If you’re looking for a secure way to grow your savings, fixed annuities offer key advantages over CDs. With higher interest rates, tax-deferred growth, and guaranteed income options, they provide greater financial flexibility and long-term security.

Why a Fixed Annuity is Better Than a CD

Fixed annuities and certificates of deposit (CDs) are popular options for conservative investors seeking guaranteed growth and security. However, fixed annuities often offer distinct advantages over CDs, especially when it comes to long-term retirement planning.

Higher Interest Rates

Fixed annuities typically offer higher interest rates than CDs, especially for longer terms. This higher rate translates to more substantial growth potential, helping your money grow faster while still remaining secure.

Tax Deferred Growth

With a fixed annuity, interest grows on a tax-deferred basis. You won’t pay taxes on earnings until you start withdrawing funds, allowing for faster accumulation due to compounding. CDs, however, are taxed annually on interest, which can reduce your overall growth.

Guaranteed Income Stream Options

Unlike CDs, fixed annuities can provide a guaranteed income stream for life or a set number of years, making them particularly valuable for retirement. This feature helps protect against the risk of outliving your savings, which CDs cannot offer.

No Early Withdrawal Penalties After Initial Period

Fixed annuities often have withdrawal provisions after the initial surrender period, allowing partial access without penalties. CDs are more restrictive, usually charging a penalty if you withdraw funds before the term ends.

Longer-Term Options with More Flexibility

Fixed annuities offer flexibility with contract terms, ranging from a few years to several decades, and often let you choose income start dates. CDs, however, are typically short-term, often 3 months to 5 years, and offer limited renewal options that can lock in lower rates if interest rates drop.

Beneficiary Options for Inheritance

Fixed annuities can have a death benefit feature, allowing the remaining balance to pass directly to a designated beneficiary. This feature helps bypass probate, while CDs are subject to probate unless held in a trust or transfer-on-death account.

Ideal Situations for Choosing a Fixed Annuity Over a CD

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Longer-Term Financial Goals

If you’re looking to build wealth over a longer period, a fixed annuity’s higher rates and tax deferral provide a greater advantage.

Retirement Income Needs

If generating lifetime income is important to you, a fixed annuity offers options that a CD does not.

Estate Planning

Fixed annuities are often better suited for those wanting a smoother inheritance transfer.

No Obligation Consultation

While CDs offer safety and predictable returns, fixed annuities provide greater growth potential, tax advantages, and the option for guaranteed lifetime income—making them a stronger choice for long-term financial security. Whether you’re planning for retirement or looking to preserve and grow your wealth, a fixed annuity can offer the flexibility and protection you need. Explore your options today and take the next step toward a more secure financial future.