No. of Recommendations: 3
Just over a year ago I retired; one of the financial restructuring activities was establishing a 5 year fixed instrument ladder. You all know this - put a year's expenses worth of cash into a CD/bond that matures in a year, and 2-5 years as well, to buy down sequence risk. I did that initially via Schwab, which was perfectly fine and that process harbored nothing janky.
I went into this a year ago with a general sort of "annuities are bad [minus a very few boutique cases]" mentality, but I reset on this some after a good discussion with my Schwab fixed instrument guy. Before this chat, I would have gone CD and/or Treasuries to build the 5 rungs for the ladder.
He pointed out that for years 3/4/5, I could consider a Multi-Year Guaranteed Annuity. You smart people can look up MYGAs and how they work in detail if you want, but the very tl;dr is it is a rough equivalent of a CD or bond in that you give them money and they give you a low but reasonably acceptable percentage return on that over a few years.
So Schwab hooked me up with a MYGA broker, who in turn helped set up years 3-5 using these. They're not as lithe to obtain as a CD or bond (you can buy Treasuries on Schwab, and I would expect Fidelity and E*Trade and Vanguard and whoever as well, direct) but it wasn't too hard. There is a bit more to sign as it is a contract, and you get a fat folder of papers at the end, so a little old school.
The kicker is the pretty lofty premium these offer over CDs and bonds.
I just finished replacing the just-matured Year One rung, which was in a treasury note that matured, and I talked to Schwab again. Their offerings are conservative; I don't believe they go below A. M. Best (the equivalent of Moody's or Standard and Poor's for rating annuity issuers) ratings of A+.
I saw a pretty sizable bump going to an A- issuer. For those who like numbers there is no measurable, stated percentile risk of an A+ issuer going under in the first year. For an A- issuer, in aggregate A. M. Best listed a 0.15% chance of year one failure. I was OK with that.
My wife asks the tough questions - what *does* happen if an issuer fails? How often does this happen? So I did a day or two of digging about and reading. There is no FDIC equivalent for annuities - not at the national/federal government level. However, each state - and even Puerto Rico, don't know about Guam or other territories - has a state level guarantee entity. Most states will cover up to $250k for a single annuity. A few are less, California was more.
As for likelihood, beyond the A. M. Best prediction, as I pored through news archives about annuity companies going under, it isn't common. It seems about as common as bank failures.
I went with Axonic (
https://www.axonicinsurance.com/waypoint) as an issuer, brokered via Blueprint Income (
https://www.blueprintincome.com). Axonic's parent company has been in the insurance business since the mid-80s, and Axonic has maintained its A- rating for I think about 8 years. I felt good with that.
Blueprint has a search engine of sorts, which looks a lot like Bankrate's list of CDs, and which lists MYGAs by rate and includes A. M. Best rating. There was an offering from a newer company that came in about half a percent higher than Axonic, but I wasn't as confident in such a new issuer. Just a hint of "too good to be true" vibes.
Axonic came in, at the time, at 5.65% for a five year MYGA. And at the time that was about 1.6% above a higher paying 5 year CD, and about 1.85 above a five year treasury note. Blueprint made the acquisition fairly simple - most of the application is digital. Axonic did sent the contract after about a month - from my first contact to Blueprint through when the final contract arrived was a month. So that was hard copy but everything else was online, which was nice.
Blueprint has real people if you want to talk to them - which I did initially just to help make sure this wasn't some elaborate scam...for some reason I'm loathe to wire a big amount of loot without talking to a person and such. Even when I researched Axonic I looked up their headquarters building, found the parent company, looked at all their employee group photos from their social days that showed up when I clicked the building on google maps, and various other spy craft (hey, it was my job from 2011-2025).
I called as well when the wiring instructions came, to make sure they were correct - a clever hack is for a cyber criminal to intrude on the email server of a smaller company (which Blueprint is) email server and send out emails when they realize a transaction is about to close, but cyberjerk sends out bad wiring instructions, and your money is off to North Korea or whatever. So once I affirmed that, the wire was simple enough.
All in all I would recommend MYGAs as an alternative to a CD or bond, especially when you are really assured you won't need the money (surrender fees on MYGAs are high, 9%ish). I would also recommend blueprint as a modern, helpful, responsive, competitive choice for finding a high paying MYGA.
I'll be doing this again in early 2027. Possibly another MYGA...
