Even the Best CD Rates Don’t Compare to Annuity Rates (MYGA)

Both CDs and annuities offer guaranteed returns without significant risk, but they’re hardly equal retirement savings products. Unless you’re saving for just a few months, multi-year guaranteed annuities (MYGAs) will provide better returns than even the highest CD rates.

CD Rates Are Minimal

CDs are known for offering guaranteed returns without any risk, but the returns they offer are marginal at best. Like most other investment vehicles, CD rates vary depending on interest rates. Even in the best of times, though, CD rates remain low.

It’s not uncommon for the highest CD rates to be just barely above the rate of inflation, and sometimes they don’t even reach that amount. In most cases, investing in CDs provides little more than an assurance against inflation.

CDs may be appropriate if you’re looking for a place to stash some cash for a few months, as they do offer better rates of return than checking accounts. For long-term savings and retirement, however, CD rates just aren’t high enough.

MYGAs Offer Better Guaranteed Rates

A better alternative for long-term and retirement savings are multi-year guaranteed annuities, which are also known as fixed-rate annuities.

MYGAs offer guaranteed returns much like CDs do, and the rates they offer tend to be much better than even the highest CD rates. While exact rates of return depend on many factors, it’s not uncommon to see MYGAs with rates that dwarf the best CD rates available.

As their name indicates, MYGAs don’t offer the same 3- and 6-month flexibility that some CDs do. For longer-term investing, though, they offer many multi-year options. There are lots of 3-, 5-, 7- and 10-year MYGAs available, and it’s easy to roll one over into another for sustained income throughout retirement.

Learn More About MYGAs​

There are many retirement savings options that are more attractive than CDs, and several of the options provide guaranteed income streams. To learn more about multi-year guaranteed annuities and other retirement savings options, enroll in our workshop.