Calculate Potential Fixed Annuity Returns

A fixed annuity or multi-year guaranteed annuity (MYGA) offers a guaranteed return for your retirement savings. It provides tax-deferred accumulation at a guaranteed fixed rate for a predetermined period of time (typically 2 to 10 years).

Guaranteed Growth

$35,727

Accumulated Value

$135,727

Year by Year Potential Account Balance

The following could be your guaranteed annual account balance and interest accumulation.

YEAR	RATE	EARNINGS	BALANCE
1	6.30%	$6,300	$106,300
2	6.30%	$6,697	$112,997
3	6.30%	$7,119	$120,116
4	6.30%	$7,567	$127,683
5	6.30%	$8,044	$135,727
Total	$35,727	$135,727

1 This calculator is pre-filled with our highest available fixed rate using compound interest and based off of an investment amount of $100,000 for 5 years.

2 The fixed annuities on our site use compound interest, unless otherwise noted.

What is a Fixed Annuity?

A fixed annuity is a retirement savings vehicle that provides tax-deferred accumulation at a guaranteed fixed rate for a predetermined period of time (typically 2 to 10 years). In other words, the interest earned in your fixed annuity is not taxed until withdrawn, and the rate of return is guaranteed over the course of the multi-year term selected. It is most similar to a Certificate of Deposit (CD), which is offered by a bank or other-FDIC insured institution, except that it is offered by an insurance company. The fixed annuity guarantee is backed by the financial strength of the insurance company, which is best understood through its financial rating.

Tip: You might hear this product referred to using a few different names:

Fixed annuity
Fixed deferred annuity (FDA)
Fixed rate annuity
Multi-year guaranteed annuity (MYGA)
Single premium deferred annuity (SPDA)

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Fixed annuities are a useful tool for retirement savings. They provide a safe, tax-advantaged way to earn a good return on savings needed in the future.
Guaranteed, Strong Return
The money you invest in a fixed annuity will accumulate at a fixed rate, which is specified upfront and guaranteed until the end of the rate guarantee term.
Tax-Deferred Growth
From the government's perspective, an annuity is a retirement savings vehicle. No taxes are paid until distributions are made. For a fixed annuity, this means that interest will accumulate and compound without incurring annual taxes.
Principal Protection
Unlike with most other investments, there is no market risk associated with a fixed annuity. Your principal is protected and guaranteed to accumulate at a fixed rate, making fixed annuities a good place to park retirement money you don't want to risk losing.
Some Liquidity
Fixed annuities provide some liquidity, typically making interest earned or 10-15% of the contract's cash value available penalty-free annually if you're over 59½. The rest of the contract is available, but subject to surrender penalties.
Easy to Understand
There are a lot of complex products, but a fixed annuity is one of the easier ones to understand. Assuming you leave your money in the fixed annuity until its guaranteed rate term ends, all you need to know is (1) how long until your money is available and (2) what your return will be over that period of time. There are no hidden fees that you need to worry about.
Penalties for Withdrawals Under Age 59½
Fixed annuities are really meant to be used for retirement savings. The IRS issues a 10% penalty on gains withdrawn from a fixed annuity for account holders under age 59½.
The three most important considerations in selecting a fixed annuity (also known as a multi-year guaranteed annuity or MYGA) are the guaranteed annual rate, insurer rating, and the investment term.
Guaranteed Rate
This is the effective annual rate that your money is guaranteed to grow during the investment term, assuming you hold the contract to the end of the term.
Insurer Rating
An insurer's financial credit rating measures their financial strength and ability to meet future obligations. The rating indicates the credibility and ability an insurance company has to repay any claims to customers. Our site uses the ratings of A.M. Best, which specializes in the insurance industry. We only offer carriers with a rating of B or better.
The A.M. Best rating categories are as follows:
A+, A++ are a superior rating
A, A- are an excellent rating
B+, B++ are a good rating
B, B- are a fair rating
C-D ratings are rated marginal to poor
Investment Term
Terms range from 1 to 10 years. During that period of time, you'll receive a guaranteed rate but will have limited access to your funds. Generally speaking, the longer the contract term, the higher the rate; however, there may be some exceptions to this rule based on the availability of some intermediate terms, like 6, 8, and 9 years.
Fixed annuities (also known as a multi-year guaranteed annuity or MYGA) operate very similarly to CDs. Both vehicles offer a way to save money, crediting higher interest rates than available through savings accounts by requiring you to lock your money away for a period of time. However, fixed annuities have longer-term investment horizons and tax-preferential treatment.
FIXED ANNUITY
CD
SOLD BY
Insurance Companies
Banks
AMOUNT YOU CAN INVEST
$2,500 - $3,000,000
Virtually any denomination
INVESTMENT TERM
1 - 10 years
3 months - 6 years
INTEREST RATES
Vary by investment term and size, but typically higher than CD rates
Vary by investment term and size, but typically lower than fixed annuity rates
TAXES
Taxes on interest gains are deferred until money is withdrawn
Interest gains are taxable annually as they are earned
ACCESS TO FUNDS
Typically a portion of the account balance will be available for withdrawal annually, but a 10% IRS penalty is imposed for withdrawals before age 59½
Typically there is not free access to the account balance
FINANCIAL PROTECTION
Backed by the issuing insurance company
Insured by FDIC
SOLD BY
FIXED ANNUITY
Insurance Companies
CD
Banks
AMOUNT YOU CAN INVEST
FIXED ANNUITY
$2,500 - $3,000,000
CD
Virtually any denomination
INVESTMENT TERM
FIXED ANNUITY
1 - 10 years
CD
3 months - 6 years
INTEREST RATES
FIXED ANNUITY
Vary by investment term and size, but typically higher than CD rates
CD
Vary by investment term and size, but typically lower than fixed annuity rates
TAXES
FIXED ANNUITY
Taxes on interest gains are deferred until money is withdrawn
CD
Interest gains are taxable annually as they are earned
ACCESS TO FUNDS
FIXED ANNUITY
Typically a portion of the account balance will be available for withdrawal annually, but a 10% IRS penalty is imposed for withdrawals before age 59½
CD
Typically there is not free access to the account balance
FINANCIAL PROTECTION
FIXED ANNUITY
Backed by the issuing insurance company
CD
Insured by FDIC
Any guarantees made by an insurance company are subject to the financial strength of the insurance company and their claims paying ability. Additionally, each state does have its own guaranty fund, but it should not be thought of as a substitute for FDIC insurance, which annuities do not have. State guarantee fund rules vary significantly state-by-state. You can find more state specific information here.
If the fixed annuity is purchased with qualified funds (pre-tax income, usually in the form of a contribution to a retirement plan), then a fixed annuity doesn't provide any additional tax benefits beyond what the retirement fund offers, which is tax-deferral of gains until money is withdrawn. Qualified-funded annuities may also be subject to required minimum distributions (RMDs) starting at age 73.
If the fixed annuity is being purchased with non-qualified funds (post-tax dollars, money that has already been received through income sources and income tax has been paid), let's dig deeper into the tax treatment at each phase of the contract:
- There are no taxes due during the contract term. Your money isn't subject to taxation while it's growing. Not paying taxes means that you're able to keep more money invested and earning interest. And this benefit continues as long as you keep your money in the contract, which can be beyond the end of the initial guaranteed interest rate term.
- Instead, you pay taxes once money is withdrawn, be that during, at the end of, or after the initial interest rate term of the contract. Only the interest gain portion of your withdrawal will be taxable at ordinary income rates. This differs again from when a fixed annuity is purchased with qualified funds, in which case, all withdrawals will be taxable. Waiting until you're in retirement, or in a lower tax bracket, to withdraw can reduce the taxes you owe. Note that you may be subject to a 10% penalty if you withdraw money before age 59½, or surrender charges if you withdraw more money than allowed prior to the end of the investment term.
- You can continue your tax-deferral by staying with your annuity, or by rolling over your fixed annuity into a new annuity. You can choose to roll it over into another fixed annuity or a different type of annuity through a tax-free 1035 exchange.
It's important to understand the tax implications of fixed annuities and work with a tax professional to develop a plan that helps to minimize your tax burden.
Some fixed annuities (generally those paying the highest rate) do not allow for any withdrawals during the guarantee term without a surrender charge. Surrender charges vary, but can be as high as 9% in year one and typically decline to 0% at the end of the guaranteed rate period. Some contracts will have a new surrender charge schedule once the rate matures if no action is taken. It's also important to consider if your money is subject to a market-value adjustment (MVA), which means the withdrawal charge will be adjusted based on the change in interest rates between purchase and the decision to withdraw.
Other fixed annuities allow for penalty-free withdrawals of interest earned; however, this is sometimes restricted in the first year. Still other fixed annuities allow for withdrawals of up to 10% per year of the beginning balance at the start of the year. This will be broken down for you on the product details page of any annuity.
Note that any interest withdrawals made prior to age 59½ will incur a 10% penalty from the IRS. The IRS treats all withdrawals from a fixed annuity on an interest-first basis.
Here's an outline of what you can expect from the application process.
Online Application
(Preview a Sample Application)
It should take 15-30 minutes to complete. Feel free to move between sections as you complete the application. We will auto save your progress, and you can exit and return to the application at anytime.
- Personal Information: Your address, phone number, SSN, and place of birth.
- Driver's License: Confirm your identity by uploading a picture of the front of your driver’s license.
- Beneficiaries: List the individual or individuals who will receive the accumulated value of your annuity should you pass away.
- Financial Overview (May Require Preparation): Provide estimates of your income, expenses, assets, and debt; and answer suitability questions required by the insurance company to make sure the annuity is a good fit for you.
- Funding Source: Such as a check, wire transfer, ACH deposit, IRA, or annuity exchange, etc. Some funding sources can impact insurer processing times.
Application Review
Within 1-2 business days, our team will review your Blueprint Income application and reach out to you to confirm any necessary details before finalizing the insurer application. As part of this process, we will send you the final insurer application to review and sign before submitting it to the insurance company.
Insurer Processing
Most insurers will typically have a processing period of a few weeks to accept the application, process funding, and formally issue the policy. Processing may take longer for a 1035 exchange or transfer of assets.
Policy Receipt
Once the processing is complete, the insurer will provide us with your formal policy documentation, which we'll pass along to you and make available in your online account. You'll always have about 10-30 days from the time you receive the policy to reject it for any reason. This is called the "Free Look Provision", and it’s required by law.
Manage Your Annuities
Keep track of your annuity via our online portal. We'll be there to help with important milestones, like when a fixed annuity's rate guarantee is ending.
Blueprint Income is here to help guide you through the process; it's part of the service and commitment we provide to our clients. We will contact you in advance of your policy reaching the end of its guaranteed investment term and provide you with information on options available to you. In general, at the end of the guaranteed interest rate term, you can do any of the following: rollover your funds into a new fixed annuity, annuitize your policy, do nothing and let your policy auto-renew, or cash out your funds. The best option for you will depend on your age and your goals for the proceeds of your fixed annuity. To learn more about the options, head to this article

TERM	INSURER	RATING	Rate (APY)
1 Year	ELCO Mutual	B++	4.00%
2 Years	CL Life	B++	5.25%
3 Years	Wichita National	B+	5.85%
4 Years	Nassau	B++	5.30%
5 Years	Knighthead Life	A-	6.30%
6 Years	Nassau	B++	5.55%
7 Years	Knighthead Life	A-	6.50%
8 Years	Equitrust	B++	5.40%
9 Years	Clear Spring Life	A-	5.35%
10 Years	Wichita National	B+	6.05%

RATING	INSURER	TERM	Rate (APY)
A++	Reliance Standard	7 Years	4.85%
A++	Reliance Standard	10 Years	4.85%
A+	Protective	5 Years	5.00%
A+	National Life Group	5 Years	5.00%
A	American National	6 Years	5.52%
A-	Knighthead Life	7 Years	6.50%
B++	Revol One	5 Years	6.00%
B++	Revol One	7 Years	6.00%
B++	Revol One	10 Years	6.00%
B+	Wichita National	5 Years	6.25%

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Calculate Potential Fixed Annuity Returns

Guaranteed Growth

$35,727

Accumulated Value

$135,727

Year by Year Potential Account Balance

What is a Fixed Annuity?

What are the pros and cons?

How to compare fixed annuities?

What's the difference between a fixed annuity and a CD?

How is the fixed annuity rate guaranteed?

What can I expect in regards to taxes?

What should I consider when determining if I should withdraw from my fixed annuity?

What can I expect when I apply?

What can I expect at the end of my fixed annuity term?

What are today's best fixed annuity rates by term or rating?

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