Substantial Annuity Rate Increases

Late last summer everyone was freaking out about the Fed dropping interest rates.  As much as I’d like to say it one time and not ever have to say it again, the Fed does not control annuity rates.  When the Federal Reserve acts it is an attempt to expand or restrict the economy and it only directly affects banks.  Yes, CD and mortgage rates may change a bit but annuities are better tracked by the economy and the rates don’t move as quickly as the Fed makes changes.  Not even close.  So I like to pat myself on the back and give you proof today that I was right.  The stock market advanced so you made more money and interest rates are now higher, in spite of several interest rate cuts by the Fed.  Annuity rates are higher in every area so you may want to think harder about the timing of protecting some money.

The best time to buy an annuity is when nobody wants one.  Human behavior and emotions make more decisions than objective reasoning.  Many are still locking down guarantees right now but a lot of people are in a frenzy over the stock market.  I’ve talked to a handful of veteran investment managers in the past few weeks saying that a lot of clients are acting in a way that reminds them of 1999.  Unproven companies with no earnings recorded enjoyed incredible market valuations only to disappear completely in a short period of time.  The fallout took three straight years of loss in the stock market and absolutely demolished a lot of retirement portfolios.

I’m not here to say that anyone should bail out of the stock market entirely and I don’t think we are in for three straight years of decline.  But several analysts have called for investors to take profits because a correction may be coming.  Those guys aren’t always right so do what you think is best.  If you are like a lot of people you may be hanging on to risk with assets you didn’t have even a few years ago.  When I talk to people I met three or more years ago I notice that most of them have about twice as much money as they did before.  They didn’t buy an annuity then but now is a good time to revisit the idea.  If you already have your safe assets in place or guaranteed income secured then you’ve got nothing to worry about.  For those who have waited, now is as good an opportunity as I’ve seen.

One thing that is slightly different this time is that we have a normalized yield curve, meaning that short term rates are lower than long term rates and yields rise steadily as the length of maturity increases.  It is a gentle curve but nothing like the inverted yield curve we have seen.  A normalizing yield curve means there is a positive outlook on the long-term economy.  This is something that I always watch and it can change fairly quickly.  It’s only bad news for those who really liked only locking money up for a year or two.  In the past few years the highest rates available were in the 2-3 year range.  Now you have to go a little longer but it’s nothing to be worried about.  It just takes a little more planning with regards to the type of liquidity you need and any other long term goals you have in mind.

Different annuity products behave differently because of interest rate maturity.  Three year MYGAs are based on an entirely different rate than lifetime income products.  One can change dramatically and the other not at all.  I have to keep an eye on both because everybody wants something different.

Right now we have top deals in every area of the annuity market.  CDs have taken a hit so MYGAs are the best safe alternative.  Mid range fixed and fixed indexed annuities in the range of five to ten years are as high as I’ve seen for anyone who wants a bond alternative that’s a lot safer and has more liquidity.  Guaranteed income deals are as high as I’ve seen and it’s the perfect way to support a portfolio for long term growth.  Anyone who rode the market up to this point is getting an incredible deal.  Just remember that market assets are worth anything until you sell them.  Annuities allow you to keep the money and that’s the type of luxury a solid retirement plan deserves.  If anyone wants to revisit a retirement or explore new options then now is as good a time as ever.  Get on my calendar if you want to have an honest conversation.

Have a great weekend!!!

Bryan

Last Updated on June 12, 2026 by Bryan Anderson