Personal finances are as unique as the people they belong to—from a couple with no children both working in high-income jobs to a single parent securing minimum wage. Regardless of the industry, income level, or family situation, the desire to eventually retire is the same goal for almost everyone.
Although planning for this next step in life is dependent on the individual, most people traditionally default to 401ks, IRAs, and CDs. More people are now considering how a MYGA could help them achieve their goals for retirement.
Here is an overview of how annuities play a role in a successful retirement plan by offering advantages that other types of retirement accounts do not.
MYGA: A Powerful Wealth Building Tool
When planning for retirement, the most important element is to secure and increase wealth. For high income earners who are approaching their desired retirement age, now is the time to ensure that the assets you have accumulated will continue to serve you over your remaining years. To achieve a predictable level of asset accumulation, consider how a MYGA may help.
What Is A MYGA?
A MYGA, or multi-year guaranteed annuity, is a product offered by life insurance companies instead of banks. MYGAs are funded using a lump sum, but unlike other types of annuities, they do not provide regular and predictable payments over time.
Instead, the money stays in the MYGA to accumulate according to a fixed rate that does not fluctuate over the life of the product. When the MYGA’s term has concluded, the money is returned to its owner or transferred into another MYGA to continue to securely accumulate.
Benefits Of MYGA For High-Income Earners
High income earners face unique challenges when planning for retirement, and they may find their options more limited than those with lower gross earnings.
A MYGA can help to overcome some of the limitations experienced when using CDs, IRAs, and 401ks without compromising the ability to accumulate wealth.
MYGA vs. CDs
Because MYGAs accumulate at a fixed rate over a set period of time, many people compare them to certificates of deposit, or CDs. However, MYGAs provide additional advantages.
While both products offer a means of ensuring that your wealth increases over time according to a transparent rate safe from market fluctuations, MYGAs are tax deferred and will not incur the annual tax burden of a CD. Thus, MYGAs can outperform CDs while maintaining similar levels of security.
MYGA vs. Traditional Retirement Accounts
The advantages of a MYGA are not limited only to certificates of deposits. They can also compete with (and work alongside) some of the most utilized retirement options, such as IRAs and 401ks.
One of the most significant advantages is that MYGAs function without a cap; individuals can utilize MYGAs for any amount they wish with no limit.
MYGA As An Alternative To IRAs
High income earners may face frustrations as they are more restricted in their contributions to IRAs due to their earnings.
However, MYGAs do not have income limits or tax filing status restrictions of any kind, nor do they inhibit contributions by placing a cap on the annual amount transferred into the account. While a Roth IRA can see no more than $7,500 in use at most each year (as of 2023), a MYGA has no limit.
Comparing MYGA and Traditional Annuities
Annuities as a whole can be a powerful tool for retirement, but MYGAs specifically offer unique advantages.
Traditional annuities pay out predictably over time, but those who are not yet ready to receive income or who want to further boost their asset value before beginning payments can benefit from the secure, tax advantaged accumulation offered by a MYGA.
Estate Planning Advantages Of MYGA
Another element that boosts the efficacy of MYGAs for retirement is their role in estate planning. Unlike traditional retirement accounts, a MYGA can secure a more predictable sum for beneficiaries after the principal owner has passed away.
Preserve Your Wealth For Heirs
Transferring a 401(k) or other retirement account after a person’s death can be complex; the funds may inadvertently be taxed if this transfer is done improperly, or the new beneficiary may fall under inconvenient rules regarding the rate or age at which they may access the funds.
However, MYGAs have the ability to be very easily passed intact to beneficiaries, who can continue to enjoy their predictable accumulation without issue.
MYGA vs Other Estate Planning Instruments
MYGAs offer flexibility in estate planning. They are established in a contractual situation focused on accumulation and simple to pass to a beneficiary.
Additionally, MYGAs are also sheltered against market fluctuations, which means that they are secure no matter the economy, and they are simple to manage.
Secure Your Retirement Wealth With A MYGA With Pillar Life
Understanding the right retirement options for you is a personalized process, but MYGAs are often a smart choice for those with high incomes.
The team at Pillar Life believes that you should have the liberty to explore and select MYGAs without the interference of a middleman, which is why we offer a self-service online portal.
Contact Pillar Life Insurance to explore your options online or ask questions about how a MYGA can serve your long-term financial goals.