Fixed annuities offer powerful protections for savers looking for a predictable alternative to a savings or investment account.. While fixed annuities share many similarities with savings products like certificates of deposit (CDs), they have additional benefits that, when used correctly, can offer substantial advantages.
For example, CDs are rarely sold for terms longer than five years and do not offer tax deferral on the invested balance. Annuities can have longer investment term lengths while shielding all growth from taxes until the money is withdrawn.
For patient consumers with long-term horizons and the desire to lower their taxable investment income, fixed annuities can be an excellent solution.
Current 10-Year Fixed Annuity Rates
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| Product |
Rate
|
Guarantee Period
|
Surrender Period
|
AM Best Rating
|
|---|---|---|---|---|
American Pathway Vision MYG |
5.00% | 10 Years | 10 Years | A |
|
Assured Edge Income Achiever |
2.25% | 10 Years | 10 Years | A |
Certainty Select |
5.50% | 10 Years | 10 Years | B++ |
|
Revol One Financial DirectGrowth MYGA |
5.70% | 10 Years | 10 Years | B++ |
|
Revol One Financial DirectGrowth MYGA |
5.90% | 10 Years | 10 Years | B++ |
10-year fixed-rate annuities are popular because their rates are high and guaranteed for the duration. I have many clients with what I term “lazy money”—funds they never intend to use and plan to leave behind for their families. The guaranteed growth of a fixed annuity can make leaving a legacy predicatable without the risk and headache of market fluctuations.
Aamir M. Chalisa, MBA, LUTCF, MDRTGeneral Manager at Futurity First Insurance GroupAamir M. Chalisa is a seasoned financial services leader with over 30 years of experience in insurance, wealth management and retirement planning. As General Manager of Futurity First Insurance Group’s Oak Brook branch, he oversees one of the company’s top-performing teams. Aamir has held leadership roles at MetLife, Prudential and Nationwide and is a Million Dollar Round Table (MDRT) qualifier, recognized for his expertise in life and annuity sales and commitment to helping clients achieve lasting financial security.
Case Study: Buying a 10-Year Fixed Annuity
Ellen
Age: 67
Amount Invested: $100,000
Ellen is about to enter retirement, and while she is happy with her savings, she is looking for ways to grow her money more safely while remaining financially secure throughout her retirement.
Ellen’s risk aversion limits her options. She has major concerns about volatile investments, not wanting to risk her money at a time when she needs it for income.
Through her research, Ellen learned about fixed annuities. The 10-year timeframe aligns with her goal of growing part of her savings safely for later on in retirement. The product advertises a guaranteed interest rate of 5.65%, allowing her to grow her money at a solid pace without exposure to any real risk. She is also interested in the product’s tax deferral features.
Ellen buys the annuity using $100,000 of her savings. Ten years later, when she turns 77, the annuity will be worth more than $170,000.
10-Year Fixed Annuities vs. Other Term Products
The type of annuity that makes the most sense for you will depend on your goals and circumstances. Rates depend on the length of the term you choose.
Different fixed annuity terms will appeal to different people for a variety of reasons, explains Ken Orenstein, FRC. “An individual looking to take advantage of high, short-term interest rates may decide to fund a two-year, fixed interest-only annuity,” Ken Orenstein, FRC, told Annuity.org. “Another individual seeking lifetime, guaranteed income may choose a longer-term product.”
While a 10-year fixed annuity does not offer a guaranteed interest rate beyond 10 years, all annuities can be used to purchase lifetime income at the end of the contract term. The guaranteed interest rate ensures that you know how much you’ll be able to contribute towards a future income annuity.
Predictable returns or income are attractive features for many retirees, as they can more effectively mitigate longevity risk.
See How Much You Could Earn With Today’s Best Rates
10-Year Fixed Annuity vs. CDs and Bonds
CDs and bonds operate differently than fixed annuities and can have appealing advantages. One key area is liquidity.
With annuities, you will likely face steep penalties if you attempt to withdraw more than 10% of the annuity’s value before your agreed-upon term has passed. Bonds and CDs simply withhold a few months’ interest as a penalty.
10-Year Fixed Annuity vs. Fixed Index Annuity
Another potential option for those interested in longer-term strategies is a fixed index annuity. These products provide the same guaranteed protection as a fixed annuity but leave more room for growth by tying it to a market-based index’s performance.
In exchange for protecting your principal, your growth is capped or limited to a portion of the index’s growth. Rate caps and crediting strategies vary, but with a 9% cap, for example, even if an index grows by 11%, your annuity may grow by 9%.
This avenue allows annuity buyers to participate in market gains more than they would with a fixed annuity while still protecting their principal.
How We Get Our Rates Data
Annuity.org supplies fixed annuity rates through Cannex, an independent company providing access to a database of updated annuity products.
We synchronize and update our rates information several times each week using the newest Cannex data to help ensure you have access to the most recent interest rates available.
Annuity.org features rates for fixed annuities from 1- to 10-year terms. In addition, we list the carrier offering the rate, along with its respective AM Best financial strength rating.
