How to Shop for Fixed Annuities

When it comes to planning for retirement, many people seek stability, predictability and security. Fixed annuities can provide just that. They offer a guaranteed return on your investment, making them an attractive option for those looking to secure their financial future. In this post, we will explore the top considerations to make when you're trying to choose a fixed annuity that best suits your individual needs.

In 2025, the fixed annuity market is more competitive than ever, making it increasingly confusing for annuity investors to navigate. With interest rates in flux, staying informed about the best available options is crucial. Let’s explore the details.

Understanding Fixed Annuities

Before purchasing any type of fixed annuity, it is important to understand what fixed annuities are and how they work. Fixed annuities are contracts between you and an insurance company. You pay a lump sum or make a series of payments, and in return, the insurer promises to pay you a fixed interest rate or income for a specified period. This can be a great way to grow your savings without the risks to principal associated with the stock market.

• Assured Returns, Principal, and Income: Fixed Rate or Fixed Index annuities offer a predetermined interest rate or income over a specified timeframe. This ensures you are aware of the exact growth or payments your investment will generate in the future, while your principal remains secure and stable.

  
  

• Tax-Deferred Growth: Funds invested in a fixed annuity accumulate on a tax-deferred basis until withdrawal. This feature can greatly benefit long-term savings in after-tax accounts. Keep in mind that withdrawing funds held in an annuity before reaching age 59 1/2 may incur an IRS early withdrawal penalty, similar to an IRA. A calculator for comparing tax-deferred and taxable growth is available here: Investment Growth Calculator - Compare taxable, tax-deferred, and tax-free investments.

• Payout Options: Once the contract ends, you can choose to reinvest some or all of the proceeds into a new annuity with any available issuer at that time to postpone taxation on your gains. Alternatively, you can decide to receive your funds either as a lump sum or as regular payments over a set period or for life.

These characteristics make fixed rate and fixed indexed annuities with enhanced income options appealing to conservative investors seeking a dependable income stream or moderate growth opportunities, while also protecting principal in their investment portfolio.

Factors to Consider When Choosing a Fixed Annuity

When selecting a fixed annuity, several factors can influence your decision. Here are some key points to keep in mind:

• Interest Rate: When evaluating Fixed Rate annuities, seek the highest guaranteed rate while also considering the issuer's financial strength rating, the term length, and any associated fees. Typically, issuers of Fixed Rate annuities provide better rates for larger minimum investments, often beginning at $100,000.00. Higher rates might also be available for longer maturities, up to 10 years. Additionally, be aware that some annuity issuers offer only a simple interest rate, unlike the majority who provide a compounded interest rate.

• Insurer's Financial Strength Ratings: Before purchasing an annuity, it's crucial to evaluate the financial strength ratings of the insurance company offering it. A high rating indicates that the company is more likely to meet its future guarantees and obligations, though this might lead to lower interest or income rates as compared to annuities from companies with lower ratings. The contractual guarantees set forth in a fixed annuity rely on the issuing insurer's financial stability, making it essential to choose companies with strong financial ratings. This vital consideration will narrow down the top annuity options to a smaller, much more manageable list of issuers and simplify your fixed annuity shopping process.

• Surrender Charges: It's important to understand the penalties for withdrawing more than the typical 10% annual penalty-free amount that most providers allow. Some annuities have significant surrender charges that can diminish your returns if you withdraw more than 10% of your funds early in any given year. Furthermore, some advertised rates you'll see pertain to Fixed Rate annuities that are subject to a "Market Value Adjustment" (MVA) if you exceed the annual penalty-free withdrawal limit in any year. The MVA can be greater or less than the invested amount, moving inversely to interest rates during your holding period. Therefore, if interest rates fall during your holding period, the market value adjustment applied might lead to "appreciation" at withdrawal, whereas the opposite might occur if interest rates rise during your holding period.

  
  

• Payout & Liquidity Options: Think about how you prefer to receive your funds. Certain annuities provide more flexible and enhanced income choices, such as income bonuses, lifetime income and annual penalty-free access compared to others.

• Inflation Protection: If you are concerned about inflation, look for annuities that offer inflation protection features on income payments to help offset the rising costs of living.

  
  

By considering these factors, you can make a more informed decision that aligns with your financial goals.

Tips for Maximizing Your Fixed Annuity Investment

To get the most out of your fixed annuity, consider these tips:

• Shop Around: Don't settle for the first or highest rate you find. Compare offers from various insurers to find the best overall value, considering the issuer's financial strength ratings and the contractual terms. Companies with lower financial strength ratings often need to offer higher rates to offset their lower ratings and may have limited liquidity options or no penalty-free access until the maturity date, including interest payments. At Annuity Rate Shop, we generally recommend selecting fixed annuities from providers with one of AM Best's top three financial strength ratings: "A", "A+", or "A++", which allow for a penalty-free withdrawal amount of 10% or more annually.

• Understand the Terms: Read the fine print and understand the terms of the annuity. This includes surrender charges, fees, liquidity and payout options.

  
  

• Consider Your Time Horizon: Think about how long you plan to keep the annuity. Longer terms often offer higher rates if you won’t need access to the funds during your holding period.

  
  

• Call us for your free consultation and Fixed Annuity Report: Please call or email Annuity Rate Shop for a free, customized Fixed Annuity Report (FAR) to help you navigate all the options and find the best fit for your situation.

  
  

By following these tips, you can make a more informed decision and maximize your fixed annuity investment.

Current Market Overview

In 2025, the annuity market is again experiencing a surge in interest. Issuers continue to offer very competitive rates to attract new customers. According to industry research organization LIMRA in their report released earlier this year, U.S. annuity sales doubled from $219 billion in 2020 to $434 billion in 2024 and continue to set new records in 2025.

Click the link below to access today's partial list of leading Fixed Rate annuity rates for all maturities from insurers with an "A" or better financial strength rating by ratings agency AM Best. Higher rates may be offered by issuers with an A- rating or lower, which involve greater credit quality risk and can be provided upon request.

See Today's Rates here...

https://members.annuityratewatch.com/pods/script.js?v=202509261250 

*Rates on our list are updated daily by the publisher "Annuity Rate Watch", subject to change without notice and may have restrictions. Please contact us for details.

As an independent annuity agency, we are not tied to any specific issuer, which enables us to provide the most thorough and current information on all major annuity issuers and assist you in your annuity shopping process at no charge. We are compensated directly by the annuity companies for acting as an authorized independent broker of their products, allowing us to filter the available fixed annuities in the market to identify the best option that aligns with your financial objectives.

The Future of Fixed Annuities

In the final quarter of 2025 and as we head into 2026, the fixed annuity market will continue to evolve. Interest rates fluctuate, and new products may emerge.

• Potential Rate Changes: Monitor economic indicators that could influence fixed annuity interest rates, particularly the Federal Reserve's rate decisions. On September 17, 2025, the Federal Reserve lowered interest rates by 1/4 percentage point for the first time in 2025, resulting in a similar 1/4-point decrease in fixed annuity rates across most maturities and issuers. Given that bond market participants largely anticipate further Fed rate reductions at their upcoming October and December 2025 meetings and throughout 2026, according to the Fed's own published statements and projections, it may be prudent to secure a rate sooner rather than later.

• Innovative Products: Insurers are consistently creating new solutions to address consumer demands. Seek out enhanced features from financially robust companies, like better income and liquidity options, or hybrid fixed index annuity products with Long Term Care linked benefits, which have emerged as a favored alternative to traditional LTC policies over the past decade. Get your free copy of "Tax-Free Benefits for Long-Term Care" for more details by clicking the tab at the top of this page.

• Increasing Demand: As more people seek dependable retirement income they won't outlive or the security of principal with a competitive interest rate, the demand for fixed annuities has been hitting new peaks in recent years and is anticipated to keep rising. This trend is expected to lead to heightened competition, which should benefit annuity investors in the future.

  
  

Allow us to assist you in staying updated on these trends real-time so you can make the most informed decisions for your financial future.

Wrapping It Up

When evaluating the top fixed annuities for 2025 and beyond, it's crucial to thoroughly compare various options, be clear on their terms and features including issuer financial strength ratings and ensure they match your financial goals. This strategy will enable you to achieve growth with stability of principal and secure a dependable income stream to support you during your retirement years. Fixed annuities can be a valuable tool for portfolio management and retirement income planning. With the right information and our professional assistance, we can efficiently find a fixed annuity option that meets your particular needs.