New Update: Rising Oil Costs are Affecting Retirement Plans. Will you be impacted?
6 Retirement Myths Every USAA Employee Should Not Fall For!
Oil prices between $50 and $120 per barrel with 80% annualized volatility have created ripple effects throughout the economy over the past six months. Energy price swings affect insurer investment portfolios and the broader economic conditions that drive policy demand and claims patterns. Retirement savings strategies at USAA should account for how energy price cycles influence inflation, interest rates, and market returns over the long horizons that retirement planning requires. A financial advisor can help you build strategies that maintain progress toward retirement goals through periods of energy-driven economic turbulence.
Source: Yahoo Finance
During our 30+ years helping retirees, the majority have been very excited to start the planning process. However, some have been surprised to find out our recommendations differ from what they have heard elsewhere.
This is because there’s a lot of misinformation swirling around. As a fiduciary, we are legally obligated to serve your best interests at all times. So, we can tell you achieving the retirement you desire is not going to happen if you’re sidetracked by myths and false information.
That's why we aim to debunk the top six retirement myths that USAA employees may have heard. Our goal is to help you start building the retirement of your dreams today.
Myth #1: If I receive a pension, I do not have to make any decisions regarding my pension.
If USAA offers you a defined-benefit plan, your pension is primarily the responsibility of the company. However, that doesn’t mean you just wait for a check in the mail once you retire. You have major decisions to make.
If offered a pension, employees can potentially elect to receive a monthly payout like a traditional pension or they could convert their pension into a one-time lump-sum benefit, which can be subsequently rolled over into an Individual Retirement Account (IRA) and then controlled by the retiree.
So, monthly or lump-sum pension?
Each payout has its own set of pros and cons. Deciding which option is most appropriate for you involves many factors. Deciding which option is most appropriate for you involves many factors. It is best done with the help of a professional, who can incorporate all aspects of your financial life – Social Security, 401(k), real estate, and inheritance into your decision.
Further, married USAA employees may have survivor benefit options to consider. At retirement, it is possible that you have multiple survivor options to choose from for the monthly pension, but these are only available for a qualified spouse.
Myth #2: If I receive a pension from USAA , Social Security becomes less important.
Social Security will likely be one of your primary sources of retirement income. And just like your pension, you should carefully consider how best to use it based on your personal needs.
The size of your Social Security benefit is greatly determined by your age when you claim. You can receive your full Social Security retirement benefit upon reaching your Full Retirement Age, which is age 66 or 67, depending on your date of birth. But you can claim a permanently reduced benefit as early as age 62. Delaying Social Security until age 70 entitles you to a higher benefit of up to 8% per year. A benefit at age 70 will be 76-77% higher than the payout if you start at age 62.
USAA is returning nearly $1 billion to Florida policyholders through a $500 million dividend and rate cuts effective June 15, capitalizing on recent insurance reforms that have lowered costs in the state. Under the leadership of CEO Juan Andrade, the company continues to emphasize its commitment to innovation and risk-taking that has traditionally defined its approach to serving military families and their financial needs. Beyond its core insurance operations, USAA is broadening its national efforts to help military families navigate rising living costs while maintaining its support for veteran communities through partnerships such as naming itself a preservation partner of Army West Point Athletics and sponsoring initiatives like the Call of Duty Endowment Bowl. The substantial return to Florida members reflects USAA's positioning of reduced claims and regulatory improvements into direct policyholder benefits, reinforcing competitive rate advantages in a challenging insurance market.
Source: Currents API / Google News
Ultimately, factors such as your other income sources, marital status and health should guide your decision, not just when you can get the biggest Social Security paycheck.
Myth #3: When I retire from USAA doesn’t matter
No, no, no. When you retire has a major effect on the quality of your retirement.
For one, years of service is one of the primary factors in your pension calculation. Generally, the longer you work at USAA, the higher your pension. Your pension is also impacted by interest rates, which fluctuate. When rates are lowered, lump-sum pension payouts are increased, and vice versa.
Plus, USAA retirement benefits are not set in stone. They are subject to change. For example, the significant changes made to USAA’s pension calculation, health care subsidies and retiree health insurance.
You may find that it is more financially advantageous to retire sooner or later than your desired retirement date.
Myth #4: USAA stock is a good investment
Something USAA employees should be aware of is that we commonly see employees invest an excessive amount of their 401(k) in their company’s stock. While it can be rewarding to own a piece of a respected company, it may be risky from a retirement planning perspective.
Firstly, most of your financial life becomes dependent on the performance of one company. That includes your current income and retirement income from the USAA pension and 401(k) plan (if USAA offers these to you). Such a high concentration of your financial well-being in a single company is risky. Secondly, a single stock can be riskier and more volatile than a mutual fund or the broader stock market. Therefore, the greater amount of USAA stock you have in your 401(k), the more you can expect your investment return to fluctuate.
It’s more appropriate to diversify the investment choices in your USAA 401(k) account (If USAA offers you a 401K). That means selling your company stock and investing in mutual funds. The right mix of funds depends on your specific needs, goals and level of risk you’re comfortable with.
Myth #5: It’s better to leave my 401(k) with my company.
Upon leaving USAA, you may leave some or all of your savings in your USAA 401(k) account (If this is offered to you). However, there are a variety of benefits to rolling over your 401(k) to an Individual Retirement Account (IRA). These include greater investment choices, greater withdrawal flexibility, more withholding options, and professional management by an advisor of your choosing.
When done properly, no tax applies to the rollover. One area of your 401(k) that provides no flexibility is tax withholdings.Every withdrawal is subject to a mandatory 20% federal tax plus applicable state taxes.
Myth #6: Medicare will cover my medical expenses
One of the biggest expenses for most people in retirement is health care. Taking the time to review your options can help you plan accordingly and avoid large out-of-pocket costs that could derail your retirement.
Once you turn 65 you are Medicare-eligible You and your Medicare-eligible dependents are required to enroll in Medicare Part A (hospital benefits) and Part B (doctor benefits). These two parts cover about 80% of health care benefits for individuals, so it’s important to consider your supplemental coverage options.
Closing that savings gap starts with fully understanding what USAA already contributes on your behalf. When you're weighing retirement planning, the specifics of your employer's retirement plan change the math in ways that generic advice can't capture.
USAA offers a 401(k) plan with a generous employer match of 100% on the first 8% of eligible pay, one of the highest matches in the financial services industry. USAA also provides a cash balance pension benefit, funded by company contributions, available to eligible employees. Those retirement plan details are one half of the financial picture. On the healthcare side, your plan elections, whether an HSA makes sense for your situation, and what medical coverage looks like after you leave USAA all feed into the same planning conversation around retirement planning.
Connecting your specific USAA benefits situation to a comprehensive retirement income plan, and understanding how each component interacts, gives you the most complete picture of what retirement planning will look like for you.
What types of retirement savings plans does USAA offer?
USAA offers a 401(k) plan as part of its retirement savings options for employees.
How does USAA match employee contributions to the 401(k) plan?
USAA matches employee contributions up to a certain percentage, typically a dollar-for-dollar match up to a specified limit.
Can employees at USAA choose their investment options within the 401(k) plan?
Yes, USAA allows employees to choose from a variety of investment options within the 401(k) plan to suit their individual retirement goals.
What is the vesting schedule for USAA's 401(k) matching contributions?
USAA has a vesting schedule that determines how long an employee must work at the company to fully own the matching contributions made by USAA.
How can USAA employees access their 401(k) account information?
USAA employees can access their 401(k) account information through the USAA employee portal or by contacting the HR department.
Does USAA offer any educational resources for employees regarding their 401(k) plans?
Yes, USAA provides educational resources and workshops to help employees understand their 401(k) plans and make informed investment decisions.
What is the minimum contribution percentage required for USAA employees to participate in the 401(k) plan?
USAA typically requires employees to contribute a minimum percentage of their salary to participate in the 401(k) plan, which may vary by plan specifics.
Are there any fees associated with USAA's 401(k) plan?
Yes, USAA’s 401(k) plan may have administrative fees, which are disclosed in the plan documents provided to employees.
Can USAA employees take loans against their 401(k) savings?
Yes, USAA allows employees to take loans against their 401(k) savings, subject to specific terms and conditions outlined in the plan.
What happens to a USAA employee's 401(k) if they leave the company?
If a USAA employee leaves the company, they have several options for their 401(k), including rolling it over to an IRA or a new employer's plan, or cashing it out.
For more information you can reach the plan administrator for USAA at , ; or by calling them at .
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