At its core, a MYGA (also commonly called a multi-year guaranteed annuity) is a very particular type of fixed annuity with an interest rate that is applied to invested funds for multiple years in a row – hence the name. In a lot of ways, they’re not too dissimilar to something like a bank certificate of deposit and indeed, many experts consider them to be one of the most straightforward forms of annuities available.
When it comes to your own retirement planning efforts, there are a number of clear reasons why MYGAs are something you’ll want to consider carefully moving forward.
The Ins and Outs of MYGAs: Breaking the Situation Down
As stated, MYGAs aren’t too different in concept to something like a CD that you may already have. The major advantage that the former has over the latter, however, comes by way of tax deferral.
If you have a CD that is NOT currently in an IRA or some other type of retirement account, taxes must be paid every year on every last penny of interest that you earn. This isn’t the case with MYGAs and indeed, it’s one of the many reasons why savvy investors find them so attractive in the first place.
With regards to the advantages for retirement in general, MYGAs are typically beneficial in a long-term investment situation. Surrender charges apply if you attempt to take money out of a MYGA before your contract period ends. This contract is typically about two years in length. Having said that, a lot of financial institutions will allow you to take up to 10% of your funds without penalties if you need to do so. Most MYGAs also offer their full value at the time of your death – making them a good thing to embrace for your loved ones, too.
What this means is that if your retirement date is more than two years away, a MYGA can give you significant tax benefits that you would be hard-pressed to find through other means. This, coupled with the higher interest rates that MYGAs normally bring with them, make them a viable candidate for adding diversity into your portfolio before your big day finally arrives.
If you’d like to learn more information about the benefits of owning a MYGA, or if you’re just eager to discuss your own investment strategy with someone in a bit more detail, please don’t delay – contact Fortified Retirement today.
Licensed Insurance Professional, provides general information about insurance and retirement-related products and services, these products and services may not be specific to a particular state. Information provided on this website, in seminars or through printed or other published materials are not intended as specific legal, accounting or investment advice to an individual’s particular situation. By providing your information to us, you agree that we may contact you regarding the potential sale of annuity and/or insurance products. Information provided by Licensed Insurance Professional does not necessarily represent that of the individual professionals presenting this information. All the information presented is believed to be accurate and is secured from reliable resources, however, no guarantee is made to the completeness or accuracy of the information presented. Any opinions expressed are those of the author and the material presented is for educational and informational purposes only and is not intended as legal, investment or tax-related advice.
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