Retirees hunting for guaranteed income are finding fixed-annuity payouts at roughly 15-year highs. Five-year multi-year guaranteed annuities now advertise rates around 6.30 percent, a figure that sits between 1.5 and 2 percentage points above the top nationally available five-year certificate of deposit. That gap between annuity income and bank deposit yields has not been this wide since before the 2008 financial crisis, creating a clear incentive for income-focused savers to weigh the tradeoff between FDIC-insured CDs and higher-paying insurance contracts.

What the rate data verifies

The strongest data anchor for this comparison comes from the federal government’s own deposit-rate tracking. The FDIC publishes a monthly National Rate and National Rate Cap series that serves as the official benchmark for CD yields across U.S. banks. That series covers deposits under $100,000 at 60-month maturities and consistently shows national averages well below the promotional “best-of” rates advertised by online banks.

The St. Louis Fed mirrors this deposit information through its NDR60MCD dataset, which tracks the FDIC national average for 60‑month CDs under $100,000 in deposit size. Together, these datasets confirm that the broad CD market pays substantially less than what many fixed-annuity carriers are quoting for the same five-year lock-up period. In other words, the headline-grabbing 6.30 percent annuity offers are not just a small edge over typical bank CDs; they represent a sizable premium over what most savers actually earn on standard five-year deposits.

Why insurers can offer higher rates

The interest-rate backdrop also lines up with this story. Treasury yield curves, published by the U.S. Department of the Treasury, show the prevailing market compensation for lending to the federal government across different maturities. When the five-year Treasury yield, as reflected in the department’s daily yield curve, sits above four percent, annuity companies can credibly offer higher guaranteed rates because they invest premium dollars into bonds at those elevated yields. That mechanism explains why annuity payouts have climbed in tandem with the broader rate environment since the Federal Reserve began tightening monetary policy.

Structurally, the products also behave differently. A five-year CD typically locks in a single rate for the term, with penalties for early withdrawal but clear federal backing up to insurance limits. A five-year multi-year guaranteed annuity (MYGA) usually credits a fixed rate for the full period as well, but the contract is issued by an insurance company, may include limited annual withdrawal provisions, and converts into a new set of options at maturity, such as renewing, annuitizing into income, or transferring to another carrier. These design features, combined with the higher base yields available in the bond market, help explain why MYGAs can outpay CDs even when both share a five-year horizon.

One important caveat sits behind the headline 6.30 percent figure. That rate is currently offered by a carrier with an AM Best rating of B++, not by one of the higher-rated insurers. The best five-year MYGA rate available from an A-rated carrier is closer to 5.65 percent, narrowing the gap with top CDs to roughly 1.5 percentage points. Because fixed annuities carry no federal insurance and rely entirely on the issuing insurer’s claims-paying ability, many financial advisors recommend that retirees evaluating MYGAs prioritize carriers rated A- or higher and treat the headline rate from lower-rated carriers as a tradeoff, not a free lunch.

What remains uncertain about MYGA rates

No federal agency publishes a standardized national average for fixed-annuity or MYGA rates the way the FDIC does for CDs. The 6.30 percent figure circulating in the market comes from insurance-industry quoting platforms and individual carrier rate sheets rather than from a single audited government dataset. That distinction matters because annuity quotes can vary by state, by the buyer’s age, and by the size of the premium, making direct apples-to-apples comparisons with the FDIC national rate inherently imprecise.

Equally unclear is how long the current spread will last. If the five-year Treasury yield drops below four percent in coming quarters, annuity carriers would likely reprice their guarantees downward, compressing the gap with CDs. The FDIC national rate model and annuity pricing formulas both track the same Treasury curve, so a sustained decline in government bond yields would narrow the advantage on both sides, though not necessarily at the same speed. Annuity carriers sometimes lag rate cuts because they lock in bond portfolios ahead of time, while bank CD rates tend to adjust more quickly as funding needs change.

What retirees give up for the yield

The tradeoff for that extra yield is also worth spelling out plainly. CDs carry FDIC insurance up to $250,000 per depositor per institution, offering a direct federal guarantee on principal and accrued interest within those limits. Fixed annuities carry no federal deposit guarantee. They are instead backed by the claims-paying ability of the issuing insurer and supported by state guaranty associations, which typically cover only a portion of contract values and may impose per-company and per-owner caps. Coverage rules differ by state, and policyholders must rely on the financial strength of the insurer in addition to any state safety net.

Liquidity is another open question for many buyers. While most MYGAs allow limited penalty-free withdrawals, often up to a set percentage of account value each year, larger or earlier surrenders can trigger steep charges during the contract term. CDs also impose penalties for early withdrawal, but those penalties are usually defined as a set number of months of interest rather than a declining schedule on the entire balance. For retirees who may need flexible access to cash, the harsher surrender structure of some annuities can offset part of the appeal of higher stated yields.

Finally, tax treatment and individual circumstances complicate any blanket conclusion about which product is “better.” Interest on CDs is typically taxed annually, while interest inside a nonqualified fixed annuity grows tax-deferred until money is withdrawn, potentially improving after-tax returns for some investors but creating ordinary income tax exposure later. For others, the simplicity and federal backing of CDs may outweigh the allure of higher nominal yields. With no single, government-standardized annuity rate series to consult, savers are left balancing these factors using a patchwork of carrier quotes, independent rate tables, and their own tolerance for risk and illiquidity.