Rising Annuity Rates May Make Fixed-Annuities Better Investment Option
Annuity rates are rising, according to data collected from AnnuityAdvantage’s database of 290 fixed annuities from 35 insurers. According to AnnuityAdvantage, 10-year annuities pay up to 3.4 percent, five-year annuities pay up to 3.15 percent and three-year annuities pay up to 2.1 percent.
AnnuityAdvantage’s CEO says fixed-rate annuities are a safer option than bonds and CDs. Like bonds, fixed annuities earn a set rate of interest for a set period, but you can lose money in bonds, while an annuity is guaranteed by the issuing insurance company. Bonds are affected by interest rates, fixed annuities, on the other hand, are not -- reinvested earnings earn the same rate as the base annuity. AnnuityAdvantage also points out interest from bonds are taxable, while annuities are tax-deferred.