As you approach retirement, building a secure account to protect your savings and preserve your legacy becomes increasingly important. With so many income strategies available, it is easy to feel overwhelmed or worried about making the wrong choice. Multi-Year Guaranteed Annuities (MYGAs) are often considered a stable option, but they may not be the right fit in every situation.
This article will help you understand:
- How MYGAs work and what makes them different from other income strategies
- The benefits they can provide for safe and predictable growth
- Potential considerations to evaluate before choosing one
- How to align MYGAs with your overall retirement plan
By breaking it down, you can make informed decisions and feel confident about your retirement planning strategy.
How MYGAs Fit Into a Risk-Managed Retirement Plan
Multi-Year Guaranteed Annuities (MYGAs) can be an important piece of a retirement income strategy, especially for individuals focused on protecting their savings while preparing for the future. As a type of fixed annuity, they work alongside other retirement tools, such as IRAs, 401(k)s, or Roth accounts, to provide a more predictable path toward your goals.
Key ways MYGAs support a risk-managed strategy:
- Protect Principal: Your initial investment is shielded from market fluctuations, giving you peace of mind.
- Predictable Growth: MYGAs offer a fixed accumulation rate over the contract term, helping you plan your income with clarity.
- Reduced Reliance on Market-Based Products: For individuals seeking stability, MYGAs can balance portfolios that include variable or equity-based investments.
- Integration With Broader Retirement Planning: They complement other savings vehicles, making it easier to create a diversified and secure income strategy.
Tip: Review your overall retirement portfolio to see how a MYGA could provide stability and predictable growth. A clear picture of your assets and timeline makes it easier to choose a MYGA term that aligns with your future income needs.
Why Predictable Growth Matters as Retirement Approaches
Preserving your assets becomes increasingly important as you near retirement. Market fluctuations can have a bigger impact when you are relying on your assets to fund your future lifestyle. MYGAs offer a level of predictability that helps you feel confident in your planning.
Key reasons predictable growth is valuable:
- Reduces Market Risk: MYGAs shield your principal from the ups and downs of the stock market.
- Supports Financial Confidence: Knowing how your money will grow helps you plan withdrawals and retirement spending more accurately.
- Simplifies Decision-Making: Fixed growth rates provide clarity compared to variable products that may be harder to forecast.
- Protects Your Legacy: Predictable growth ensures your savings are preserved for you and your beneficiaries.
Practical Tip: Evaluate your current retirement timeline and financial goals. Understanding how much growth you need from your MYGA can guide your choice of term length and accumulation rate
Key Benefits of MYGAs
Multi-Year Guaranteed Annuities offer several advantages for individuals focused on safe, predictable growth. Understanding these benefits can help you determine if a MYGA fits your retirement strategy.
1. Guaranteed Accumulation
- Provides a fixed accumulation rate over the chosen term.
- Offers confidence in knowing how your money may grow.
- Makes retirement planning more predictable and easier to manage.
2. Tax-Deferred Growth
- Taxes on the accumulation are postponed until withdrawals begin.
- Helps extend the growth potential of your retirement assets.
3. Simple and Flexible Options
- Straightforward design compared with more complex annuity products.
- Allows the option to roll into another annuity at maturity if your circumstances or goals change.
- Provides flexibility without adding unnecessary complexity.
Practical Tip: Compare MYGA terms, accumulation rates, and your overall retirement timeline to ensure the annuity aligns with your income needs.
Considerations Before Choosing a MYGA
Even though MYGAs offer predictability, the investment format is not a good fit for every situation.
| Feature | Description | Key Considerations | Benefit for Retirement Planning |
| Term Length | Fixed periods (e.g., 3, 5, 7 years) | Align term with retirement timeline | Predictable growth over chosen period |
| Accumulation Rate | Fixed growth rate guaranteed during term | Compare rates across terms | Provides confidence in projected account growth |
| Liquidity | Access to funds may be limited before term ends | Surrender charges may apply | Encourages long-term savings discipline |
| Tax Treatment | Growth is tax-deferred until withdrawals | Plan withdrawals with advisor guidance | Helps extend the growth potential of assets |
| Flexibility | Option to roll into another annuity at maturity | Evaluate alignment with future goals | Maintains adaptability for changing circumstances |
Key Takeaway
Choosing the right MYGA depends on your retirement timeline, growth goals, and need for stability. By comparing term lengths, accumulation rates, liquidity, and flexibility, you can select a MYGA that complements your overall retirement plan and provides predictable, tax-deferred growth. Consult a trusted advisor to ensure your choice aligns with your long-term income and legacy goals.
Plan for Predictable Growth with Matador
Multi-Year Guaranteed Annuities can be a valuable part of a retirement strategy focused on stability and predictable growth. By understanding the benefits, considerations, and how MYGAs integrate with your overall plan, you can make informed decisions that protect your savings and support your long-term goals.
Next Step: Connect with a Matador advisor today to explore whether a MYGA fits your retirement plan. Our team provides personalized guidance, clear explanations, and a process-driven approach to help you feel confident about your financial future.