Fixed annuities provide a safe way to save money for people who want something more stable than bank accounts or market investments. Like CDs, they help protect savings but also offer extra benefits that can be valuable when used wisely.
CDs usually have a maximum term of five years and do not let your money grow tax-free. Annuities, on the other hand, can last longer and delay taxes on earnings until you take the money out. Fixed annuities can be a smart choice for careful savers with long-term goals who want to pay less tax on their earnings.
Current 8-Year Fixed Annuity Rates
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| Product |
Rate
|
Guarantee Period
|
Surrender Period
|
AM Best Rating
|
|---|---|---|---|---|
|
United of Omaha Insurance Company (a Mutual of Omaha company) Bonus Flexible Annuity |
4.25% | 8 Years | 8 Years | A+ |
Certainty Select |
5.35% | 8 Years | 8 Years | B++ |
|
Guaranty Income Life Insurance Company Guaranty Rate Lock |
4.10% | 8 Years | 8 Years | A- |
Multi Select |
5.20% | 8 Years | 8 Years | A |
Palladium MYG |
4.90% | 8 Years | 9 Years | A |
|
Palladium MYG |
4.90% | 8 Years | 10 Years | A |
Platinum Edge |
4.50% | 8 Years | 8 Years | A+ |
|
Clear Spring Life and Annuity Company Preserve Multi-Year Guaranteed Annuity |
5.40% | 8 Years | 8 Years | A- |
Case Study: Buying an 8-Year Fixed Annuity
Mary
Age: 70
Amount Invested: $100,000
Mary is enjoying her retirement, but, like many retirees, she worries about the prospect of outliving her savings if she survives to an advanced age. She would like to ensure that her money is working for her and growing over time.
She learns about an 8-year fixed annuity that is offering a guaranteed interest rate of 5.35%. She is intrigued by the possibility of growing some of her money over the next few years before having the option to convert it into lifetime payments when she turns 78.
This money will help to guarantee that she always has new income coming in and never has to worry about outliving her savings.
Mary decides to purchase the annuity with $100,000. Eight years later, its value will grow to over $150,000. She can then opt to convert that money into a guaranteed stream of monthly payments that will continue for as long as she is alive.
8-Year Fixed Annuities vs. Other Term Products
The main advantage of an 8-year fixed annuity is the safety and predictability it provides. You are not exposed to market risk, are offered a guaranteed interest rate, and are not at risk of losing your principal.
For this reason, fixed annuities are often compared to other safe products like CDs and bonds.
“The only other products to consider in contrast to an annuity for safe money assets would be banking instruments, bank notes or individual bonds, all of which will remove stock market risk from a portfolio,” Ken Orenstein, FRC, told Annuity.org. “But none of which will do as an efficient job of income planning as using annuities, especially if the individual is structuring lifetime income by using fixed index annuities with non-fee income riders.”
If you are considering an 8-year fixed annuity, it may make sense to also look into long-term CDs. The products operate similarly, involving you locking up money at a set interest rate and then receiving that money with its accrued interest at a later date.
CDs are more liquid than annuities, typically only docking you a few months’ interest if you have to take out your money early. Fixed annuities allow up to 10% withdrawals without issue but can impose steep penalties beyond that amount.
However, annuities can be structured to provide you with lifetime payments and are tax-deferred. The option that makes the most sense for you will likely depend on your personal preferences and financial needs.
While opting for a longer term, such as those offered by an 8-year fixed-rate annuity, may result in a higher guaranteed interest rate, it’s essential to balance your desire for stability and predictability with the need for liquidity and access.
Marguerita M. Cheng, CFP®, CRPC®, CSRIC®, RICP®CEO of Blue Ocean Global WealthMarguerita M. Cheng, CFP®, CRPC®, CSRIC®, RICP®, is the chief executive officer at Blue Ocean Global Wealth. As a CFP Board of Standards Ambassador, Marguerita educates the public, policymakers and media about the benefits of competent and ethical financial planning. She is a past spokesperson for the AARP Financial Freedom campaign.
Calculate Your Returns Based on Today’s Best Rates
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.
