Fixed Annuities vs CDs – Diversified Insurance Brokers

If you’re looking for a secure way to grow your savings, fixed annuities offer key advantages over CDs. With higher interest rates, tax-deferred growth, and guaranteed income options, they provide greater financial flexibility and long-term security.

Why a Fixed Annuity is Better Than a CD

Fixed annuities and certificates of deposit (CDs) are popular options for conservative investors seeking guaranteed growth and security. However, fixed annuities often offer distinct advantages over CDs, especially when it comes to long-term retirement planning.

Higher Interest Rates

Fixed annuities typically offer higher interest rates than CDs, especially for longer terms. This higher rate translates to more substantial growth potential, helping your money grow faster while still remaining secure.
Tax Deferred Growth

With a fixed annuity, interest grows on a tax-deferred basis. You won’t pay taxes on earnings until you start withdrawing funds, allowing for faster accumulation due to compounding. CDs, however, are taxed annually on interest, which can reduce your overall growth.
Guaranteed Income Stream Options
No Early Withdrawal Penalties After Initial Period
Longer-Term Options with More Flexibility

Fixed annuities offer flexibility with contract terms, ranging from a few years to several decades, and often let you choose income start dates. CDs, however, are typically short-term, often 3 months to 5 years, and offer limited renewal options that can lock in lower rates if interest rates drop.
Beneficiary Options for Inheritance

Ideal Situations for Choosing a Fixed Annuity Over a CD

Longer-Term Financial Goals

If you’re looking to build wealth over a longer period, a fixed annuity’s higher rates and tax deferral provide a greater advantage.
Retirement Income Needs
Estate Planning

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Why Fixed Annuities Outperform CDs for Long-Term Security

Certificates of deposit (CDs) offer short-term stability—but when it comes to building lasting financial security, fixed annuities provide significantly more. With higher growth potential, tax-deferred compounding, and the option for guaranteed lifetime income, fixed annuities deliver a more powerful solution for retirement planning and wealth preservation.

Whether you’re seeking predictable income or protection from market volatility, a fixed annuity offers long-term value that CDs simply can’t match.

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