If you’re nearing retirement and have money sitting around in a savings account or CD, how much interest are you getting paid? If you’re like most people, it’s probably a tiny amount that adds up to a few cents per month. Your money could - and should – be doing more for you.
If you’ve never heard of a multi-year guaranteed annuity (MYGA), I’ll explain what it is, why it pays so much more than a savings account or CD, and why you should act soon to lock in the highest possible interest rate – as high as 6.4%, as of November 2023.
➡️ Rather talk to a real person about how to maximize your retirement savings? I’m here to help! Click the button below to schedule a call and let me give you personalized, one-on-one help.Schedule a Call
The Problem: Pitiful Interest Rates from Big Banks
Although interest rates have risen steadily since March of 2022, big banks have not passed those higher rates onto consumers who have savings accounts, interest-bearing checking accounts, money market savings accounts, or CDs. As of November 2023, for example, here’s what you’re likely to get from well-known banks in your area:*
- Bank of America savings account: 0.01%
- Chase savings account: 0.01%
- U.S. Bank savings account: 0.01%
Some online-only banks, smaller banks, and credit unions will offer more interest, but usually at the cost of parking at least $50,000 in your account. Plus, the online banks offering higher rates don’t have local branches you can walk into and talk to a real person.
So what’s the solution? Is there any way to get a competitive rate of interest on your money that doesn’t require you to hand it over to an online-only bank? There is – and you’ll be surprised at how easy it is.
➡️ Rather talk to a real person about how to maximize your retirement savings? That’s why I’m here! Click the button below to schedule a call and let me give you personalized, one-on-one help.Schedule a Call
The Solution: Switch to a MYGA Instead
When I tell my clients about MYGAs, most of them are shocked that no one had ever mentioned them before. MYGA stands for a multi-year guaranteed annuity, available from life insurance companies.
There are many kinds of annuities, but this particular kind functions similar to a CD. It’s a financial product that you can use to stash money for a particular period of time, during which it earns a guaranteed compounding rate of interest.
Here’s how it works:
- Choose a term length. Common MYGA terms include 3 years, 5 years, 7 years, and 10 years.
- Shop around for the best interest rate. As of November 2023, I’ve seen interest rates ranging between 5% and 6%. Your money compounds every year, tax-deferred.
- Decide how much money you want to include. MYGAs are usually funded with one single payment. The minimum and maximum amounts allowed will differ by insurer, but range in general from a few thousand dollars to a few million dollars.
- Collect guaranteed interest for the full term length. The interest rate is locked in as soon as you buy the annuity – no matter whether the Fed raises or lowers the minimum national rate. Your money grows and compounds each year throughout the length of the annuity term. All taxes on your gains are deferred until you withdraw the money.
- Decide how you want to proceed after your term. Options include rolling the money into another MYGA, renewing your current MYGA on an annual basis, or annuitizing the money to provide an income stream during retirement.
Keep in mind that an annuity is a retirement product. You need to be at least age 59 ½ when you plan to start receiving distributions from your annuity to avoid the IRS’s early withdrawal penalties. You don’t have to be that age to buy your MYGA, though – that minimum age only applies to when you choose to start taking distributions or withdrawals.
➡️ Rather talk to a real person about MYGAs? That’s why I’m here! Click the button below to schedule a call and let me give you personalized, one-on-one help.Schedule a Call
Current MYGA Interest Rates
Keep in mind that these rates change frequently. For the most up-to-date rates, please contact me. As of early November 2023, here are some of the highest rates I’ve seen:^
- 2-year: 5.45%
- 3-year: 6.25%
- 5-year: 6.4%
- 7-year: 6.3%
- 10-year: 6%
➡️ Want to learn more about MYGAs and see today’s rates? I can help! Click the button below to schedule a call and let me give you personalized, one-on-one help.Schedule a Call
*”Best Savings Accounts for November 2023,” Bankrate.com, accessed 11/8/23; “U.S. Bank Savings Account Interest Rates November 2023,” Forbes.com, accessed 11/8/23
^”Multi-Year Guaranteed Annuity (MYGA),” Annuity.org, accessed
Always consult your accounting, legal, and tax advisors before implementing any recommendations. This material does not constitute tax, legal, or accounting advice. It cannot be used for the purpose of avoiding any IRS penalty.