A fixed annuity guarantees a set interest rate for a defined term — typically 3, 5, or 10 years. Unlike variable annuities, your principal cannot decrease. This calculator shows future value, interest earned, and a side-by-side comparison of different rate scenarios so you can see the impact of shopping for even a 0.5% higher rate.
Who Should Use a Fixed Annuity?
Fixed annuities are best for conservative investors who want a predictable return without market risk. They're often compared to bank CDs but typically offer higher rates because your money is held by an insurance company (not FDIC-insured, but covered by state guaranty associations up to $250,000). The typical buyer is someone in their 50s or 60s moving money out of equities and into guaranteed income-generating assets.
The Real Cost of a Lower Rate
On a $100,000 principal over 5 years, the difference between a 4.5% and 5.5% fixed annuity is approximately $5,800 in earned interest. Over 10 years, the same 1% gap grows to roughly $14,000. This is why comparing rates from multiple insurers before buying is one of the highest-ROI things you can do before signing an annuity contract. For the distribution phase, see our annuity payout calculator.
Frequently Asked Questions
What is a fixed annuity rate in 2024?
Fixed annuity rates in 2024 range from approximately 4.0% to 6.5% depending on the term length and insurer. Multi-year guaranteed annuities (MYGAs) with 5-year terms from highly-rated insurers have been offering rates in the 5–6% range — the highest in over 15 years due to the elevated interest rate environment. Shorter 3-year terms often offer slightly lower rates. Always check the insurer's AM Best rating before committing — look for A or A+ rated companies.
Is a fixed annuity safe?
Fixed annuities are among the safest financial products available. Your principal is guaranteed against loss, and the insurer is required by state regulators to hold reserves to cover their obligations. However, they are not FDIC-insured — the guarantee comes from the insurance company. Most states have guaranty associations that protect consumers up to $250,000 per insurer if the company becomes insolvent. Sticking to A-rated insurers significantly reduces this risk.
How does a fixed annuity differ from a CD?
Both offer a guaranteed rate for a fixed term, but there are key differences. CDs are FDIC-insured up to $250,000; fixed annuities are not, though state guaranty associations provide similar protection. Fixed annuities typically offer higher rates than CDs of the same term length. Annuities also offer tax-deferred growth — you don't pay taxes until withdrawal, unlike CDs where interest is taxed annually. Fixed annuities often have surrender charges if you exit early; CDs have early withdrawal penalties. Use our
annuity formula guide for a deeper comparison of the math.
Can I add money to a fixed annuity?
Most multi-year guaranteed annuities (MYGAs) accept a single premium payment only — you make one lump sum deposit and no further contributions are allowed during the term. Some flexible premium annuities do allow ongoing contributions, but they are less common and often come with lower guaranteed rates. If you plan to contribute regularly, a deferred annuity structure may be more appropriate. See our
deferred annuity calculator for multi-contribution scenarios.