Multi-year guaranteed annuities remain one of the more overlooked corners of the retirement-income market, even as sales set records. LIMRA industry data shows U.S. annuity sales reached roughly $347 billion through the first three quarters of 2025, on pace to top 2024's full-year record of $432.4 billion. As of July 1, 2026, the best MYGA yields still exceed comparable bank CDs by a wide margin — and the rate window may not stay open indefinitely.
What a MYGA Actually Is
A multi-year guaranteed annuity is a fixed insurance contract. A saver deposits a lump sum with an insurer, and in exchange the insurer guarantees a specific interest rate for a set term, typically three to ten years. At the end of the term, the contract owner can withdraw the balance, roll it into a new MYGA in a tax-free 1035 exchange, or annuitize for income. The structure is often described as a "CD-type annuity" because the mechanics resemble a bank certificate of deposit, but the tax treatment is different: interest inside the MYGA grows tax-deferred and is only taxable when withdrawn.
Current rates from A-rated carriers illustrate why the product is drawing attention. Top three-year MYGAs are quoting around 5.65%, five-year contracts reach approximately 6.30%, and seven-year contracts have crossed 6.50%. By comparison, the best five-year bank CD is paying about 4.15%. That spread of roughly two percentage points, compounded and tax-deferred, adds up meaningfully over a full contract term.
Why the Rate Window May Be Closing
Annuity yields are anchored to what insurers can earn on their own portfolios, mostly investment-grade corporate bonds. With the 10-year Treasury projected to settle in the mid-4% range through 2028 and further Federal Reserve rate cuts widely expected, industry analysts anticipate MYGA rates to edge lower through the back half of 2026. The decline is not expected to be sharp, but a saver who locks in 6.30% today for five years captures a rate that may not be reissued if new-money yields drift toward 5%.
This is the same reasoning driving the sales surge. Pre-retirees who watched near-zero rates for a decade are treating the current environment as a lock-in opportunity for the safe-money portion of a portfolio.
Where MYGAs Fit — and Where They Do Not
MYGAs are a substitute for the fixed-income sleeve of a retirement plan, not a replacement for growth assets. Reasonable uses include parking money earmarked for planned withdrawals in five to seven years, building a laddered income floor before Social Security claiming, or holding an emergency reserve inside a tax-deferred wrapper without generating annual 1099 interest.
They come with real trade-offs. Most MYGAs allow only limited penalty-free withdrawals — typically the annual interest, or 10% of the balance — during the surrender period. Withdrawals before age 59½ can trigger a 10% federal tax penalty in addition to ordinary income tax. And unlike bank deposits, MYGAs are not FDIC-insured; they are backed by the claims-paying ability of the issuing insurer and, secondarily, by state guaranty associations with per-contract coverage limits that vary by state.
Practical Checklist Before Signing
- Verify insurer strength. Most advisors recommend A- or better ratings from AM Best when the contract is meant to hold retirement assets for a decade or more.
- Read the surrender schedule. Longer terms usually pay higher rates but lengthen the illiquidity window. Match the term to a real cash-flow need.
- Check the free-look period. State law provides a window — commonly 10 to 30 days — to cancel a new contract without penalty.
- Confirm the state guaranty limit. Coverage generally ranges from $250,000 to $500,000 per owner per insurer, so large deposits may warrant splitting across carriers.
- Coordinate with the IRA account type. MYGAs can be held inside a traditional or Roth IRA, but the tax deferral is redundant inside an IRA — the value there is the guaranteed rate, not the wrapper.
For pre-retirees who need a defined, guaranteed return on a portion of their savings, mid-2026 is one of the better MYGA rate environments in more than fifteen years. The product is not right for every investor, but ignoring it because annuities have a reputation for complexity leaves real yield on the table.
Sources: Annuity.org, MyAnnuityStore, AnnuityAdvantage, CNBC Select, LIMRA