job or it won’t, depending on whether the money had a specified job one to begin with, and on whether the account owner has a plan for when the contract runs out.
