Fixed Annuities
Secure your retirement with guaranteed interest rates and principal protection.
What is a Fixed Annuity?
A fixed annuity is a retirement savings product that provides guaranteed interest rates and principal protection. When you purchase a fixed annuity, you enter into a contract with an insurance company, making either a lump sum payment or a series of payments over time.
In return, the insurance company guarantees you a fixed interest rate on your money for a specified period, typically ranging from 3 to 10 years. This means your investment grows at a predictable rate, regardless of market fluctuations.
Fixed annuities are particularly appealing for conservative investors approaching retirement who want to protect their savings while ensuring steady growth and potentially securing a reliable income stream.
Current Fixed Annuity Market Rates
As of April 2025, fixed annuity rates are ranging from:
3-Year Term
4.25% - 4.75%
5-Year Term
4.50% - 5.25%
7-Year Term
4.75% - 5.50%
10-Year Term
5.00% - 5.75%
*Rates are subject to change and vary by provider, investment amount, and specific product features.
Fixed Annuity Highlights
Guaranteed Interest Rates
Predetermined interest rates for the entire term
Principal Protection
Your initial investment is protected from market losses
Tax-Deferred Growth
No taxes on earnings until withdrawals are made
Steady Income Options
Convert to guaranteed lifetime income during retirement
Death Benefits
Value passes to beneficiaries, often avoiding probate
Types of Fixed Annuities
Understanding the different fixed annuity options available to you
Traditional Fixed Annuities
Traditional fixed annuities offer a guaranteed interest rate for a specific period, typically 3-10 years. After the initial rate guarantee period ends, the rate may change based on market conditions, but a minimum guaranteed rate will always apply.
- Initial guaranteed rate periods (3-10 years)
- Competitive rates for risk-averse investors
- Surrender periods match guarantee periods
Ideal for: Conservative investors seeking predictable returns with minimal risk.
Multi-Year Guaranteed Annuities (MYGAs)
MYGAs function similarly to Certificates of Deposit (CDs) but with tax advantages. They guarantee a specific interest rate for the entire contract term, providing certainty about your returns throughout the investment period.
- Fixed rate for entire term (3-10 years)
- Higher rates than traditional fixed annuities
- No uncertainty about future rate changes
Ideal for: CD ladder investors seeking better rates with tax advantages.
Fixed Immediate Annuities
Fixed immediate annuities convert a lump sum into guaranteed income payments that begin right away. The payment amount is fixed at purchase and continues for life or a specific period, providing reliable income for retirement.
- Immediate income starting within 12 months
- Guaranteed payments for life or set period
- Higher payments for older purchasers
Ideal for: Retirees seeking immediate, guaranteed lifetime income.
Fixed Deferred Income Annuities
Fixed deferred income annuities allow you to purchase income that begins at a future date, typically 2-20 years after purchase. This provides higher future payments in exchange for deferring the start of income.
- Income begins 2-20+ years in the future
- Higher payment rates than immediate annuities
- Can include inflation protection options
Ideal for: Pre-retirees planning for future income needs.
Benefits and Considerations
Understanding the advantages and potential drawbacks of fixed annuities
Key Benefits
Principal Protection
Your initial investment is guaranteed and protected from market losses
Guaranteed Minimum Rates
Know exactly what your minimum return will be, providing peace of mind
Tax-Deferred Growth
Pay no taxes on earnings until you begin taking withdrawals
Income Security
Option to convert to guaranteed lifetime income, regardless of how long you live
Death Benefits
Value passes to your beneficiaries, typically avoiding probate
Important Considerations
Limited Liquidity
Access to your money may be restricted during the surrender period (typically 3-10 years)
Surrender Charges
Withdrawals exceeding allowed amounts during the surrender period may incur penalties
IRS Penalties
Withdrawals before age 59½ may be subject to a 10% federal tax penalty
Inflation Risk
Fixed payments may lose purchasing power over time due to inflation
Complexity
Contract terms and features can be complex and vary between providers
Fixed Annuity Calculator
See how your investment could grow with a fixed annuity
Frequently Asked Questions
Common questions about fixed annuities
Have more questions about fixed annuities?
Ready to Explore Fixed Annuity Options?
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