Market Watch: The Fed raised rates. What it means for your safe money

Short answer: the Federal Reserve raised its benchmark rate in September 2026 and meets again on October 27–28. Higher rates generally mean insurers can offer better guaranteed rates on fixed annuities and more room on indexed products. Nobody can predict the Fed, so the better question is not "what will rates do?" but "how much of my safe money should be earning a locked rate right now, and for how long?"

Why this week matters

The Fed's policy committee meets Tuesday and Wednesday, October 27–28, with its decision due at 2:00 p.m. Eastern on the 28th. Headlines will focus on whether rates go up again. For savers and retirees, the more useful story is what has already happened: rates on safe-money products have climbed, and many people still have cash sitting in accounts that pay far less.

It is also year-end. CDs mature, people review retirement accounts before December 31, and many retirees take required withdrawals. That makes this a natural moment to check whether your safe money is working as hard as it could.

What changed in 2026

On September 16, the Fed raised its target range by a quarter point to 3.75%–4.00%, from 3.50%–3.75%. Its statement said inflation "remains elevated." Fed officials' projections, as summarized by Advisor Perspectives, put the rate at 4.1%–4.4% by the end of 2026, up from their earlier estimate.

Inflation matters here. At 3.7%, money earning 1% or 2% is losing buying power each year, even though the balance looks safe.

What higher rates mean for annuities

Insurers invest annuity premiums largely in bonds. When interest rates rise, they can generally afford to pay more. That shows up in three places:

• Multi-year guaranteed annuities (MYGAs) lock a fixed rate for a set term of years. One rate survey describes fixed annuity rates as near 15-year highs this month.
• Fixed indexed annuities (FIAs) credit interest tied to a market index with a 0% floor. Higher rates can give insurers more room for caps and participation rates. The floor protects you from index losses, but you will not get the full upside of the market.
• Income annuities turn a lump sum into a paycheck for life. LIMRA reported a record $4.1 billion in single premium immediate annuity sales in the second quarter of 2026 and said rising rates make income annuities more attractive.

Americans have noticed. LIMRA counted $121.2 billion in total annuity sales in the second quarter, and its head of research pointed to global tensions, record stock market performance and rising rates as drivers of demand.

MYGA vs. bank CD

The best CDs pay well above the national average, so compare real quotes, not averages. A CD can be the right home for money you may need soon. A MYGA tends to fit money you will not touch for the full term.

Agent tip: Do not try to time the Fed with all your money. Many clients "ladder" instead: split savings across, say, a 3-year and a 5-year guarantee. If rates rise, the shorter one renews sooner. If rates fall, the longer one keeps today's rate.

Before you lock in a rate

1. Check the insurer, not just the rate. The highest advertised rates sometimes come from insurers with lower AM Best ratings. A small rate gain is not worth extra risk to your safe money.
2. Read the surrender schedule. Know exactly what it costs to leave early and how much you can withdraw each year without a charge.
3. Ask about renewal. When the term ends, what happens? Rates on renewal can be lower, and contracts set different minimum guaranteed rates.
4. Keep your emergency fund separate. Annuities are for long-term money. See our emergency fund guide first.
5. Mind the IRS age rules. Withdrawals of earnings before 59½ may face a 10% penalty on top of income tax.

RMDs, IRAs and taxes

Year-end brings a hard deadline for many retirees. Once you reach 73, the IRS generally requires minimum withdrawals from traditional IRAs and workplace plans each year, due by December 31 after your first year. Missing one can mean a 25% excise tax on the shortfall, reduced to 10% if corrected within two years.

TrueFin Services does not sell IRAs, CDs, stocks or other securities, and does not give tax advice. For RMD calculations, Roth conversions or investment decisions, talk to a tax professional or financial advisor. What we can do is show how a fixed, fixed indexed or income annuity, including one held inside an IRA, fits your plan. If you hold an annuity in an IRA, ask whether the contract waives surrender charges for RMD withdrawals.

What to look out for this season

• Watch the Fed's October 28 decision, but do not make all-or-nothing moves around one meeting.
• List any CDs or annuities maturing in the next 90 days and what they will renew at.
• Compare what your savings earn to inflation, which was 3.7% over the latest 12 months.
• If you are 73 or older, confirm your RMD will be taken by December 31.
• Check AM Best ratings for any insurer you are considering.
• Read the surrender schedule and free-withdrawal terms before you sign.
• Keep your emergency fund in cash or savings before locking money away.

Sources

• Federal Reserve: FOMC statement, September 16, 2026
• Federal Reserve: October 2026 calendar
• Advisor Perspectives: Fed's interest rate decision, September 16, 2026
• U.S. Bureau of Labor Statistics: Consumer Price Index, September 2026
• FRED / FDIC: National rate on 60-month CDs
• Annuity Expert Advice: fixed annuity rates, updated October 25, 2026
• LIMRA: U.S. annuity sales, second quarter 2026
• IRS: Required minimum distributions
• IRS Topic 558: Additional tax on early distributions from retirement plans and annuities