Best 5-Year Fixed Annuity Rates

What Is a 5-Year Fixed Annuity (MYGA)?

A 5-year fixed annuity, also called a 5-year multi-year guaranteed annuity (MYGA), provides a guaranteed interest rate for a full five-year term. For a comparison across all term lengths, see our best fixed annuity rates page, or jump directly to 3-year MYGA rates or 7-year MYGA rates. Your money earns a fixed rate each year, and the insurance company guarantees that rate will not change during the 5 years.

5-year fixed annuities work similarly to certificates of deposit (CDs), but they are issued by an insurance company, not a bank.

My Annuity Store does not charge you a fee. Most MYGAs have no annual fees, but withdrawing more than the free withdrawal amount before the term ends can trigger a surrender charge.

• You agree to leave your money in the annuity for the full term
• The insurance company credits a fixed interest rate that is locked-in for all  5 years
• Early withdrawals above any free-withdrawal amount may be subject to surrender charges and possible tax penalties
• Interest you earn in a fixed annuity grows tax-deferred, so you won’t have to deal with a 1099 each year

What Happens at the End of an Annuity Contract?

It is important to note that there is a 30-day window at the end of an annuity contract in which you will need to make a decision. If you do nothing, your annuity will renew for another term at whatever annuity rate is being offered at that time. You will have several options at the end of your annuity contract, and we’ve listed them below.

• You can rollover the funds into another annuity to continue tax-deferred growth (via a 1035 exchange).
• You can rollover to an income annuity to secure a new income stream.
• You can also initiate withdrawals, systematically or as a lump sum.

You should be aware of possible tax implications. Tax considerations and potential ramifications will vary based on your annuity contract and situation. My Annuity Store recommends you carefully assess your options and consult an annuity specialist to align your decision with your financial objectives.

What Affects 5-Year Fixed Annuity Rates?

5 year fixed annuity rates can vary based on several factors, including:

• State of residence – Not all products and rates are available in every state.
• Premium amount – Some carriers offer higher rates for larger deposit levels.
• Tax status and product – IRA vs non-qualified funds, and specific MYGA product features, such as free withdrawal amounts, can influence the rate offered.
• Carrier pricing – Insurance companies adjust MYGA rates based on interest rates, portfolio yields, and their own business goals.
• Insurance Company Financial Ratings – Companies with lower financial ratings usually have higher fixed annuity rates than companies with higher AM Best ratings3.

How to See the Most Accurate Fixed Annuity Rates

For the most accurate and relevant 5-year fixed annuity (MYGA) rates for your situation:

1. Filter rates by your state of residence to see products and rates available where you live.
2. Enter your desired premium amount to view any rate breaks or deposit tiers.
3. Review product details for each annuity, including surrender schedule, free-withdrawal provisions, and carrier rating.

If you’d like help comparing options or confirming your exact rate before you apply, call us at 855-277-8088 or request a personalized quote.

Comparing Fixed Annuity Rates

When shopping for the best fixed annuity rate, it is important to look past the highest rate and consider all features of each annuity.

Key Features to Consider:

• Insurance Company’s financial ratings
• Free withdrawal privileges
• Surrender charges
• Simple vs. compounding interest

Simple vs Compound Interest

When evaluating the best 5 year fixed annuity rates, you will likely see that the majority of MYGAs, or multi-year guarantee annuities, offered by insurance companies use compound interest. Knighthead Life’s Staysail MYGA takes a more straightforward approach with simple interest.

Let’s compare two five-year fixed annuities with an initial deposit of $100,000.

The simple interest MYGA pays a rate of 5.95%, and compound interest MYGA pays a crediting rate of 5.35% annually. As you can see from the table of values below, both individuals have the same accumulated value after five years, making the products rate-equivalent.

The Difference: Income
What if you’d like to use your MYGA for income purposes and take interest-only withdrawals annually to cover certain living expenses? See how the compound and simple interest MYGAs compare over five years of annual, interest-only withdrawals. Use our simple vs. compound interest calculator

The simple interest option generates $29,750 versus the compound interest total of $26,734. That’s 11.5% more income. When it comes to income, the simple interest MYGA provides more value.

Free Withdrawal Options

Many 5 year fixed annuities allow you to withdraw the interest earned, or up to 10% of your account value annually, without penalty. While some fixed annuities have no free withdrawal options. Example: If you have $100,000 in your annuity, you could withdraw up to $10,000 in year two without facing surrender charges.

If you do not want or need any free withdrawal options, it may be wise to consider annuities with no free withdrawal provisions because they typically pay a higher guaranteed rate.

Surrender Charges

A surrender charge is a fee applied by an insurance company4 when you withdraw money from an annuity during the “surrender period,” which is during the 5 year annuity contract.
Surrender charges are applied as a percentage of your annuity’s account value and decrease over time.

They reduce the total cash value you receive and are typically highest at the start, often becoming zero after 7-8 years, with some contracts allowing small penalty-free withdrawals annually.

Fixed Annuities vs. CDs vs. Bonds

Fixed annuities, bonds, and CDs are all worth considering if you are looking for a safe and steady way to grow your retirement savings. They each offer predictable returns and safety of principal, but there are differences among them.

The table below compares and contrasts the differences.

Fixed Annuity Advantages:

• Higher rates: 1.5-2% more than CDs
• Tax-deferred growth: Pay taxes only when you withdraw
• No annual 1099s: Unlike CDs and bonds
• Competitive with bonds: Without interest rate risk

When to Choose CDs Instead:

• Need FDIC insurance specifically5
• Want maximum liquidity
• Uncomfortable with the insurance company backing annuities

When to Choose Bonds Instead:

• Want government backing
• Need to sell before maturity (secondary market)
• Building a bond ladder