Annuities can be a great way to grow your money and provide income for your future. But how do you know that you’re getting the best interest rate?
Understanding the Best Annuity Rates
Rates are set by the insurance company that’s issuing the policy. Before you even take a look at a policy, though, check to make sure the company is highly rated when it comes to their claims- paying ability.
You should also be aware that higher rates generally come with downsides; it will typically be harder to withdraw money without including surrender charges. You may not have access to standard riders like long-term care, either.
Fixed Annuity Rates
These products offer a guaranteed rate of return for a specific time period. A multi-year guaranteed annuity will guarantee rates for a set number of years (say, three or ten).
Rate settings vary from company to company, and the rates are generally based on things like Federal Reserve interest rates and the size of the annuity.
Fixed annuities can be great for people getting close to retirement; the guaranteed rate of return is good for those who want a low-risk financial product.
These annuities also allow you to defer paying taxes, which can be a great strategy if you’re actively trying to limit your tax liability.
Other annuities can have more flexible rates of return. These include things like fixed index annuities. A fixed-indexed annuity bases its rate of return on the performance of a particular stock market index.
These annuities will typically have an interest floor and interest cap, though. The cap means you won’t get the whole upside of a market surge, while the floor ensures you’ll still make a little money, even in a bear market.
Annuities where a large lump sum is converted into an income stream don’t have a rate of return. In an immediate annuity, you will start getting payments right away, while in a deferred annuity, you get payments after a certain number of years.
The difference in return rates can make shopping for annuities very difficult; it can feel like you’re comparing apples with oranges. Multi-year guarantee annuities are very different than index annuities.
That’s why it helps to shop the annuity market with a licensed professional like those at Annuity Associates. We’ll help you choose the best product for your particular situation and help you avoid traps like a misleading product name.
No matter what annuity you and your financial advisor choose, you’ll be getting one of the lowest-risk financial products out there. If you go with a strong issuing insurance company, you can feel confident in getting your promised return.
And with the current annuity rate much higher than savings accounts or certificates of deposit, they’re a great choice for a long-term investment. As long as you don’t need immediate liquidity, they’re a great choice.
Take a look at the Annuity Associates annuity calculator to see how much you can earn.
What is the Highest-Paying Annuity Right Now?
The rates for November 2022 are significantly higher than those in 2021 or even earlier in the year.
Annuity Rates For November
Annuities haven’t had payouts this high in decades. It’s a great time to lock in retirement income with an annuity contract.
How Much Does a $1,000,000 Annuity Pay Per Month?
The payouts depend on the type you choose, of course. But let’s say you won $1 million in a recent lottery jackpot and decided to take the annuity payout. This increases the payments by 5% every year.
The first year, you’ll get $15,051. This works out to $1,254.25 a month. In the thirtieth and final year of the payouts, you’ll get $5,162.83 a month–not a bad paycheck!
Of course, these are all pre-tax numbers. But you can see the power of having an income annuity that increases every year. A guaranteed income can provide you with a lot of peace of mind.
What Are the Best 3-Year Annuity Rates?
A 3-year annuity will provide you with a guaranteed interest rate over a 3-year period of time. That provides you with a lot of stability.