Annuities Now Pay More Than CDs: AnnuityAdvantage
September 8, 2017 by Allison Bell
Trends in the gap between what fixed annuity contracts pay holders and what comparable bank certificates of deposit pay are moving in the annuity issuers’ favor, according to AnnuityAdvantage.
The Medford, Oregon-based company runs an annuity sales website. It tracks 290 annuity contracts from 35 insurers.
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The highest-paying 3-year contract now offers a 2.1% crediting rate, and the highest-paying 5-year contract offers a 3.15% crediting rate, the firm says.
That compares with top CD rates of 2% for a 3-year CD, and just 2.4% for a 5-year CD, according to BankRate.com.
AnnuityAdvantage says, in a discussion of the rate comparison aimed at consumers, that the full gap in performance is much bigger than the top-rate figures suggest.
The firm points out that a consumer who holds a CD outside a retirement account must pay taxes on interest earnings every year.
A consumer who holds an annuity can defer paying taxes on interest until the consumer starts to take withdrawals, the firm says.
Wink’s Note: Has there been a time when annuities weren’t higher than CDs in the past 15 or so years?!
