When you’re shopping for annuities, it’s important to understand the different features that are available. One important feature is the guaranteed interest-crediting rate. This is the rate of return that your annuity will earn, regardless of what the stock market does. In this guide, we will explain what a guaranteed interest-crediting rate is and how it works. We’ll also give you some tips on how to find the best rate for your needs!
What is a guaranteed interest-crediting rate?
A guaranteed interest-crediting rate is a feature of some annuities that guarantees a minimum rate of return. This means that no matter what happens in the stock market, your annuity will earn at least the specified rate of return. For example, if you have an annuity with a guaranteed interest-crediting rate of four percent, your annuity will earn four percent per year, no matter what the stock market does.
Benefits Of A Guaranteed Interest Crediting Rate
Guaranteed interest-crediting rates are important because they provide a guaranteed minimum rate of return on your investment. This can be helpful in two ways.
- First, it can help you keep up with inflation. Over time, prices for goods and services tend to go up. This is known as inflation. If your investment doesn’t keep up with inflation, then it’s losing value. A guaranteed interest-crediting rate can help you keep up with inflation by guaranteeing a minimum rate of return that is higher than the rate of inflation.
- Second, a guaranteed interest-crediting rate can help you reach your financial goals. For example, let’s say you’re saving for retirement and you want to have $500,000 in 20 years. If you invest in an annuity with a guaranteed interest-crediting rate of four percent, then you can be confident that your investment will grow to at least $500,000 in 20 years. Even if the stock market doesn’t perform well during that time, you’ll still reach your goal.
Conclusion
When you’re shopping for annuities, be sure to ask about the guaranteed interest-crediting rate. This is an important feature that can help you reach your financial goals. Be sure to shop around and compare rates to find the best deal for you. With a little research, you can find an annuity that will provide you with the guaranteed interest-crediting rate you need to reach your financial goals!
Do you have more questions about how annuities work? Check out our other guides about annuities. We have guides that explain the different types of annuities, how to calculate your annuity payments, and more!
Still, have questions? Our team of financial experts would be happy to answer them. Just contact us and we’ll get back to you as soon as possible. We’re here to help you reach your financial goals. Thanks for reading!
Request A Quote
Get help from a licensed financial professional. This service is free of charge.