With the stock market drawdown of 2022 and continued equity and bond market volatility, many retirees are searching for safe, principal-protected ways to earn a fair interest rate on their savings. Bank CDs have historically been the safe haven of choice. However, even with rising interest rates, many retirees are not seeing a correlation to significantly higher bank CD rates.
Solution - MYGAs
MYGAs, or Multi-Year Guarantee Annuities, provide a very similar benefit as a bank CD.
Here are a few highlights of MYGAs:
Your contract is issued and insured by an insurance company rather than a bank.
Interest rates guarantees are typically VERY competitive. Click for current rates.
Interest grows tax-deferred within the contract and is only taxed when you distribute the interest.
The original premium (your principal) plus any and all interest gains are fully protected and insured by your insurance company against loss.
Contracts are offered under a variety of guarantee periods, however 3 year, 5 year, and 7 year periods are most common.
The contract has no fees (unless you opt for a specific rider), so long as you do not exceed the penalty-free withdrawal privilege offered by the contract.
Contracts offer beneficiary designations which allow for avoidance of probate should the annuitant die during the contract period.
MYGAs and Bank CDs share many of the same characteristics, but there are a few small differences, as noted above. MYGAs are not suitable for every client and most contracts require certain minimums and suitability criteria prior to issue.
If you would like more information about MYGAs or discuss your current suitability for such a product, please contact Creekside Insurance Advisors Inc. for more information.
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