Since about 2000, I’ve heard people say they’ll consider purchasing a SPIA or DIA when interest rates are higher. The statement assumes interest rates are the primary factor determining SPIA and DIA payouts.
Another factor to consider when considering a delay in the purchase of a SPIA or DIA is how you’d invest the money while waiting to buy the annuity. About half the group will die before reaching average life expectancy. The insurer uses that knowledge to determine how much income it will guarantee to each member of the group.
That means if you buy a SPIA or DIA in a few years, you’re likely to receive lower mortality credits than if you buy today. It’s not a major factor, but it’s something to consider. Instead, create a MYGA ladder. Spread your money among MYGA contracts with different terms. Put one-third in a one-year MYGA, one-third in a three-year MYGA, and one-third in a five-yar MYGA, as one example.
What consumers need to know is fixed annuities are offering rates we haven’t seen in decades. Now is an amazing time lock in a fixed annuity yielding over 5.50%!