Fixed Annuities in 2026: How Retirees Can Lock In Guaranteed Income (and When It Makes Sense)

In 2026, with fixed annuity rates near their highest in years, more Greensboro and Piedmont retirees are weighing fixed annuities for retirement income as a home for money they cannot afford to lose. Here is the bottom line. A fixed annuity, specifically a multi-year guaranteed annuity (a MYGA), locks in a guaranteed interest rate for a set number of years while your principal stays protected from market swings. In late July 2026 that rate is commonly around 6 percent on three to five year terms from A-rated carriers. A fixed annuity is not FDIC-insured. It is a promise from the insurer that issues it, backed by that company's financial strength and, as a last resort, by North Carolina's guaranty association up to $300,000 per person, per insurer. It fits some retirees well and others poorly. This guide covers how it works, what you can lock in this year, whether it is safe, how it compares to a CD, and when it is the wrong choice.

The short version:

• A MYGA guarantees a fixed rate for a set term (often 3 to 10 years) and protects your principal from market loss.
• Top A-rated rates in late July 2026 sit near 6 percent on 3 to 5 year terms. The highest advertised long-term rates can come from lower-rated carriers, so the top number is not automatically the best choice.
• Fixed annuities are not FDIC-insured. They are backed by the insurer and, as a backstop, by your state guaranty association ($300,000 per person, per insurer in North Carolina).
• You trade liquidity for the guarantee: early withdrawals face surrender charges, most contracts allow about 10 percent penalty-free each year, and taking earnings before age 59 and a half usually adds a 10 percent IRS penalty.
• It is a poor fit if you need easy access to the money, want maximum growth, are under 59 and a half, or have not yet maxed out an IRA or 401(k).

What is a fixed annuity, and how does a MYGA work?

A fixed annuity is a contract with an insurance company. You hand over a lump sum, and the insurer guarantees your money will earn at least a set minimum rate. As the National Association of Insurance Commissioners puts it, a fixed annuity guarantees your money will earn at least a minimum interest rate, and the insurer sets the rates. A MYGA simply locks one fixed rate in place for the whole term, much like a bank CD, which is why retirees so often compare the two.

Two features do most of the work. Your principal is not exposed to market loss during the accumulation years, and the earnings grow tax-deferred. According to the U.S. Securities and Exchange Commission's investor site, you pay no taxes on the gains inside the annuity until you withdraw them. Most contracts also let you take out a limited amount each year, commonly about 10 percent of the account value, without a surrender charge. Our team walks through how these pieces fit a real plan on our fixed annuities page.

Fixed annuity rates in 2026: what retirees can lock in

Based on the dated rate table published by the educational resource Annuity.org and updated July 22, 2026, top MYGA rates by term were roughly 5.25 percent for 2 years, 6.00 percent for 3 years, 6.45 percent for 5 years, 6.90 percent for 7 years, and 7.65 percent for 10 years. Those are single top-of-market figures, not what every carrier offers. A sensible read is that around 6 percent is common on 3 to 5 year terms from A-rated carriers, with a handful advertising more. One caution belongs here: the highest long-term numbers, the 6.9 to 7.65 percent figures, are best-case rates that sometimes come from carriers rated below A. Since a fixed annuity is only as sound as the insurer behind it, the smarter goal is the best rate from a financially strong, A-rated carrier, not the biggest headline.

The demand is real, not hype. The research firm LIMRA reported U.S. retail annuity sales hit a record $464.1 billion in 2025, with fixed-rate deferred (MYGA) sales of $165.3 billion, as roughly 4.1 million Americans turn 65 each year.

Are fixed annuities safe for retirees? What "guaranteed" really means

Let us be precise, because this is the question that matters most. A fixed annuity is not FDIC-insured. There is no federal deposit insurance behind it. As the SEC notes, an insurer's obligations under an annuity are subject to its financial strength and claims-paying ability, and if the company runs into serious trouble it may not be able to pay in full. So the first thing to check is not the rate but the carrier. Independent agencies such as A.M. Best, S&P, Moody's, and Fitch grade insurers on financial strength, and starting with an A-rated carrier is the most important safety step.

There is a second layer. Every insurer that sells annuities in a state must belong to that state's guaranty association, which steps in if a member company fails. According to the National Organization of Life and Health Insurance Guaranty Associations, the guaranty association in the policyholder's state of residence generally provides coverage, up to state limits, regardless of where the policy was bought.

Here is the local detail many national articles get wrong. In North Carolina, the guaranty limit for annuity benefits is $300,000 per individual, per member insurer, not the $250,000 figure you often see quoted. The North Carolina Life and Health Insurance Guaranty Association states plainly that the maximum protection for each individual is $300,000, no matter how many policies you bought from your company. That $250,000 figure is the NAIC baseline most states follow; North Carolina exceeds it.

One honest caveat about that backstop: it is a last resort, not a selling point. Consumer-protection rules bar agents from using guaranty coverage as a reason to buy, and we agree. Think of the $300,000 limit the way you think of FDIC insurance on a bank account. It is reassuring to know it is there, but the real safety comes from choosing a strong, well-rated company in the first place.

Fixed annuity vs CD: how they compare in 2026

Because a MYGA and a bank CD both lock in a fixed rate for a set term, the fixed annuity vs CD question is the one retirees ask most. They differ on four things: rate, taxes, backing, and liquidity. On rate, 2026 favors the annuity. The FDIC's national average for a 5-year CD is just 1.36 percent, top nationally available 5-year CDs run roughly 4 to 4.3 percent, and the top 5-year MYGA near 6.45 percent beats even the best CDs by about 1.5 to 2 percentage points. The table below shows how they compare on taxes, backing, and liquidity as well.

*Illustrative before-tax accumulation if the example rate held for the full five years. Not a quote or guarantee. Your actual rate, tax bracket, and results depend on the carrier and your situation, and annuity earnings are taxed when you withdraw them.

The takeaway is not that one always wins. A CD keeps money fully liquid and simple; a fixed annuity pays more and defers taxes, in exchange for tying the money up longer. Which fits depends on when you will need the money and your tax picture.

The trade-offs: what you give up for the guarantee

A responsible look at fixed annuities has to cover the costs, not just the rate.

Surrender charges. If you withdraw more than the penalty-free amount during the surrender period, the insurer charges a fee. Annuity.org describes surrender charges that commonly start around 7 to 10 percent in the early years and decline by roughly one point per year over a surrender period of 5 to 10 years. That is the liquidity you give up, offset by the roughly 10 percent of value most contracts let you withdraw penalty-free each year.

The age 59 and a half rule. Taking earnings out before age 59 and a half generally triggers a 10 percent IRS penalty on top of ordinary income tax, which makes a fixed annuity the wrong tool for anyone who might need the money before then.

Taxes and Medicare. Annuity withdrawals are taxable when you take them, and a large withdrawal can raise the income figure Medicare uses. For higher-income Greensboro retirees, that can matter for the Medicare IRMAA surcharge, so the timing of withdrawals is worth planning. Tax-deferral helps, because you have some control over when the income lands.

Inflation risk. This is the most important counterweight to the "lock in 6 percent" appeal. Locking in today's rate protects you if rates fall, but a level return does not automatically rise with the cost of living. If you convert the annuity into a stream of level income payments, those payments buy less over a long retirement as prices climb, unless you add an inflation feature, which costs extra.

One protection works in your favor: state law gives you a "free look" period, usually 10 to 30 days after you receive the contract, to cancel a new annuity for a refund if you change your mind.

Who a fixed annuity does not suit

A fixed annuity is a tool, not a one-size-fits-all answer. It is usually the wrong choice if you:

• Need the money to stay liquid, or expect to need a large lump sum during the surrender period.
• Are seeking maximum long-term growth, since a diversified stock portfolio has historically outpaced fixed rates and an annuity trades that upside for certainty.
• Are under age 59 and a half, where the 10 percent IRS penalty on earnings usually makes a CD or other option a better fit.
• Have not yet maxed out tax-advantaged accounts such as an IRA or 401(k), which generally come first.

If several of those describe you, a fixed annuity may not be the right place for this money, and a good advisor should tell you so.

A note for Greensboro and Piedmont families

For many retirees here, the appeal of using fixed annuities for retirement income is simple. A fixed annuity converts part of your savings into a guaranteed, predictable return without exposing it to the stock market, and North Carolina's $300,000 guaranty limit adds a meaningful layer of protection behind an already strong carrier. The key word is "part." A fixed annuity works best as one piece of a broader plan, alongside your Social Security, Medicare coverage, and other savings, not as a place to put everything.

This article is general education, not individual investment or tax advice. Your right answer depends on your age, your tax bracket, how soon you will need the money, and which carriers are strongest when you buy. Before you lock in a term, bring your situation to a local advisor you trust, and check with a tax professional about how a withdrawal would affect your taxes and Medicare premiums.

Have more questions or want to get in touch? We are independent, education-first, and serving seniors across Greensboro and the Piedmont Triad. Prefer to speak with a member of our team? Give us a call at (336) 937-7501. Prefer to write, or want a no-pressure review? Contact Seniors Insurance Hub and we will help you compare A-rated carriers before you commit to a single term. We look forward to hearing from you.

Frequently asked questions

Are fixed annuities safe for retirees?

Your principal does not fall with the market, but they are not FDIC-insured. Safety rests on the insurer's financial strength, backed by your state guaranty association as a last resort ($300,000 per person, per insurer in North Carolina). Choosing an A-rated carrier matters most.

Fixed annuity vs CD, which is better for retirees?

It depends on your needs. In 2026, top MYGAs (near 6.45 percent for 5 years) pay more than top CDs (roughly 4 to 4.3 percent) and grow tax-deferred, but tie your money up longer. A CD stays fully liquid and FDIC-insured, so it fits better if you need easy access to the cash.

How much do fixed annuities pay in 2026?

As of late July 2026, top A-rated MYGA rates were around 6 percent on 3 to 5 year terms, with the highest 7 and 10 year rates reaching the high 6 percent and 7 percent range. Those top long-term rates can come from lower-rated carriers, so the highest number is not always the best choice.

Can I lose money in a fixed annuity?

Your principal is not exposed to market loss, but you can lose money to surrender charges if you withdraw more than the penalty-free amount during the surrender period, and to a 10 percent IRS penalty if you take earnings before age 59 and a half. A level payout can also lose purchasing power to inflation over time.

What happens if the insurance company fails?

Your state's guaranty association steps in, up to state limits. In North Carolina that is $300,000 per individual, per member insurer, for annuity benefits. It is a backstop, not a reason to buy, which is why starting with a financially strong carrier matters most.

Citations

1. National Association of Insurance Commissioners, "Buyer's Guide for Fixed Deferred Annuities" (Revised 2013, maintained reference)
2. U.S. Securities and Exchange Commission (Investor.gov), "Annuities" (maintained reference)
3. Annuity.org, "Best Fixed Annuity Rates" (updated July 22, 2026)
4. LIMRA, "Final U.S. Retail Annuity Sales Set New Sales High, Totaling $464.1 Billion in 2025" (March 23, 2026)
5. National Organization of Life and Health Insurance Guaranty Associations (NOLHGA), "How You're Protected" (updated June 1, 2025)
6. North Carolina Life and Health Insurance Guaranty Association, "Frequently Asked Questions" (maintained reference)
7. Federal Deposit Insurance Corporation (FDIC), "National Rates and Rate Caps" (July 2026)
8. Annuity.org, "What Are the Biggest Disadvantages of Annuities?" (updated June 16, 2026)