The Truth About Fixed Annuity Rates in 2025 (And What I Wish I Knew)

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If we’re being real, most of us don’t wake up excited to research annuity rates. But if you’re nearing retirement—or already there—these numbers matter more than ever. I spent months trying to figure out what a “good” fixed annuity rate actually means, and honestly, it’s not as simple as just picking the highest number. There’s a lot of noise out there, and a lot of fine print.

So, let’s cut through it. Here’s what I learned about fixed annuity rates in 2025, the real trade-offs, and the one thing I wish I’d known before I started.

What’s a Fixed Annuity, Anyway?

A fixed annuity is basically a contract with an insurance company. You give them a lump sum (or a series of payments), and in return, they promise to pay you a set interest rate for a specific period. At the end of that period, you get your money back, plus the interest. It’s like a supercharged CD, but with some extra rules and tax benefits.

The big selling point? Guaranteed returns. No stock market swings, no surprises. For retirees who want stability, that’s a huge relief.

What Are the Best Fixed Annuity Rates Right Now?

As of late 2025, the best fixed annuity rates are in the 5% to 6.8% range for multi-year guaranteed annuities (MYGAs). The exact rate depends on the term, the insurer, and your state.

Here’s a snapshot of what’s out there:

Term (Years)	Best Rate (%)	Provider	AM Best Rating
1	6.00	Global Atlantic	A
2	5.25	Mountain Life Insurance	B
3	6.00	Mountain Life Insurance	B
4	5.30	Americo Financial Life	A
5	6.30	Wichita National Life	B+
6	5.50	Americo Financial Life	A
7	5.80	Mountain Life Insurance	B
8	5.40	Clear Spring Life	A-
9	5.40	Clear Spring Life	A-
10	5.80	Mountain Life Insurance	B

These rates are much higher than what you’d get from a typical CD or Treasury bond. For example, a 5-year CD might pay around 4.3%, while a 5-year fixed annuity can pay up to 6.3%. That’s a real difference over time.

Why the Rate Isn’t Everything

Not gonna lie, I was tempted to just pick the highest rate and call it a day. But here’s where things got messy: not all annuities are created equal.

Insurer strength matters. A high rate from a company with a weak financial rating (like a B or lower) is riskier. If the company goes under, your guarantee could be in trouble. I learned this the hard way when I almost signed up with a company that offered a killer rate but had a B rating. A financial advisor gently reminded me that a slightly lower rate from a stronger company (A or A+) is usually safer.
Liquidity is limited. Most fixed annuities lock up your money for the term. If you need to withdraw early, you’ll pay surrender fees—sometimes as high as 10% in the first year. I didn’t realize how strict this was until I had a family emergency and needed access to my cash. Lesson learned: always check the surrender schedule.
Taxes are deferred, not avoided. The interest you earn is tax-deferred, which is great, but you’ll pay taxes when you withdraw. If you’re in a high tax bracket later, that could bite.

Fixed Annuity vs. Other Options

Here’s how fixed annuities stack up against other common retirement savings tools:

Product	Typical Rate	Term Length	Liquidity	Tax Treatment
Fixed Annuity (MYGA)	5%–6.8%	3–10 years	Low	Tax-deferred
High-Yield CD	4%–5%	6m–5 years	High	Taxable
Treasury Bond	4%–4.5%	1–30 years	High	Taxable (Fed)

If you’re looking for safety and a slightly higher return, fixed annuities are hard to beat. But if you need flexibility or want to avoid surrender fees, CDs or Treasuries might be better.

My Experience: The Good, the Bad, and the Ugly

I’ll be honest—my first fixed annuity purchase was a mess. I was so focused on the rate that I didn’t read the fine print. I picked a 5-year MYGA with a 6.15% rate from a company with a B+ rating. It seemed like a no-brainer.

But then I realized the surrender period was 7 years, not 5. If I needed to get my money out early, I’d pay a hefty fee. And the company’s customer service was… not great. When I had a question, it took days to get a response.

Looking back, I wish I’d spent more time comparing insurers, not just rates. I also wish I’d talked to a financial advisor before signing anything. It’s easy to get caught up in the numbers, but the details matter.

What I’d Do Differently

If I could go back, here’s what I’d change:

Prioritize insurer strength. I’d only consider companies with an A or A+ rating from AM Best. The slightly lower rate is worth the peace of mind.
Check the surrender schedule. I’d make sure I could access my money if I needed it, even if it meant a lower rate.
Talk to a professional. I’d schedule a call with an annuity expert or financial advisor to review my options. It’s worth the time.
Don’t put all my eggs in one basket. I’d spread my money across a few different annuities or products, not just one.

Mistakes to Avoid

Here are the most common mistakes I see retirees make with fixed annuities:

Chasing the highest rate. It’s tempting, but a high rate from a weak insurer is risky.
Ignoring surrender fees. Always read the surrender schedule. If you might need access to your money, pick a shorter term or a product with lower fees.
Not checking insurer ratings. A strong financial rating is just as important as the rate.
Forgetting about taxes. Remember, the interest is tax-deferred, not tax-free. You’ll pay taxes when you withdraw.
Not shopping around. Rates and terms vary widely by state and insurer. Always compare multiple options.

The Unexpected Insight

Here’s something most people don’t talk about: fixed annuities aren’t just about the rate—they’re about peace of mind. For retirees who want to sleep at night, knowing their money is safe and earning a guaranteed return is priceless. I didn’t realize how much that mattered until I actually had my annuity in place.

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How to Shop for a Fixed Annuity

If you’re ready to start shopping, here’s my step-by-step process:

Decide how much you want to invest. Most fixed annuities have minimums, usually $5,000 to $25,000.
Choose your term. Shorter terms (3–5 years) usually have lower rates but more flexibility. Longer terms (7–10 years) pay more but lock up your money.
Compare rates and insurers. Use a site like Blueprint Income or Annuity.org to compare current rates and insurer ratings.
Check surrender fees. Make sure you understand the surrender schedule and fees.
Talk to a professional. If you’re unsure, schedule a call with an annuity expert or financial advisor.
Read the contract. Don’t sign anything until you’ve read the fine print.

My Final Thoughts

Fixed annuities aren’t for everyone, but for retirees who want safety and a guaranteed return, they’re a solid option. The rates in 2025 are some of the best we’ve seen in years, but the details matter. Don’t just pick the highest rate—look at the insurer, the surrender fees, and your own needs.

If you’re considering a fixed annuity, I’d love to hear your thoughts. What’s your biggest question or concern? Drop a comment below—let’s figure this out together.