Best Fixed Annuity Rates

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An annuity is a financial contract between an insurance company and an investor. In exchange for premium payments from the investor, the insurance company agrees to pay a certain amount of money in the future.

A fixed annuity comes with a guaranteed minimum interest rate — set by the insurance company providing the annuity, which means you can better predict the amount of income it will produce. The higher your interest rate on a fixed annuity, the more your money can potentially grow.

Current Monthly Fixed Annuity Rates

Fixed annuities can provide you with predictable monthly income in retirement. The actual rate you receive and your monthly payment amount depend on several factors, including:

• Size of the annuity
• Interest rate
• Your age
• The state you live in
• Contract term
• Whether the annuity allows withdrawals
• When you begin receiving payments
• Whether you receive immediate or deferred payments
• Length of time you’ll receive payments.

Average Fixed Annuity Rates by Term Length

To help you evaluate interest rates as you shop for a fixed-rate annuity, GOBankingRates averaged the five highest and five lowest rates among the best multi-year guaranteed annuity rates published by Annuity Resources.

Where Annuity Resources listed fewer than 10 annuities, GOBankingRates averaged all the published rates. Annuities available in one state were excluded.

To see how this might play out for your retirement, consider the example of a 60-year-old with $100,000 to put into an annuity. They choose a five-year fixed annuity and will receive their payments over 20 years, beginning in 2030, when they turn 65.

With an average rate of about 5.43%, the annuity can grow to approximately $129,900 by the time payouts begin. This annuity will provide about $991.50 per month for 20 years, for a total minimum payout of approximately $237,960 in steady income.

Did You Know?

Gainbridge’s FastBreak™ annuity is offering , one of the most competitive rates available for a fixed-rate annuity.

Key Factors That Influence Rates

Insurance companies base their published rates on many variables. Key ones include economic conditions, the provider’s financial strength and the contract term.

Economic Conditions

The premium you pay for a fixed-rate annuity is invested primarily in fixed-income assets such as bonds, so bond yields influence annuity rates. Bond yields, in turn, tend to move in the same direction as economic trends such as inflation and the federal funds rate. 

Provider’s Financial Strength

Insurance companies receive credit ratings from several credit rating agencies. In some cases, the financial strength of a highly rated company lets it offer competitive rates. However, the opposite also might be true. Insurance companies have to hold a lot of capital to earn the top credit ratings, and as a result, they have less to pay out to annuity investors.

That said, financial strength should always take precedence over rates when you’re shopping for an annuity. A struggling company could fold before it has paid out your annuity.

Term Length

Generally speaking, the longer the terms are, the higher the rates will be. That means you’ll likely earn a better return with a seven-year annuity than you will with a two-year contract.

Benefits of Fixed-Rate Annuities

Fixed-rate annuities offer numerous benefits that make them a good choice for the right investor.

• Guaranteed income with predictable growth
• Funds grow tax-deferred until you withdraw them in retirement
• Principal protection against market volatility

Drawbacks To Consider

These drawbacks might not be deal-breakers, but it’s important to understand them before you invest.

• Withdrawing money before the contract term ends might incur a penalty
• Lower returns compared to stocks and mutual funds
• Vulnerable to inflation risk, which can reduce the annuity’s value, even if the dollar amount stays the same.

How To Compare and Choose the Best Rates

A modest difference in interest rates can have a significant impact on your payout. Here’s how to compare fixed annuities to find the best deals.

• Compare rates from several different annuity providers. Also, look at how rates vary between terms.
• Annuity fees may be a surprise if you don’t know when those charges occur. Read your contract to make sure you understand your contract’s surrender charges and other fees, as well as renewal rates.
• Work with a fee-based financial advisor who can make customized recommendations based on your financial situation and retirement income needs.

Alternatives to Fixed-Rate Annuities

Fixed-rate annuities are one of several financial products that can produce predictable income in retirement. Here are a few more:

Certificates of Deposit

CDs are a type of savings account with some features in common with fixed-rate annuities. You lock in your money for a set period in return for a guaranteed interest rate. When the CD matures, you can renew your CD at the current rate or take your money out.

Bonds

Bonds produce income with relatively low risk compared to stocks — the reason fixed-rate annuities invest their clients’ premiums in bonds. You might have to forgo guaranteed rates, but you gain the flexibility to select which bonds or bond funds to invest in.

Indexed Annuities

Indexed annuities track an underlying benchmark index, such as the S&P 500. They give you exposure to the market and a greater potential for growth while limiting your risk by capping losses to a certain percentage of your principal. On the downside, they also cap your earnings.

Conclusion

A fixed-rate annuity can provide you with a predictable and consistent monthly income in retirement. You can use your annuity payments to supplement other retirement income and possibly delay Social Security to increase your benefit. 

When comparing fixed annuities, it’s important to understand your guaranteed rate, the term length of your investment and each insurance company’s financial rating. This helps you gauge the value of your annuity, how much you’ll make (at a minimum) and how long the contract lasts.

Allison Hache, Jacob Wade and Karen Doyle contributed to the reporting for this article.

Data is accurate as of April 7, 2025, and is subject to change.

Annuity rates were sourced from Annuity Resources and additional research by our editorial team.

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