Why Multi-Year Guaranteed Annuities Are a Safe Option for Retirement

May 9, 2023

Multi-Year Guaranteed Annuities are an excellent option for investing your hard-earned income in a vehicle that earns solid returns without incurring unnecessary risk. Retirement planning requires several strategies for saving and investing. It's essential to strike the perfect balance between investing and saving securely to ensure you have enough to fund your retirement in how you want to live.

What Are Multi-Year Guaranteed Annuities?

Multi-year guaranteed annuities, or MYGAs, are among the simplest examples of annuities available. They deliver a fixed return on your investment for a specific period. Usually, this investment lasts between three to ten years. This investment vehicle is an excellent choice to add a reliable income stream for your retirement.

How Do MYGAs Work?

An MYGA is essentially a contract with an insurance company that enables an invested sum of money to accrue interest. You agree to purchase an annuity at a guaranteed interest rate for a particular length of time,  for example, a 5-Year Annuity. When the term ends, you can either withdraw the premium plus accumulated interest, renew the contract, or transfer the money to another annuity option.

MYGA Benefits

MYGAs  give a better return than CDs.

Guaranteed Income

Muti-year guaranteed annuities can be used as a predictable income stream when you are retired, removing the necessity of self-regulating your own draw-downs from your savings.

Partial Withdrawals

You can pull out up to 10% of the value of the annuity without incurring a penalty.

Tax Deferral

Unlike traditional savings accounts and CDs, multi-year guaranteed annuities have tax-deferred status. Until you start withdrawing money from your annuity, you can reap tax deferment benefits.

Death Benefits

If an annuity owner passes away, the death benefit may pass to a beneficiary or multiple beneficiaries. It can be payable as a lump sum or other options.

Who Benefits From an MYGA?

Annuities can have a single owner or multiple joint owners. Usually, multi-year guaranteed annuities are available to anyone under 85. Of all the potential investors in MYGAs, retirees over 60 have the most to gain because they offer a fixed interest rate, a minimum return on investment, and a reliable income source without the market dependency and associated risks that other investments are subject to. The stability of MYGAs makes them a great way to diversify your portfolio.

Are Guaranteed Annuities Safe?

Multi-year guaranteed annuities are a much safer investment than variable annuities. With either type of annuity, you have a good chance to recover your principal investment, but the value of each dollar may decline if the amount of interest received does not keep up with the inflation rate.

Multi-year guaranteed annuities are a safe investment when purchasing from reputable insurance companies. Because annuities are not bank deposits, the FDIC does not cover them, which means they have no protection in the event of a financial industry collapse.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.

Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.