What Is the Cost of Waiting for Interest Rates to Rise?

March 1, 2023

Even in a low interest-rate environment, an annuity can be a good choice. Compounded growth and tax deferral can grow your savings faster than you may think. But if your clients say they’re waiting for interest rates to go up before buying an annuity, they may be missing out.

Consider this example:

If a client puts $50,000 into a five-year fixed annuity paying 4.00%, that client would be guaranteed $60,833 at the end of five years, minus any withdrawals taken.

That’s the power of tax-deferred, compounded growth. Plus, clients can experience a minimum guaranteed return and flexible access to funds along the way. Few taxable investments can compete with this blend of safety, growth and flexibility.

Here’s another way to look at it:

If a client waits one year before buying an annuity, that same $50,000 would have to earn 5.02% annually for four years to catch up with the annuity’s value of $60,833.

What happens if a client waits two years? That $50,000 would have to earn 6.76% annually for three years to achieve the guaranteed $60,833 if the client had not waited.

Use This Sales Idea With Clients

Try our Cost of Waiting calculator. This calculator quickly illustrates how many years it will take to catch up if your clients wait for interest rates to rise.

Sales Concept Flyer

16483

What Is the Cost of Waiting?

More About Sales Insights & Tools
The 50/30/20 allocation model using fixed index annuities offers a strategic alternative to the traditional 60/40 portfolio. Find out how FIAs can become a valuable addition to a balanced investment strategy.
Paul Garofoli shares a strategy for clients to leave a legacy without underwriting, using the Legacy Max Enhanced Death Benefit Rider. This approach helps clients convert “live on” assets into “leave on” legacies, ensuring their financial plans benefit future generations.
Concerned about potential declines in long-term yields and participation rates for fixed indexed annuities? Take advantage of the current higher rates offered by the Enhanced Choice Index Plus Series to save your clients thousands before rates drop.
Now might be a great time to consider a fixed index annuity before interest rates drop. The Index Select Annuity 7 offers a 65% participation rate in the S&P 500® Index gains without any downside risk, plus a 5.00% fixed interest crediting option.
Join us in celebrating the one-year anniversary of the Enhanced Choice Index Plus! Its many options make it a powerful tool to protect and grow clients’ assets.
Knock your next sales meeting out of the park using “Score Big With Legacy Max.” Find out more about what it is, how to use it and where to find it.
As the world becomes more interconnected, so does the need for coverage. Find out how you can offer annuities to foreign nationals working for a company in the United States.
Your clients with CDs are receiving their 1099 forms soon. So, it’s an ideal time of year to talk about the tax advantages of fixed annuities. Share our flyer to show clients what they’d have to earn in a taxable investment to match the earnings of a fixed annuity.