Are Annuities a Smart Move When Interest Rates Are High?
Rising interest rates can be a double-edged sword in retirement planning. They usually make borrowing more expensive, but they can also create a major opportunity for conservative savers—especially inside fixed annuities and Multi-Year Guaranteed Annuities (MYGAs). In higher-rate environments, many insurers can credit stronger guaranteed rates, which can make annuities more compelling for people who want stability, principal protection, and a clearer plan for retirement income.
That said, “rates are up” doesn’t automatically mean every annuity is competitive. Not all carriers reprice at the same speed, not all products are built to take advantage of rate cycles, and the details that matter most—like surrender schedules, liquidity provisions, and crediting terms—can vary dramatically from one contract to another. The real advantage comes from knowing what to compare and when to lock in guarantees.
For many retirees, the goal isn’t to chase the single highest number. It’s to build a retirement plan that is easier to stick with: predictable growth on the “safe” portion of assets, a path to guaranteed income if needed, and enough liquidity to handle the real-life surprises that happen in retirement. That’s exactly where higher-rate annuity environments can shine—when they’re used intentionally, with the right contract design.
Why Higher Rates Can Improve Fixed Annuity and MYGA Value
Fixed annuities and MYGAs are often most attractive when insurers can invest new premiums into higher-yielding fixed-income portfolios. As those yields rise, carriers can often offer better credited rates on new annuity contracts. For you, that can mean higher guaranteed accumulation over a set term, without stock market exposure—and with contract terms that can be easier to understand than many market-based strategies.
In practical terms, the “higher rates” story matters most for people who want a bond-like alternative with insurance-style guarantees. Many retirees who are uncomfortable with market volatility or sequence-of-returns risk use fixed annuities to create stability—particularly for money they don’t want exposed to drawdowns. If you’re evaluating where annuities fit in the bigger retirement picture, it’s worth reading Are annuities worth it? and Are annuities a good investment in retirement? to frame the decision around outcomes, not marketing.
Another advantage annuities can offer compared to bank products is tax treatment—especially for non-qualified money. Unlike CDs, annuities generally grow tax-deferred, which means interest can compound without annual taxation until you take withdrawals. That tax deferral doesn’t make a product “better” by itself, but it can be meaningful for savers in higher brackets or for those trying to control taxable income during retirement.
Why It’s Not Enough to “Just Grab the Highest Rate”
Rate shopping is smart—but rate-only shopping is where people get burned. Two annuities can post similar rates and still behave very differently when you actually need to use the money. That’s why we recommend comparing the full structure of the contract, not just the top-line crediting number.
Here are the items that most directly affect real-world outcomes: the surrender charge period, the free-withdrawal provisions, any waivers (such as nursing home or terminal illness access), how interest is credited, and whether you want a future income option. If you want a quick, plain-English explanation of liquidity and access rules, this resource helps: Annuity free withdrawal rules.
For fixed indexed annuities (FIAs), there’s another layer: some terms can change at renewal—like caps, participation rates, or spreads—within the contract’s rules. That doesn’t automatically make FIAs “bad,” but it does mean you should understand what can adjust and what is contractually guaranteed. If you’re comparing indexed strategies, it’s also helpful to know how a spread works and why it matters: What is an annuity spread rate?
Finally, annuities are not only about accumulation. Many retirees use them to build a more predictable income plan. Even if you’re focused on rates today, it’s worth looking at how guaranteed income could fit later—especially for people rolling over qualified accounts like IRAs or 401(k)s. If you’re thinking about retirement rollovers broadly, start here: What should I do with my 401k after I retire?
How We Help You Identify “Today’s Best” Without Guesswork
With over 1,000 annuity products across the market, the most common frustration is not knowing which contracts are actually taking advantage of the current rate environment—and which are lagging behind. Some carriers move quickly, some move slowly, and some products are designed more for income or bonuses than for pure fixed rate accumulation. The result is that “best” can change depending on what you’re optimizing for.
At Diversified Insurance Brokers, we shop top annuity carriers to help you secure the best available rates and structures while they’re competitive. That includes simple fixed-rate options (often used as a conservative “safe bucket”), bonus-focused options when they make sense, and income-focused designs when the goal is to create predictable retirement paychecks. The point isn’t to force one solution—it’s to match the annuity design to the job it needs to do in your retirement plan.
Ensure You’re Seeing the True Top Rates (Not Just One Carrier)
Use the tools below to compare rate categories and request personalized annuity options.
Fixed MYGA Rates
Compare today’s best fixed MYGA rates across multiple carriers and term lengths.
Bonus FIA Rates
See which annuities offer the highest upfront bonus and how bonus designs impact income.
Request an Annuity Quote
Submit our annuity request form to receive personalized rate and income options.
Lifetime Income Calculator
Rates matter, but retirement is ultimately about income. Use the calculator below to explore how different annuity designs can translate savings into guaranteed lifetime income. This tool is especially helpful if you’re comparing “safe growth” annuities versus annuities built around future income. When you run scenarios, focus on what you’re trying to solve: covering essential expenses, replacing a paycheck, or creating a stable income floor so your other assets can stay invested.
How to Use Higher Rates in a Smarter Retirement Strategy
In a higher-rate environment, a common approach is to treat fixed annuities and MYGAs as the “sleep-well” portion of the portfolio. That doesn’t mean putting everything into an annuity. It usually means identifying the portion of assets that is meant to be stable and predictable, then structuring that piece so it supports your retirement income plan.
For some retirees, that means using a MYGA to lock a guaranteed rate for a set term while maintaining planned liquidity. For others, it means using an annuity that can later be converted into guaranteed lifetime income. For others, it’s a blend—some money positioned for fixed-rate stability, and some positioned for income or bonus design. The best structure depends on what you need the money to do, how soon you need income, and how much flexibility you want to maintain.
If you’re doing rollover planning, your annuity decision is usually connected to other accounts and rules—like required minimum distributions, tax brackets, and beneficiary planning. If legacy planning matters, it’s also worth understanding how annuity death benefits typically work: Annuity beneficiary death benefits. Clear beneficiary structure is one of the most overlooked parts of a “good annuity decision.”
Related Pages
Talk to an Advisor or Request Your Annuity Quote
Ready to explore this annuity in more detail—or compare it with other carriers to see if even higher rates are available? With guaranteed income, principal protection, and long-term growth potential on the line, making the right choice is essential. The experienced advisors at Diversified Insurance Brokers will guide you through the options and design a strategy tailored to your retirement goals.
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FAQs: Rising Interest Rates and Annuity Rates
Do higher interest rates usually increase annuity rates?
Often, yes—especially for fixed annuities and MYGAs. When market yields rise, many insurers can credit stronger guaranteed rates on new contracts. Timing still matters because carriers don’t all reprice at the same speed, and product designs vary.
Are the “best annuity rates” always the best annuity choice?
Not necessarily. A higher headline rate can come with tradeoffs like longer surrender periods, stricter liquidity rules, fewer withdrawal features, or less flexibility if your goals change. It’s usually smarter to compare the full contract structure—rate, term, liquidity, and how the annuity fits your income plan.
What types of annuities benefit most from rising rates?
Fixed annuities and MYGAs typically benefit most because they are directly tied to insurers’ general account yields. Fixed indexed annuities can also look more attractive in certain environments, but their renewal terms (like caps, participation rates, or spreads) may be adjustable within the contract rules.
Do fixed indexed annuity rates change over time?
They can. Many FIAs allow the insurer to reset renewal terms—such as caps, participation rates, or spreads—at the end of each crediting period, subject to the contract’s minimums and rules. Some products offer terms that are designed to be more stable for a set period, so it’s important to confirm what is guaranteed versus what can change.
Can annuity rates go down after I buy?
For fixed-rate annuities and MYGAs, the credited rate is typically guaranteed for the stated guarantee period. For FIAs, the index-linked terms may change at renewal. The key is to separate what the contract guarantees from what the insurer may reset later.
How do surrender periods affect “locking in” a good rate?
Surrender periods are the tradeoff for stronger guarantees. In general, the longer the guarantee/term commitment, the more competitive the rate can be. The right choice depends on how long you can leave the funds in place, what free-withdrawal provisions exist, and whether you need liquidity for emergencies or planned expenses.
Are annuities like CDs?
They can be similar in the sense that many fixed annuities provide principal protection and a stated guarantee. However, annuities are insurance contracts (not bank products) and they typically grow tax-deferred, may include optional income features, and have different withdrawal rules than CDs.
Does tax deferral automatically make an annuity better?
No. Tax deferral can be a meaningful advantage for some people, but the annuity still has to fit your timeline, liquidity needs, and income plan. The decision should be based on outcomes—stability, guarantees, and how the contract supports retirement cash flow—not just the tax treatment.
How should I compare fixed rates versus bonus annuity offers?
Fixed-rate products are usually evaluated by the guaranteed credited rate over a set term and the liquidity rules. Bonus annuities are evaluated by how the bonus applies (account value vs. income base), the surrender schedule, and whether the bonus improves the outcome you actually care about—like higher guaranteed income later.
What information matters most when requesting an annuity quote?
The most important inputs are your state, age, funding amount, money type (qualified vs non-qualified), time horizon, liquidity needs, and whether your priority is fixed growth, future income, or a blend. With that information, you can narrow the market quickly to products that fit your goals instead of comparing apples to oranges.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
