Americans are encouraged from a young age to start saving for retirement. That’s why annuities have special features and tax benefits, intended to provide retirement income.
But how do you know if an annuity is right for you? How do you compare annuities? One place to start is by understanding current annuity rates. A local independent insurance agent can help you determine if an annuity is right for you and help you find the best annuity rates today. But first, you can use our guide that explains annuity rates.
What Is an Annuity?
Annuities are policies issued by insurance companies that pay a regular guaranteed income for life or a period of years. You can purchase an annuity policy by making a single payment or a series of payments.
- Deferred annuities: These annuities accumulate money for a period of time before the policy pays income.
- Immediate annuities: These annuities start paying income to the policyholder right away.
- Traditional qualified annuities: These annuities are part of a traditional pension plan or IRA and are purchased with before-tax dollars. Roth-qualified annuities are part of a Roth IRA or pension plan and are purchased with after-tax dollars. Non-qualified annuities are personally owned and paid for with after-tax dollars.
An independent insurance agent can help you choose the right type of annuity for your personal needs.
How Are Annuity Rates Determined?
You may wonder, "How do annuity rates work?" The answer depends on the type of annuity. Use our guide to learn what affects annuity rates.
Fixed Deferred Annuities
Fixed deferred annuities accumulate money at a stated rate of interest. “Annuity rate” is often used to refer to a fixed deferred annuity rate of interest. The rate is guaranteed for one, three, five, seven, or 10 years. Fixed annuity interest rates are generally higher than CDs or savings accounts. The rate of return you get is based on the insurance company’s portfolio of U.S. government and highly rated corporate bonds.
The insurance company absorbs any market risk. So, what’s the benefit? You get the returns of a large, diversified, and professionally managed bond portfolio with no market risk.
Fixed deferred annuity rates change regularly. Annuity rates are one way to compare fixed deferred annuities offered by different insurance companies.
Fixed Immediate Annuities
Fixed immediate annuities start to pay income 30 days to one year after the purchase payment is made. The annuity rate is applied to the purchase payment to calculate the guaranteed income.
Immediate annuity rates are based on age, sex, and interest rates. Some insurance companies offer more competitive rates than others.
Official Annuity Ratings Organizations
Fixed annuity rates are often impacted by an insurance company's financial strength rating. A company with a lower rating might offer a better fixed, deferred, or immediate income rate. That's not necessarily bad, but you'll want to make an informed decision.
| Rating Agency | Highest Ability To Meet Obligations | Medium Ability To Meet Obligations | Lowest Ability To Meet Obligations |
|---|---|---|---|
| AM Best | A++ to A- | B++ to B- | C++ to C- |
| Moody’s | Aaa to Aa | A to Baa | Ba to Caa |
| S&P | AAA to A | BBB to B | CCC to C |
| Fitch | AAA to AA- | A+ to BBB- | BB+ to CC |
Annuity Rates vs. Bond Yields
Fixed annuities and bonds can each be used to generate retirement income. Bonds have greater liquidity and may have higher rates. Fixed annuities, on the other hand, can provide guaranteed income for life and have the added benefit of customizable contracts.
Annuities are contractual agreements with insurance companies, while bonds are debt instruments. While bonds are more liquid, fixed annuities provide greater protection against rising interest rates. Fixed annuities also offer greater tax advantages and more flexibility than bonds, meaning they can potentially generate higher income. Fixed annuities also provide lifetime income, which is why many people prefer them to bonds.
Annuity Interest Rate Trends
Staying up-to-date on current annuity interest rates and trends can help you determine your best option. Keep in mind that annuity rates vary by carrier and other factors.
Average Annuity Rates by Age
Here are some sample annuity interest rates by age for New York Life's Guaranteed Lifetime Income Annuity II.
| Age | Single Life | Joint Life |
|---|---|---|
| 65 | 7.27% | 6.70% |
| 70 | 7.93% | 7.22% |
| 75 | 8.83% | 7.95% |
| 85 | 11.41% | 10.24% |
Future Outlook for Annuity Rates
Annuity sales are expected to decline by the end of 2025, mainly due to lower short-term interest rates. However, due to strong equity markets and favorable demographics, they are expected to stabilize in 2026 and 2027. An independent insurance agent can help you stay updated on annuity rate trends.
Top Annuity Rates Now
Ready to compare annuity rates to find the best option? Check out our comparison of the best annuity interest rates today. These outstanding carriers offer the highest annuity payout rates for this year.
Best Fixed Annuity Rates 2025
| Annuity Name | Issuer | Interest Rate | Contract Length | Minimum Premium | AM Best Rating |
|---|---|---|---|---|---|
| Gainbridge SteadyPeace | Gainbridge Life Insurance | 5.5-5.8% | 5 years | $1,000 | A- |
| Reliance Guarantee 5 | Reliance Standard Life Insurance | 5% | 5 years | $20,000 | A++ |
| MNL Guarantee Pro 5 | Midland National Life Insurance | 4.6-4.85% | 5 years | $20,000 | A+ |
| MassMutual Premiere Voyage | MassMutual | 4.05-4.45% | 5 years | $10,000 | A++ |
| Protective Secure Saver | Protective Life Insurance | 4.05-5.25% | 5 years | $10,000 | A+ |
| New York Life Secure Term MVA Fixed Annuity II | New York Life Insurance | 3.8-4.45% | 5 years | $5,000 | A++ |
An Independent Insurance Agent Can Help You Compare Annuity Rates
If you are considering purchasing an annuity, it pays to shop around. A local independent insurance agent can greatly simplify this process by shopping and comparing annuities and current rates from multiple carriers for you. Your agent stays updated on the latest annuity trends to help provide you with the best options.
Sources
https://www.bankrate.com/investing/best-fixed-annuity-rates/#best-annuity-rates
https://www.limra.com/en/research/research-abstracts-public/2025/annuity-sales-strategic-insights-and-future-market-trends/
https://www.annuity.org/annuities/strategies/annuities-vs-bonds/
https://www.nylannuities.com/resources/rates
