Registered index-linked annuities have been getting a lot of attention lately, but they accounted for just 14% of U.S. individual annuity sales in the third quarter of 2024, according to Wink.
Sales of multi-year guaranteed annuities — contracts from issuers that promise to pay a set interest rate for at least a specified number of years, such as three, four, five or seven years — accounted for about 37% of individual annuity sales.
David Byrnes, chief distribution officer at Security Benefit, an annuity issuer, expects worries about the presidential transition and the geopolitical situation to help keep MYGA sales strong.
The products "offer a safe haven for assets by mitigating market risk and by helping to diversify a portfolio," Byrnes said.
Interest rates have been starting to fall, but rates on bonds, bank savings accounts and bank certificates of deposit have been falling faster, and MYGA rates are still considerably higher than they were even in January 2023, Byrnes said.
Byrnes answered questions about MYGA strategy via email. The questions and answers have been edited.
THINKADVISOR: What does the new rate environment for MYGAs' appeal?
DAVID BYRNES: In this new environment of declining rates, locking in a MYGA rate now is a smart strategy that offers stability, predictability, and the potential for more favorable interest accumulation.
How should retirement savers come up with the percentage of their portfolios that goes into MYGAs?
We urge customers to consult with a financial professional regarding their portfolio asset allocation. Advisors can leverage different asset-allocation strategies depending on customer needs.