Why More Retirees Are Choosing Multi-Year Guaranteed Annuities (MYGAs)
As market volatility becomes more frequent and unpredictable, many retirees and pre-retirees are rethinking how much risk they truly want in their portfolios. While stocks and bonds still play an important role for long-term growth, a growing number of investors are carving out a portion of their savings for stability. This is where Multi-Year Guaranteed Annuities (MYGAs) have become increasingly attractive.
MYGAs are designed to provide a fixed, guaranteed interest rate for a defined period—typically anywhere from two to ten years. In many ways, they function similarly to certificates of deposit (CDs), but with one important advantage: interest grows tax-deferred. Instead of paying taxes on interest each year, your earnings compound uninterrupted, which can significantly increase your effective return over time.
For investors approaching retirement, this combination of predictability and tax efficiency can be especially valuable. MYGAs allow you to step away from market risk without stepping away from growth entirely, offering a reliable alternative to bonds, money market funds, or low-yield bank products.
Why MYGAs Appeal to Retirees and Conservative Investors
Multi-Year Guaranteed Annuities are often used by individuals who want to protect capital while earning a competitive return. Unlike variable or indexed annuities, MYGAs are intentionally simple. There are no market indexes to track, no participation rates, and no income riders to manage. You know your rate on day one, and that rate is locked in for the full guarantee period.
This simplicity makes MYGAs particularly well-suited for:
- Retirees seeking a stable alternative to bonds
- Investors holding excess cash that is earning little interest
- Those looking to ladder guaranteed rates over multiple time horizons
- Individuals who want to reduce portfolio volatility without sacrificing yield
Many clients choose to ladder MYGAs across different terms—such as three, five, and seven years—to create rolling liquidity while maintaining competitive yields. Others use MYGAs as a temporary holding strategy while deciding when and how to activate lifetime income.
To better understand how MYGAs compare to other fixed products, it can be helpful to review how fixed indexed annuities work and where MYGAs fit within the broader annuity landscape.
MYGAs vs. Other Fixed Annuities
While MYGAs are a type of fixed annuity, they differ from traditional fixed annuities and fixed indexed annuities in meaningful ways. A MYGA offers a single guaranteed rate for a set period, whereas other fixed annuities may reset rates annually or offer index-linked growth with caps and participation rates.
For investors who value certainty above all else, MYGAs are often the most straightforward option. You are not exposed to index performance, interest rate resets, or policy complexity. That clarity makes MYGAs an excellent choice for funds earmarked for near-term needs or for conservative segments of a retirement plan.
To compare today’s guaranteed yields, you can review current offerings on our fixed annuity rate page, which includes MYGAs alongside other fixed-rate options.
How MYGAs Fit Into a Retirement Income Strategy
Although MYGAs are primarily accumulation tools, they often play an important role in retirement income planning. Many retirees use MYGAs to preserve principal during the early years of retirement while deferring income decisions to a later date. This approach can reduce sequence-of-returns risk and provide psychological comfort during market downturns.
In some cases, MYGAs are later repositioned into income-focused annuities, such as contracts that offer guaranteed lifetime income. Understanding how annuities can provide income for life can help investors see how MYGAs may serve as a stepping stone rather than a final destination.
For those evaluating whether guaranteed income will eventually be needed, MYGAs can serve as a low-risk holding strategy while waiting for higher payout ages or clearer income needs.
Comparing MYGA Rates Across Carriers
MYGA rates can vary widely depending on term length, premium size, and carrier appetite. Even small differences in rate can have a meaningful impact on long-term results, especially when compounded over multiple years.
At Diversified Insurance Brokers, MYGA rates are compared across more than 75 top-rated insurance carriers, allowing clients to identify the strongest guarantees available for their preferred time horizon. This comparison process helps ensure that conservative dollars are working as efficiently as possible without unnecessary risk.
Ensure You Are Receiving the Absolute Top Rates
Current Fixed Annuity Rates
Compare today’s best fixed annuity and MYGA rates from top carriers.
Estimate Future Income Potential
While MYGAs are primarily designed for accumulation, many investors eventually transition a portion of their savings into income-producing annuities. Understanding how guaranteed income might look down the road can help inform today’s decisions.
Lifetime Income Calculator
Explore how guaranteed income strategies can fit into your long-term plan.
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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: Multi-Year Guaranteed Annuities Offer Fixed Returns
What is a Multi-Year Guaranteed Annuity (MYGA)?
A Multi-Year Guaranteed Annuity, or MYGA, is a fixed annuity that guarantees a specific interest rate for a defined period—commonly 3, 5, 7, or 10 years. During that term, your rate does not change, regardless of market conditions.
How do MYGAs compare to CDs?
MYGAs are often compared to CDs because both offer fixed returns, but MYGAs are issued by insurance companies, not banks. Unlike CDs, MYGAs grow tax-deferred, which can result in higher effective returns for many savers.
Are the returns on a MYGA guaranteed?
Yes. The interest rate is contractually guaranteed for the full term you select, backed by the claims-paying ability of the issuing insurance company.
What happens when the MYGA term ends?
At the end of the term, you typically have several options: renew into a new term, transfer to another annuity, roll into income, or withdraw funds during a penalty-free window.
Can I access my money during the term?
Most MYGAs allow limited penalty-free withdrawals each year, often around 10%. Withdrawals beyond that amount during the term may trigger surrender charges.
Who is a MYGA best suited for?
MYGAs are well-suited for conservative investors who want predictable, stable growth, especially those nearing retirement or looking to protect principal while earning a competitive fixed return.
Are MYGAs safe?
MYGAs do not carry market risk, but they are not FDIC-insured. They are backed by the financial strength of the insurer, with additional protection potentially available through state guaranty associations.
Can MYGAs be used inside retirement accounts?
Yes. MYGAs can be held in both qualified accounts (like IRAs) and non-qualified accounts. In qualified accounts, the tax-deferred feature applies to interest earned within the annuity structure.
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.
