Annuity Rates May 2023
Comparing annuity and bank rates of return…
Annuity rates on most annuities are not as easy to compare as bank interest rates. By simply comparing one bank’s Annual Percentage Rates (APR) to a competing bank’s APR, it’s easy to choose which bank’s rates are best. Most annuities have far too many variables, even for savvy investors to compare easily! Two annuity exceptions to this may be Multi Year Guarantee Annuities (MYGA – fixed contracts) which have an APR that is locked-in for a specified period or Single Premium Income Annuities (SPIA – fixed contracts) based on their monthly income payout. Recently, MYGAs have two to three times higher rates of return than banks typically offer, MYGAs also defer income taxes on interest earned, creating a higher net rate of return. When shopping or comparing annuity rates, it can be quite confusing because the APR may fluctuate or be easily confused with an Annual Payout Percentage (APO). When an APO is critically analyzed, you discover it’s based on the return of your own money as an income stream, rather than the return on your money! Yes, you read that correctly, the APO percentage is based on receiving your own money back, it’s not a rate of return on your money or a growth percentage! This is why some current rates appear dubious since their true APR is not properly explained by salespeople who often use this APR vs APO confusion to their advantage as an unfair sales tactic. Thus, working with a licensed fiduciary financial planner having extensive experience can be an indispensable advantage when… [Continued below video]
Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
[continued] …comparing the more complex rate options for your retirement that may be needed to span the duration of your life. Hence, Fiduciary Financial Planners are legally obligated to work on your behalf in your best interest, unlike insurance licensed annuity salespeople that are not held to this much higher fiduciary standard!
Secure, unexciting, super conservative in fact downright boring but… fixed annuity contracts are considered far safer than securities investments! In 2007, it might have been hard to get anyone to admit that they actually put much money into a fixed index annuity! However, today it is a different story as many individuals lost substantial amounts of money with security investments during our not so distant Great Recession. Since 2007, millions of folks holding safer fixed annuities suddenly found themselves encouraged by the fact that their locked in rates of return were secure and growing as they were designed to do. Using these protected them from the Great Recession and saved all or at least that portion of their retirement plan intact with locked in interest rates from their fixed contracts.
Rates for fixed annuities offer competitive APR interest, typically 1-3% higher than bank products. They were never designed to give returns that are potentially available in the stock market, however; for the first ten years of this new century many actually outperformed the stock market and may do so again in a down or an extended flat market.
When you buy an annuity the insurance provider and contract available will determine the actual rate. Longer terms of five to ten years offer higher rates than shorter term, though a one to five-year annuity can still potentially outperform bank instruments. In addition to earning higher interest rates, a fixed annuity has even greater growth potential with tax-deferral accelerating their growth.
When comparing these to bank instruments, many factors are clearly in favor of the annuity. Moreover, banks and securities don’t offer much in the way of additional retirement benefits. Some bank instruments have early withdrawal penalties as do fixed annuities and they are both considered safe and secure.
However, if you keep your money liquid and lose the opportunity to make an extra 2% per year for ten years, you may actually pay a lost opportunity penalty of 31% by default. That extra 2% compounded will increase your asset value by 31%. So if you plan properly, the fixed index annuity for retirement has the potential to make a significant difference over other fixed investments and cash equivalents, and, at times, it actually can beat the stock market! So even a 10% early surrender penalty can be small compared to a potential stock market correction. In fact, annuities have many additional benefits: For more information about fixed index annuities.
Today's Top Ten Fixed Annuity Rates (MYGA)
Fixed Index Annuity Rates & Features
Fixed index annuities have many features that are unique in both the fixed-rate safer-money world and the securities risk investment world. Initially introduced in 1995, they are a modern class of annuity that utilize a safer approach to asset growth potential. They combine guarantees** on principal and accumulation with the inflation-hedging ability of higher interest rate crediting. Their upside potential is limited to less than the full upside of the stock market, however, the most positive effect of this is – NO LOSS YEARS, consider avoiding all losses, and only retaining gains. This potential makes these types of investments quite popular, so, you may want to consider utilizing them for some portion of your own retirement portfolio to provide income for life.
- Safety: Backed by highly rated state regulated insurers
- Tax Deferral: Tax-deferred growth
- Higher Return: Better interest rates typically than what banks offer
- Life Insurance: Death payout **guarantee options
- Liquidity: Flexible withdrawal privileges
- Unlimited Contributions, unlike IRAs and 401(k)s
- Inheritance: Pass money directly to heirs by-passing probate
- Lifetime Option: Income you can’t outlive (Annuitization or a Living Benefit Rider)
- Lump-sum or periodic contributions
- Invested in mostly high quality A-AAA bonds
- No risk to client. Insurance company assumes all risk
- Guaranteed interest
- Reasonable growth
- 3% to 7% interest earning potential
- 5 to 10-year maturity
- Predictable, simple
- Guaranteed** retirement income
- LOW or NO ANNUAL FEES!
Using OutCome Based Planning™ for Your Retirement
We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.
"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available."Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"
This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.
When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.
Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.
Selecting the Best Annuity & Retirement Income Advisor
Are you willing to work with one of our retirement and annuity advisors based on their experience and expertise as a first priority rather than being limited by a local or regional area? The good news is that technology has forever eliminated our geographical limitations and leveled the playing field for everyone! As a result of today's technological advances, all of us can now work confidently with experts in any field including personal finance. We are no longer confined by regional or local boundaries limiting our choices and ultimate success. A high quality advisor is now as close as a click or phone call away.
"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."
"There are no undo buttons in retirement so it is vitally important that you do it right the first time!"
We are fortunate to have a select few who we believe are truly the highest qualified advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best options available for your retirement planning.
"It takes an experienced expert to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage."
"Anyone can sell you an annuity; however, it takes a truly qualified and experienced advisor to know how to structure them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an advisor structures multiple annuities in balancing your total portfolio that makes it possible to achieve your most important retirement objectives."
Why Searching for the Best Annuities on Your Own Can be so Frustrating...Almost everyone nowadays turns to the internet for answers on everything - from buying new widgets to researching just about everything under the sun; and finding the best annuity is no exception!At first, it may seem that researching will be straightforward but the more time you spend researching them, the more frustrating it can be. Why is this? First of all, it does not take long to realize that gimmicks abound - such as warnings and alerts from salesmen who just want your attention so they can sell you one or the "too good to be true" claims of 8% to 14% **guaranteed interest and of course the claim that you can get the full market upside with no downside risk! If you have done any research you have heard all of these claims in advertising which are mostly half truths and not fully explained.So how can you find the best annuities on the internet? The truth is... you can't! And what is even more frustrating is all the conflicting points of view from so called experts. There are well over 6,000 different annuities - all designed for different reasons, so is it any wonder that the deck is stacked against the average researcher or do-it-yourselfer. Add to that the fact that they pay high enough commissions to attract a plethora of both good and bad agents. This does not make annuities good or bad; they are simply a financial tool that truly benefit those who use them correctly.How can you find the best annuities for your unique situation?
- Use the internet cautiously;
- Work with a vetted and experienced specialist;
- Do not settle for that one dubious best plan. Compare multiple Outcome Based Plans to decide on the one that is truly best for you;
- Be keenly aware of scare tactics and hyperbole - avoid those advisors and websites;
- Avoid websites that are focused on rushing free reports, rates and quotes to get your contact information they are rushing you to speak with them, instead, take your time and choose someone you are more comfortable with that works on your time-table;
- Know the Five Vital Factors (listed above) that an experienced specialist must answer before helping you select the best options for your situation;
- Watch this telling video "Avoid Annuity Gimmicks, Amateurs and Charlatans"...
** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
They are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
*Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)
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- MarketFree™ Annuity Definition: Any fixed annuity or portfolio of fixed annuities that protects principal / premium and growth by remaining market risk free.
- Market Free™ (annuities, retirements and portfolios) refer to the use of fixed insurance products with minimum guarantees that have no market risk to principal and are not investments in securities.
- Market Gains are a calculation used to determine interest earned as a result of an increasing market related index limited by various factors in the contract. These can vary with each annuity and issuing insurance company.
- Premium is the correct term for money placed into annuities principal is used as a universal term that describes the cash value of any asset.
- Interest Earned is the correct term to describe Market Free™ Annuity Growth; Market Gains, Returns, Growth and other generally used terms only refer to actual Interest Earned
- Market Free™ Annuities are fixed insurance products and only require an insurance license in order to sell these products; they are not securities investments and do not require a securities license.
- No Loss only pertains to market downturns and not if losses are incurred due to early withdrawal penalties or other fees for additional insurance benefits.
- Annuities typically have surrender periods where early or excessive withdrawals may result in a surrender cost.
- Market Free™ Annuities may or may not have a bonus. Some bonus products have fees or lower interest crediting and when surrendered early the bonus or part of the bonus may be forfeited as part of the surrender process which is determined by each contract.
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- Annuities are not Federal Deposit Insurance Corporation (FDIC) insured and their guarantees are based on the claims paying ability of the issuing insurance company.
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Question: How do you avoid being scammed the way Bernie Madoff MADE-OFF with his client’s money?
Answer: Never make a check (for insurance, assets, or investments) out directly in the name of the broker, insurance salesman or planner! Always make the check out to a third-party such as the institution that will receive the funds, never to an individual or their company.