You may have heard more people talking about annuities lately—and there’s a reason for that.
Fixed annuity rates are currently some of the highest they’ve been in over a decade. In mid-2025, certain multi-year guaranteed annuities (often called MYGAs) are offering rates around 5.5% for a five-year term. That’s significantly higher than many savings accounts or CDs. But what does that really mean for you—and should you pay attention?
Are these rates a rare opportunity, or is this just another financial product getting more buzz than it deserves?
Let’s take a step back and explore what’s going on—because understanding annuities today could help you make smarter decisions about your money tomorrow.
Why Annuities Are Back in the Spotlight
For a long time, annuities were overlooked by many people—often viewed as too complex or only useful in retirement. But rising interest rates in the past couple of years have changed the picture.
Here’s what’s happening: As the Federal Reserve raised rates to fight inflation, insurance companies began offering higher yields on annuities to stay competitive. That’s created a unique situation—some annuities now offer guaranteed returns that are outpacing more familiar savings vehicles.
A recent article notes that “MYGA rates have been very attractive recently, and while they may not remain at this level for long, they still outpace many other guaranteed options. (1)
In short, annuities are now offering a combination of predictability, growth potential, and stability—something many people are seeking after years of market ups and downs.
How Fixed Annuities Work—and What to Consider
At their core, fixed annuities are contracts with an insurance company. You agree to leave your money with them for a certain period, and in return, they guarantee a fixed interest rate. When the term ends, you can access your funds with the growth you earned—or convert it into a stream of income.
Sounds simple, right? It can be. But there are a few things to keep in mind:
- Time Commitment: Most MYGAs lock in your money for 3, 5, or 7 years. If you take money out early, there may be surrender charges.
- Tax Benefits: Your interest grows tax-deferred, which means you won’t owe taxes until you withdraw the money. This could be helpful depending on your situation.
- Who’s Behind the Guarantee: These products are backed by insurance companies—not the government. That’s why it’s important to work with financially strong providers.
- Comparison Shopping: Not all annuities are alike. Some offer more flexibility, others have added features or riders. Understanding the differences matters.
In other words, annuities aren’t “good” or “bad” on their own—it depends on what you’re trying to accomplish.
Is This the Right Time?
That’s the big question. Because annuity rates are tied to interest rates, today’s environment may represent a limited-time opportunity. If the Federal Reserve lowers rates in the near future (which many economists expect), annuity rates may drop, too. (1)
So if you’ve been keeping extra cash in a low-yield account or looking for ways to create more predictable income later in life, this could be a good moment to explore your options.
Of course, no one can predict the future. But looking at where rates are now compared to just a few years ago, the difference is striking—and worth understanding.
Final Thoughts
In uncertain times, people often look for financial choices that offer more clarity and control. Fixed annuities might offer just that. But how do you know if they’re right for you?
Is locking in a guaranteed 5% return for the next few years a smart move—or could your money be working harder somewhere else? Should an annuity play a role in your retirement strategy, or is there a better fit?
These aren’t questions with one-size-fits-all answers—but they are worth asking.
If you’re curious about what today’s annuity rates could mean for you, consider scheduling a complimentary conversation. Sometimes a short discussion is all it takes to bring your long-term financial picture into sharper focus.
Source
(1) Picardi, Aly Yale. “Are Annuity Rates Good Right Now? Here’s What Experts Think.” CBS News, 15 July 2024, https://www.cbsnews.com/news/are-annuity-rates-good-right-now-heres-what-experts-think/
Annuities are long-term insurance contracts that involve fees and charges, including possible surrender penalties, and they are not suitable for everyone. Withdrawals before age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company, and for variable annuities, do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions. Product and feature availability may vary by state. Variable annuities are subject to market risk, including the potential for losses.
