I often get asked what is the best fixed annuity right now.  Although a lot of it depends upon your own personal situation one things remains pretty constant with my recommendations;  The shorter term the better.  It is my belief that interest rates will remain low for probably the next 2-3 years and it will probably be 3-5 years until we start to see CD rates and fixed annuity rates creep back up into the 5% range.  With that said I like products that are shorter in length (5-6 years) and have liquidity above and beyond earned interest.

Why am I looking for those two things.  First, the shorter term you go the shorter the time from you can withdrawal ALL of your money and reinvest it at a potentially higher rate.  Second, if I am wrong about interest rates taking 3-5 years to creep back up to the 5% range and it happens sooner then that, by being able to withdrawal up to 10% per year (without penalty) gives you the option to reinvest that money at a higher rate than you are currently getting.   One of the main benefits to fixed annuities over CD’s is the flexibility to withdrawal more than just interest.

The two fixed annuities I like right now and I will get to in my next blog post are the ING Secure Index 5 and Lincoln Financial New Directions 6.  Both are Fixed  Indexed Annuities, both have good guaranteed minimum interest rates and excellent index crediting strategies.