MYGAs vs Inflation: How to Lock In Guaranteed Returns

How to Adjust for Inflation With a MYGA

Inflation doesn’t care about your retirement. That’s the blunt truth. You can’t stop it, control it, or even predict it. But what you can do is adjust for it—strategically, contractually, and without risking your principal. That's where Multi-Year Guarantee Annuities (MYGAs) come in.

Let’s walk through how MYGAs can be used to manage inflation risk and secure your income, especially if you're looking for guarantees, not guesses.

What Is a MYGA and Why Should You Care?

A MYGA—Multi-Year Guarantee Annuity—is a fixed-rate annuity. Think of it as the annuity industry's version of a CD. It pays a guaranteed interest rate for a set number of years. You choose the term. You lock in the rate. And you get peace of mind knowing your principal is protected.

Why is that important? Because in today’s volatile environment, where inflation can eat away at purchasing power, you want certainty. MYGAs deliver that. You won’t hit home runs with them, but you also won’t strike out.

Inflation: The Retirement Killer

Inflation is sneaky. A few percent here, a few percent there, and suddenly your monthly expenses have outgrown your income. When planning retirement, too many people focus on the number—how much they’ve saved. But the real question is: What will that money be worth in the future?

Enter the MYGA ladder strategy.

Building a MYGA Ladder to Hedge Inflation

A MYGA ladder is similar to a bond ladder, but without market risk. You split your money across multiple MYGAs with different durations—1 year, 3 years, 5 years, 7 years, etc.

Here’s what happens:

• Each year, one of your MYGAs matures.
• You can choose to reinvest it into a new MYGA at the current rate.
• As rates adjust (and potentially rise), your money rolls into new opportunities.

You get guaranteed growth during the term, and you maintain flexibility to adjust to changing interest rate environments. That’s how you outpace inflation without betting the farm.

Real-Life Example

Let’s say you have $500,000. You split it:

• $100,000 into a 1-year MYGA
• $100,000 into a 2-year MYGA
• $100,000 into a 3-year MYGA
• $100,000 into a 4-year MYGA
• $100,000 into a 5-year MYGA

Now, each year you have money coming due. You can evaluate current rates, inflation, and your needs, and adjust your allocation accordingly. This provides you with flexibility in a world where flexibility is essential.

What About Interest Withdrawals?

Not all MYGAs are created equal. Some allow you to pull interest out each year, others don’t. Some offer penalty-free withdrawals of up to 10% annually. When we quote MYGAs for you, we include this info. It matters.

Let’s say you need income. You might choose a MYGA that allows interest-only withdrawals. That way, you live off the interest while your principal remains untouched and continues to grow.

MYGAs vs. Other Annuity Types

This is where many people get confused. MYGAs are not the same as Indexed Annuities, Deferred Income Annuities (DIAs), or Variable Annuities. They're simple—no moving parts. No fees. No market exposure.

If you want guaranteed interest for a set period of time, MYGAs are the tool.

• Indexed Annuities: Tied to market indexes. Upside potential with limited risk. But they come with moving parts, caps, and participation rates.
• Variable Annuities: Fully in the market. Potential for growth, but full risk too. Usually have fees.
• MYGAs: No fees. No market risk. Just fixed rates and simplicity.

Adjusting for Inflation Without Guessing

The biggest mistake people make in retirement is guessing. Guessing on returns. Guessing on markets. Guessing on inflation.

Contractual guarantees eliminate the guesswork.

When you build a MYGA ladder or use MYGAs alongside other income-producing annuities like Single Premium Immediate Annuities (SPIAs) or DIAs, you create a stable, predictable income stream. That’s the antidote to inflation’s unpredictability.

Do You Need a MYGA?

That depends on what you want your money to contractually do and when you want those guarantees to start. At The Annuity Man we ask those two questions to determine the right solution:

1. What do you want the money to contractually do?
2. When do you want those contractual guarantees to begin?

If the answer involves Principal Protection, guaranteed yield, or a fixed-term interest plan, a MYGA could be the right fit.

Final Thoughts

MYGAs aren't flashy. They won't make headlines. But they do what they're supposed to do: grow your money at a guaranteed rate without risk. And when used as part of a broader retirement income plan, they offer flexibility and control in an inflationary world.

So, don’t let inflation win. Don’t guess. Don’t gamble. Use MYGAs as part of your strategy.

Book a Free 30-minute Call with The Annuity Man Team to see current MYGA rates and get your own customized ladder strategy.