MYGA vs. Fixed Annuity

With so many annuity choices, the right option differs for everyone. Multi-year guaranteed annuities (MYGAs) are a type of fixed annuity, so if you’re exploring fixed annuities, compare MYGAs with fixed annuities to see which one is right for you.

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APA Zinn, D. (2025, March 20). MYGA vs. Fixed Annuity. RetireGuide.com. Retrieved March 25, 2025, from https://www.retireguide.com/annuities/types/myga/myga-vs-fixed/

MLA Zinn, Dori. "MYGA vs. Fixed Annuity." RetireGuide.com, 20 Mar 2025, https://www.retireguide.com/annuities/types/myga/myga-vs-fixed/.

Chicago Zinn, Dori. "MYGA vs. Fixed Annuity." RetireGuide.com. Last modified March 20, 2025. https://www.retireguide.com/annuities/types/myga/myga-vs-fixed/.

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Key Takeaways
  • While both MYGAs and traditional fixed annuities offer guaranteed interest rates, MYGAs have set terms and are typically short- to medium-term investments, whereas fixed annuities may offer longer-term, lifetime income options.
  • MYGAs lock in a fixed interest rate for a specific term, usually between 3 and 10 years, while fixed annuities may have rates that adjust annually, depending on the agreement.
  • MYGAs provide a lump-sum payout at the end of the term or the option to renew, but they lack lifetime income options, whereas fixed annuities can offer regular payouts for life, providing more flexibility for long-term income needs.

Insurance companies sell multi-year guaranteed annuities (MYGAs) and fixed annuities. While similar, both options have different interest rates, fees and terms. While all multi-year guaranteed annuities are fixed annuities, not all fixed annuities are considered MYGAs. Knowing the distinctions is essential before signing up for your annuity type.

Multi-Year Guaranteed Annuities (MYGAs)

Multi-year guaranteed annuities, or MYGAs, are annuities that lock in a fixed interest rate for a set amount of time, between three and 10 years. You’re guaranteed that rate for those terms, similar to a certificate of deposit (CD).

You can buy MYGAs from an insurance company, and you’ll earn your guaranteed interest once you pay your lump-sum premium. During the accumulation period, or when the funds from your contributions grow, you can’t touch your annuity without facing a surrender charge.

At the end of the accumulation period, you can cash out on your annuity—both the premium and earned interest. You can also renew your MYGA or move your funds into another type of annuity.

Fixed Annuities

Fixed annuities offer a guaranteed minimum payout with a fixed interest rate. After you pay your premium, you’ll start earning interest at your fixed rate. Fixed annuities have a current rate and a guaranteed rate, which means that your insurance company will pay out no less than what it guarantees you in your contract.

Like MYGAs, they have an accumulation period where your money grows. After the period ends, you’ll move into distribution, where you’ll get regular payouts over a set amount of time or for the rest of your life. Your interest rate may reset every year, depending on the agreement you have with your insurance company.

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Key Differences Between MYGAs and Fixed Annuities

While there are a lot of similarities between MYGAs and fixed annuities, there are some standout differences.

Rate Duration

  • MYGA: A multi-year guaranteed annuity locks in your rate for multiple years.
  • Fixed annuities: Your agreement might include a minimum guaranteed interest rate, but some fixed annuities have annual rate adjustments, which means your rate could change regularly.

Payout Structure

  • MYGA: If you take a payout during the accumulation period, you could face a surrender charge. Otherwise, you’ll get the guaranteed payout once the term ends.
  • Fixed annuities: These also have accumulation periods, but some offer regular payouts during the terms.

Flexibility

  • MYGA: These are fixed annuities, but the terms aren’t as long as other options. They might be more appealing to those who are looking for regular short- or medium-term growth, not necessarily something for the long term.
  • Fixed annuities: General fixed annuities offer more variety, including lifetime options that allow you to receive regular payouts until you die.
A client was torn between a fixed annuity and a MYGA. After reviewing options, we structured a 6-year MYGA at 5.4% alongside an FIA with no fees, ensuring stable growth with tax deferral and no risk exposure—a strategy ideal for preserving retirement income.

Pros and Cons of MYGAs and Fixed Annuities

MYGAs and fixed annuities both have advantages and disadvantages. Make sure you understand the pros and cons before buying one or the other.

MYGAs

Pros
  • Guaranteed rates for the term: MYGAs have a guaranteed rate regardless of market conditions and volatility.
  • Higher rates than savings options: MYGAs usually offer higher interest rates than CDs and high-yield savings accounts.
  • Simplicity and predictability: These are some of the most straightforward annuity choices compared to other options available.
Cons
  • Limited liquidity: If you want to withdraw your money before the terms are up, you could face surrender charges.
  • No lifetime income options: MYGA terms go up to about 10 years. There aren’t any lifetime options unless you convert it after the terms are up.
  • Lump-sum premium: Unlike other types of annuities, most MYGAs require you to pay for your annuity in one lump-sum premium rather than over a series of payments. A lump-sum premium might be more difficult for some folks to afford.

Fixed Annuities

Pros
  • Flexibility in payout structures: You can opt for regular payments with fixed annuities, whether monthly, annually or something else.
  • Stability with guaranteed growth or income: Fixed annuities offer a minimum guaranteed interest rate, regardless of how the market is performing.
  • Can fit long-term retirement plans: Payouts can be as short or as long as necessary, including the rest of your life.
Cons
  • Rates may reset annually: A guaranteed interest rate is only for a set amount of time, and the current interest rate may reset every year, changing how much you earn.
  • More complex: Traditional fixed annuities are more complex compared to MYGAs. You might have difficulty understanding how they work, the fee structure or when you’ll get paid.

Which Is Right for You?

MYGAs are a type of fixed annuity, but they aren’t suitable for everyone seeking a fixed option. MYGAs are ideal for those who want a low-risk investment with guaranteed returns and are comfortable with set terms that typically last up to 10 years. On the other hand, traditional fixed annuities may be a better choice for individuals who are interested in exploring lifetime income options, prefer regular payouts over cashing out at the end of the term or desire more flexibility in terms and timing.

Frequently Asked Questions About MYGAs vs. Fixed Annuities
Can I convert a MYGA to a fixed annuity for lifetime income?
Yes. After your original MYGA terms are up, you can convert your MYGA to a fixed annuity with a lifetime income. Both MYGAs and fixed annuities are tax-deferred, meaning you’ll pay taxes when you start receiving distributions.
How do surrender charges compare between MYGAs and fixed annuities?
It’s up to each individual insurance company to decide how to implement surrender charges on different annuity products.
Are MYGAs or fixed annuities safer than CDs or bonds?
MYGAs, fixed annuities, CDs and bonds are all considered safe investments. CDs are the only FDIC-insured option, so if anything happens to your bank, you’re guaranteed your funds up to a set amount.

Editor Norah Layne contributed to this article.

Last Modified: March 20, 2025
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Dori Zinn President of Blossomers Media, Inc.
Dori Zinn is a veteran personal finance journalist with more than ten years of expertise, whose work has been showcased in prestigious publications such as the New York Times, Wall Street Journal and CNN. As the President of Blossomers Media, Inc., she has also earned accolades for her leadership, notably guiding the SPJ Florida Pro Chapter to win the “Chapter of the Year” award twice. Dori's dedication lies in empowering individuals to grasp and manage their finances with confidence.
  • Published in top outlets, such as the New York Times, Wall Street Journal, CNN and more
  • President of Blossomers Media, Inc.
  • Bachelor’s degree in Multimedia Journalism from Florida Atlantic University in Boca Raton, Florida
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2 Cited Research Articles

  1. Wisconsin Office of the Commissioner of Insurance. (2024, October). Consumer’s Guide to Understanding Annuities. Retrieved from https://oci.wi.gov/Documents/Consumers/PI-214.pdf.
  2. National Life Group. (n.d.). What is a MYGA – and Can it Help You Save for Retirement? Retrieved from https://www.nationallife.com/Resource-center/what-is-a-myga