The Truth About Multi-Year Guarantee Annuities (MYGAs)

When it comes to retirement planning, guarantees matter. And few products deliver guarantees as cleanly and directly as a Multi-Year Guarantee Annuity (MYGA).

If you’ve searched for MYGA rates, you’ve probably been bombarded with confusing charts, polished pitches, and promises that sound too good to be true. The truth is, MYGAs are not complicated. They’re not mysterious. They’re not magical unicorn products.

They are simple, fixed contracts with simple guarantees. Let’s cut through the noise and get to the truth about MYGAs, what they are, how they work, and when they make sense.

What Exactly Is a MYGA?

A MYGA is the annuity industry’s version of a certificate of deposit (CD). Think of it as a CD inside of an annuity contract.

Here’s how it works:

• Issued by life insurance companies. Not by banks, not by Wall Street.
• Pays a fixed interest rate. You choose the term, typically ranging from 4 to 10 years.
• Protects your principal. Your original deposit is intact at the end of the contract.
• Tax deferral. In non-IRA accounts, interest grows tax-deferred until you withdraw it.

That’s it. No moving parts. No “might do” illustrations. No market volatility. Just a contractual guarantee backed by the issuing insurance company.

MYGAs vs. CDs vs. Treasuries

The most common question I get is: Why not just buy a CD or a Treasury?

Here’s the truth:

• CDs are taxable annually in non-IRA accounts and FDIC-insured up to $250,000.
• Treasuries are backed by the U.S. government and offer state-tax-free interest.
• MYGAs are issued by insurance companies, provide tax-deferred growth in non-IRAs, and often pay higher rates than CDs or Treasuries of similar duration.

Rule of thumb:

• 3 years or less: CDs or Treasuries may be the better fit.
• 4–10 years: MYGAs usually win, both in rate and tax efficiency.

Real-Life Example

Let’s say you have $250,000 and you buy a 5-year MYGA at 5%.

• You’ll earn $12,500 a year in guaranteed interest.
• At the end of five years, you still have your original $250,000.

That’s what I mean when I say you can “peel off the interest” and never touch your principal.

Try doing that with a volatile stock portfolio, you can’t.

When a MYGA Makes Sense

Here are situations where MYGAs are a strong fit:

• You want safety. No market risk, no surprises.
• You want to live off the interest. Use it for income while leaving your savings untouched.
• You want tax deferral. Especially valuable in non-IRA accounts.
• You want to diversify. Laddering MYGAs across multiple durations can give you flexibility.

If you’re looking for equity-like growth, don’t buy a MYGA. They’re for people who value guarantees more than speculation.

Common Misconceptions About MYGAs

Let’s crush some of the myths:

MYTH 1: “MYGAs have high fees.”

Wrong. MYGAs don’t have annual fees. The interest rate is the interest rate.

MYTH 2: “You’ll lose access to your money.”

False. Most MYGAs allow annual interest withdrawals without penalty. At maturity, you can take back 100% of your principal.

MYTH 3: “They’re risky because they’re not FDIC insured.”

Not true. MYGAs are backed by the financial strength of the insurance company and supported by state guaranty associations (rules vary by state).

How to Shop for the Best MYGA Rates

Here’s the no-BS truth: MYGA rates change all the time.

• Rates vary by company.
• Rates vary by duration.
• Rates vary by state.

That’s why you need to shop all carriers. At The Annuity Man , you can run live MYGA quotes 24/7/365. You’ll see the same data I see with no hidden agendas, no cherry-picked products.

FAQs About MYGAs

Q: What happens if rates go down after I buy?

A: You’ll be glad you locked in. That’s the whole point of a multi-year guarantee.

Q: What if rates go up after I buy?

A: You won’t benefit until your term ends. That’s why many people ladder MYGAs—buying contracts with staggered maturities.

Q: Can I use a MYGA inside an IRA?

A: Yes. But the tax deferral doesn’t matter inside an IRA (since IRAs are already tax-deferred). In that case, it’s purely about the rate guarantee.

Q: What happens at maturity?

A: You have choices. You can renew into another MYGA, move to another annuity type, or simply take your principal and interest back.

Q: Can I lose money in a MYGA?

A: No—unless you cash out early and trigger surrender charges. If you hold it to term, your principal is guaranteed.

How MYGAs Compare to Other Annuities

• SPIAs (Single Premium Immediate Annuities): Provide lifetime income, not accumulation.
• DIAs (Deferred Income Annuities): Lock in future lifetime income, not fixed growth.
• FIAs (Fixed Index Annuities): Market-linked but capped. Often sold with hype, but realistically, average bond-like returns.
• MYGAs: Pure principal protection with guaranteed fixed growth.

Each annuity type solves a different problem. MYGAs are the cleanest for accumulation with safety.

The P.I.L.L. Framework

All annuities solve for one or more of four things:

1. Principal Protection
2. Income for Life
3. Legacy
4. Long-Term Care/Confinement Care

MYGAs fit firmly in the Principal Protection category. That’s it. Don’t let anyone overcomplicate it.

No Mulligans in Retirement

Here’s the bottom line: retirement doesn’t come with do-overs. You don’t want to gamble on “might do” projections.

With MYGAs, you’re buying what it will do, not what it might do. That’s a big difference.

Final Thoughts

The truth about MYGAs is simple:

• They protect your money.
• They guarantee a fixed rate.
• They let you live off the interest without touching your savings.

They’re not investments. They’re contracts. And in a world full of noise, MYGAs deliver what retirees need most—peace of mind and guarantees you can count on.