Best 5-Year Fixed Annuity Rates

The best 5-year fixed annuity rates come from Multi-Year Guarantee Annuities, or MYGAs.

A MYGA provides a guaranteed interest rate for a specific period.

In this case, the guarantee lasts five years.

But finding the best 5-year fixed annuity is not simply a matter of choosing the highest rate.

You also need to consider the carrier, liquidity provisions, and whether the contract is available in your state.

Key Takeaways

• Five-year fixed annuities are generally MYGAs.
• The interest rate is guaranteed for the five-year term.
• MYGA availability and rates vary by state.
• Carrier ratings should be reviewed along with the rate.
• Contracts may offer different penalty-free withdrawal options.
• Live rates should be compared because MYGA pricing can change.

What Is a 5-Year Fixed Annuity?

A five-year fixed annuity is a MYGA with a five-year contract term.

You deposit money with a life insurance company.

The company contractually guarantees the interest rate for five years.

That makes the product simple to evaluate.

MYGAs Are Not Fixed Index Annuities

A MYGA is different from a Fixed Index Annuity.

With a MYGA, the interest rate is guaranteed.

With a Fixed Index Annuity, future indexed returns depend on a crediting formula and are not guaranteed.

If you want a known contractual rate for five years, the MYGA is the straightforward comparison.

Rates Vary by State

MYGAs are regulated at the state level.

That means the best 5-year rate depends on where you live.

A carrier may offer a product in one state but not another.

That is why any meaningful MYGA comparison needs your state of residence.

Compare the Guaranteed Yield

Once you filter for your state and the five-year term, you can compare available yields.

The rates can then be ranked from highest to lowest.

That gives you a clear starting point.

But it should not be the end of the comparison.

Look at the Carrier Rating

The insurance company issuing the contract matters.

Financial strength ratings can help you evaluate the carrier.

One commonly used rating is AM Best.

Other major rating organizations include:

• Standard & Poor's
• Moody's
• Fitch

The highest rate may not necessarily be the contract you ultimately choose.

Understand Liquidity

Different five-year MYGAs can have different withdrawal rules.

One contract may allow you to withdraw the interest annually.

Another may provide up to a 10% penalty-free withdrawal.

Another may offer less flexibility.

That can matter if you think you may need access to the money before the five years are complete.

What Does "INT" Mean?

When comparing MYGA rates, you may see a contract marked with something like "INT."

That generally means the contract allows interest withdrawals.

Other products may show a percentage such as 10%, indicating an available penalty-free withdrawal amount.

Those features should be compared alongside the interest rate.

Do You Need Liquidity?

Some buyers do not need access to the money during the contract term.

They simply want to lock in the guaranteed rate and allow the interest to compound.

Others want the ability to take interest or a portion of the contract value.

Neither approach is automatically better.

It depends on your liquidity needs.

MYGAs and Tax Deferral

With non-qualified money, MYGA interest generally grows tax-deferred inside the contract.

That allows the interest to compound without being taxed annually while it remains inside the annuity.

MYGAs can also be used in traditional IRA and Roth IRA accounts, depending on the situation.

Compound Interest Matters

For someone using a MYGA for accumulation, compound interest is one of the main benefits.

Leaving the interest inside the contract allows the guaranteed interest to continue compounding over the term.

That can be especially useful when you do not need immediate income.

Do Not Choose Based on Rate Alone

The highest rate may be appealing.

But the complete comparison should include:

• the guaranteed yield
• carrier financial strength
• surrender schedule
• withdrawal provisions
• state availability

The goal is to find the strongest contract for your specific situation.

Where to Compare 5-Year Fixed Annuity Rates

Use our annuity calculators to compare current MYGA rates for your state.

Select the five-year term, review the available guarantees, and compare carrier ratings and liquidity provisions.

The Bottom Line

The best 5-year fixed annuity rate is the highest appropriate contractual MYGA guarantee available in your state from a carrier you are comfortable with.

The rate matters.

But so do financial strength and liquidity.

Compare all three before deciding which five-year MYGA fits your goals.

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