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Laddering of MYGAs for Liquidity

Dec 31, 2025

In today’s financial climate, balancing safe earning potential with access to funds is essential, especially for retirees or those nearing retirement. One increasingly popular approach that delivers both guaranteed returns and flexibility is laddering Multi-Year Guarantee Annuities (MYG Annuities). This strategy helps maintain liquidity while optimizing interest earnings, allowing you to meet near-term needs without sacrificing long-term growth.

Understanding MYG Annuities and liquidity


Before diving into the strategy, it’s important to understand the basics. An MYG Annuity is a type of fixed annuity that provides a guaranteed interest rate for a specific time period, typically from 3 to 10 years. These products are ideal for those seeking predictable returns and no exposure to market volatility.

Liquidity, in financial terms, refers to how easily an asset can be converted into cash without affecting its value. Annuities (by design) are not highly liquid; they're meant to be held for the contract term, with limited access for withdrawals. However, by laddering MYG Annuities, you can overcome this limitation and create a more flexible, accessible portfolio.

What is MYG Annuity laddering?


Laddering means purchasing several MYG Annuities at the same time with different maturity dates. This staggered approach gives you periodic access to funds as each annuity matures. It also provides a sustained income stream, ideal for covering your living expenses or supplementing your retirement income, while the remaining money continues to earn interest.

Additionally, you could set aside a smaller amount in something liquid like a savings account to cover any larger liquidity needs during the term of the 3-year MYGA.

Example:
Someone with $150,000 could split it into three different MYG Annuities:

  • $50,000 3-year MYGA
  • $50,000 5-year MYGA
  • $50,000 7-year MYGA
Bar graph

This approach creates a seven-year ladder that puts all the funds to work right away. As a portion of the portfolio becomes liquid at each interval, the holder has the option to reinvest at prevailing rates or access funds as needed.

Benefits of laddering MYG Annuities for liquidity
 

  1. Increased earning potential
    Annuity ladders are similar to a Certificate of Deposit (CD) ladder. If your duration need is 3 years or more, one major benefit to an annuity ladder over a CD ladder is that fixed-rate annuities generally offer better rates than CDs and grow tax-deferred.
  2. Tax-efficiency opportunity
    Your money grows tax-deferred with no annual income tax on earnings. It may also help with tax efficiency. At the end of the guarantee period, you have the option to withdraw all your money or roll it into another high-yielding annuity to delay taxes at the end of the original guarantee period depending on your current tax year situation.
  3. Penalty-free withdrawals
    Unlike a CD, those who are 59½ or older can pull out up to 10% each year penalty free if needed — an added liquidity benefit over a CD.1
  4. Regular access to funds
    Rather than locking all your money into a long-term contract, laddering provides staggered liquidity. Each maturing annuity gives you access to a portion of your original funds without penalties. You’re never that far away from one of your annuities reaching maturity and therefore able to access the cash without taking a penalty.
  5. Risk reduction
    Spreading your money across multiple contracts and timelines reduces exposure to unfavorable rate environments and minimizes reliance on a single payout stream. 

Looking for a leg up on how smart MYG Annuity strategies can help your portfolio work harder for you? 

Take the Next Step

1Penalty-free withdrawals allow up to 10% of the annuity value at the beginning of the year to be withdrawn annually, free of surrender charges. Any withdrawals, including interest-only withdrawals, will reduce the amount of interest credited to your contact. Withdrawals of earnings are subjected to income tax. A 10% IRS penalty may be imposed for withdrawals before 59 1/2.