MYGA Laddering Strategy Explained (2026): $500K Sample Build
TL;DR: One $500K MYGA at 5.95% locks all your money to a single maturity, a single carrier, and a single rate environment. A 5-rung ladder ($100K each in 1/3/5/7/10-year MYGAs) yields a blended ~5.90% APY but gives you maturing principal every 2 years for reinvestment, splits guaranty-fund exposure across 3-5 carriers, and lets you tune cash flow without surrender charges. The 5 bps you give up buys real optionality.
Why one big MYGA is a worse bet than a ladder
The "best" 5-year MYGA on the June 2026 leaderboard paid 5.95%. The instinct is to dump $500K into it and collect. The problem is structural, not numerical:
- Reinvestment risk concentrated in one date. If your $500K matures in June 2031 and rates are 3.50% that month, you reinvest everything at 3.50%. A ladder maturing every 2 years averages out that risk.
- Single-carrier concentration. $500K in one A-rated carrier = $250K covered by state guaranty fund, $250K unsecured. A 5-carrier ladder = $500K fully covered.
- Single rate environment. June 2026 rates are not the only rates in your retirement. A ladder lets you participate as new tranches reset higher (or lock more if rates fall).
- Cash flow inflexibility. One big MYGA gives you 10% annual penalty-free withdrawal. A ladder gives you a maturing rung every 2 years: full principal access, no penalty, no MVA.
CD vs MYGA, after tax
What $100,000 earns in 5 years: CD vs MYGA, after 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.
$500,000 sample 5-rung ladder (June 2026 rates)
| Rung | Amount | Term | Carrier (AM Best) | APY | Matures |
|---|---|---|---|---|---|
| 1 | $100,000 | 1-year | Oceanview Life (A-) | 5.30% | Jun 2027 |
| 2 | $100,000 | 3-year | Atlantic Coast Life (was A- in June 2026; AM Best C+ on 9/22/2026, not recommended) | 5.90% | Jun 2029 |
| 3 | $100,000 | 5-year | Athene (A+) | 5.95% | Jun 2031 |
| 4 | $100,000 | 7-year | Sentinel Security (was A- in June 2026; AM Best C+ on 9/22/2026, not recommended) | 6.05% | Jun 2033 |
| 5 | $100,000 | 10-year | Symetra (A) | 6.20% | Jun 2036 |
| Weighted average APY | 5.88% | ||||
Rating update: on September 22, 2026 AM Best downgraded Atlantic Coast Life and Sentinel Security Life to C+ (Marginal) from B (Fair) and kept both under review with negative implications (AM Best press release, 9/22/2026). This table shows June 2026 rates for illustration only; do not use those two carriers for rungs 2 and 4.
The lump sum into a single 5-year would yield 5.95%, just 7 bps higher. In exchange for those 7 bps you get five different maturity dates, five carriers, and a free reset of $100,000 every 2 years.
Rates expire like milk.
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How the ladder rolls forward (years 1-10)
Each maturing rung either rolls back into a fresh 10-year (extending the ladder) or pays out to cash. After 10 years, you've turned the original five-rung ladder into a continuously rolling structure:
| Year | Maturing rung | Action | New 10-year locks at |
|---|---|---|---|
| 2027 | Rung 1 ($100K) | Roll into new 10-yr | Whatever the top 10-yr A-rated rate is in 2027 |
| 2029 | Rung 2 ($100K) | Roll into new 10-yr | 2029 top rate |
| 2031 | Rung 3 ($100K) | Roll into new 10-yr | 2031 top rate |
| 2033 | Rung 4 ($100K) | Roll into new 10-yr | 2033 top rate |
| 2036 | Rung 5 ($100K) | Roll into new 10-yr | 2036 top rate |
By 2036, every rung is a 10-year contract at the prevailing top rate, with one rung maturing every 2 years. You've converted a static lump sum into a dynamic rate-tracking ladder.
How a ladder beats a single MYGA in a falling rate environment
Hypothetical: Fed cuts 200 bps over 2027-2030. Single 5-year MYGA still pays 5.95% until 2031, then reinvests at ~3.95%. Ladder: rung 1 reinvests at lower rates immediately, but rungs 2-5 keep paying 2026 rates. The ladder's weighted yield drops gradually rather than cliff-edge.
| Year | Single 5-yr MYGA blended yield | Ladder blended yield |
|---|---|---|
| 2026-2027 | 5.95% | 5.88% |
| 2028 | 5.95% | 5.74% (rung 1 rolled at 4.30%) |
| 2030 | 5.95% | 5.50% (rungs 1-2 rolled at lower rates) |
| 2032 | 3.95% (cliff drop) | 5.10% (rungs 1-3 rolled) |
| 2034 | 3.95% | 4.65% (rungs 1-4 rolled) |
The single MYGA wins for the first 5 years and loses badly thereafter. Across a 10-year window the ladder wins on cumulative compound interest if rates fall, and loses by only ~7 bps if rates stay flat.
How a ladder beats in a rising rate environment
If rates rise, the single MYGA buyer is stuck at 5.95% for 5 years while the market pays 7%+. The ladder buyer reinvests rung 1 in 2027 at the higher rate, rung 2 in 2029, etc. By year 5 the ladder is delivering ~6.5%+ blended while the single MYGA is still at 5.95%.
Common ladder mistakes
- Same carrier on every rung. Defeats the guaranty-fund diversification. Use a different A-rated carrier per rung where possible.
- All 10-year terms with staggered start dates. Doesn't work, because you can't start MYGAs in the future. The rungs need different terms, not different start dates.
- Forgetting MVA on early surrender. A ladder gives you maturing principal every 2 years, not penalty-free access in between. If you need $100K in year 3.5, you're still paying surrender on rung 3.
- Mixing IRA and non-qualified ladders. Tax treatment is wildly different on withdrawal. Build separate ladders for IRA money and after-tax money.
- Picking the lowest rate per rung just to spread carriers. Diversification matters, but a 30 bps gap to chase a B+ carrier you don't need is not the trade.
When NOT to ladder, just buy one MYGA
Three scenarios where the ladder loses to a single contract:
- Under $100K total. Most A-rated carriers have $25-50K minimums. Building 5 rungs out of $100K leaves each rung too small for top-tier carriers, and you end up with worse rates on all 5.
- You need every dollar at one specific date. Bridge to age 70 SS claiming, college tuition year, etc. Then you want the maturity date matched, not staggered.
- You're rolling pension money you'll annuitize at 70. A single 5-year MYGA into a SPIA at 70 may yield more lifetime income than a ladder, because you're optimizing for a one-time conversion, not ongoing reinvestment.
Build a custom MYGA ladder for your dollar amount
Independent review of your specific decision.
The 5-rung sample above used $500K. A ladder built around your specific dollar amount, time horizon, and tax situation often looks different. Get a written ladder design with current top rates, carrier matching, and projected weighted yield. No charge, no pressure.
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Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers
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Frequently Asked Questions
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- Annuity Commission Disclosure
- Pension Lump Sum vs Monthly
About Hans Goldstein: Independent retirement income specialist. CA Life License #4273294. NPN #20602398. Phone: 213-414-2808. Email: hans@hansgoldstein.com.
Disclosure
This article reflects publicly available product materials, carrier rate sheets, and approximate rates and tax law as of the date stated above. Annuity rates, caps, participation rates, payout factors, crediting methods, commission structures, and pension regulations change frequently. Always confirm current values against the most recent carrier disclosure document, plan summary, and actual contract before making any decision. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers across the annuity and long-term care insurance market; producer's specific appointment status with any carrier discussed may vary, and discussion of any carrier is not an endorsement or representation of carrier appointment. No compensation has been received from any carrier in connection with the publication of this article. Always read the actual contract, summary plan description, or pension election form, and consult a licensed advisor and tax professional before purchasing any annuity, accepting a pension election, or executing a rollover. Annuities are long-term contracts with surrender charges and are not suitable for funds you may need before the end of the surrender period. Tax discussion reflects federal tax law as of 2026 and is subject to change. State tax treatment varies. PBGC coverage limits and pension plan termination rules are set by federal statute and may change.