Before The Fed Cuts: Why Smart Advisors Are Locking In Annuities Today
As of late July 2025, the market is increasingly confident that the Federal Reserve will begin cutting interest rates—possibly more than once—before the end of the year. Inflation has cooled, the labor market is softening, and forward-looking indicators show a slowing economy. With the rate cut narrative gaining momentum, several major carriers—including New York Life and MassMutual—have already announced upcoming rate drops on their Multi-Year Guarantee Annuities (MYGAs).
For financial advisors, this is a clear signal: your window to lock in historically high annuity rates for your clients is rapidly closing.
Why This Matters Now
- We’re Still Near 18-Year Highs. Across the board—MYGAs, Fixed Indexed Annuities (FIAs), Single Premium Immediate Annuities (SPIAs), and QLACs—contract rates and payout yields are among the highest we’ve seen since the mid-2000s. These elevated rates are directly tied to the Fed’s monetary policy. Once the rate cuts begin, product pricing will follow—and the generous income and accumulation opportunities available today will shrink.
- Carriers Are Already Repricing. Advisors should not wait for the Fed’s official move. Insurance carriers are proactive, adjusting their pricing and rate sheets in anticipation. We’ve already seen downward movement from top-rated carriers, and it’s likely just the beginning. Waiting could mean offering your clients a lower rate, a smaller income base, or reduced caps and participation on indexed strategies.
- Annuities as a Strategic Tool in Today’s Environment. For pre-retirees and retirees looking for safety, guaranteed income, or just a bond alternative in a traditional 60/40 portfolio, annuities are more competitive than they’ve been in decades
- MYGAs offer predictable, tax-deferred growth—ideal for clients sidelined from market volatility.
- FIAs provide growth potential tied to market indexes with no downside risk, and many still have caps and par rates that reflect the high-rate environment.
- SPIAs and QLACs convert today’s high interest rates into guaranteed income for life, helping clients hedge longevity and sequence-of-return risk.
- Rate Windows Don’t Stay Open Long. If you’re waiting for confirmation of rate cuts before taking action, you’re already behind. Advisors who act now can help clients secure lifetime income or growth before yields retreat—potentially for years to come. It’s worth remembering: the last time annuity rates were this competitive, we were still using flip phones.
Final Thoughts for Advisors
This is a rare moment where urgency and opportunity align. In a shifting rate environment, annuities are uniquely positioned to provide the certainty many clients are craving—and today’s rates give you a powerful story to tell.
If your clients are sitting on cash, under-earning in short-term treasuries, or unsure about staying in the market, now is the time to bring annuities into the conversation. You’ll be delivering long-term value while helping them take advantage of a fleeting window.
