Stress less, retire more with USAA.

Video Duration: 43 minutes 59 seconds

Webinar begins: Elapsed time 0 minutes 0 seconds [00:00] 

Larry Bordovsky:
Good afternoon or good morning, depending on the time zone that you're in. We are so excited to have all of you, our members, here with us today and this webinar - A Paycheck for Life: How Annuities Can Provide Guaranteed Income. Almost 11,000 Americans a day are turning 65, and one of the biggest concerns that we hear is about, how do I generate income in retirement? And so we're here to talk about that with you today. My name is Larry Bordovsky. I am the annuity product line Leader Executive here at USAA. I've been at USAA for about 18 and a half years, and in the industry for a little over 29 years in life, health, and investments as well. I am the proud son and nephew of Vietnam, veteran era service members in the army.  And it is an honor and a privilege for me to serve our membership and our mission each and every day here at USAA. So welcome!  We are excited to have a great agenda. We have some great presenters and panelists here with us today as well. BK, Elizabeth and Eric, if you would introduce yourselves and tell us a little about yourself and then we’ll get started

Brett Kalbfleisch:
Absolutely. Thank you so much, Larry. My name is Brett Kalbfleisch, otherwise known as BK inside the USAA walls and I've been with USAA 38 years, however, the last 5 years I've been working leading one of the retirement income specialist teams at USAA. So in my role in assisting my specialists, we help members as they are building, preparing, and living in retirement and super excited to be here. I will pass it to Eric.

Eric Bremer:
Hello! My name is Eric Bramer. I'm a retirement income specialist located at our headquarters in San Antonio, Texas. I graduated from the University of Texas at Austin and root for my longhorns every Saturday. I currently hold designations as a Retirement Income Certified Professional and a Certified Wealth Strategist. I'm celebrating my three-year anniversary this month at USAA with our retirement team.

Elizabeth Vieira:
Thanks, Eric, and my name is Elizabeth Vieira. I'm one of your product management directors here for our USAA annuity line. I work in our beautiful Colorado Springs office, and I've been here with USAA for over 10 years now. Been in a variety of annuity roles. I've worked in roles like Eric's helping members over the phone. I've also worked in roles like BK managing teams and have helped to improve the end-to-end annuity sales experience for all of our members.

Larry Bordovsky:
Thank you. Before we get started let's cover a few housekeeping items with all of you. We will email a link out to the recording to everyone that's registered. We'll probably talk for about 25 min, and then we'll go into Q&A.  Please use the Q&A function in zoom to submit your questions anytime during the webinar, so don't wait ‘til the end. Any time is fine. We have specialists monitoring the questions and answer session who will try to answer every single question that you have. If your answer includes a message from us that say, to give us a call, it's typically because the answer requires information from you that we can only deliver over the phone. And then please ensure that you don't provide any personal or sensitive information in your questions. Okay, all of that said, let's get to the exciting part. I'm going to say it one more time. We are so excited to have you our members here with us today and we're going to get to the topic at hand. And that's a webinar about how annuities can provide a paycheck for life.

We'll start by talking about market volatility. We all know that there's a lot of that out there right now. And we can compare going to compare two different withdrawal strategies to show you how we can mitigate that risk. And then we'll discuss what exactly an income annuity is. And finally, we'll cover the biggest and most frequently asked questions that we receive around income annuities. We are excited to share all the great content with you. Again, the webinar slides are available to download and the resources tab of your Zoom toolbar and the link to the webinar recording will be emailed to everyone as soon as it's available, so you may want to give us a little bit of time after it's over. But we'll get that out to you.

And before we start learning about annuities, we'd like to give you a sneak peek behind something that's very special that we do at USAA. And I've been at other companies, and there are missions and mission moments and things that are shared. But USAA is very different. We are member centric. And what that means is we're always putting our member stories, how we serve our members, why our members are special, you and your families, those who protect us each and every day, we try to keep that on the forefront of everything that we do in the decisions that we make and the advice that we provide and how we provide exceptional service.

And so today we have Tony Garcia, who's going to share a story with you about how we share our mission moment at USAA. And again give you a little insight, and then we'll get into the content.

Tony, over to you.

Tony Garcia:
Thanks, Larry, for this opportunity. Just to introduce myself, I myself am also a Retirement Income Specialist with Eric. I'm working here in the retirement income team here at USAA. And I'm excited to be able to share a story that started actually last year when I had the opportunity to work with a member couple that wanted to reduce their risk profile in light of the recent market volatility. As we went through a full review and planning conversation, it became apparent that one of the risks that the couple faced was a significant loss of income if the husband passed away because a large part of their current pensions, for the husband did not include survivability for his spouse and as a result our plans became not just about risk reduction, but also about planning for future income for the wife.

After talking, we set forth a plan that included a deferred annuity contract with protection from the risk of market loss and the capability to create lifetime guaranteed income in the future. Now fast forward. Almost exactly a year later I received an email from the same wife that said “Tony, my husband has passed away. What do I do?” Now, of course I immediately called the member and expressed my condolences for her loss and when we were talking I told her that although there was nothing I could do to fix the hurt she was going through, what I could do is make sure that she had the income she needed, so that her finances were the least of her worries. It was comforting for her to know that the same annuity we established last year to reduce risk was designed to help her replace the pension income she lost with her husband's passing.

Today with her new lifetime income source in place, she's now able to focus on her family and healing. I appreciate the opportunity again to share that mission moment with you. I'll now transition to Elizabeth, who has a poll question for us.

Elizabeth Vieira:
Thank you so much, Tony. And wow! What a powerful mission moment! That's really such a strong reminder of the importance of planning ahead for any financial needs, but especially retirement income, not just for ourselves, but for our loved ones as well. So thank you. So now that we've heard how Tony helped deliver our mission for those two members, now we'd like to get to know a little bit more about you through our first poll question.

So let's talk about market volatility. Market volatility is often a big concern whether you're planning to retire soon, you're a recent retiree, or you've been retired for a while. So let's start there. What concerns you most about market volatility? And I know this may look like a quiz question, but don't worry. There are no wrong answers. All right, and time. Now, thank you all for providing your responses. Clearly. We can see that market volatility is something that causes a lot of lost sleep for everybody. So BK, let me turn this topic over to you. Can you talk about why market volatility is such a concern, and what causes it.

BK:
Absolutely, Elizabeth, and as we know, it's always a very hot topic when we talk about market volatility. So, many of you have been saving for retirement for decades. So you may have noticed that market risk has really shifted and changed over time. So one example of that when you look at market risk is what we call index concentration.  So essentially, what that talks to is fewer stocks today comprise a significant portion of the weighting of the S&P500 compared to say, like 30 years ago. So this phenomenon is known as index concentration and essentially what it means is, there's a smaller number of large cap companies that dominate the index. And some of these companies are also concentrated in the same sector, for example, Tech. And the buzzword now a lot is IA.

So as a result of this, the performance of key stock market indexes or exchanges are dependent on fewer companies versus in the past. So if we look at at these pie charts show in 2008, you could have 47% of your portfolio invested in fixed income in order to achieve a 7% return. However, if you look at 2023 that has dropped to 33%. And that means that 67% of your portfolio is now exposed to greater risk through stocks and private markets compared to 53% in 2008.

So what that means to all of us is: in order to receive that same rate of return today you are forced to take on more complexity and risk. And to put this into a little bit more detail and show you how at USAA, when you speak to a retirement income specialist. Eric talks through.

How do these conversations and what does our process at USAA look like when it comes to risk.

Eric Bremer:
And thank you, BK. Even though you're exposed to more market risk today in order to achieve the same returns as 15 years ago, there are approaches that that you can take to reduce market risk. USAA's approach is one of these. USAA believes that members should use a balanced approach when it comes to planning on living their best life in retirement that includes protected income: having enough guaranteed or secure income to cover your essential expenses in retirement.

An investment portfolio keeping something allocated for growth, using an approach that's appropriate to your goals, style, and time horizon in order to help meet future needs and, thirdly, protection: making sure that your plan is protected against some of the common risks that come up in retirement, such as health concerns, the need for long-term care, emergencies, and the possible death of a loved one.

A balanced approach can help you reduce market risk, keep your nest egg growing, and provide guaranteed income. In addition to annuities, USAA may be able to help you with additional medicare coverage beyond original medicare, life insurance and important services, like estate planning and will preparation.

BK:
So an income annuity, also called an immediate annuity, is one of the only financial instruments out there that can provide you guaranteed income for the rest of your life, no matter how long you live.

So let's take a look at a short educational video to learn more about that.

VIDEO:
You did the smart thing by putting away money all your life. But now that you're nearing retirement, you may be wondering how to make the best use of your hard-earned cash. Whether you're getting ready to retire or already enjoying retirement, a USAA Single Premium Immediate Annuity, or SPIA, may be the right choice for you. A USAA SPIA works like a paycheck. You pay in a lump sum, and in return you get a series of guaranteed payments for life, for a set period, or both. No matter how long you live, you can receive income to support you and your loved ones. After you're gone, remaining payments, if any, will pass down to your beneficiaries.

A USAA SPIA can add to other retirement incomes such as social security or pensions. You can spend on what you want when you want. It can be an efficient way to generate income. And with USAA's competitive rates, you can make the most of your hard-earned retirement savings. Since a USAA SPIA is an insurance product and not an investment, you don't have to worry about losing your money or taking portfolio withdrawals during market downturns. Start living your best retirement with a USAA SPIA. To get advice you can count on, speak to a USAA Retirement Income Specialist today.

Eric Bremer:
And now that we know what an income annuity is, let's take a more detailed look about how it can help reduce market volatility risk. With USAA's approach you can make sure that your essential expenses are covered by guaranteed income sources like social security, a pension, or an annuity. This income is guaranteed, regardless of how the market performs. So you'll know your essential expenses are covered, no matter what. Rour income annuity payments would reduce the reliance on portfolio withdrawals. This is especially important in down markets.

And since these essentials are covered by guaranteed income, any adjustments or reductions in withdrawals due to market downturns will only reduce your discretionary spending.

BK:
Great, so let's bring this to life with an actual example. A member case study.

And this is similar to what Tony talked about during his mission moment. So we have Frank and Jenni. They are married, both 65 years old. They have a $900,000 nest egg invested in a portfolio that has a 60/40 split between stocks and bonds. They have estimated that they will need about $36,000 per year in additional retirement income to supplement their social security. And they are planning for a retirement horizon of about 30 years. So they are interested in comparing two different withdrawal options. Some of their friends have talked about this 4% withdrawal rule. So the first option they are considering is leaving their portfolio invested like it is in the market with that 60/40 split and annual withdrawals of $36,000. We'll call this the 60/40 portfolio option.

So, based on that, they would need to withdraw 4% each year from their $900,000 nest egg in order to provide themselves with that 36,000 to supplement social security. So they've also heard about another option, which is purchasing an income annuity. So in the second scenario, they would purchase an income annuity to provide themselves with $36,000 each year instead of the portfolio withdrawals. So they would purchase a USAA Single Premium Immediate Annuity for $590,000 and leave the remaining $310,000 invested in that same 60/40 split. So we'll call this the Single Premium Annuity Combo option. So, Eric, give us an example of, kind of, withdrawal options, and how we review that with our members. And what are some of the key considerations that we look at?

Eric Bremer:
Absolutely. And one of the tools that we use at USAA is called a Monte Carlo simulation, which is a technique used to understand the impact of risk and uncertainty.

It models the probability of different outcomes. On this slide, we've applied a Monte Carlo simulation to both withdrawal options in order to compare them. The left side of the slide shows the 60/40 portfolio option. As you can see in the green bar, it has an average value of $1.7 million. It also has a high probability of success at 95%. This is well within our safe zone.  However, the low value represented by the red bar goes negative, which means that you would run out of money in scenarios where the market performs poorly. On the flip side, the blue bar goes above $5 million in scenarios when market performance is great. The right side of the slide shows the SPIA Combo option. This has an average value of $1.6 million, which is nearly identical to the 60/40 Portfolio option. It even has a higher probability of success at 100%. Notice that the red bar does not go below 0. So even with poor market performance, you do not risk running out of savings in retirement. The trade-off of reducing market risk in this high scenario doesn't go as high, although it does reach nearly $3 million. Both of these options have a high probability of success, and the difference lies mostly in your risk tolerance.

BK:
Alright, so we know life throws us curve balls from time to time. So even the best plans can change unexpectedly. And that's why at USAA we recommend that you stress test your plan at least once a year. So in this stress test, we'll assume that Jenny and Frank have a large unplanned expense that increases their income needs. This could be from an unplanned medical expense, it could be taking care of an aging parent, or it could be increased travel to visit the kids and the grandkids. So let's just assume that Jenny has some unplanned expense related to taking care of her mom. So Frank and Jenny, their retirement income needs all of a sudden rise from $36,000 to $48,000 a year.

So in that 60/40 portfolio option that we talked about, Frank and Jenny would need to increase their withdrawal rate to provide themselves that $48,000 in income, which would be an increase from the well-known 4% with withdrawal rule. So in the Single Premium Immediate Annuity combo option they would still use their income annuity to cover the $36,000 in income. However, they would withdraw from their $300,000 that they have left in their 60/40 split to gain that additional $12,000. So based on that, let's look at the results.

Eric Bremer:
So the Monte Carlo simulation shows that the SPIA Combo withdrawal option fares much better than the 60/40 Portfolio does. The average value of the 60/40 Portfolio is $729,000, and the probability of success drops down to a very concerning 67%. The low value shown by the red bar shows that the chances of running out of money are much higher. The high value shown by the Blue Bar reaches $4 million. However, the retirement income is very dependent on market performance. The SPIA Combo option shows an average value of $626,000, almost as high as the 60/40 portfolio. However, the probability of success is 97% and stays within our recommended range. There is less upside potential shown by the blue bar, but there is a much lower risk of running out of money.

Elizabeth Vieira:
Great stuff, Eric and BK, that is such a powerful comparison to show the peace of mind that something like this SPIA Combo option can provide, even when things don't go according to plan. All right, so today we covered two common withdrawal options. There may be others out there that you're familiar with or interested in. And our Retirement Income Specialists can help discuss different withdrawal strategies in detail with you over the phone. So, we saw Eric perform that stress test in the second scenario based on an unexpected increase in income needs. Another common factor to stress test against would be a longer time horizon, you know, living too long in retirement, if you will. But you should stress test your plan against what specific concerns that are keeping YOU up at night, and that's where Retirement Income Specialists can help. They'll work with you to understand your needs, your wants, your wishes, and they can provide recommendations on both a high-level asset allocation. Think you know, stocks, fixed income versus cash, and they can also run through retirement income scenarios with you.

Most importantly, though, they know a lot about annuities, so you don't have to. So, if you'd like to receive a call from one of our specialists, answer this poll question with yes, and you'll be contacted within the next week. All right! Great! Thank you for all of your responses. So now that we've finished the last of our poll questions for today's session, let's move on from our hypothetical Frank and Jenny and learn more about all the real-life Frank and Jennies out there. So, Eric, share with us, how do most retirees feel about owning an annuity?

Eric Bremer:
Frank and Jenny's scenario illustrated how an income annuity can help reduce market risk. How would you feel about your retirement if you didn't have to worry every time the market dropped? The peace of mind that annuities can provide helps you understand some of the characteristics of annuity owners. There is plenty of research that shows that annuity owners enjoy their retirement more. First, annuity owners are more confident about retirement. In fact, 78% of annuity owners are confident that their retirement savings will last the rest of their lives compared to 61% of non-owners. This data confirms that annuities can help solve the fear of outliving retirement savings. Second, annuity owners are more satisfied in retirement. 75% are very or somewhat satisfied with retirement compared to 71% of non-owners.

Annuities can help you enjoy retirement more by not only helping ensure that you don't run out of money, but also make sure that you can spend your money. Sometimes the fear of outliving your savings can lead to underspending. Annuities can help alleviate this fear by providing income that you have confidence will last.

Elizabeth Vieira:
Great stuff, and obviously reducing market risk is just one of the reasons that annuity sales are at record highs, as you can see in this chart.  And this is not just here at USAA but this is across the entire industry. So, as the chart shows, the popularity of annuities has just absolutely surged in recent years. You can see that total sales have grown from $219 billion in 2020 (yes, that's “billion” with a “B”), up to $385 billion in 2023. So that's a 76% increase in annuity sales in just the last 4 years. So, Eric, we know now that the industry is selling more annuities than ever, and we've already talked about how an annuity can provide income for the rest of your life. So talk to us, how does life expectancy play into this picture?

Eric Bremer:
Well, according to 2021 data from the Social Security Administration, for 10 couples, all at age 65, there is a 60% chance that one will live to the age of 90 and a 10% chance that one will live to age 100. If 65 is your retirement age, then that means there's a high likelihood that your retirement could last 25 years or more.

Elizabeth Vieira:
Well, so, Eric, my great grandma lived to be 96, and my grandma is currently pushing 90, so I absolutely believe those stats.

Eric Bremer:
Well, then, Elizabeth, your family knows exactly why a retirement horizon of 25 years or more can be a double-edged sword if you're prepared for it, then you can have the freedom to enjoy this phase of life to the fullest. However, a long retirement can also be a big concern, because you need to make sure that your nest egg will last. As recent headlines show, outliving their retirement is one of the greatest fears of most retirees. Thankfully, annuities can help solve this problem.

Elizabeth Vieira:
That's right. And, in fact, annuities are one of only a few financial instruments that provide guaranteed income that you cannot live, so one of the only things out there that can solve that problem. Now, one of the others is employer pensions or defined benefit plans. As you can see in the chart, though they're becoming less and less common. So, Eric, when you're having conversations with our members, are you seeing the same trend?

Eric Bremer:
Well as you may expect. many of our members receive military retirement pensions. But, you're right. For the most part, pensions have given way to defined contribution plans like 401(k)s. 401(k)s can be a very effective tool for growing your retirement savings. But when you get closer to retirement, and then transition into retirement, you might want to add other solutions to help protect your nest egg from market volatility or convert it into guaranteed income that you can't outlive. For those that don't have guaranteed income from an employer pension, an annuity can be an effective alternative. So let's take a look at some of the examples of who could benefit from owning one.

Elizabeth Vieira:
So we like to think about 3 different stages of annuity owners. First, we have members in the retirement red zone, if you'll excuse the football analogy. So they're working towards that final touchdown. They're 5 to 10 years out from retirement, and they've worked hard to build up their retirement savings. So a market downturn for them might have a significant impact to their retirement plan, and it might force them to have to work even longer. So for these members a fixed deferred annuity can preserve those assets while also offering potential for growth to continue building their nest egg. Depending on their needs, they may choose something with a guaranteed rate of return from a fixed rate annuity, or they may opt for more growth potential from a fixed indexed annuity. Now I'll let Eric, I'll let you walk us through the other stages of annuity owners.

Eric Bremer:
Another stage of retirement is our members who are already living in retirement but are concerned about keeping up with inflation. In periods of high inflation, fixed rate annuities and CDs may not be able to keep up. While investing in the market can offer the potential for higher returns, it also comes with the risk of losing money. For those not willing to take that risk, a fixed indexed annuity could be a great solution. But let's save that for another webinar. Finally, the most important for today. Many members need income, or a retirement paycheck, even after they stop working. An income annuity can help supplement social security to make sure fixed expenses are covered. It can also be used to pay for travel or hobbies to reduce the concern that you might be overspending on things that aren't necessities.

Additionally, income annuities can help ensure that your spouse has enough income for the rest of their lives, even if you pass before them. So let's dig into the details about income annuities. When you stop working, your paychecks also stop. But your bills don't. Social Security can help you cover expenses. Employer pensions can, too, for those that still have one, and so can immediate income annuities.

Elizabeth Vieira:
Absolutely right, Eric. So immediate annuities, also called income annuities, are designed to provide guaranteed income during retirement. There are options to choose income for a set period of time, for your lifetime, or for both. Many annuity owners will choose a lifetime option since annuities are, as we've talked about many times today, one of the few financial instruments that provide guaranteed income that you cannot outlive.

Eric Bremer:
Yes, your lifetime income is very important. Immediate annuities can be set up to provide income for yourself and also your spouse if you pass away. They can help protect your loved ones and give you peace of mind that they'll be taken care of, even if you're gone. And finally, immediate annuities can reduce the risk of taking withdrawals during market downturns. For example, if you have retirement savings in your 401(k), you can take regular withdrawals to provide yourself income during retirement. However, those savings would be exposed to investment risk, which means that if the market drops, so would your retirement savings. When you convert your retirement savings into income through an annuity, that income is guaranteed, no matter what the market does. So, Elizabeth, can you share a few specifics about the income annuity that we offer here at USAA.

Elizabeth Vieira:
Why, of course, Eric, I thought you'd never ask.  So at USAA we have a Single Premium Immediate Annuity, also referred to as a SPIA. So with an immediate annuity, you'd start receiving income within 12 months. You can specify the payment frequency. You can decide if you want to get checks from us monthly, quarterly, semi-annually, or annually depending upon your income needs. You can choose whether you want it to cover just you, or you and someone else like your spouse, for lifetime, life and a guaranteed number of years, or just a certain number of years.

We also have an option to annually increase your income from 1% to 3% a year. So if you'd like to give yourself a raise every year in retirement, if you will. And it takes a minimum of $20,000 to get started with a SPIA at USAA. You can fund a SPIA with many different sources. It can be from 401(k)s, IRAs, inheritances, savings account, a maturing CD.  There are many, many funding possibilities out there.

Eric Bremer:
Thanks, Elizabeth. So how much income can you get from an annuity? That answer very much depends on the features that you choose. To give you some idea, the average payout of a USAA members is $1,650 per month.  But payout amounts can vary greatly depending on if you choose a life only, life with period certain, or period certain options. Gender is also an important factor. On average, women live longer than men. Our SPIA calculator can provide you a personalized quote. You can find a link in the resources tab in your zoom toolbar in the downloadable webinar slides. We encourage you to use it as many times as you need for your planning purposes.

Elizabeth Vieira:
Great Eric, thanks for showing us that great tool that we have available in the resources and also on USAA.com. So that concludes the presentation portion of our webinar today. Now, throughout our time together, we've received a lot of great questions through the chat, and now we'd like to turn it over to an FAQ, Frequently Asked Questions, section, so that we can hear some of the most common questions about our immediate annuities. All right, so, Eric, I think I'm going to turn this first question over to you, but then I'd also like to offer BK to help tag team some of these for us. So, Eric, when does an immediate annuity begin making payments?

Eric Bremer:
An immediate, or income, annuity pays out between 30 days and 12 months of opening it.

Elizabeth Vieira:
Perfect. Thank you. Think like, like we discussed, you'll start getting income within the first 12 months. All right. Let's pass this next question over to BL.

So this is an important one. What happens to my money if I die before the SPIA ends?

BK:
Great question, Elizabeth, and it depends on the options you select when purchasing the annuity. So, if you choose a guaranteed period option and pass before that period ends, payments will continue to your beneficiary. Our Retirement Income Specialists can assist in selecting the best option that fits your personal situation.

Elizabeth Vieira:
Great thanks for helping me answer that, BK. All right on to our next question. Eric, if you will, can you remind us how we can fund an income annuity?

Eric Bremer:
Absolutely. Income annuities can be funded from either a taxable account, like cash in a checking or savings account, or possibly a maturing CD, or brokerage accounts, or from qualified accounts like IRAs, or 401(k)s.

Elizabeth Vieira:
Perfect. All right, and I'm liking this back and forth, so let's pass it back over to BK, so how much do I need to open an income annuity with USAA?

BK:
So $20,000 is the minimum. However, as you heard from Eric and Tony with their member cases. The size of an income annuity really depends on your specific retirement income needs. And at USAA, that's what our specialists do is they have that holistic conversation and determine what is in suitable for your personal situation but $20,000 is the minimum.

Elizabeth Vieira:
Thank you. Right, all dependent upon if you need a little extra income or a lot.  All right. Next question, Eric, if you will. This is an important one. So when we're talking about income annuities, is the income that I receive from it taxable?

Eric Bremer:
So annuity payments are subject to tax based on how the annuity was funded. If your annuity was funded with pre-tax dollars, typically seen in qualified plans, the entire amount of the withdrawals, or the payments, that you receive is taxable as income. Conversely, if your annuity was purchased through post-tax dollars as with non-qualified plans, then you are only taxed on the earnings portion of the withdrawals.

Elizabeth Vieira
Great information and very relevant for retirement planning. All right, question #6. BK, let's have you take this one. We know that, you know, social media gets different messages out there to us. So why is it that annuities get a bad rap?

BK:
You know, that's a very fair question. And there are folks in the financial services industry who aren't huge fans of annuities. And we get this question a lot at USAA, and here's really our take on why. So, annuities come in all different shapes and sizes. They can range from simple to very complex and they can range from having low or no fees to having high fees. They can be sold by pushy sales reps or advisors, and they have complicated features. Some of these annuities are sold by companies that you may have concerns: “Are they still gonna be around in 25 years?” These are the types of annuities that tend to give the product a bad name. However, there are other annuities that are simple and have low or no fees. In fact, if you look at Social Security, that is an annuity. It's probably the easiest way to understand how annuities can be simple and have low or no fees. Employer pensions are types of annuities that fall into this category as well. And this is where USAA annuities live. We intentionally try and keep our annuities as simple as possible. All of our annuities at USAA have no fees. And none of our USAA Specialists that sell our annuities are paid on commission.

We offer simple products and try to match them up with your individual retirement goals. So, in summary, not all annuities are bad. However, you do need to do your homework before you buy one. Make sure you understand how it works. Ask about fees and commissions. And make sure you have confidence in the financial strength and longevity of the company that you're buying them from.

Elizabeth Vieira:
Great insight. Thank you, BK.  And that that financial strength is absolutely so important, so thanks for emphasizing that. All right. for our last question of the day, Eric, if you would help us answer, how do falling interest rates impact income annuities?

Eric Bremer:
Well, falling interest rates can lead to lower income payments from income annuities, because the rate of return on annuities is often correlated to the Federal funds rate. However, other factors also affect annuity payouts. Those include your current age and life expectancy, payout options, gender, and mortality credits. These are a unique feature with income annuities. When an annuity owner dies earlier than expected, the money left over is put into a pool of funds for other contract holders. This money is known as mortality credits and is used to pay for lifetime income to those who live longer than expected. Mortality credits allow insurers like USAA to promise to pay more to annuity owners than they would be able to pay for investment returns alone. When considering an income annuity, interest rates can be an important factor. But you should also focus on your long-term financial goals and risk tolerance.

Elizabeth Vieira:
Absolutely, Eric. Thank you so much for helping with that. Of course, it's always important to consider your personal situation when making any sort of big financial decision. Well, we hope that this helped answer some of the most burning questions that have been top of mind from today's webinar. So let me go ahead and kick us back over to our host with the most to close us out. So, Larry, will you take it away?

Larry Bordovsky:
I will. Thank you, Elizabeth. Thank you, BK, and thank you, Eric, as well. Great information. Appreciate all of you being here. I want to thank all our members for being here today. We appreciate you very much. You are what makes USAA special.  Now, couple housekeeping items kind of like I started with here at the end. We want to recognize everyone's situation is unique. When we want to really equip you with the information tools to help you evaluate your own retirement plan. Our team is here to help you with all the factors going into your plan, so don't be afraid to reach out. If you'd like to speak to one of our Retirement Income Specialists, you can give us a call at the number shown, or, if you prefer, you can schedule a call at a time that is more convenient for you by scanning the QR code that you see. We have teammates that standby ready for your calls every Monday to Friday, from 7:30 to 8:00 central standard time, 7:30 in the morning to 8 o'clock at night, central standard time. But we also encourage you to visit our website to learn more about our annuities and use a variety of different tools, including that SPIA calculator, that immediate calculator, that we talked about earlier.

If you want to learn more about annuities and retirement income planning at USAA, you can visit our website: usaa.com/annuities. There are some additional resources that that are available to you, and I've mentioned some of these will kind of read them real quickly here at the end. If you haven't already done so, you can download the webinar slides using the resource tab in your zoom toolbar. The slides will provide you with clickable links for all the resources listed here, including a link to schedule a call with their USAA Retirement Income Specialist that I just mentioned, a direct link to the SPIA calculator to get a personalized quote based on your retirement income needs, and links to watch to previously recorded USAA. Webinars that you might find valuable.

Our “Stress Less. Retire More” webinar takes a deep dive into all the ways annuities can reduce investment risk, including inflation and market downturns. And our “Annuity Basics” webinar gives a high level overview of all the different ways that annuities can help you achieve your retirement goals, including growing your nest egg while protecting it.

Finally, we have the “Benefits of an Income Annuity” advice article that will help reinforce some of the topics that were covered here today, and you can read it in approximately 3 to 5 min. We want to thank you very much for spending time with us today. We know that you have busy lifestyles, whether you're working or enjoying your retirement and wanting to learn more. We hope you enjoyed the presentation. There will be a short survey that will pop up after you close out of the webinar. We love to hear your feedback. What did you like? What else would you like to hear? We are here for you and can always come back with another webinar to meet the needs that you have. Everyone registered will be emailed a link to the webinar recording as soon as it's available. We want to thank you for trusting USAA, and we look forward to helping you achieve your retirement goals. Hope you have a wonderful afternoon. Thank you again for joining us.

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