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Independent Review of the USAA Flexible Retirement Annuity (FRA)

What Will Be Covered in this Annuity Review

In this annuity review, we will be going over the following details regarding the USAA Flexible Retirement Annuity (FRA) deferred annuity: USAA Annuities
  • Product type
  • Fees
  • Current rates
  • Realistic long-term return expectations
  • How the annuity is best used
  • How the annuity is most poorly used

Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.

Over the past several years, annuities have become a much more popular component of retirement planning. One reason for this is because, as people are living longer, having a retirement income that lasts much longer is necessary – and unlike any other insurance or financial product in the market place, an annuity is the only vehicle that can guarantee you an income for the remainder of your lifetime, regardless of how long you may need it. Fixed annuities have become particularly favored by those who are at or approaching retirement time, as people are getting much more leery about entrusting their hard-earned savings to a very volatile and unpredictable stock market. With that in mind, if you have been on the proverbial fence regarding the purchase of a fixed annuity like the USAA Flexible Retirement Annuity – because you want to ensure that your money is safe, and that you’ll have lifetime income that you can count on – then this particular financial product could be a possible solution for you. But, before you get excited and go out and purchase this (or any other) annuity, it is important that you take it for a “test drive” so that you know exactly how the product works, and how it may – or may not – work for you and your short- and long-term financial goals.

Annuity and Retirement Income Planning Information That You Can Trust

If you have never been to our website before, please allow us to personally welcome you here. At Annuity Gator, we are a team of experienced financial experts who are dedicated to helping you decode the complicated world of annuities. We strive to create unbiased, yet highly comprehensive, annuity reviews – and we have been at this for far longer than most of those “copycat” websites out there. Annuities are a highly unique insurance product in that they are the only financial vehicle that can make the promise of providing you with a lasting, lifetime income stream. Unfortunately, though, some insurance and financial services advisors – albeit unintentionally – will tend to make them sound better than they actually are. Not that they are trying to mislead their clients. Most of them really aren’t. But many of these professionals just simply don’t know the intricate details about annuities. Also, in order to obtain the nice benefits and guarantees that you can get with a fixed annuity, there are oftentimes also some tradeoffs that you need to make. So, with that said, you need to know just exactly what you might have to give up in order to get the guarantees and other benefits an annuity can provide. Many annuity sales reps, and even many of the annuity websites that you’ll come across online, will make some pretty bold claims about the performance of the annuities that they offer, such as:
  • 7 to 8% return
  • Low fees
  • Guaranteed income for life
  • No market risk
Look familiar? The goal of the annuity reviews that you’ll find here on is to provide you with information on the features and benefits inside the annuity, and to help you better understand what the benefits could mean to you and your financial situation – both now and in the future. So, if you’re ready to get started, let’s dive in!

USAA Flexible Retirement Annuity (FRA) at a Glance

Product NameFlexible Retirement Annuity (FRA)
Type of ProductFlexible Premium Fixed Annuity
S&P Rating
Phone Number(800) 531-8722
WebsiteAA+ (Very Strong)

Opening Thoughts on the Flexible Retirement Annuity (FRA) from USAA

USAA has been serving military members and their families for nearly 100 years, with a primary focus on providing insurance, banking, investments, and retirement advice and products. The company was initially founded by a group of Army officers who decided to insure each other, in turn, forming the United States Army Automobile Association. Over the years, the company has expanded to include a variety of other insurance and financial products. As of year-end 2017, USAA had in excess of $77 billion in assets under management, and the company’s owned and managed assets grew to over $260 billion. During 2017, USAA handled more than 287,000 disaster claims, with nearly $15 billion in total claims paid for the year. The company and its subsidiaries rank highly in terms of financial strength and stability, with USAA Bank being the 28th largest bank (based on U.S. bank deposits of $71 billion). USAA is also ranked as number 102 on the list of Fortune 500 companies. With more than 12.4 million members – and an impressive 98% member retention rate – USAA is also ranked as number 20 on the 2018 list of FORTUNE’s World’s Most Admired Companies. The company has high ratings from the insurer rating agencies, including a(n):
  • A++ from A.M. Best Company
  • Aaa from Moody’s Investors Services
  • AA+ from Standard & Poor’s
Given the unpredictability in the stock market over the past several years, the demand for fixed annuities has grown a great deal. One reason for this is because fixed annuities can provide the benefits of keeping assets safe, as well as an assurance of a stable and reliable income stream in the future. However, because of the extremely low-interest-rate environment that we have been in for roughly the past ten years, the return that is offered by most fixed annuities is painfully low – and that can create problems for you and your money. For instance, the returns that are obtained on fixed annuities have not even been enough to outpace the inflation rate over time. Because of these low rates, your future purchasing power could be affected – especially if you plan to use the income from a fixed annuity as a primary source of your retirement income down the road. So, even though your money is technically “safe,” going this route may or may not actually be the most beneficial course of action for you. That’s why we’ve compiled this annuity review so that you can weigh the pros and cons.

Before we get into the gritty details, here are some necessary legal disclosures…

This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. USAA has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners. For additional information on how to compare fixed annuities so that you can decide which may be the best one for you, click here in order to obtain our free annuity report.

How USAA Describes the Flexible Retirement Annuity (FRA)

USAA describes the Flexible Retirement Annuity as a product where you can put money away as often as you like while you are saving for retirement. The money will grow daily, and when you are ready to retire, you will then have the option to receive guaranteed monthly payments for the remainder of your lifetime – regardless of how long that is. Like other annuities, the money that is inside of this product is allowed to grow tax-deferred. That means that there is no tax on the gain until the time of withdrawal. It also means that the funds in the annuity can grow and compound exponentially. Some of the key highlights of the Flexible Retirement Annuity include the:
  • Ability to keep money protected from market declines
  • Flexibility to add money as often as you want, after a $5,000 initial minimum contribution
  • Creation of a stream of retirement income that lasts for as long as you choose
The locked-in rate that you receive depends on how much you have deposited in the annuity. For an outline of the dollar amount needed to obtain certain rates, go HERE. Based on the amount of your first year’s contribution, you may also receive a bonus. The rate on this bonus can fluctuate, but will never be less than 1% – and, it will not change once the annuity has been issued. There are a few other “bells and whistles” on this annuity, like a waiver of surrender penalties if you need to access more than 10% of the contract’s value during the surrender period and if you qualify based on health or long-term care needs. If you’d like to check out the full USAA annuity brochure you can do so HERE.

How a Financial or Insurance Sales Person May “Pitch” this Annuity

Given our longer life expectancy these days, the concern about running out of retirement income is a very real fear. This is one reason why fixed annuities have grown in popularity of late, as they can offer you the assurance of income for the remainder of your lifetime. Because of that, if you have been presented the USAA Flexible Retirement Annuity by an insurance or financial advisor, then it is very likely that they have focused heavily on such guarantees. Likewise, insurance and financial professionals will also key in on the fact that your principal will be safe in a fixed annuity, and that you can essentially lock in a set rate of interest for a certain number of years – in this case, ten – regardless of what occurs in the market, or even in the economy overall. However, while having these assurances can certainly help you to sleep better at night, the reality is that the interest rates today (and for the past decade or so) that are offered on fixed annuity products would have you hard pressed to meet, much less beat, inflation. And this could lead you to struggle financially when trying to keep up with the rising cost of the goods and services that you’ll need to purchase in the future. In addition, you really need to weigh the potential loss of financial opportunity for other, more beneficial products, if you have a large chunk of your money locked up in just one annuity for at least a decade.

What About the Fees on the Flexible Retirement Annuity from USAA?

While there is no up-front sales charge for this annuity, nor an annual administrative fee, don’t let that lure you into believing that there are no charges or fees at all. That’s because you could end up incurring various “penalties” if you need to access more than 10% of your funds from this annuity during the first ten years. On top of that, any of the interest that you withdraw prior to turning age 59 1/2 will also incur an additional 10% “early withdrawal” penalty from the IRS.

The Annuity Gator’s End Take on the USAA Flexible Retirement Annuity (FRA)

Where it works best: While it may not be right for everyone, this annuity will usually work the best for those who are looking for the following benefits:
  • Guaranteed lifetime income
  • Safety of principal
  • Interest rate guarantee – at least for a certain period of time
Where it works the worst: This annuity may not be an ideal fit if you:
  • Want access to most or all of your funds within the first 10 years (during the surrender charge period)
  • Are seeking a high rate of return on your money
  • Do not anticipate using the annuity for lifetime income
If you want to really compare the best annuity options for you, click here so that you can download our free annuity report.

In Summary

There are many different factors that you should ideally consider when you are thinking about the purchase of an annuity. That is because these products constitute a long-term financial commitment – as well as one that could be quite costly if you decide that the annuity isn’t the right vehicle for you. Therefore, long before you purchase it, you should know how the annuity will produce a return, as well as how safe your money is inside the contract…and how (and when) the income from the annuity will pay out. If you’re still leaning towards purchasing the FRA annuity from USAA, you can be sure that your money will be safe – and that you will also be able to count on a guaranteed income stream for the remainder of your lifetime (regardless of how long that may be). However, you also need to consider some additional criteria here, and the only way to truly know whether or not this particular annuity will be right for you is to have it tested. We can perform this test for you, based on your specific financial parameters, and we can do so for you free, with no obligation. So, if this is something that is of interest to you, all you need to do is just contact us here through our secure online contact form.

Do You Still Have Any Questions on the FRA Annuity? Did You Notice Any Mistakes in this Review?

We know that this annuity review was a tad bit lengthy – and for that, we thank you for sticking with us here to the end. But our feeling is that we would much prefer to give our readers a bit too much detail than not enough. So, if you found that this review was beneficial for you, then please do feel free to share it and to forward it on to anybody else that you think may also benefit from it. Also, we know that the details about annuities – and other financial products, too – can and do change somewhat quickly. With that in mind, if you happened to notice anything in this review that needs to be corrected and/or updated, please let us know that as well, and we will get on the revisions right away. Are there any other annuities that you would like to see information about? No problem! If you would like to see reviews on any other annuity (or annuities), our team of annuity “geeks” will get on the ball and get them on our website. Just simply click here to let us know which product (or products) you are interested in seeing. And, be sure to check back soon. Best, The Annuity Gator P.S If you would like to read more of our USAA annuity reviews here are a link to check out: Independent Review of the USAA Flexible Retirement Annuity (FRA)

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