Why I Recommend MYGA Laddering for Every Client Over 55

February 10, 2026 • 6 min read • MYGA, Laddering

Here is a conversation I have at least three times a week:

A client walks in with $200,000 and says, “I want to lock it all in at the best rate. What’s the highest 5-year MYGA right now?”

I understand the instinct. Rates are strong. They want certainty. And a 5-year MYGA is about as simple as it gets — guaranteed rate, no fees, no market risk. I get it.

But almost every time, I talk them into a ladder instead. Here is why.

The Problem with One Big MYGA

When you put $200,000 into a single 5-year MYGA, you are making two bets: first, that you will not need any of that money for five years (beyond the 10% annual free withdrawal). Second, that interest rates in five years will be as good or better than today.

Both of those bets are reasonable. Neither is certain.

Life happens. A roof needs replacing. A grandchild needs help with college. Your spouse gets a diagnosis that changes your financial picture overnight. If all $200,000 is locked in a single contract with three years left on the surrender schedule, your options are limited. You can take the 10% free withdrawal ($20,000), but beyond that you are paying a surrender charge — typically 3–5% in year three — to access your own money.

I split the $200,000 across four MYGAs with staggered terms:

$50,000 in a 2-year MYGA
$50,000 in a 3-year MYGA
$50,000 in a 4-year MYGA
$50,000 in a 5-year MYGA

Each contract is with a different A-rated carrier. (Carrier diversification is its own conversation — short version: do not put all your money with one insurer. Read our carrier financial strength guide for why.)

The result: starting in year two, one MYGA matures every year. At each maturity, you have a clean decision point — take the money, reinvest at then-current rates via a tax-free 1035 exchange, or convert to income. You are never more than 12 months from having $50,000+ available with zero penalties.

The Numbers

Let me walk through a real example with illustrative rates. Say today’s market offers:

Term: 2-year | Rate: 4.30% | On $50,000: $54,370 | Matures: 2028

Term: 3-year | Rate: 4.55% | On $50,000: $57,144 | Matures: 2029

Term: 4-year | Rate: 4.70% | On $50,000: $60,068 | Matures: 2030

Term: 5-year | Rate: 4.85% | On $50,000: $63,369 | Matures: 2031

Rates and values are illustrative only. Actual rates vary by carrier and are subject to change. All guarantees backed by the issuing insurer’s claims-paying ability. Not FDIC-insured.

The blended rate across all four rungs is about 4.60%. Compare that to putting everything in a single 2-year MYGA at 4.30% (too conservative) or everything in a 5-year at 4.85% (too illiquid). The ladder captures most of the long-term premium while keeping you flexible.

What Happens at Each Maturity

This is the part clients love once they experience it.

When Rung 1 matures in 2028, we sit down together and look at the landscape. Are rates higher? Lower? Has your situation changed? Do you need income? Here are the three paths:

Path A: You do not need the money and rates are good. We 1035 exchange the matured $54,370 into a new 5-year MYGA — tax-free. Now you have a perpetual ladder: one rung maturing every year, each locked at the best available 5-year rate at the time of purchase.

Path B: You need the cash. Take it. No surrender charge, no penalty (assuming you are over 59½). The MYGA has done its job.

Path C: You are ready for income. We 1035 exchange into a SPIA or DIA. The full amount transfers tax-free and converts to guaranteed lifetime income. This is the hybrid ladder strategy — accumulation feeding into income, one rung at a time.

The One Time I Do Not Ladder

There is one scenario where a single MYGA makes more sense: when a client has a specific, known expense at a specific, known date.

Example: “I am selling my house in 4 years and buying a condo. I need the $200,000 to be available then, not before.” In that case, a single 4-year MYGA is the right answer. The goal is not flexibility — it is matching a known liability to a known maturity. One product, one job.

But for general retirement savings with no specific spending date? Ladder it. Every time.

What to Do Next

If you have $100,000+ in savings that you will not need for at least 2 years, a MYGA ladder is worth exploring. The math works in almost every rate environment, and the peace of mind of knowing you always have a rung maturing soon is worth more than the marginal rate difference of going all-in on a single long-term product.

I am happy to walk through your specific numbers. The consultation is free, and if a ladder is not the right fit for your situation, I will tell you that too.