Fixed annuities offer strong protections for people who want a safe and predictable way to save money instead of using a bank or the stock market. They are similar to CDs but come with extra benefits that can be very useful when used correctly.
CDs usually last no more than five years and do not let your money grow without immediate taxes. Annuities can have longer time periods and allow your earnings to stay tax-free until you take the money out. For people who are willing to wait and want to reduce the taxes they pay on their savings, fixed annuities can be a great option.
The following table shows 4-year fixed annuity rates from some of the nation’s top providers. The term of the annuity refers to how many years the initial rate is guaranteed.
Current 4-Year Fixed Annuity Rates
Loading...
| Product |
Rate
|
Guarantee Period
|
Surrender Period
|
AM Best Rating
|
|---|---|---|---|---|
Access SPDA |
3.25% | 4 Years | 4 Years | A- |
American Pathway Fixed 4 Annuity |
4.85% | 4 Years | 4 Years | A |
|
American Pathway Vision MYG |
4.65% | 4 Years | 10 Years | A |
Asset Guard |
4.95% | 4 Years | 4 Years | A- |
|
First Choice 4-Year MVA |
4.85% | 4 Years | 4 Years | A |
|
Guaranty Income Life Insurance Company Guaranty Rate Lock |
3.90% | 4 Years | 4 Years | A- |
Harbourview Multi-Year Guaranteed Annuity |
4.90% | 4 Years | 4 Years | A |
|
Harbourview Multi-Year Guaranteed Annuity |
5.05% | 4 Years | 4 Years | A |
MYGA |
5.05% | 4 Years | 4 Years | B++ |
Milestone MYGA |
4.95% | 4 Years | 4 Years | A- |
Case Study: Buying a 4-Year Fixed Annuity
Jack
Age: 61
Amount Invested: $100,000
Jack is 61, nearing retirement and looking for ways to continue to boost his nest egg. Given his age, he has little interest in an option that might put his existing money at risk. He’s fine with a lower return in exchange for security.
Initially, Jack is focused on a 4-year certificate of deposit (CD) with a solid rate that will accomplish his goal. But he then learns about fixed annuities. Since Jack will be in a lower tax bracket in a few years when he retires, he is intrigued by the tax-deferred nature of the product.
The offered rate is similar to that of the CD, and liquidity is not a major concern for Jack. So, he opts for the annuity, taking advantage of an interest rate of 5.5%.
4-Year Fixed Annuity vs. Other Term Products
Given their short-term nature, security and similar rates, fixed annuities are often compared to CDs and bonds. You wouldn’t have a hard time finding a 4-year annuity, 4-year CD or 4-year bond with generally favorable rates.
CDs are one of the more common alternatives, and they share the most similarities.
4-Year Fixed Annuities vs. 4-Year CDs
A 4-year annuity and a 4-year CD both require you to lock money into an account in exchange for a fixed interest rate.
While CDs are acquired through banks and credit unions, fixed annuities are available from major annuity and insurance providers. Unlike many investment opportunities, neither product has put the principal at risk.
Taxation may be a major factor in your decision if you are near retirement. For example, when you place your money in a CD, the interest you earn is taxed each year as ordinary income. If you are trying to stay in a lower bracket, this might be a problem.
Fixed annuities, on the other hand, are tax-deferred products. This means your interest is not taxed each year, allowing it to grow even more. It also means that you may take advantage of a lower tax bracket when taxes finally are owed during retirement.
However, one advantage that CDs hold over annuities is their liquidity. Fixed annuities are generally illiquid products. You may be able to withdraw up to 10% of the contract value, but typically your money is locked in.
Plus, the penalty for breaking a CD early isn’t as severe as an annuity. You may just have to forfeit some of the interest owed.
Choosing between an annuity or a CD will depend on your preferences.
Keep in mind, that the 4-year fixed annuity may or may not provide any free withdrawal options. There are some right now that do not allow you to take any earnings out and then there are others that will only let you take out 5% per year.John Stevenson, CFFOwner and Advisor at Stevenson Retirement SolutionsJohn Stevenson, a Certified Financial Fiduciary®️, specializes in securing retirements with tax-free accounts. With a focus on guaranteed retirement, he’s ensured none of his clients suffer from market fluctuations. As a renowned educator and podcast host, John empowers thousands weekly, sharing his expertise in minimizing taxes and protecting against financial downturns.
Worried About Your Retirement Savings?
How We Get Our Rates Data
Annuity.org supplies fixed annuity rates through Cannex — an independent company that provides access to a database of updated annuity products.
We synchronize and update our rates information several times each week using the newest Cannex data to help ensure you have access to the most recent interest rates available.
Annuity.org features rates for fixed annuities from one- to 10-year terms. In addition, we list the carrier that offers the rate and its respective AM Best financial strength rating.
