Annuity Awareness Month: What You Need to Know About Today’s Annuity Market

June is Annuity Awareness Month, and there’s never been a better time to explore the potential of annuities for your retirement savings. With interest rates on the rise, annuity products are offering some of the highest returns we’ve seen in years. But how long will these rates last, and what features make today’s annuities so compelling?

Skyrocketing Rates

Annuity rates have been surging in recent months. In fact, Legal & General reports that annuity rates have risen 23% in just two years, with their latest rate reaching 6.46% as of June 2024.

Multi-Year Guaranteed Annuities (MYGAs) and Fixed Index Annuities (FIAs)

Both MYGAs and FIAs are seeing exceptional rates right now.  MYGA rates are still over 5% for a 3-year period.  I am seeing more and more being sold in the 7-year period to lock in the great rates for even longer.   Remember that all MYGAs are tax-deferred vs. CDs, which aren’t.

FIAs offer returns tied to market indexes like the S&P 500. One exciting feature of FIAs is the performance trigger, which credits interest if the index is flat or rises, even by just 1%. For example, if the S&P 500 is flat but the performance trigger cap is 8.65%, you’d still earn 8.65%.

We have quite a few carriers that are offering the Performance Trigger allocation. We even have a couple of carriers that offer a dual trigger that still pays if the S & P goes negative. Call Scott for more info on this.)

Participation Rates

Participation rates, which determine how much of the index’s gain is credited to your annuity, are also reaching new heights. Participation rates as high as 390% are now available on different allocations, far exceeding the 100% participation once considered good.

Lifetime Income and Long-Term Care

For guaranteed income in retirement, Single Premium Immediate Annuities (SPIAs) and FIAs with lifetime income riders are compelling options. With FIAs, you can start the income stream immediately or delay it until needed. Even more, some FIAs allow adding a spouse to the income benefit without requiring a joint policy, ensuring the surviving spouse continues receiving income even if the account value reaches zero.

Long-term care is another crucial consideration for retirement. While annuities aren’t a replacement for dedicated long-term care insurance, some annuities offer riders that can provide extra funds for long-term care expenses. OneAmerica highlights annuity-based products that can offer a tax-efficient way to address long-term care costs.

Is Now the Time to Buy an Annuity?

With rates at historic highs, it’s an excellent time to explore annuities. Whether you want the predictable growth of a MYGA, the market-linked potential of an FIA, or the income guarantees of a SPIA, there’s an annuity product designed to help you achieve your retirement goals.

Don’t miss out on the opportunity to help your clients with today’s exceptional annuity offerings. Contact Scott at Producers XL to discuss how annuities can help you protect your savings and create a steady income stream for the future.