How to Get Higher Rates of Return on Annuities

If you are buying an annuity for your retirement you may be wondering how to get higher returns, since typical fixed annuities offer a percentage rate that is comparable to money markets and CDs. You can buy an Index Equity Annuity, which returns a percentage rate based on a stock index or you could buy a variable annuity, which is tied to the stock market and uses subaccounts somewhat like a mutual fund. There are a few ways to get higher rates of return, no matter what type of annuities you buy.

Compare the total rate of return you will earn over the entire course of the annuity and translate this into a dollar amount. You will have to factor in the amount of fees you will pay, the cost of your benefits if any and any other management fees that variable annuities may charge. This should always be the basis for comparison.

Disregard bonus rate annuities even though they offer a higher rate of return the first year. The rate of return after this bonus period could be very low, resulting in a lower overall gain.

Find higher rate fixed annuities by conducting a long search. Call several no-load annuity companies that offer direct sales of annuity contracts. They typically return higher rates of return, and since they do not offer benefits, you will earn more simply because you aren't paying more for a benefit.

Consider variable annuities, index annuities and CD or money market type annuities. These products are designed to compete with investments that earn more interest, and often return higher rates of return. However, variable annuities (which pay interest based on sub accounts that are tied to investments like stocks) could lose money.

Invest in fixed annuities that have longer guarantee periods of high interest when interest rates are high. This will lock in higher rates of return since fixed annuities offer higher interest based when interest rates are high. You will lock in the higher rates for a longer period of time when you get a higher fixed rate for a longer period of time.

Keep your annuities for a longer period of time and always renew at the highest possible rate. Some annuities may require you to renew your contract to continue getting a high interest rate. So, always renew at the highest rate, and be sure the annuity you buy allows you to renew at a higher rate. Check the renewal periods and rates for the past history of the annuity.


  • Buying annuities can be confusing, so be sure to read up on the different types of rates, benefits and stipulations of annuities. Annuities usually have a guaranteed rate (the rate you are guaranteed to earn), a guarantee period (how long that guaranteed rate will last), as well as minimum rates, which is the lowest rate you could earn.


  • Do not invest in bonus rate annuities that offer a higher interest rate at first then drop down to a lower interest in a year or two. Be careful investing in variable annuities--they are complex and involve some knowledge of the markets.