Fixed Income Ladders

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Similar to CDs that pay a fixed rate of interest for a set period of time, Multi-Year Guarantee Annuities ("MYGA") are simple to understand and pay you a guaranteed annual fixed rate of interest for the entire contract period.

The primary functional difference between a MYGA and a CD is when a MYGA is held in a non-qualified account (for example, assets held in an individual or joint account) - you don't pay taxes on the interest until the money is withdrawn - so your interest can grow and compound tax-deferred. With a CD held in a non-qualified account, you have to pay taxes on the interest annually.

MYGAs are offered in various time frames - typically for as short as three years and up to as long as 10+ years - and pay different interest rates.

Similar to most fixed income instruments, MYGA rates are impacted by interest rate cycles.

Depending upon the interest rate environment, we may recommend building a Multi-Year Guarantee Annuity Income Ladder by staggering the time period of maturity, as well as the interest rate earnings, of several MYGAs for you.

The proportion of allocation will typically depend upon your age, your time frame of needed cash flow, the interest rate spread between the various time frames and the outlook for interest rates for the foreseeable future.

For example, if interest rates appear to be moving in an upward direction for the foreseeable future, we may recommend an allocation into shorter-term durations (for example, a MYGA Income Ladder consisting of three, four, and five-year contract surrender periods).

Then, as the short term MYGAs mature, you can exchange the values into other MYGAs that will hopefully coincide with locking in higher interest rates for longer contract surrender periods at that time.

Conversely, if interest rates appear to be moving in a downward direction for the foreseeable future, we may recommend an allocation into longer-term durations (for example, a MYGA Income Ladder consisting of five, six and seven-year contract surrender periods) to lock in higher interest rates for you.

If you need to plan for retirement income and lifestyle gaps or shortfalls (1) immediately, (2) during some fixed period in the future, or (3) for your entire retirement, Immediate Income Annuities ("SPIA") and Deferred Income Annuities ("DIA") allow you to lock in guaranteed lifetime income streams - and help simplify your future financial life.

Immediate Income Annuity and Deferred Income Annuity payments are based on your life expectancy at the time you start the payment stream - so the later you start, the shorter your life expectancy, which in turn increases the payout rate.

Guaranteed Lifetime Income Annuity Ladders may ladder Immediate Income Annuity and Deferred Income Annuity payment start dates for you depending upon your unique situation and needs.

For example, you may want to stagger receiving higher amounts of guaranteed lifetime income after you retire, when you will no longer receive a monthly paycheck from your employer and, in addition, your risk tolerance for stock market volatility and Sequence Of Returns Risk lessons.

Guaranteed Lifetime Income Annuity Ladders can ladder Immediate Income Annuities and Deferred Income Annuities for you so you have guaranteed lifetime income streams starting now, in five, 10, 15 years, etc. - and you will know to the penny, the exact guaranteed lifetime income amount, for each specific start date.