Why Multi-Year Guaranteed Annuities Are Worth Considering
February 20, 2024
In today's uncertain financial landscape, securing a stable income stream for your retirement years is more important than ever. As you navigate the complex world of retirement planning, it's essential to explore various options that can help you achieve your goals. One such option that has gained popularity in recent years is the multi-year guaranteed annuity (MYGA).
Whether you're just starting to think about retirement or creating your financial plan, you should understand the benefits of incorporating MYGAs into your strategy.
What Are the Benefits of Multi-Year Guaranteed Annuities?
Multi-year guaranteed annuities are a type of fixed annuity that offers a guaranteed rate of return for a specific period, usually ranging from three to 10 years. Unlike variable annuities, which invest in a portfolio of mutual funds and offer a fluctuating return based on market performance, MYGAs provide a fixed, predictable rate of return. Below are some of the benefits of this investment option.
1. Stability and Predictability
When you invest in a multi-year guaranteed annuity, you lock in a fixed rate of return for the duration of the annuity contract. This guaranteed rate is often higher than those offered by other conservative investment options, such as CDs or traditional fixed annuities.
By securing a predictable return, MYGAs provide a strong defense against market volatility and downside risk. Unlike investments tied to the stock market, these funds protect your principal and earned interest, ensuring your retirement savings remain stable even during economic turbulence.
2. Flexibility in Investment Terms
When considering a multi-year guaranteed annuity, it's important to understand the various terms available and how they align with your individual financial goals and needs. 1891 Financial Life offers a five-year multi-year guaranteed annuity, which provides a balance between long-term growth and flexibility. Generally, longer MYGA terms offer higher interest rates, as the insurance company can invest your funds for an extended period.
3. Tax Advantages
One of the significant advantages of multi-year guaranteed annuities is the tax-deferred growth of earnings within the annuity contract. Any interest earned on your MYGA investment compounds without being subject to taxes until you begin receiving payouts. For retirees seeking income solutions, this tax deferral can offer substantial benefits, as it allows your money to grow more quickly than it would in a taxable investment account.
When compared to other investment options, such as CDs or taxable bonds, MYGAs stand out for their tax efficiency. MYGAs allow you to defer taxes until you start withdrawing funds instead of paying annual taxes on the earned interest as you would with CDs, bonds, and similar investments.
Guaranteed Interest Rate
By offering guaranteed interest rates, tax-deferred growth, and protection against market volatility, MYGAs provide a sense of financial stability and peace of mind. When assessing whether a multi-year guaranteed annuity is right for you, consider your individual financial goals, risk tolerance, and time horizon. As you navigate the journey toward a financially secure retirement, evaluate the benefits of MYGAs and how they might contribute to your long-term financial success.
About 1891 Financial Life
At 1891 Financial Life, we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. In 2023, 1891 Financial Life was listed by Forbes as one of "The World's Best Life Insurance Companies."
Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.