Laddering Annuities
Build a Flexible Annuity Ladder
Spread deposits across multiple terms to balance growth, safety, and access—then roll each maturity into the best rates available.
Laddering annuities is a simple strategy that divides your money across several fixed terms instead of locking everything into one contract. Similar to CD or bond ladders, an annuity ladder staggers maturities so part of your money becomes available at regular intervals. That gives you built-in flexibility, helps you capture competitive rates over time, and keeps your principal protected while growth is tax-deferred.
What Is an Annuity Ladder?
An annuity ladder uses multiple fixed terms—often multi-year guaranteed annuities (MYGAs)—so contracts mature in different years. Instead of committing all funds to a single 7-year term, for example, you might split evenly among 3-, 5-, 7-, and 10-year terms. Each maturity gives you a decision point: withdraw, convert to lifetime income, or reinvest at current rates.
Why Ladder Instead of One Term?
- Built-in access: A portion matures regularly, giving you optional liquidity without surrender charges.
- Rate opportunity: As terms roll, you can shop the market and move into stronger rates or better features.
- Principal protection: Fixed annuities protect against market loss while interest grows tax-deferred.
- Behavioral win: A documented, rules-based approach strengthens confidence and reduces guesswork.
How to Build a Ladder (Step-by-Step)
- Pick your time window: Common core ladders use 3, 5, 7, and 10 years. Shorter windows (e.g., 2–6 years) work for near-term goals.
- Allocate your deposits: Many people split evenly (e.g., 25% each term). You can tilt more toward earlier maturities for access, or longer terms for yield.
- Set rollover rules: At each maturity decide whether to:
- Reinvest into a new rung at the longest end to keep the ladder going,
- Start lifetime income with part of the matured value, or
- Withdraw a portion for upcoming expenses.
- Review annually: Shop carriers and update allocations to reflect rates, taxes, and cash-flow needs.
Example Ladder Schedule
Illustration: $400,000 spread across four MYGA terms. (Rates and availabilities change—your quote will reflect current market options.)
| Rung | Term | Initial Allocation | Maturity Year | At Maturity |
|---|---|---|---|---|
| 1 | 3-Year | $100,000 | Year 3 | Reinvest to new 10-Year or start income |
| 2 | 5-Year | $100,000 | Year 5 | Reinvest, start income, or withdraw portion |
| 3 | 7-Year | $100,000 | Year 7 | Reinvest based on rates and goals |
| 4 | 10-Year | $100,000 | Year 10 | Often rolled to the longest rung to maintain ladder |
This is an example only. We’ll size terms, carriers, and allocations to your timeline, tax situation, and income goals.
Smart Variations (Income & Inflation)
- Income ladder: Use the first maturity to fund a lifetime income rider or immediate annuity, then ladder more income as future rungs mature.
- Inflation-aware ladder: Blend fixed annuities with fixed indexed annuities or inflation-focused options for long-term purchasing power.
- RMD-friendly: For IRA funds, align maturities to required minimum distributions so cash is available without extra withdrawals.
Who Benefits Most
- Conservative investors seeking steady growth with principal protection
- Pre-retirees who want optional access every few years
- Retirees building a bridge to future income or to Social Security timing
- Anyone who prefers a disciplined, rules-based plan over rate chasing
FAQs
Which terms should I choose?
There’s no one “right” ladder. We’ll match term lengths to your cash-flow horizon, risk tolerance, tax needs, and rate opportunities in your state.
Can I mix fixed and indexed annuities in a ladder?
Yes. Many clients combine MYGAs for guaranteed rates with indexed annuities for growth potential, then rebalance at each maturity.
What happens at maturity?
You can roll to a new term, start guaranteed lifetime income, or take a partial withdrawal. We’ll shop 100+ carriers for the best fit at that time.
Are annuity ladders liquid?
MYGAs usually include limited penalty-free withdrawals (e.g., 10%/yr). Full liquidity events are at each maturity—your built-in access points.
How are taxes handled?
Growth is tax-deferred; taxes are due when you withdraw interest (or on distributions from qualified accounts). We’ll coordinate with your tax professional.
Helpful Resources
Get Your Laddering Plan & Quotes
We’ll compare 100+ carriers and design a ladder that fits your timeline, tax picture, and income goals.
Prefer to talk? Call 800-533-5969
