Interest rates are at 20-year highs. That is why now is the time to invest in a fixed rate annuity, especially if you are approaching retirement and want your investments to continue to grow.
Before I get into too much detail, a word of caution: I would avoid variable annuities. Variable annuities come with high fees and no safety net for your investment. You may lose principal.
On the other hand, fixed-rate annuities offer a simple, safe and effective way to grow your savings.
They work similar to a certificate of deposit, or a CD. However, they grow tax-deferred, meaning you will not pay taxes on your earnings until you start making withdrawals, helping your money compound more efficiently. Additionally, you can lock in the rate from 2 to 7 years!
There are two types of fixed rate annuities: a Multi-Year Guaranteed Annuity, or MYGA, and an Equity Indexed Annuity.
What is a MYGA?
A MYGA allows you to lock in a set interest rate for a fixed period. They offer guaranteed fixed growth over a set period, making them an ideal choice for those who prefer stable and predictable returns.
You do not need to actively manage your investment — just select a term that suits your financial goals and enjoy the benefits of consistent, guaranteed growth. They are particularly beneficial for people ages 50 and older seeking higher returns without exposure to market volatility.
With interest rates hovering over 5%, MYGAs are significantly outperforming traditional savings accounts. For more details about how MYGAs work with some examples, see my blog on MYGAs.
What are Equity Indexed Annuities?
For those who want potential for higher growth, an Equity Indexed Annuity might be a better fit. These annuities grow with the market while offering protection from downside risk.
The annual growth for an Equity Indexed Annuity is capped at a specific rate, depending upon your contract. While this investment has a ceiling, it also has a floor — your investment cannot lose money or fall below 0% growth in a given year. Gains are also locked in each year.
Right now, the cap for Equity Indexed Annuities are uncommonly high, which makes it an even more enticing opportunity.
For more details and examples on how they work, see my blog on Equity Indexed Annuities,
Why is Now a Good Time to Invest?
Interest rates have remained high for an extended period — higher than they have been in the last 20 years. This presents a rare and exciting opportunity for individuals who want to lock in tax-deferred returns at a higher rate.
As independent brokers, we have access to annuities from a wide range of carriers. This allows us to shop for the highest rates available from the most highly rated companies, ensuring that our clients get the best possible return on their investments.
Whether you prefer the simplicity of a MYGA or the growth potential of an equity-indexed annuity (or both), there are excellent opportunities to take advantage of this moment in financial history.
Now is the time to act. Contact us today to learn how you can benefit.
Mario Bick
Mario Bick is the founder and President of Bick Insurance Consultants. As a former practicing attorney, Mario believes in representing his client first and foremost. His legal and financial background uniquely allows him to plan and communicate with other trusted advisors such as tax attorneys, estate planning attorneys, accountants, and human resource executives. As an independent agent, he is able to utilize the latest concepts and products in the industry to customize an insurance portfolio to meet the needs of every client.
