Why 5-Year MYGAs Are the Sweet Spot for Most Buyers

Quick take: A 5-year MYGA hits the perfect middle ground, high enough yield to beat the best 5-year CDs by roughly 130-165 bps (A-rated 5-year MYGAs 5.50-6.05% vs top 5-year CDs 4.35-4.50% APY in late September 2026), short enough lockup that you're not committed past 70 if you start at 65, and renewal optionality at maturity. Below: the math, the renewal-integrity question, and why "5-year" wins for most buyers.

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CD vs MYGA, after tax

What $100,000 earns in 5 years: CD vs MYGA, after tax

AmountYears3 years5 years7 yearsCD rate (%)Federal bracket10%12%22%24%32%35%37%State tax (%)

Rates used: CD 5.00%, the top nationally available 5-year CD (Bankrate, October 14, 2026); change it to the rate you are offered. MYGA 5.95%, the best A-rated rate we track as of October 13, 2026: Delaware Life Pinnacle Plus 5-year (AM Best A-, negative outlook, 7/31/2026), $100,000 and up, effective October 6, 2026 (Delaware Life rate sheet).

CD, interest taxed every year	$121,081
MYGA, tax-deferred, before tax	$133,507
MYGA after paying tax on all the interest at withdrawal	$126,136
Tax deferral alone adds about	$674
MYGA ahead of the CD, after tax	$5,055

Assumes 22% federal and 0% state income tax, no withdrawals, rates held for the whole term. MYGA interest is taxed as ordinary income when you withdraw it, not as capital gains. Gains taken before age 59 1/2 can owe a 10% IRS penalty, and cashing out early can cost a surrender charge.

In an IRA both grow tax-deferred, so the edge there is the rate alone. Bank and credit union deposits are FDIC or NCUA insured up to the limits; a MYGA is backed by the issuing insurer's claims-paying ability and your state's guaranty association up to its limits, not the FDIC. General education, not tax, legal or financial advice.

The peace-of-mind framework

Buyers want three things in safe money:
1. Yield that beats inflation + taxes
2. Lockup tolerance they can live with
3. Predictability: knowing exactly what they get

A 5-year MYGA delivers all three. The reasons:

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Yield: 5-year is at the rate-curve sweet spot

As of September 25, 2026 (rates re-checked on carrier rate sheets and rate feeds):

Term	Rate	Carrier (AM Best)
3-year	5.85%	Wichita Security 3 (B+)
5-year	6.25%	Wichita Security 5 (B+)
5-year (A+ rated)	6.05%	Athene MaxRate 5, $100K+, most states
7-year	6.10%	Wichita Security 7 (B+)
10-year	6.05%	Wichita Security 10 (B+)

On Wichita National's sheet the 5-year pays more than its 7-year and 10-year, so there is no reward for locking longer with that carrier. At Athene the 7-year paid only 0.10% more than the 5-year ($100K+, 9/25/2026).

Hans's note: Typically longer = more yield. When the curve is this flat past 5 years, the 5-year term gives you most of the yield with less lockup.

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Lockup: 5 years is short enough to plan around

For a 65-year-old buying a 5-year MYGA:
• Exit at 70, still healthy, still flexible
• Money is back BEFORE Social Security max claim age (70)
• Money is back BEFORE Medicare gap-year decisions get complex
• Money is back BEFORE RMDs trigger at 73

For a 60-year-old:
• Exit at 65, Medicare onset, retirement transition
• Money available for first "active retirement" years
• Plenty of time to roll into another MYGA or SPIA

For a 70-year-old:
• Exit at 75, still within typical life expectancy
• Avoids the 10-year-FIA "exit age 80+" problem

5-year is the maximum term most retirees should consider unless they have very specific long-hold reasons.

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The renewal-integrity question

Here's the unsexy truth about MYGAs:

When your 5-year MYGA matures, the carrier offers a renewal rate. The renewal rate is almost always LOWER than the new-money rate.

How carriers handle renewals

Carriers segment buyers into two pools:
• New money pool: gets the headline rate to attract you (6.25% on Wichita's 5-year as of 9/25/2026)
• Renewal pool: gets a lower rate because they assume you won't shop around

The difference is typically 50-150 basis points. So your 6.25% MYGA at maturity may renew at 4.75-5.75%, even though new buyers get 6.25%.

How to defeat this

Two options at maturity:
1. §1035 exchange to a different carrier's NEW MYGA at current market rate
2. Surrender within the 30-day window and reinvest

Both options take you out of the "renewal pool" and into the "new money pool" elsewhere. This is the entire point of a 5-year strategy, you have a built-in decision point every 5 years to optimize.

Renewal Integrity grades

Some carriers have BETTER renewal histories than others:

Carrier	Renewal Integrity Tier	Notes
Wichita National	A (transparent, predictable)	Publishes renewal rates publicly
Aspida	A- (Apollo-backed, fairly competitive)	Generally close to new-money
Delaware Life	B (Group 1001, variable history)	Worth shopping at maturity
Athene	B+ (volume-driven, can drop)	Almost always worth 1035
EquiTrust	C (renewal can drop sharply)	Strongly recommend 1035 at maturity

See Renewal Rate Integrity guide for the full breakdown.

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Predictability: 5-year vs FIA

A 5-year MYGA pays a fixed rate GUARANTEED for the full term (5.85-6.25% on the contracts above, September 25, 2026).

A 5-year FIA pays 0-7% credited annually, dependent on market performance.

Year	5-yr MYGA (6.05%, Athene MaxRate 5, card effective 10/14/2026)	5-yr FIA (7% cap, S&P historical)
Y1	6.05%	7% (cap hit)
Y2	6.05%	0% (down year)
Y3	6.05%	7% (cap hit)
Y4	6.05%	4% (mid year)
Y5	6.05%	6% (mid year)
Average	6.05%	~4.8%

In MOST 5-year windows, MYGA beats FIA. The exception: 5-year periods with extreme bull markets (rare). For predictability and certainty, MYGA wins.

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The 5-year laddering strategy

For larger amounts ($300K+), ladder across 3 different 5-year MYGAs at different carriers:

Allocation	Year purchased	Carrier	Term ends
$100K	2026	Aspida WealthLock 5 (A-)	2031
$100K	2026	Delaware Pinnacle 5 (A-)	2031
$100K	2026	Oxford Multi-Select 5 (A)	2031

In 2031, all three mature. Decision point:
• Roll each individually into new 5-year MYGAs (if rates still attractive)
• Pull cash from one or more (if needed)
• §1035 to a different product type (SPIA, FIA, MYGA)

This is the lowest-stress retirement income foundation strategy.

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When 5-year MYGA is wrong

❌ You need income IMMEDIATELY (look at SPIA)
❌ You want index upside potential (look at FIA)
❌ You have 10-15 year horizon and want max yield (10-year MYGA)
❌ You're under 59½ (early withdrawal penalty risk)
❌ You don't have enough other liquidity (don't lock up emergency fund)

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5-year MYGA recommendations by buyer profile

Conservative buyer (rating-focused)

• Oxford Multi-Select 5: A rating, 5.55% (effective 9/1/2026)
• MassMutual Stable Voyage 5: A++ rating, 5.50% ($100K+, sheet effective 9/28/2026)

Yield-focused (B++ tolerable)

• Aspida WealthLock 5: A-, 5.70% ($100K+, effective 9/22/2026)
• GBU Compass 5: B++ (rate not re-checked; ask for the current sheet)

Maximum yield (B+ tolerable, small dollars)

• Wichita Security 5: B+, 6.25% (listed 9/25/2026)

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What to do

213-414-2808 for a 5-year MYGA ladder analysis. Hans pulls quotes from 4-5 different A/A- carriers for your specific dollar amount and shows the blended yield + carrier diversification picture. No charge.

Goldstein Complexity Index

Every annuity I review gets a complexity score from 0 to 100. Higher means harder to understand. Complexity is where buyers get hurt: riders they didn't know they were paying for, surrender charges that surprise them, and income "benefit bases" they took for cash. SPIAs and MYGAs score low. Products that stack a bonus, an income rider, an MVA and several crediting options score high.

This product's score: 8/100, Grade A+ (Transparent)

Easy to understand. Few moving parts. The buyer can fully explain the product to a friend after one read of the contract.

Score breakdown

Dimension	Score (1-10)	What this measures
Riders	1/10	How many riders, optional or built in (income, death benefit, LTC). Each one adds cost and one more thing to understand.
Crediting strategies	1/10	How many index options (cap, spread, participation rate, step rate, volatility-controlled indices). More choices are harder to follow.
Surrender complexity	1/10	Length of the surrender period, plus any MVA and bonus recapture. The longer and more layered it is, the harder it is to know what leaving early costs.
Benefit-base separation	1/10	Whether there is a separate income base ("PIV") that is not cash but looks like it. This causes more buyer confusion than anything else.
Bonus structure	1/10	A premium bonus with a recapture schedule. The bonus is real, but you can lose part of it if you leave early.

How to read this

• A+/A (0-40): Easy to understand. A pure accumulation FIA, a MYGA or a SPIA. Little room for mis-selling.
• B (41-60): Read the contract carefully and get a second opinion before signing. Income riders cause most of the confusion.
• C (61-80): Many owners don't fully understand what they bought. Common mis-sells: a bonus presented as cash, a benefit base presented as account value, surrender charges glossed over.
• D (81-100): Get an independent second opinion before signing. The product may still fit you, but the odds you later say "I didn't know it worked that way" are high.

Why it matters: nobody gets sued for selling a complicated product, but buyers regret them all the time. An annuity that wins your money in year one and confuses you for the next 14 is worse than a simpler one you understood from the start. Simple products are easier to check.

How a MYGA works, in plain terms

A MYGA (Multi-Year Guaranteed Annuity) works like a CD from an insurance company. You give the carrier money for a fixed term (3, 5, 7, or 10 years). The carrier guarantees a specific interest rate for that entire term. At maturity, you get your money plus accumulated interest back, or you renew or convert to another product.

The math (MYGA rate as of October 14, 2026, CD rate as of September 24, 2026):
• Put $100,000 in a 5-year MYGA at 5.50%, the low end of what A-rated carriers paid (public carrier rate sheets)
• At year 5 maturity: ~$130,700 (compound growth, no tax until withdrawal)
• Same $100K in a 5-year CD at 4.50% APY, the top national rate (DepositAccounts), taxed each year at 24%: ~$118,300

Why MYGA beats CD:
• Higher rate (about 1.0 to 1.7 points over the best 5-year CDs on September 24, 2026)
• Tax-deferred growth (you owe tax only at withdrawal)
• Terms out to 10 years at a fixed rate

The trade-off:
Surrender charges if you withdraw before maturity (5 to 10% typical)
Free withdrawal of 10% per year (usually) for emergencies
Locked-in rate for the term: if rates rise after you buy, you're stuck at the lower rate
IRS 10% penalty on gain portion if withdrawn before age 59½

The only "fee" is built into the contract. There's no separate annual fee.

Quick MYGA FAQ

Q: Is a MYGA safer than a CD?
A: Both are safe at the retail level. CDs are FDIC-insured (federal); MYGAs are state guaranty fund covered (state). Coverage limits are similar (~$250K).

Q: What happens at maturity?
A: You typically have 30 days to elect: renew at the carrier's then-current rate, withdraw cash, transfer (§1035) to a different annuity, or annuitize for lifetime income. Don't miss the window. Many carriers auto-renew if you don't elect.

Q: Can I §1035 exchange to a different MYGA at maturity?
A: Yes. It's a tax-free direct transfer to a new annuity, including a different carrier offering better rates.

Q: What about MVA (Market Value Adjustment)?
A: Some MYGAs have MVA. If you surrender early when rates have RISEN, MVA reduces your surrender value further. If rates have FALLEN, MVA can increase it.

Q: Should I ladder MYGAs?
A: For larger purchases, yes. Splitting across 3-year, 5-year, 7-year locks in rates at multiple maturity dates and gives flexibility to capture future rate moves.

Q: How is MYGA interest taxed?
A: Inside the contract: tax-deferred. At withdrawal (non-qualified): only the gain is taxable as ordinary income. Inside an IRA: standard IRA rules apply.

Q: Can I lose money on a MYGA?
A: Not from market loss (no market exposure). You CAN lose money from early surrender charges + MVA. Stay to maturity = guaranteed return.

Q: Is the rate locked for the full term?
A: Yes. Some MYGAs have a "1-year rate" then "renewal rate" structure. Be sure you understand whether the full term is at one rate or steps down.

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Disclosure

This review is based on the carrier's public product materials and rates as of the date shown above. Annuity rates, caps, participation rates, payout factors, crediting methods, and long-term care benefit structures change often, sometimes monthly. Confirm current figures in the latest carrier disclosure and the contract before you buy. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (CA license 4273294, NPN 20602398) appointed with several A-rated carriers. His appointment with the carrier reviewed here may vary, and this review is not an endorsement. No carrier paid for this review. Always read the actual contract and consult a licensed advisor before purchasing any annuity or long-term care insurance product. Past index performance does not predict future credited interest. Annuities and hybrid life+LTC policies are long-term contracts with surrender charges; they are not suitable for funds you may need before the end of the surrender period. AM Best ratings and tax treatment are subject to change. Tax discussion of IRC §7702B, §1035, and the Pension Protection Act of 2006 reflects law as of 2026 and is subject to change.