Articles for Financial Advisors

Fixed-Rate Annuities

Fixed-Rate Annuities

Conservative investors often look to bank CDs, money market funds, and government securities for current income. Sadly, fixed-rate annuities are usually not considered. This is unfortunate because annuities have yields that are substantially higher than bank CDs and money market accounts; annuities also consistently have better rates than government securities.


For example, over each of the past 12 years, 5-year fixed-rate annuities have had a higher yield than 5-year government securities; 10-year annuities have also yielded more than 10-year government bonds for each of the last 12 years. Fixed-rate annuities also offer the investor the option of tax-advantaged income or tax-deferred income—something not offered by government T-bills, T-notes, or T-bonds. Perhaps more importantly, the value of U.S. government securities fluctuate daily (face value is guaranteed only if the note or bond is held to maturity); principal in a fixed-rate annuity is guaranteed every day—the value can only fluctuate upward (compounding interest).


No insurer has ever missed an annuity payment. In 2011, the GAO endorsed fixed-rate annuities as a source of income for middle-income retirees.

Fixed-Rate Annuity Sales


Billions Sold











Source: Beacon Research

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