Tuesday, 07 July 2026 10:07 AM
Company Update
CD-like annuity often pays much higher rate than money-market funds or savings accounts
MEDFORD, OR / ACCESS Newswire / July 7, 2026 / Fixed-rate annuities usually beat alternatives like money-market funds or high-yield savings accounts, says Ken Nuss, CEO of AnnuityAdvantage, an online annuity marketplace.
He's referring to a multi-year guarantee annuity (MYGA), which, like a bank certificate of deposit, pays a guaranteed rate for a set term.
Though you may need access to some of your money to pay bills and as a safety valve for surprises, overinvesting in cash-equivalent funds has an opportunity cost.
"The key is to strike the right balance," says Nuss, a national expert on annuities and widely published writer.
But many people hesitate because they're leery of tying up their money. Some may believe that rates will be higher next month or next year. But delaying costs you, Nuss says.
Committing now can put you ahead
Let's say you put $100,000 into a five-year MYGA at 6.00%, an annuity rate available as of July 2026. Since that rate is set for five years, you're guaranteed to have an account value of $133,823 at the end of the term, assuming no withdrawals. If you don't take any money out, all of your interest is tax-deferred.
Suppose you put your money in a savings account now yielding 4.00%. If rates stay the same on average-they likely won't-after two years, you'd be behind the annuity by $4,200. After five years, you'd be behind by $12,158.
If the rate on the annuity spikes over the next two years, you could conceivably come out ahead by waiting. But that's not too realistic.
Most annuities give you penalty-free access to some of your money
While fixed-rate annuities don't give you quick access to all your money, you're not usually locking all of it up for the term. When you buy a MYGA, you usually have unpenalized access to some of your funds.
However, if you take withdrawals beyond what's allowed by the contract, you will pay a penalty. By understanding the surrender period and choosing annuities that provide sufficient access to your money, you can avoid surrender charges.
Most products let you at least receive interest payments without penalty. While 10% annual penalty-free withdrawals are common, some annuities may allow less, such as 5%. A few don't allow anything.
Liquidity and taxes
Make sure to understand liquidity limits before you buy.
Sometimes you can get a higher withdrawal percentage in exchange for a slightly lower rate. That can sometimes be worth the peace of mind and greater financial flexibility. If the annuity is in a traditional IRA, you may want sufficient penalty-free withdrawals to cover your required minimum distributions (RMDs), which start when you reach age 73.
Some annuities have enhanced withdrawal provisions (living benefits), which waive penalties if you need to withdraw money for events such as an extended nursing home stay or a terminal illness.
Any interest you receive from a nonqualified annuity (one that's not in an IRA) counts as taxable income. If you're younger than 59½, it's also normally subject to a 10% IRS penalty. This is one reason many people don't consider annuities until they're in their 50s.
"It doesn't make financial sense to avoid longer-term fixed-rate annuities when interest earnings can be dramatically improved over cash equivalents," Nuss says.
Half now, half later?
If you're uncomfortable about locking in today's rates, use a strategy of half now and half later, he says.
Allocate half of the funds you're considering for fixed-rate annuities. Set aside half in case rates increase in the near future.
"Millions of sidelined investors are throwing away lost interest earnings every day. Many of these investors have already been waiting for a long time and have lost out on a lot of potential interest income," Nuss says.
Financial decisions are often emotionally driven rather than data-driven. But the data paints a clear picture. It's almost always better to commit to a MYGA today rather than wait for some hoped-for future interest rate that may never come.
"After you think it through, you may find you can commit more of your money than you thought to longer-term vehicles," he says.
Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and lifetime income annuities. Ken is a nationally recognized annuity expert and widely published author. A free rate comparison service with interest rates from dozens of insurers is available at www.annuityadvantage.com or by calling (800) 239-0356. The firm also offers an income-annuity quoting service. There are no fees or charges for the firm's services; 100% of the client's money goes to work for them in their annuity.
Media contact: Henry Stimpson, Stimpson Communications,
[email protected]
SOURCE: AnnuityAdvantage