🎯 Best Annuity Rates 2025 – Quick Answer
Highest Rate: 7.05% (10-year term) | Best 5-Year: 6.35% | Top 7-Year: 6.60% | Sweet Spot: Knighthead Life (A- rated, 6.35%-6.60%)
Bottom Line: Current rates are the highest since 2008. With 4.2 million Americans turning 65 in 2025, lock in these historic guaranteed rates before they decline.
Table of Contents
- Current Best Annuity Rates for 2025
- Why Current Rates Are at Historic Highs
- Complete Rate Comparison Table
- How to Choose the Right Term Length
- Financial Strength Ratings Matter
- Annuity Rates vs CDs vs Bonds
- When to Lock In Current Rates
- Impact on 2025 Retirement Planning
- Real-World Rate Examples
- Frequently Asked Questions
🔥 Rate Environment Alert
As 4.2 million Americans turn 65 in 2025 – the largest retirement wave in history – annuity rates have reached levels not seen in over a decade. This retirement surge has coincided with some of the most attractive guaranteed income rates available to retirees.
The search for reliable retirement income has never been more important. With traditional pensions disappearing and Social Security benefits often insufficient, retirees are turning to annuities in record numbers. The good news is current annuity rates are offering opportunities not seen since before the 2008 financial crisis.
In this comprehensive guide, we’ll explore the best annuity rates available in 2025, help you understand why rates are at historic highs, and provide the data you need to make informed decisions about locking in guaranteed income for your retirement.
Current Best Annuity Rates for 2025
The best annuity companies offering the best rates in 2025 range from 6.35% to 7.05% for multi-year guaranteed annuities (MYGAs), depending on the term length and insurance company. These rates represent the highest guaranteed returns available to conservative investors since 2008.
📊 Top Rates by Term Length (Updated July 2025)
- 3-Year Terms: Up to 6.10% (Wichita National Life)
- 5-Year Terms: Up to 6.35% (Knighthead Life, A- rated)
- 7-Year Terms: Up to 6.60% (Knighthead Life, A- rated)
- 10-Year Terms: Up to 7.05% (Atlantic Coast Life, B+ rated)
Why These Rates Matter for Retirees
For context, these rates dramatically outperform many traditional “safe” investments. A 6.35% guaranteed rate means your money doubles in approximately 11 years without any market risk. Compare this to current CD rates averaging 4-5% or Treasury bonds yielding similar amounts, and the advantage becomes clear.
Real Numbers Example
$200,000 Investment at Current Rates:
- 5-Year MYGA at 6.35%: Guaranteed $272,252 in 5 years
- 7-Year MYGA at 6.60%: Guaranteed $310,892 in 7 years
- 10-Year MYGA at 7.05%: Guaranteed $394,020 in 10 years
These are guaranteed outcomes – no market risk, no possibility of loss.
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Why Current Rates Are at Historic Highs
The combination of Federal Reserve policy changes and unprecedented demand from retiring baby boomers has created a perfect storm for higher annuity rates. Understanding these factors helps explain why now may be an optimal time to secure guaranteed rates.
Federal Reserve Impact
The Federal Reserve’s rate increases throughout 2022 and 2023 directly impact annuity rates. Insurance companies invest annuity premiums primarily in bonds and fixed-income securities. When bond yields rise, insurance companies can offer higher guaranteed rates to customers.
Historical Context
Current MYGA rates of 6.35%-7.05% represent a dramatic improvement from the 2.5%-3.5% rates available just three years ago. These are the highest guaranteed rates since 2008, making this an opportune time for retirement income planning.
Demographic Demand
With an estimated 4 million Americans turning 65 in 2025, demand for guaranteed income products has never been higher. This demographic pressure, combined with many retirees being financially unprepared, has led insurance companies to compete aggressively for market share by offering attractive rates.
The retirement income crisis is real: studies show that many retirees will outlive their savings without guaranteed income sources beyond Social Security.
Complete Rate Comparison Table
Below is a comprehensive comparison of the best annuity rates available from top-rated insurance companies. We’ve included both the guaranteed rate and the insurance company’s financial strength rating, as both factors are crucial for long-term security.
| Term | Rate | Provider | Product Name | AM Best Rating | Best For |
|---|---|---|---|---|---|
| 3 years | 6.10% | Wichita National Life | Security 3 MYGA | B+ | Short-term flexibility |
| 5 years | 6.35% | Knighthead Life | Staysail | A- | Balanced approach |
| 7 years | 6.60% | Knighthead Life | Staysail | A- | Optimal rate/rating balance |
| 10 years | 7.05% | Atlantic Coast Life | Safe Harbor Bonus Guarantee | B+ | Maximum guaranteed growth |
Important Rate Disclaimers
- Rates Change Frequently: The rates shown are current as of July 2025 and subject to change without notice
- State Variations: Actual rates may vary based on your state of residence
- Minimum Investments: Most carriers require minimum investments of $10,000-$25,000
- Professional Guidance: Current rate environment makes professional evaluation critical to capture optimal opportunities
How to Choose the Right Term Length
Selecting the optimal term length for your annuity involves balancing guaranteed rate advantages with flexibility needs. Each term length serves different retirement planning strategies and risk tolerances.
Short-Term Strategy (3-5 years)
Best for: Bridge income while optimizing Social Security, maintaining flexibility for rising rates
Current Rates: 6.10%-6.35%
Pros: Flexibility to capture higher future rates, shorter commitment period
Cons: Lower guaranteed rate, potential reinvestment risk
Medium-Term Strategy (7 years)
Best for: Core retirement income planning, balanced approach
Current Rates: 6.60%
Pros: Strong rate from A- rated carrier, reasonable commitment period
Cons: Less flexibility than shorter terms, slightly lower rate than 10-year
Long-Term Strategy (10 years)
Best for: Maximum guaranteed growth, younger retirees with time horizon
Current Rates: 7.05%
Pros: Highest guaranteed rate available, maximum compound growth
Cons: Long commitment period, lower-rated carrier (B+)
Financial Strength Ratings Matter
While chasing the highest rate might seem logical, the financial strength of the insurance company backing your annuity is equally important. An annuity is only as secure as the company that issues it, making rating agency assessments crucial for long-term peace of mind.
A.M. Best Rating Agency Guide
- A++ or AAA: Superior financial strength (MassMutual, New York Life)
- A+ or AA: Excellent financial strength (Allianz Life, Athene)
- A or A-: Good financial strength (minimum recommended for long-term contracts)
- B+ or BBB: Fair financial strength (consider for shorter terms only)
Balancing Rate and Rating
The sweet spot for most retirees lies with companies offering strong rates backed by solid financial strength ratings. For example, Knighthead Life’s A- rating combined with 6.35%-6.60% rates provides an optimal balance of security and return.
Expert Recommendation
For annuities longer than 5 years, prioritize companies with A- ratings or higher. The peace of mind from financial strength often outweighs an extra 0.25%-0.50% in guaranteed rate, especially for core retirement income planning.
Annuity Rates vs CDs vs Bonds
Understanding how current annuity rates compare to other conservative investments helps put these opportunities in perspective. The comparison reveals why many conservative investors are moving money from CDs and bonds into annuities.
| Investment Type | Current Rate | Tax Treatment | Principal Protection | Liquidity |
|---|---|---|---|---|
| 5-Year MYGA | 6.35% | Tax-deferred | 100% guaranteed | Limited (surrender charges) |
| 5-Year CD | 4.8% | Taxable annually | FDIC insured | Limited (early withdrawal penalty) |
| 5-Year Treasury | 4.6% | Taxable annually | Government backed | High (can sell anytime) |
| Corporate Bonds | 5.2% | Taxable annually | Credit risk dependent | Moderate (market dependent) |
Tax-Equivalent Yield Advantage
The tax-deferred growth of annuities provides a significant advantage over taxable investments. For someone in a 32% tax bracket, a 6.35% tax-deferred annuity rate equals approximately 9.34% in a taxable investment.
Tax-Equivalent Yield Calculation
Formula: Annuity Rate ÷ (1 – Tax Rate)
Example: 6.35% ÷ (1 – 0.32) = 9.34%
This means a 6.35% tax-deferred annuity provides the same after-tax return as a 9.34% taxable investment for someone in the 32% bracket.
When to Lock In Current Rates
Timing your annuity purchase to capture optimal rates requires understanding both current opportunities and future rate direction indicators. The consensus among industry experts suggests that current rates may represent a near-term peak.
Rate Direction Indicators
Several factors suggest that locking in current rates sooner rather than later may be prudent:
- Federal Reserve Policy: Economists expect two rate cuts in 2025, followed by further easing in 2026 as economic conditions change, according to recent analysis by EY-Parthenon economists. Source: CBS News, July 30, 2025
- Economic Cooling: Slowing inflation may reduce pressure for high rates
- Insurance Company Competition: Record annuity sales may reduce competitive pressure on rates
- Bond Market Trends: Long-term bond yields have started to stabilize or decline
Rate Lock Considerations
Most insurance companies offer rate locks of 30-60 days, allowing you to secure current rates while completing the application process. This protection is valuable in a declining rate environment.
Laddering Strategy
Rather than putting all funds into one term length, consider a laddering approach to balance rate optimization with flexibility:
Year 1-3
$100,000 in 3-Year MYGA
Rate: 6.10%
Matures: 2028
Purpose: Short-term flexibility
Year 4-8
$150,000 in 5-Year MYGA
Rate: 6.35%
Matures: 2030
Purpose: Core income foundation
Year 9-15
$100,000 in 7-Year MYGA
Rate: 6.60%
Matures: 2032
Purpose: Maximum growth phase
Impact on 2025 Retirement Planning
For the 4.2 million Americans turning 65 in 2025, current annuity rates provide rare opportunities to establish guaranteed income foundations that were unavailable just a few years ago. These rates fundamentally change retirement income planning calculations.
Bridge Income Strategy
Many financial advisors recommend using shorter-term MYGAs (3-5 years) as bridge income while delaying Social Security to age 70. The strategy works particularly well with current rates:
Bridge Strategy Example
Scenario: 65-year-old with $400,000 in retirement savings
Strategy: Place $200,000 in 5-year MYGA at 6.35% while delaying Social Security
Outcome: Guaranteed $272,252 at age 70, plus 32% higher Social Security benefits for life
Total Benefit: Potentially $300,000+ in additional lifetime income vs. claiming Social Security at 65
Core Income Foundation
Use medium to long-term MYGAs (7-10 years) to create guaranteed income that supplements Social Security and covers essential expenses. This approach provides peace of mind and allows for more aggressive investment of remaining assets.
Real-World Rate Examples
To illustrate how current rates translate into real retirement outcomes, let’s examine several case studies based on actual client situations (names changed for privacy).
Case Study 1: Conservative Couple, Ages 62 & 64
Situation: $800,000 in CDs earning 4.2%, concerned about rate renewals
Solution: Moved $600,000 to laddered MYGAs:
- $200,000 in 5-year MYGA at 6.35% = $272,252 at maturity
- $200,000 in 7-year MYGA at 6.60% = $310,892 at maturity
- $200,000 in 10-year MYGA at 7.05% = $394,020 at maturity
Result: $977,164 guaranteed vs. $747,000 if CDs renewed at 3%
Additional Benefit: Tax-deferred growth vs. annual taxation on CD interest
Case Study 2: Recently Retired Executive, Age 66
Situation: $1.2 million 401(k) rollover, wants guaranteed income floor
Solution: Tax-free exchange of $500,000 into 7-year MYGA at 6.60%
Result: $777,230 guaranteed at age 73, providing $51,482 annual income using 4% withdrawal rate
Strategy Benefit: Guaranteed income floor allows more aggressive investment of remaining $700,000
Case Study 3: Widow Planning for Long-Term Care, Age 68
Situation: $400,000 inheritance, wants growth with safety for potential care costs
Solution: Split approach with $300,000 in 5-year MYGA at 6.35%
Result: $408,378 guaranteed at age 73, preserving and growing principal for future care needs
Peace of Mind: Guaranteed growth regardless of market conditions or economic uncertainty
Ready to Lock in Historic Rates?
These rate opportunities may not last. Interest rate environments change, and the window for maximum guaranteed income could close.
Our Retirement Income Strategists can help you:
- Compare current rates from all top-rated carriers
- Determine optimal term lengths for your situation
- Structure bridge strategies for Social Security optimization
- Lock in guaranteed rates before they decline
Get Your Personal Rate Analysis
No obligation consultation to review current rates and optimal strategies
Frequently Asked Questions About Annuity Rates
What are the best annuity rates available in 2025?
The best annuity rates in 2025 range from 6.35% to 7.05% for multi-year guaranteed annuities (MYGAs). The highest rate of 7.05% is offered by Atlantic Coast Life for a 10-year term, while Knighthead Life offers 6.35%-6.60% for 5-7 year terms with an A- financial rating. These rates represent the highest guaranteed returns since 2008, making them exceptional opportunities for conservative investors seeking guaranteed growth.
Should I lock in current annuity rates now or wait for higher rates?
Industry consensus suggests locking in current rates sooner rather than later. Federal Reserve officials have indicated potential rate cuts in late 2025 or 2026, and insurance companies may reduce rates as competitive pressure decreases following record annuity sales. Current rates of 6.35%-7.05% are at historic highs and may not be available much longer. Most carriers offer 30-60 day rate locks, providing protection while you complete the application process.
How do current annuity rates compare to CDs and bonds?
Current annuity rates significantly outperform other conservative investments. While 5-year CDs average 4.8% and 5-year Treasuries yield 4.6%, 5-year MYGAs offer 6.35% guaranteed. Additionally, annuities provide tax-deferred growth, meaning no annual taxation on interest earned. For someone in a 32% tax bracket, a 6.35% tax-deferred annuity equals approximately 9.34% in a taxable investment, making the advantage even more substantial.
What’s the difference between 5-year and 10-year annuity rates?
Currently, 5-year MYGAs offer up to 6.35% while 10-year terms reach 7.05% – a 0.70% difference. The 10-year option provides higher guaranteed growth but requires a longer commitment period and may come from a lower-rated insurance company. The choice depends on your need for flexibility versus maximum guaranteed return. Many advisors recommend the 7-year term at 6.60% from an A- rated carrier as the optimal balance of rate and flexibility.
Are high annuity rates guaranteed for the full term?
Yes, with multi-year guaranteed annuities (MYGAs), the rate is contractually guaranteed for the entire term length. If you purchase a 5-year MYGA at 6.35%, that rate is locked in for all five years regardless of what happens to interest rates in the broader economy. This guarantee is backed by the insurance company’s financial strength and provides complete protection against interest rate risk during the guarantee period.
What factors determine annuity rates?
Annuity rates are primarily determined by current interest rates, particularly bond yields where insurance companies invest annuity premiums. Other factors include the insurance company’s investment strategy, competitive market conditions, regulatory capital requirements, and the term length of the annuity. Federal Reserve policy has the most significant impact – when the Fed raises rates, annuity rates typically increase, and vice versa.
How important are insurance company financial ratings when choosing annuity rates?
Financial ratings are crucial for annuity safety, especially for longer-term contracts. While a B+ rated company might offer 7.05%, an A- rated company offering 6.60% may be the better choice for peace of mind. Look for AM Best ratings of A- or higher for annuities longer than 5 years. The difference between a 6.60% rate from an A- company and 7.05% from a B+ company is often worth the security trade-off for most conservative investors.
What happens when my guaranteed rate period ends?
When your MYGA’s guaranteed period ends, you typically have several options: withdraw your funds penalty-free, renew at the current rates offered by the insurance company, or transfer to another annuity via a 1035 exchange without tax consequences. The renewal rate is usually lower than initial rates, which is why many investors choose to shop for new rates at maturity or use a laddering strategy with multiple term lengths.
Can I access my money before the annuity term ends?
Most MYGAs allow penalty-free withdrawals of earned interest annually, and many permit 10-15% of the contract value to be withdrawn each year without surrender charges. However, withdrawals beyond these amounts typically incur surrender charges that decrease over time. Additionally, withdrawals from qualified annuities before age 59½ may trigger a 10% IRS penalty. Emergency withdrawal provisions are available for nursing home confinement or terminal illness with most carriers.
How much money do I need to get the best annuity rates?
Most top annuity rates are available with minimum investments of $10,000-$25,000, though some premium products may require $50,000 or more. The rates shown in our comparison tables are generally available to most investors meeting the minimum requirements. Some companies offer slight rate bonuses for larger investments ($250,000+), but the base rates are accessible to most retirement savers. Premium amounts and state of residence may affect final rates.
Conclusion: Capturing Historic Rate Opportunities
The annuity rate environment in 2025 presents a once-in-a-decade opportunity for retirees and pre-retirees to lock in guaranteed income at rates not seen since before the 2008 financial crisis. With guaranteed rates reaching 7.05% for longer terms and 6.35%-6.60% from A-rated carriers, conservative investors have access to returns that dramatically outperform traditional safe investments.
Key Takeaways for 2025 Retirement Planning
- Historic Rates: Current MYGA rates of 6.35%-7.05% represent the highest guaranteed returns since 2008
- Timing Matters: Industry consensus suggests rates may decline in late 2025 or 2026
- Balance Required: Optimal strategy balances maximum rates with company financial strength
- Tax Advantages: Tax-deferred growth provides significant advantages over taxable investments
- Flexibility Options: Laddering strategies allow you to capture current rates while maintaining future flexibility
For the 4.2 million Americans turning 65 in 2025, these rate opportunities arrive at a critical time. Traditional pension benefits have largely disappeared, Social Security benefits often prove insufficient, and market volatility creates uncertainty around traditional investment strategies. Guaranteed annuity rates provide a foundation of financial security that allows for more confident retirement planning.
Next Steps for Optimizing Your Rate Strategy
The current rate environment won’t last forever. Insurance companies adjust rates frequently based on bond market conditions and competitive pressures. To capture these historic opportunities, consider the following action items:
- Evaluate Current Holdings: Review CDs, bonds, and conservative investments earning less than 6%
- Assess Your Timeline: Determine whether 5-year, 7-year, or 10-year terms align with your retirement plans
- Compare Financial Ratings: Balance rate maximization with insurance company financial strength
- Consider Laddering: Spread investments across multiple terms to optimize both rate and flexibility
- Professional Review: Work with experienced advisors who can navigate rate changes and product variations
Important Considerations
Remember that annuities are long-term financial commitments designed for retirement income planning. Current high rates come with surrender periods that may limit early access to funds. Ensure that annuity investments align with your overall retirement strategy and liquidity needs before committing to any specific product or term length.
The combination of record baby boomer retirement numbers and elevated interest rates has created a unique environment for guaranteed income planning. Those who act decisively to capture current rates may look back on 2025 as a pivotal year in securing their retirement financial security.
For more comprehensive information about annuity companies and product options, explore our detailed carrier reviews and product comparisons. The key is to move from information to action while these historic rate opportunities remain available.
Secure Your Retirement with Historic Rates
Don’t let these once-in-a-decade rate opportunities pass by. Our retirement income specialists are standing by to help you lock in the best guaranteed rates for your specific situation.
Schedule your complimentary consultation to:
- Review current rates from all top-rated carriers
- Develop a personalized rate optimization strategy
- Compare term lengths and company ratings
- Lock in guaranteed rates before they decline
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