MYGA vs. Bank CDs: Why MYGAs Might Be the Better Choice for Your Retirement Savings

Guaranteed returns on your money provide a foundation of financial security, offering peace of mind and confidence in your future.

Hey there, Friends and Family of TCB!

I hope you're doing well and enjoying life! Here at Take Care of Business (TCB), we're always on the lookout for the best ways to help you secure your financial future. Today, we’re excited to talk about an option that might not be on your radar yet but has some incredible benefits—Multi-Year Guaranteed Annuities (MYGAs). You might be familiar with bank certificates of deposit (CDs), but let’s explore why MYGAs could be a better choice for your hard-earned money.

What is a MYGA?

Imagine a safe, predictable investment that offers stability and a guaranteed interest rate for several years—typically ranging from 1 to 10. That’s a MYGA for you. It’s a type of fixed annuity that can make your money work harder while you enjoy peace of mind.

Here are 5 reasons why you should consider a MYGA as a piece of your retirement portfolio 👊

1. Higher Interest Rates

 One of the main benefits of MYGAs over Bank CDs is the potential for higher interest rates. MYGAs typically offer more competitive rates, helping your savings grow faster over time. This can be particularly advantageous in a low-interest-rate environment where traditional CDs might not offer sufficient returns to outpace inflation.

• Example: If a 5-year CD offers 3% annual interest, a 5-year MYGA might offer 5% or more. Imagine what that extra growth could mean for your future plans!

2. Tax-Deferred Growth

Another significant advantage of MYGAs is the tax-deferred growth. Unlike CDs, where interest earnings are taxed annually, the interest earned on a MYGA accumulates tax-deferred until you start receiving payments. This allows your investment to compound more effectively, potentially increasing your retirement nest egg substantially.

3. Flexible Payout Options

MYGAs also provide flexible payout options that can be tailored to your retirement needs. Whether you prefer a lump-sum payment or regular income streams, MYGAs can be customized to align with your financial planning strategy. In contrast, CDs generally offer limited flexibility, often restricting you to a lump-sum withdrawal at maturity.

1. Penalty-Free Withdrawals:

   • Some MYGAs are pretty flexible when it comes to accessing your money. They allow you to withdraw a percentage of your premium each year without any penalties.

   • Example: You might be able to withdraw up to 10% of your premium annually without any fees. This offers liquidity that bank CDs typically don’t provide.

4. Safety & Security

Like CDs, MYGAs are not subject to market volatility, making them a safe choice for conservative investors. The principal is protected, and the interest rate is guaranteed for the duration of the term, providing peace of mind and financial stability.

• MYGAs are backed by the issuing insurance company, and CDs are insured by the FDIC up to $250,000 per depositor.

• The financial strength of the issuing insurance company adds an extra layer of security with MYGAs.

5. Longer Terms Available

MYGAs often come with longer term options compared to Bank CDs. While CDs might offer terms up to five years, MYGAs can extend much longer, sometimes up to ten years or more. This can be beneficial if you are looking to lock in a high interest rate for a more extended period.

Is a MYGA Right for You? 🤔

A MYGA could be an excellent fit if you:

1. Are looking for higher returns than those offered by bank CDs.

2. Appreciate the benefit of tax-deferred growth.

3. Want a secure and predictable investment.

4. Need flexibility in term lengths to match your financial plans.

5. Prefer having the option to access a portion of your funds without penalties.

How to Get Started

Interested in learning more about MYGAs and how they can fit into your financial strategy? We're here to help! Our team at Take Care of Business (TCB) is dedicated to providing you with personalized advice and solutions tailored to your unique needs.

Final Thoughts

Multi-Year Guaranteed Annuities (MYGAs) are a fantastic alternative to traditional bank CDs, offering higher interest rates, tax-deferred growth, flexible terms, and penalty-free withdrawal options. As you explore your options, consider adding MYGAs to your financial portfolio for greater peace of mind and potentially better returns.

Thank you for being a part of the TCB family. We're committed to helping you achieve your financial goals with confidence and security. Reach out to us anytime—we're always here to support you.

Warm regards,

Shawn & JB
Take Care of Business (TCB)