Multi-Year Guarantee Annuities (MYGAs) are often called "CD-type annuities" because they function similarly to bank certificates of deposit: you commit your money for a specific term and receive a guaranteed interest rate for that entire period.
Key advantages of MYGAs over bank CDs:
- Typically offer higher interest rates (0.5% to 1% higher is common)
- Tax-deferred growth (you don't pay taxes until withdrawal)
- May offer better creditor protection (varies by state)
- No contribution limits
MYGAs come in terms ranging from 2 to 10 years, with longer terms generally offering higher rates. The interest rate is locked in for the full term, protecting you from declining rates. However, withdrawing more than the allowed free amount before the term ends typically incurs a surrender charge.
Florida residents often use MYGAs as a safe component of their retirement portfolio, particularly for money they won't need for several years but want to keep growing safely.
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