What do we cover in this USAA Single Premium Immediate Annuity review?
In this review, we will cover the following information about the USAA Single Premium Immediate Annuity (SPIA):
- Product type
- Current rates
- Realistic long-term return expectations
- How this annuity is best used
- How it 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.
Roughly a century ago, life expectancy in the U.S. was somewhere in the neighborhood of 41 years. Today, however, it is not uncommon at all for many people to live twice that long. This means that not only is it possible to spend a decade, two, or even three in retirement, but that it’s becoming more of the norm rather than the exception.
However, even though a nice long retirement can be very appealing to most people, it can also be difficult at best to live comfortably if you don’t have enough money coming in each month to pay your living expenses.
One strategy that can help you to ensure that you not only have an ongoing retirement income, but income that could last for the remainder of your lifetime, is to purchase an annuity. These products, issued by insurance companies, will typically offer a lifetime income option that guarantees you an incoming cash flow for as long as you should need it.
But, before you run out and sign on the dotted line for any annuity, it is important to first understand that not all annuities are the same. In fact, not by a long shot!
In addition to that, these products will often come with an insane amount of “fine print”, so while you may think that the annuity will offer you certain benefits, you may actually need to incur various waiting periods, fees, charges, and/or other types of tradeoffs in order to get the benefits you had anticipated.
Therefore, because immediate annuities require that you contribute a large amount of money into the account right from the get-go, it is extremely important that you know exactly what it is that you’re getting into, as well as what could happen if you decide that you want to get out of it.
That’s where we come in!
Annuity and Retirement Income Planning Advice You Can Trust
If this is your first visit to our website, then please do allow us to welcome you here to AnnuityGator.com. We are a team of experienced financial and annuity experts who are focused on offering the most comprehensive, and unbiased, reviews of annuities on the Internet. We’ve been at this for many years – much longer than our competitors – and so we have become a well-known source of annuity information online.
With that in mind, if you have been looking for more information about annuities – and especially if you have been Googling various annuity words and phrases – it is a good possibility that you have noticed there’s a lot of conflicting information out there about these products. This, however, isn’t really a surprise to us, because there is a great deal of confusion about how annuities work, and which type of annuity may be best for certain circumstances.
You may also have attended an annuity seminar or workshop recently where, in return for a free dinner or lunch, you were provided with details about the USAA Single Premium Immediate Annuity, or some other similar financial product. Attending this seminar could even have been the catalyst that ultimately led you here to our website.
Even though there are a plethora of websites that market their annuities to consumers, there are a fair number of these sites that will attempt to “lure” you in by making very enticing claims like:
- High income payments
- Lowest annuity fees
- Guaranteed lifetime income
- 7 – 8% Rate of Return
While these claims can be really inviting (particularly in our recent low-interest rate environment), the truth is that it is absolutely essential for you to first make sure that these claims are actually true. (Mostly, they’re not!) This is particularly the case if you are seriously thinking about moving a large sum of your retirement savings into one of them.
In any case, whatever the reason is that you landed here on AnnuityGator.com, you are definitely in the right place if you want to find out more about the Single Premium Immediate Annuity (SPIA) from USAA.
That’s because we provide all of the details and resources, including not just the good, but also the bad and the ugly. This is really the only way that you will be able to make a truly well-informed buying decision (or alternatively, to make a decision to pass on this particular annuity and move on to something else that may be more suitable for your specific financial goals).
This annuity review is provided here for you in order to help you ensure that you’re moving in the right direction with this (and/or other) annuity and to guide you in what to look for in terms of the pros and the cons.
So, if you are ready to get started, let’s go!
The USAA Single Premium Immediate Annuity (SPIA) at a Glance
|Product Name||Single Premium Immediate Annuity|
|Type of Product||Single Premium Immediate Annuity (SPIA)|
|S&P Rating||AA+ (Very Strong)|
|Phone Number||(800) 531-8722|
Opening Thoughts on the Single Premium Immediate Annuity (SPIA) 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
Today, with so many employers getting rid of their defined benefit pension plans, it has really become the responsibility of individuals to make sure that they convert their savings over into an income stream – and that the income continues to last throughout the remainder of their lifetime.
An immediate annuity like the Single Premium Immediate Annuity from USAA could fit the bill for solving these issues. However, it is also important to remember that, just like any other financial product, not all annuities are the same. So, it is highly recommended that you take a good, close look at this – or any other annuity that you are considering – before you commit to it.
Before we get into the in-depth details, we have some legal disclosures to present…
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.
Want to more about how annuities really work? Click here to receive our updated annuity report.
How USAA Describes the Single Premium Immediate Annuity (SPIA)
USAA describes the Single Premium Immediate Annuity as a financial vehicle that provides you with a steady stream of income as soon as you contribute a lump sum of money. (Oftentimes, individuals will “roll over” money from an employer-sponsored retirement plan like a 401(k) so that an ongoing income stream can be created). With this particular annuity, you can choose from a variety of income plans which last for a certain period of time, or even for the rest of your life – no matter how long that might be.
There are some other key benefits found on the SPIA from USAA, too, including:
- The opportunity to receive more money back that you put in
- The ability to make a one-time withdrawal in the event of certain financial emergencies, such as large medical bills, funeral expenses for a family member, or other large financial obligations
- The ability to increase your income payments by up to 3% each year
- Continued annuity payments to a named beneficiary if you have chosen a set income guarantee period and you pass away before that time has elapsed
You can compare the pros and cons of choosing annuity payments for life as versus annuity payments for a fixed period of time by visiting this website.
If you’d like to take a peek at the USAA annuity brochure, you can do so here.
How an Insurance or Financial Advisor Might “Pitch” the SPIA Annuity from USAA
If you’ve been presented the USAA Single Premium Immediate Annuity (SPIA) by your current insurance or financial advisor, then there are likely a few key items that he or she touched on in order to entice you to move forward and purchase it.
First, this product can offer you a guarantee when it comes to income in retirement. This includes providing you with an income stream that will last throughout the remainder of your lifetime, as well as the life of another individual such as your spouse if you so choose. Plus, you have the opportunity to increase the amount of your income over time by up to 3%.
But there are some other areas that you should consider before you commit a large chunk of money to this annuity. For instance, once this annuity has been converted to income, the decision is non-reversible. This means that you will not be able to dig into your lump sum of cash – even if you have a financial emergency – once the income stream has started. With that in mind, then, it is imperative to keep in mind that the purchase of an annuity is a long term decision.
What About Taxes and/or Fees Related to the USAA Single Premium Immediate Annuity?
As with other annuities, there are some tax- and fee-related areas to be aware of with the USAA’s Single Premium Immediate Annuity (SPIA).
For instance, in this case, if you purchase an immediate annuity with after-tax dollars, then each of your annuity income payments that are made will consist of both a taxable income portion and a return of premium portion (which is non-taxable).
However, if you rolled money over into the annuity from a traditional IRA and/or an employer-sponsored retirement plan (such as a 401k plan) where the money that you contributed to the annuity has not yet been taxed, then you will owe taxes on 100% of the income distributions that you receive.
This, in turn, can make a big difference in the amount of income you are actually able to “net” and spend.
The Annuity Gator’s End Take on the USAA Single Premium Immediate Annuity (SPIA)
Where it works the best:
Although an immediate annuity might not be right for everyone, the Single Premium Immediate Annuity from USAA could be a good option for you if you are hoping to achieve:
- A reliable income stream right away (or one that starts within 12 months after purchasing the annuity)
- A place to move funds from an IRA, 401(k), or another type of retirement plan so that you can convert it from a lump sum of savings into a reliable, ongoing income stream
- A solution to the concern about running out of income in retirement
Where it works the worst:
However, even though the Single Premium Immediate Annuity from USAA can offer you some nice benefits, this particular annuity may not be right for you if you:
- Think that you may need some (or all) of your funds for other needs after your income stream has begun
- Do not plan to use the annuity for income
If you’ve been considering the purchase of a single premium immediate annuity, but you are still unsure about moving forward because you just don’t know if this is the right financial vehicle for you, then it is imperative that you further your understanding of this product, and that you get all of your questions answered. We can assist you with any of the questions or concerns that you may have. Please feel free to reach out to us directly via our secure online contact form here.
At Annuity Gator, we can assist you with any of the questions or concerns that you may have. We can also help you with “test driving” this annuity, as well as compare it against other similar annuities in order to determine which one may be best.
With regard to the Single Premium Immediate Annuity from USAA, the good news is that you (as well as another individual, if applicable) can be assured that you will have income for as long as you need it, based upon the income payout option that you choose.
Not quite sure if the Single Premium Immediate Annuity from USAA is right for you? Contact us and we’ll perform a test drive of this financial vehicle to determine how it may – or may not – work for you and your specific needs.
Have Any Additional Questions? Notice Any Mistakes in this Annuity Review?
We know that this annuity review may have been somewhat lengthy. So, given that, we truly thank you for sticking with us through this far. However, we would much prefer to give you “too much” information in these annuity reviews that not to give you enough. Therefore, if you felt that this annuity review was truly beneficial, then please feel free to share it and forward it on to anyone else who you think may also be helped by it.
We also understand just how fast financial and insurance product information can – and does – change. So, if you happened to notice any details in this annuity review that are out of date or need updating, please let us know that, too, so that we can get it revised as soon as possible.
Are there any other annuities that you would like to also see reviewed?
If you have been shopping for annuities, it is possible that you’ve been presented with several different options. So, if you’ve come across any other annuities that are not included in our review database, please contact us, so that we can do our research and analysis, and add the new review(s) to our website.
The Annuity Gator