Annuity rates in 2026 are the best they’ve been in over 20 years — a direct result of the Federal Reserve’s aggressive rate hike cycle from 2022 to 2023. Savers who remember the 2% CD era are now locking in 5-year MYGAs at 4.75%–5.25% from A-rated carriers.
Understanding how rates got here — and where they’re likely headed — helps you decide whether to act now or wait.
Key Takeaways
- MYGA rates hit 20-year highs in late 2023, peaking near 6.25%–6.40% for 5-year terms
- The 2022–2023 Fed rate hike cycle was the fastest since the 1980s — 525 basis points in 16 months
- Rates moderated in 2024–2025 as the Fed began cutting; they stabilized heading into 2026
- The 2026 rate environment remains historically strong — well above the 2019–2021 era
- Waiting for “even higher rates” carries real opportunity cost if rates continue to drift lower
What Have Annuity Rates Done Over the Past 7 Years?
The story of annuity rates from 2019 to 2026 is essentially the story of U.S. interest rate policy — first a crash to near-zero, then the sharpest recovery in a generation.
| Year | Avg 3-Yr MYGA | Avg 5-Yr MYGA | Avg 7-Yr MYGA | Fed Funds Rate |
|---|---|---|---|---|
| 2019 | 2.40% | 2.75% | 3.10% | 1.75%–2.50% |
| 2020 | 1.80% | 2.10% | 2.50% | 0.00%–0.25% |
| 2021 | 1.85% | 2.15% | 2.55% | 0.00%–0.25% |
| 2022 | 3.20% | 3.80% | 4.10% | 0.25%–4.50% |
| 2023 | 5.40% | 5.90% | 5.75% | 4.50%–5.50% |
| 2024 | 5.00% | 5.40% | 5.35% | 4.25%–5.50% |
| 2025 | 4.60% | 5.10% | 5.05% | 3.75%–4.50% |
| 2026* | 4.40% | 4.90% | 4.95% | 3.25%–4.00% |
*2026 figures are approximate averages from A-rated carriers as of February 2026. Source: AnnuityRateWatch, Federal Reserve.
What Caused the 2022–2023 Rate Surge?
In March 2022, the Federal Reserve began one of the most aggressive rate hike cycles in U.S. history. Inflation had reached 9.1% — the highest level since 1981 — and the Fed responded by raising the federal funds rate 11 times, from 0.25% to 5.50%, between March 2022 and July 2023.
As Treasury yields spiked, so did the yields on corporate bonds that insurance companies use to back annuity contracts. Carriers that had been stuck offering 2% on 5-year MYGAs suddenly had the investment income to justify 5.5%, 6%, even 6.4% rates. Annuity sales hit record highs: $385 billion in 2023, the best year ever recorded by LIMRA.
Where Are Rates in 2026?
The Fed began cutting rates in September 2024, trimming the federal funds rate from 5.50% to approximately 3.25%–4.00%. Annuity rates have responded — declining from their 2023 peaks but remaining historically elevated.
A 55-year-old investing $200,000 in a 5-year MYGA today can still lock in approximately 4.75%–5.25% from A-rated carriers. At that rate, $200,000 grows to roughly $254,000–$259,000 at maturity — guaranteed, regardless of what markets do.
Compare that to 2021, when the same $200,000 in a 5-year MYGA earned 2.10% and grew to only $221,000.
How Does the Fed Funds Rate Connect to Annuity Rates?
The relationship is real but indirect. The fed funds rate directly controls overnight bank lending rates. Annuity rates are more closely tied to 5-year and 10-year Treasury yields, which incorporate not just current Fed policy but inflation expectations and long-term economic growth forecasts.
Annuity rates don’t fall in lockstep with Fed cuts. Long-term Treasury yields sometimes rise even when the Fed cuts short-term rates — which happened briefly in late 2024 as markets worried about long-term fiscal deficits.
Historical MYGA Rate Comparison: 2021 vs. 2026
Here’s what a $150,000 investment looks like across different rate environments:
| Era | 5-Yr MYGA Rate | $150K grows to | Total Interest |
|---|---|---|---|
| 2019 (pre-pandemic) | 2.75% | $170,834 | $20,834 |
| 2021 (rock bottom) | 2.10% | $166,561 | $16,561 |
| 2023 (peak rates) | 6.00% | $200,733 | $50,733 |
| 2026 (today) | 4.90% | $190,850 | $40,850 |
The 2026 environment is 78% better than 2021 in terms of total interest earned on a $150,000 investment over 5 years.
2026 Rate Outlook: Will Rates Stay High or Keep Falling?
Most economists expect the Federal Reserve to hold rates relatively steady in 2026, with perhaps 1–2 additional cuts if inflation continues to moderate. The 10-year Treasury yield is expected to remain in the 4.0%–4.5% range through most of 2026.
For every month you wait at a lower savings rate (say, 4.50% APY) versus locking in a 5-year MYGA at 5.00%, you’re leaving money on the table — and that gap compounds over time.
Should You Buy an Annuity Now or Wait?
Timing any financial market perfectly is nearly impossible. A better framework: if you have money you won’t need for 3–7 years, today’s MYGA rates are among the best in two decades. One strategy: annuity laddering — splitting your investment across multiple terms — lets you capture today’s rates while keeping future flexibility.
See today’s top offers: best 3-year rates, best 5-year rates, and best 7-year rates.
Frequently Asked Questions
When were annuity rates at their highest?
In the modern era, the 2023 peak of 6.25%–6.40% for 5-year MYGAs from A-rated carriers was the highest since the early 2000s. In the late 1970s and early 1980s, when inflation ran above 10%, some products offered double-digit guaranteed returns.
Will annuity rates go back up in 2026?
A significant rate increase would require either a resurgence of inflation forcing the Fed to raise rates again, or a spike in long-term Treasury yields. Neither is the current base case. Most forecasts call for modest continued rate declines or sideways movement.
How much did annuity rates rise from 2021 to 2023?
A typical 5-year MYGA rate went from approximately 2.10%–2.25% in 2021 to 5.75%–6.25% by mid-2023 — an increase of roughly 350–400 basis points in about 24 months.
Do annuity rates follow the Federal Reserve exactly?
No. Annuity rates track long-term Treasury yields more closely than the fed funds rate. Long-term rates don’t always fall at the same pace as Fed cuts, which is why annuity rates sometimes hold steady or even rise after Fed cuts.
What is a good annuity rate in 2026?
In February 2026, a good 5-year MYGA rate from an A-rated carrier is approximately 4.75%–5.25%. Be skeptical of rates significantly above market average — they typically indicate lower-rated carriers taking excess investment risk.