magazine - USAA.com

U SA A .CO M
W I N T E R 2 008
M AGA Z I N E
A MEMBER’S GUIDE TO FINANCIAL SECURITY
Common
Sense for
Uncommon
Times
FdUSWI08_01_Covers102808.indd 1
11/6/08 5:23:01 PM
MORE SECURITY FOR YOUR FINANCIAL FUTURE. In tough economic times, the
value of our strength shines. We have secure products that provide guaranteed growth
in any economic environment. Achieve your short-term goals with an FDIC-insured CD or
take advantage of our tax-deferred Extended Guarantee Annuity that provides interest
for your retirement savings up to 5.7% with a minimum guaranteed rate of 1-3%. Put our
strength to work for you.
GO TO USAA.COM OR CALL A USAA ADVISOR AT 800.235.1898
USAA.COM
Annuities - Not FDIC Insured • Not Bank Guaranteed.
Annuity rate shown applies to 10-year Extended Guarantee Annuity. Rates effective 10/1/2008; subject to change. Extended Guarantee Annuity earns interest at the rate in effect at the time of purchase. Rate guaranteed for the
period selected. Afterwards, interest rates may change monthly, but not below the minimum guaranteed interest rate. The minimum guaranteed interest rate is subject to change and may vary by product and state. The minimum guaranteed interest credited to the contract will be 1%-3%. The minimum guaranteed rate is xed and will not change after the contract is issued. Extended Guarantee Annuity: AEG37641ST 05-01 (varies by state); in NY,
NEG38001NY 05-01. Call for details on specic costs, benets, limitations and availability in your state. Annuities provided by USAA Life Insurance Company, San Antonio, TX, and in New York by USAA Life Insurance Company
of New York, Highland Falls, NY. Each company has sole nancial responsibility for its own products.
CDs require a $1,000 minimum opening deposit. Penalty for early withdrawal may reduce earnings. Availability restrictions apply. CDs provided by USAA Federal Savings Bank, Member FDIC. © USAA 2008. All rights reserved.
89172-1008
FdUSWI08_02_C2_ad.indd 1
10/31/08 9:58:22 AM
MESSAGE FROM THE PRESIDENT
WE’VE WEATHERED
THIS KIND OF STORM
BEFORE
IS THERE ANYBODY WHO ISN’T REELING from the
economic events of 2008? Those of us who have retirement in our
sights are nervous about dwindling account balances. It all may
seem out of our control, and we can sit and watch it happen, or we
can take charge.
Keep investing for your retirement. This is a very good time to
be investing because there are solid investments at lower prices. Do
review your time frame and objectives, and make sure that your risk
tolerance matches your investment mix. You may want to consider
investing in a target or asset allocation fund that will rebalance for you
as the market changes. If you have access to an employer-sponsored
retirement program, maximize your contributions to $15,500 with a
$5,000 catch-up for individuals age 50 and over in 2008. Traditional
and Roth IRAs, if you qualify, let you put away $5,000 with a $1,000
catch-up for individuals age 50 and over in 2008.
If you’re worried about debt, the Debt Analyzer on USAA.COM
can help establish a clear picture of your situation. You’ll learn ways
to pay off the debt faster. Then you can re-establish a budget, and
gain the peace of mind that comes from knowing you are living
within your means.
Get advice from someone you can trust
Your financial situation is personal and deserves individualized
solutions. Seek financial advice from someone who is salaried
and focused on your interests. Many investors have made a “flight
to quality” over the last two months and USAA members are no
different. Members are moving their money to us and opening a
record-breaking number of new investment and bank accounts
because they recognize the quality of USAA products, service and
advice — and they know they can trust USAA.
USAA is strong
And make sure the financial products you buy are from a company
that not only has a history of financial strength, but is strong today.
If it sounds like I’m describing USAA, you’re right. Unlike so many
financial services companies today, USAA is conservative, strong
and growing — just as we have been for more than 86 years and
through countless economic downturns. Our employees care about
your financial security, and they are eager to help you. ■
Josue (Joe) Robles, Jr.
Major General, USA (Ret.)
President & CEO
U SA A . CO M
FdUSWI08_03_CEO letter.indd 3
USAA means United Services Automobile Association and its affiliates. Financial advice
provided by USAA Financial Advisors, Inc., registered broker dealer.
WINTER 2008
USAA MAGAZINE
3
11/7/08 9:37:33 AM
USAA
A M E M B E R ’ S G U I D E TO F I N A N C I A L S E C U R I T Y
W I N T E R 2 0 0 8 • VO LU M E 4 4 • N U M B E R 4
In Every Issue
Mail Call
6
USAA members share
thoughts on military life
and pesky ATM fees.
Common
Sense for
Uncommon
Times 12
FYI
7
Get a vacation checklist,
smartphone safety tips
and other handy advice.
In a year of unprecedented
financial crises, get USAA’s
perspective before you
make your next move.
On the Money
10
Our experts answer
questions on refinancing,
payday loans and more.
By John Gilliam
Member Savings
FEATURES
25
Check out our guide to
products and services
especially for you.
’Tis the Season for Tax Prep
16
Take actions this fall that may pay off next spring.
By Dennis McCafferty
Member Snapshot
32
Meet an Army marksman
who targeted gold in
Beijing and won.
7 Essentials
for Security
18
Here’s the lowdown on the
latest ways to help secure your
home computer.
By Christopher Null
On Course
20
Managing finances as parents age
can be a challenge, and adult children
may have to step in to help. Get our
tips for easing the burden.
By Kerry Hannon
Teach Your Children Well
Your kids are watching. Make sure that the way they see
you manage money reinforces good financial habits.
By Teri Cettina
COVER PHOTO: JEFFREY COOLIDGE/GETTY IMAGES
4
USAA MAGAZINE
WINTER 2008
FdUSWI08_04_TOC_3_USAA.indd 4
24
Save energy
and money with
our timely tips.
8
U SA A . CO M
11/6/08 5:24:15 PM
Financial news
got you down?
mobile.usaa.com
Head style 2
GET FREE ADVICE from USAA to help
you weather the economic storm
U
SAA can send financial tips to your inbox —
at no charge. Stable, secure and financially
strong, USAA offers three e-newsletters filled
with advice. Each one can help you make sense of your
personal finances.
■ Financial Services Update — Offers insightful market
commentary and in-depth analysis of financial news.
Twice monthly.
■ Your Money — Offers
insight and advice for
day-to-day financial
decisions, from budgeting
and buying a car to saving
for a new home or your
Use MOBILE.USAA.COM to:
retirement. Monthly.
■ Check account balances.
■ The Retirement Report —
■ Transfer funds.
Gives guidance on how
■ Make stock trades.
to secure your financial
future with timely advice
■ Pay bills.
and tips. Monthly.
■ Request auto ID insurance
cards.
USAA ON
THE ROAD
SUBSCRIBE TODAY
Log on to USAA.COM > My Accounts > My Profile >
Manage Newsletter Subscriptions
USAA
EXECUTIVE EDITOR:
Sarah Plaster
MANAGING EDITOR:
USAA Magazine is published quarterly
by USAA as an informational and educational service to members. Material in this
magazine may not be reproduced, stored
in a retrieval system or transmitted in any
form or by any means (electronic, mechanical, photocopy or otherwise) without permission from the publisher. The post office
does not forward copies from incorrect
addresses. © 2008 USAA.
Jennifer Chappell Smith
Shari Biediger,
Lee Brookman, Nancy McAllister,
Brian P. McGlinchey, Susan Speer
CONTRIBUTORS:
PRODUCTION AND
CIRCULATION MANAGER:
Lisa Severson
VICE PRESIDENT,
MEMBER COMMUNICATIONS:
Rhonda Crawford
U SA A . CO M
FdUSWI08_05_USAA.usaa.com.indd 5
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Requests must be in writing.
MISSION: USAA’s mission is to
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their families through provision
of a full range of highly competitive financial products and
services; in so doing, USAA seeks
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usaa.com
magazine for USAA members
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USAA ALSO PUBLISHES:
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WINTER 2008
USAA MAGAZINE
5
10/31/08 9:55:15 AM
Jacey Eckhart
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USAA
MAGA
ZINE
FA L L 2
008
Saving on ATM fees
In response to “Attack of the Killer Fees” (Fall 2008): I used
to go to my local bank ATM weekly to get pocket money.
Then bank fees jumped to $3 per transaction; and, even
though USAA Federal Savings Bank returns most of these
fees,1 I started looking for cost-saving alternatives and
found two.
First, rather than going to the ATM weekly, I started going every other week and getting twice as much spending
Send your feedback
Visit USAA.COM/USAAMag and click “Contact Us.” Or, mail letters
to USAA Magazine, Mail Call, E-1-E, 9800 Fredericksburg Road,
San Antonio, TX 78288-3533. Please include a daytime phone number.
All or part of your letter may be printed in an upcoming issue. It may be edited for clarity and
length. • The opinions expressed here are those of individual members and not necessarily of
USAA. If you have comments regarding an individual claim or concerns that do not pertain to
items in the magazine, please refer to USAA.COM for a comprehensive list of contact numbers.
USAA MAGAZINE
WINTER 2008
FdUSWI08_06_mailcall_2_USAA.indd 6
USAA
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in Fort Bragg, N.C., in the backyard
in the late 1960s.
I really enjoyed your article
“Growing Up Military” (Fall 2008).
It brought back lots of memories
of being a Navy brat. The story
of Kevin and Brian Calhoun could
have been mine. I had to learn how to blend in.
My brother stayed at his high school while my
dad took an unaccompanied tour. Our family
loved our military experiences, and I, like the
author, have “military markers” that “speak the
language of home to me.” Thanks for taking all
those nameless feelings and experiences and
putting them into wonderful words. I’m going to
answer “I’m from the Navy” whenever asked!
■ Johanna Wood, Littleton, Colo.
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USAA
MAGA
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&(
money. Second, I started using the ATM at Wal-Mart stores.
Every Wal-Mart store I’ve ever been to has an ATM and all
charge only $1.40 per transaction. With these two changes,
I cut my ATM fee charges to our bank from around $156 per
year to only $36.40 per year, a $119.60-per-year savings.
Imagine if hundreds, or even thousands, of our members
adopted these two simple behavioral changes.
■ Steve Likins, U.S. Army, Lt. Col. (Ret.), Memphis, Tenn.
Editor’s Note: Thanks for sharing your tips. Keep in mind that
you can also avoid ATM fees by using the cash back option on
your debit card during checkout at stores that offer that feature.
Military housing: big benefit
Your article “Spending Smart” (Fall 2008) ignored one of
the primary benefits of military service: a free house.
When I was on active duty 20 years ago, U.S. commissioned and warrant officers and many noncommissioned
officers qualified for a housing allowance that is not taxable by any government entity. I’ve been told that policy
hasn’t changed. Coupled with the deductibility of home
mortgage interest for income tax purposes, this practically
equates to free housing.
Only under the most extraordinary of circumstances
should this benefit be ignored.
■ Thomas Smith, Fairfax, Va.
Free ATMs: USAA does not charge a fee for the first 10 ATM withdrawals and
refunds up to $15 in other banks’ ATM usage fees each month. Currency conversion charges may apply when using ATMs outside the United States.
1
U SA A . CO M
10/31/08 9:51:50 AM
MAIN PHOTOGRAPH BY THERESA CASSANGE; INSET PHOTOS COURTESY OF DALONNA RIMSKY
Drawing
it out
An Air Force wife gets
kids to share how they feel
about deployed parents
K
sought a creative way to help her son while his dad
was deployed overseas. Rimsky used her computer
to transform family photos into line drawings.
“Kids love to color. It’s a familiar thing,” Rimsky
says. “But talking about their feelings is not. As my
son started coloring, he started opening up.”
Now, she makes Color The Memories books
for other families. The order she
remembers best came from a woman who had lost her 30-year-old
son. She ordered coloring books
for her three granddaughters. “It
really captured the memories for
these girls who didn’t have their
dad anymore,” says Rimsky.
Between teaching her own two
children at home and working as
an after-school care director, Rimsky operates Color The Memories
out of her kitchen in Louisiana —
hoping to help other families like
she helped her own.
A snapshot of the Rimsky family transforms into a coloring book page.
ids say the darndest things when you
put a crayon in their little hands. Such
as how much they miss their daddies.
And when they finish, they might have
more contented smiles.
Coloring books by Color The Memories developed when USAA member DaLonna Rimsky
F
Y
I
When I
said, ‘OK, let’s
sit down and
color Daddy,’
he started
coloring and
opening up,
saying, ‘I really
miss Daddy. I
can’t believe
he’s away.’
THE ROSTER
Enjoy these events, sponsored by USAA. For more, visit USAA.COM/Events.
DECEMBER 6
Army-Navy Game
Philadelphia
JANUARY 23
Military Appreciation Night —
San Antonio Spurs vs. New Jersey Nets
San Antonio
U SA A . CO M
FdUSWI08_07-9_FYI_v3_USAA.indd 7
WINTER 2008
USAA MAGAZINE
7
10/31/08 9:48:49 AM
F
Y
I
Vacation-proof your home
B
EFORE SETTING OUT
to see the Seven Wonders of the
World — or your brother-in-law’s
house for the holidays — mark off
this checklist to help keep your own home
safe and secure.
Ask the post office to hold your mail.
Stop newspaper delivery.
PHOTOGRAPHY: THIS PAGE: (TOP) IMAGE SOURCE, (BOTTOM) LAUREN NICOLE/GETTY IMAGES; NEXT PAGE: (TOP) MURIEL DE SEZE/GETTY IMAGES, (LEFT) VINCE PENMAN/ISTOCKPHOTO, (BOTTOM RIGHT) JON PATTON/ISTOCKPHOTO
Adjust your thermostat — in winter, no
lower than 55; in summer, no higher
than 85.
Set automatic timers for your lights to
mimic your normal patterns.
Unplug sensitive appliances such as computers, televisions and microwave ovens.
Turn off water supply to toilets and your
washing machine.
Let your security service and/or the local
police know your house will be empty.
Source: Institute for Business and Home Safety
SLASH YOUR
ENERGY
BILL
HERE’S HOW:
Replace incandescent lighting with Energy Star bulbs.
■ Find drafty windows, doors
and baseboards and seal them
with caulk.
■ Unplug coffee makers, DVD
players, phone chargers and
■
8
USAA MAGAZINE
WINTER 2008
FdUSWI08_07-9_FYI_v3_USAA.indd 8
video games. They act as energy
vampires — sucking up electricity, even when powered off.
■ If you’re replacing a fridge
that’s more than 10 years old,
consider choosing a new Energy
Star model.
■ Choose flat-screen computer
monitors, which are sleek savers.
■ Consider purchasing an LCD
TV, which uses about half the
energy of its plasma counterpart.
Source: U.S. Department of Energy
U SA A . CO M
11/6/08 5:26:28 PM
MORE THAN SENTIMENTAL VALUE
PROTECT YOUR FAVORITE THINGS
What’s on your holiday wish list? A
painting by a favorite artist? Something
sparkling and emerald cut? Make sure
that such items don’t fall through any
gaps in your insurance.
A Valuable Personal Property
insurance policy protects items that
have coverage limitations or are
not covered under a homeowners
or renters policy — from furs and jewelry to fine art. Have a special work of
art, your grandmother’s silverware or
another such item that you want to
insure? With this kind of policy, you’ll
get 100 percent replacement cost up
to the amount you insure each item.1
Log on to USAA.COM and enter
keyword “VPP.”
SMARTPHONE S
AVVY
The pocketsize wonde
r is as
much a mob
USAA offers
ile compute
r as it
secure acce
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USAA offers secure access to USAA
accounts from mobile devices. Check
out our mobile capabilities at USAA.COM/
Mobile. To make a transaction or take care
of other business with USAA on a site created
for mobile devices and computers with low
bandwidth, visit MOBILE.USAA.COM.
Conversion
confusion?
Y
ou probably know about
the digital television conversion coming in February 2009, but here’s the
lowdown.
If your TV was manufactured before 2003 and you use an antenna to
get a signal, you’ll need a converter
box, costing between $40 and $70.
You can apply for coupons, worth
up to $40 toward the purchase of
the box, on the official digital conversion Web site: dtv2009.gov.
Cable and satellite customers can
avoid the cost since providers will
automatically convert the signal. But,
in a service outage, the box allows
you to get local stations, which could
be valuable in an emergency.
Newer TVs have the digital signal,
so no conversion is needed.
Did you
know?
If you need a tow truck
after an accident,
USAA can send
one directly to the
scene. Call (800) 531-8722 and
we can get your vehicle directly to a
repair facility — reducing the time
you’re without it. If you can’t call from
the accident scene, report the claim
promptly so that USAA can move your
car from a storage yard to a repair shop
sooner rather than later.
WINTER 2008
FdUSWI08_07-9_FYI_v3_USAA.indd 9
USAA MAGAZINE
9
11/6/08 5:27:09 PM
on the money
Smart solutions
From the pitfalls of payday loans to
easing estate tax burdens, USAA
answers your questions
My 84-year-old mother has $250,000
in stock and mutual funds. Now she
wants to start giving me and her
grandchildren cash gifts by liquidating
her investments. Should she just cash
in/sell her investments and give the
gifts, $12,000 per person, per year, to
each of us? — Michael, Mechanicsburg, Pa.
As you mention, your mom can
give you and your kids up to
$12,000 each, per calendar year,
without taxes, or gift tax implications, according to the IRS. But keep in mind
that her gifts don’t have to be in cash.
“Seniors who are trying to reduce the size of
their estates often implement a gifting strategy,”
says J.J. Montanaro, a Certified Financial Plannertm
practitioner with USAA. “If they sell the appreciated assets and give cash gifts it might benefit all
parties.” The recipients would receive a gift without any capital-gains implications, and the givers
would further reduce the size of their estates by
paying the capital-gains tax. “When you make
lifetime gifts of stock, land or other securities, you
don’t pay capital gains tax. But when the recipients sell such assets, they will pay tax on the
difference between what they sell them for and
what you originally paid,” says Montanaro.
Your mom is a great example of how smart
investing can contribute to a comfortable
10
usaa magazine winter 2008
FdUSWI08_10-11_OntheMoney.USAA.indd 10
retirement and help create financial security for
future generations. Making sure her money goes as
far as possible can be tricky business, however. So
consult a tax advisor if you have further questions.
I have an adjustable-rate
mortgage with 12 months
left at my current rate.
Should I refinance now?
— Ronald, Faye, N.C.
As of this writing, interest rates
are still well below average, and
there’s no guarantee they’ll drop
again soon. So as long as you’re
u sa a . co m
10/31/08 9:46:20 AM
CTA HEAD
CTAtaking
copy cta copy cta copy cta
My husband keeps
copy
cta copy cta copy cta copy
out payday loans, even
cta
copy
cta copy cta copy cta
though I have done everycopy
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thing but leave him to make
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him understand they are
bad. I feel like I am never going to get
out of this hole he put us in. What can I
do to get rid of these loans instead of
getting rid of him? — Tera, Lawton, Okla.
planning to stay in your home for at least a few
more years, go ahead and look into refinancing,
says June Walbert, a Certified Financial Plannertm
practitioner with USAA.
While you’re at it, consider switching from
your adjustable-rate mortgage, or ARM, to a
fixed-rate loan.
“ARMs have their benefits, but I usually recommend fixed-rate mortgages because they’re
a predictable expense for the entire life of the
loan,” says Walbert.
As with any financial product or service,
it pays to shop around. Start with your current
lender to set a benchmark, and then check
with others. Don’t forget to look at points, lenders fees and other closing costs, so you get an
apples-to-apples comparison.
u sa a . co m FdUSWI08_10-11_OntheMoney.USAA.indd 11
First, you’re right to take a stand
against payday loans. These
lenders are notorious for preying
on people who are desperate
for quick cash, assessing outrageous interest
charges and huge penalties for the slightest
misstep. And it sounds as though you’re in one
of many families who are stuck in a destructive
cycle of habitually borrowing money to pay off
other loans.
“People who take out payday loans often
feel they have no other choice, but there are
almost always better alternatives,” says USAA’s
Montanaro. “Some creditors may be willing to
offer revised payment plans to keep borrowers
from defaulting. And if you have to borrow more
money, using a low-interest credit card or even
asking a family member for help is probably better than another payday loan.”
As for trying to change your husband’s ways,
help him understand that his decisions have
long-term consequences. He may be robbing
your family of the opportunity to own a home,
send kids to college or retire one day. If he won’t
listen to you, hopefully he’ll listen to a financial
or family counselor. n
Get
Expert Help
For more financial advice, turn to USAA Certified
Financial Plannertm practitioners. Log on to USAA.COM
and use keyword “Financial Planning Services.”
See other important legal disclosures on page 30.
Certified Financial Planner
Board of Standards, Inc. owns
the certification marks CFP®
and Certified Financial Plannertm
in the United States, which it
awards to individuals who successfully complete CFP Board’s
initial and ongoing certification
requirements.
Financial planning services and
financial advice provided by
USAA Financial Planning Services Insurance Agency, Inc.
(known as USAA Financial
Insurance Agency in California),
a registered investment advisor
and insurance agency and its
wholly owned subsidiary, USAA
Financial Advisors, Inc., a registered broker dealer.
w i n t e r 2 0 0 8 u s a a m a g a z i n e
11
10/31/08 9:46:36 AM
12
USAA MAGAZINE
WINTER 2008
FdUSWI08_12-15_CommonSense.indd 12
U SA A . CO M
10/31/08 9:43:58 AM
COMMON
SENSE FOR
UNCOMMON
TIMES
BY JOHN GILLIAM
In a year of unprecedented financial crises,
get USAA’s perspective before you make
your next move
This summer,
before the bear
market and credit crisis morphed into a global
financial meltdown, I wrote an article about my
terrible decisions in the 2000-2002 bear market.
Back then, I rode the market down and threw
in the towel with a 50 percent loss — just as the
market was bottoming. Then I sat in cash for
two years into the next bull market before getting back into stocks. It was a classic, portfoliodecimating case of buy high, sell low and then
buy high again.
Embarrassed I’d behaved so emotionally, I
put most of my retirement assets into a conservative, professionally managed portfolio and
promised myself I’d leave it alone.
U SA A . CO M
FdUSWI08_12-15_CommonSense.indd 13
Then came the deluge of once-unimaginable
news: Fannie Mae, Freddie Mac, Lehman
Brothers, Merrill Lynch, AIG, Washington Mutual,
Wachovia — an incredible list of proud American financial institutions — either went under or
were taken over. And the Dow kept plummeting,
with no end in sight.
With my portfolio down more than 30 percent in one year and still falling, my promise
to “leave it alone no matter what” seemed
quaint. Had the investing fundamentals underpinning my philosophy collapsed? Was it time
to get out of the markets once and for all? Like
every investor in America, I was scared, angry
and confused.
WINTER 2008
USAA MAGAZINE
13
11/6/08 5:29:22 PM
When Everything Goes Down
The thing that’s been so disturbing since
the summer is that the prudent investor’s
best friend — diversification through asset
allocation — hasn’t worked. Instead of
stronger asset classes balancing weaker
ones, virtually every asset class has lost
serious money. As bad as the U.S. stock
market has been, overseas markets —
especially emerging markets — have
been much worse. Bonds not backed by
the U.S. Treasury have also had losses.
Real estate continues to be a disaster,
while commodities have crashed,
admittedly bringing the silver lining
of lower gas prices.
“The only thing asset allocation has
done recently is make sure you don’t
to his 401(k). They are like people all
over America, making crucial decisions
in the midst of a national crisis of confidence about the future.
Unraveling the Big, Scary Ball
Before making another big decision
about my portfolio, I decided to sit
back and unravel the ball of fear. While
the “financial crisis” has become an allencompassing term for today’s ills, it’s
not that simple. There are several key
elements in play, and they have to be
considered individually.
The first is the credit bubble that
drove the housing boom and the subsequent housing bust that froze the credit
markets. The critical factor turning the
Gain may be
temporary and
uncertain, but
ever while you live,
expense is constant
and certain.
—Poor Richard’s Almanac by Benjamin Franklin
do as badly as the worst asset class,”
USAA Investment Group’s Ron Sweet
states. “Outside of Treasury securities,
there’s been no place to hide. That’s
what happens when you have a credit
crisis combined with a recession, a
depressed housing market, a financial
system meltdown and a global crisis
of confidence.”
After they opened their third-quarter
investment statements, my retired mother
and business-owning brother had their
own take on the situation. She asked me
if she’d have to go back to work at 71. He
told me he was going to stop contributing
14
USAA MAGAZINE
WINTER 2008
FdUSWI08_12-15_CommonSense.indd 14
housing bust into a credit crisis was
leverage. Just as homeowners were
borrowing against rising home values,
banks and hedge funds were borrowing against the inflated value of the
mortgage-backed securities on their
balance sheets.
As home prices declined and foreclosures skyrocketed, it sparked a
second key element that led to the
overall crisis: banks and consumers
alike scrambling for cash. That reaction created huge holes in bank balance
sheets, which is what the government is
currently attempting to fix by directly
investing capital into the banks and taking a partial ownership position.
A third big problem is the lack of
trust between banks. And, again, the
government has stepped in and is
guaranteeing many types of common
financial transactions.
In fits and starts, the government’s
bold action, along with coordinated
steps overseas, is slowly unfreezing the
credit markets. Further, concrete steps
and programs are in place to support
the housing market, such as the Hope
for Homeowners Act of 2008 and the
FHASecure plan.
So does it still make sense to invest in
the credit markets? Will bonds resume
their traditional role as portfolio balancers and stable income
providers? According to
USAA’s Cliff Gladson, “The
losses in the bond market
were directly related to
the credit crisis. With
investment banks and
hedge funds liquidating
their bond holdings, we’ve
had supply and demand
imbalances that have
very little to do with the
essential element in the
bond market — that is,
the bond issuers’ ability to
repay. With the exception
of Lehman and WaMu, for
example, the other big factor that can impact bonds
is inflation, and the good
news is that the combination of global
recession with falling energy and other
commodity prices will likely wring out
whatever inflation exists. Many types of
bonds are on sale, especially municipal
and corporate securities.”
Why the Stock Market Kept Falling
Many people, me included, assumed
that the government bailout would have
a positive effect on stocks, but instead
they just kept falling. USAA’s Ron Sweet
explains why: “One big reason for the
huge sell-off since mid-September —
even after the bailout — is uncertainty
U SA A . CO M
11/6/08 5:30:31 PM
about capitalism and the capital markets moving forward. There are questions about the banking system and the
impact of a less freewheeling capital
environment. The market needs to see
what earnings will be in the post-crisis
world. Once that becomes clear, stock
prices should find a new equilibrium
that we can build from.”
So is it time to get out of stocks and
wait until things get better? Warren
Buffett doesn’t think so. “A simple rule
dictates my buying,” Buffett wrote
in October. “Be fearful when others
are greedy, and be greedy when others
are fearful.”
He continued, “I haven’t the faintest
idea as to whether stocks will be higher
or lower a month — or a year — from now.
What is likely, however, is that the market
will move higher, perhaps substantially
so, well before either sentiment or the
economy turns up. So if you wait for the
robins, spring will be over.”
America the Resilient
If you are a long-term investor, a decision to get out of stocks is really a bet
against the American (and now global)
economy. Again Buffett’s words are
If you would
be wealthy,
think of saving
as well as
getting.
—Poor Richard’s Almanac
by Benjamin Franklin
comforting, as he explained that in the
20th century the Dow rose from 66 to
11,497. “You might think that it would
have been impossible for an investor
to lose money during a century marked
by such an extraordinary gain,” he
wrote. “But some investors did; the
hapless ones bought stocks only when
they felt comfort in doing so and then
proceeded to sell when the headlines
made them queasy.”
As I climb off the ledge of fear, and
invite you to join me, does this mean that
we should all leave our investment statement envelopes unopened and do nothing? Absolutely not, says USAA’s Sweet.
“The 1980s and 1990s gave people
exaggerated ideas about the stock
market, leading to this very humbling
decade with its two deep bear markets.
People who are nearing or in retirement
need to review the risks that they are
taking, because they won’t have time to
make up bear market losses, especially
if they are forced to make withdrawals
in a falling market.”
As for younger members, Sweet
counsels that you should be investing on
a regular basis, mostly in stocks, using
tax-advantaged retirement vehicles such
as 401(k)s and IRAs and educational
vehicles such as 529 plans and Coverdell
Education Savings Accounts. “Systematic investing is the best way to go, but to
make it work you have to keep buying
when stocks are cheap — that’s when you
get the biggest bang for your buck.” ■
Systematic investment plans do not assure a profit
or protect against loss in declining markets.
NEED
REASSURANCE?
PHOTOGRAPH BY JENSEN LARSEN PHOTOGRAPHY
Call USAA at 800-531-USAA (8722).
USAA: IT DOES
MAKE A DIFFERENCE
Financial writer John Gilliam
U SA A . CO M
FdUSWI08_12-15_CommonSense.indd 15
By way of full disclosure, I am a freelance investment writer, and USAA is my
biggest client. It also manages my retirement assets.
If you’re not ready to give up on your own financial future, call USAA and
speak to a person who will take the time to get a comprehensive picture of
your situation, explain your options, and make a recommendation.
WINTER 2008
USAA MAGAZINE
15
11/6/08 5:30:50 PM
’Tis the Season —
FOR TAX P
BY DENNIS M C CAFFERT Y
EASY, END-OF-THE-YEAR actions can help
reduce your tax burden on April 15, 2009.
Here’s how.
INVEST YOUR HOLIDAY
BONUS IN AN IRA.
You were getting by without the bonus,
right? So why not use whatever you get in
December to reduce taxes? Depositing all of
it immediately into an IRA may do just that.
You may also be able to deduct the full
or a partial amount of your IRA contribution
on your federal taxes, if you meet IRS
income requirements.
Not everyone has an IRA. But people in
certain income brackets can get a tax credit
on contributions to a retirement savings plan
through the Saver’s Credit. For more details,
visit irs.gov and enter keyword “Saver’s Credit.”
FIND
THE IRA
FOR YOU
For information
on USAA’s IRA
offerings, log on
to USAA.COM
and use keyword
“IRA.”
16
USAA MAGAZINE
A GIVING NOTION.
One of the easiest ways to reduce
your payment to the IRS is to go into your
closet, toss any unused clothes and items into
a box and drop them off at a local charity. Cash
donations count, too. This isn’t just spreading
“goodwill to men” during the holidays — it’s a
wise tax move. To get credit for the deduction,
follow IRS requirements for documenting contributions. Some noncash contributions require
more documentation than others. For example,
a noncash donation under $250 generally
requires a receipt or letter from the recipient
charity outlining certain aspects of the gift.
The giver should also make sure the items are
in good condition, according to the IRS. Cash
contributions have different rules. For more
details, check IRS Publication 526 at irs.gov.
WINTER 2008
FdUSWI08_16-17_TaxTips_USAA.indd 16
U SA A . CO M
10/31/08 9:36:08 AM
X PREP
Don’t forget to consider your volunteer efforts.
You generally can deduct 14 cents a mile for
travel to and from each event where you give
of yourself and your time.
PAY DEDUCTIBLE
EXPENSES BY CREDIT
CARD IN DECEMBER.
If you use your credit card late in the year to pay
a business expense, make a charitable donation
or charge another cost that can be itemized, it
will still count toward the current tax year.
“The IRS considers the expenses deductible in the year that the charge is incurred,
not necessarily when you pay the credit card
charge,” says Tammie Hendricks, CPA, of
the Henssler Financial Group in Kennesaw,
Ga. That way, you may reduce your taxable
income for the tax year, but don’t have to
actually pay the bill until your credit card
statement comes in January.
INCREASE YOUR 401(K)
CONTRIBUTION.
Sure, it’s been a tough year
financially. And the stock market has been
horrific. But if you’re not contributing at
all to your 401(k), you’re turning away free
money from your employer with respect to
company matches, which are often at least
50 cents on the dollar up to a specified percentage of your salary.
Even if you are contributing, consider adding
to the percentage of salary you set aside, because
any reduction in your paycheck is a way to reduce
your reported current income, thereby potentially
decreasing your tax burden. And you don’t have
to invest your contributions in the stock market
either. Many plans have relatively safer bond and
money market funds as options.
U SA A . CO M
FdUSWI08_16-17_TaxTips_USAA.indd 17
Sure, taxes are the last
thing on your mind during
the holidays. But spending a
little time now can pay
off next spring
Don’t forget that you can increase contributions at the end of the year to make the most of
the company match; you’ll reduce your taxable
income and save toward your future.
If you’re over 50, take advantage of “catch up”
provisions that allow you to make extra 401(k)
and IRA contributions.
INCORPORATE YOURSELF.
Many folks — including those in the
military — maintain second incomes
with weekend jobs such as landscaping, a homeimprovement gig or other means. If you fall into
that group, consider incorporating your small
business as an “S” corporation before the year
ends and possibly reap immediate benefits.
“The law still allows, within limits, for Social
Security/Medicare tax advantages,” says Fred Imel,
a certified public accountant based in Yukon, Okla.
“The tax reduction, say, for a reservist with his
own small business can be $3,000 to $8,000 per
year, depending on the volume of the business
and type of industry. Nearly all of my clients use
this. In 15 years, many have saved enough to buy
a house with the savings.”
MEMBER
DISCOUNT!
For a 25 percent USAA
member discount on
TurboTax Online federal
and state products, log
on to USAA.COM and use
keyword “TurboTax.”
MAKE AN EXTRA
MORTGAGE PAYMENT.
This is a great move, especially if you’re paid by an
employer every two weeks and either November
or December happens to be a month where you
receive three paychecks instead of the normal two.
Instead of blowing your extra cash on something
you don’t need, make your January 2009 mortgage
payment now. That way, you can deduct the interest on that payment in the current tax year. ■
The preceding discussion is not tax advice.
Consult your tax advisor regarding your
specific situation.
PostHoliday
Prep
Want tax tips for
after the holidays?
Go to USAA.COM/
USAAMag and click
“New Year’s Resolutions: What to Do as
Tax Season Starts.”
WINTER 2008
USAA MAGAZINE
17
11/7/08 8:52:57 AM
7
Essentials for
SECURITY
BY CHRISTOPHER NULL
Y O U D O N ’ T H AV E T O be a computer
USAA
Works to
Protect Your
Information
Our Web site uses
sophisticated encryption and virus-detection
software to protect
your information. To
protect against unauthorized access, your
personal information
resides behind a secure
firewall monitored by
our security experts.
For more, log on to
USAA.COM and use
keyword “USAA Online
Security Guarantee.”
If you call in to do
business with USAA,
you may be asked to
establish a phone password to authenticate
your identity — for that
call and all future calls.
18
USAA MAGAZINE
expert to help protect your computer from hackers, viruses and black-masked thieves. Here are
the must-have tools and actions to take today.
1
USE ANTIVIRUS SOFTWARE.
Installing basic antivirus protection
should be your first move.
Today’s antivirus package options do
more than just help protect you from basic
virus attacks. Most also ward off attacks from
malware — short for malicious software —
such as spyware, rootkits, keyloggers and other
Web-based interlopers.
McAfee VirusScan Plus, Symantec Norton
Antivirus, Trend Micro Antivirus and Kaspersky
Anti-Virus are capable applications. Avira AntiVir (free-av.com) is a good, free antivirus option.
2
RELY ON ANTI-SPAM PROTECTION.
Spam isn’t just a nuisance, but a major
avenue for security breaches, whether you
open an infected attachment or click on a malicious link. Stop spam outright to avoid these risks.
Most major e-mail applications, Internet service providers and Web-based mail services now
offer anti-spam services for free. Turn these on by
using the Web-based tools given by your e-mail
provider; they are usually easy to find.
One risk is that perfectly innocent e-mail will
be flagged and deleted as spam. If you’re concerned about false positives, try a third-party
application, which gives you more control over
spam flagging, but which will likely let in a few
more junk messages. Outlook users can consider
the third-party application SpamBayes, a free
plug-in found at SpamBayes.sourceforge.net.
WINTER 2008
FdUSWI08_18-19_computer_security_3_USAA.indd 18
3
KEEP YOUR FIREWALL ACTIVE.
A firewall is simply a barrier between you
and the rest of the world. It filters out unwanted traffic — mostly attacks that troll random
computers looking for security holes. Without a
firewall, you’ll likely be attacked within minutes of
connecting an unsecured computer to the Internet.
The good news is you’re probably already
running a firewall: Almost every wireless router
has one, and Windows XP and Windows Vista
include one, too, turned on by default. There’s
no need to configure your firewall further or to
invest in expensive additional firewall software.
Just make sure you never turn off your firewall.
4
TAKE ANTI-PHISHING MEASURES.
Beware of phishing, which occurs when
phony Web sites designed by scam artists
get you to give up your personal information.
Modern Web browsers can help protect you
against phishing attacks. Firefox 3, the latest
version, has a very robust anti-phishing system
that causes an enormous red page to pop up if
you stumble onto a known malicious site. Internet Explorer 7 also checks Web sites automatically as you browse. Upgrade to the latest version
of either browser and you should be fine.
USAA provides phishing alerts on its Web
site home page if a scammer ever targets USAA
members. See “USAA Works to Protect Your
Information” on this page for more on USAA’s
online security measures.
5
TURN TO ANTI-SPYWARE TOOLS. If a
malware application does creep past all
your defenses and your antivirus software
can’t clean it, consider more specialized spyware
defense tools. You can pay for any number of
spyware cleaners, but you really don’t need to:
U SA A . CO M
11/7/08 9:00:29 AM
USE COMMON SENSE AND A LITTLE KNOW-HOW
TO HELP KEEP YOUR MAC OR PC SAFE AND SECURE
Free anti-spyware tools are capable of cleaning
any infection that the paid tools can.
computer can be tracked and perhaps recovered by law enforcement if it gets swiped.
6
7
PROTECT AGAINST THEFT. All the
software in the world won’t protect you
from simple theft. One estimate says that
5 percent of all laptops are stolen in the first
year after purchase.* Follow these tips:
■ Never leave your laptop unattended.
■ Don’t lock it in your car where it can be seen.
■ Invest in an inexpensive cable lock to secure
your computer to your desk.
■ Consider a computer theft recovery
and identity theft protection service, such as
Computrace® LoJack® for Laptops, so that your
BACK UP YOUR DATA. Drop your
laptop in a pool? Get it snatched on
the street? Plan for such misfortunes
by backing up data early and often. How?
■ Buy an inexpensive external hard drive.
■ Back up multiple computers to a single,
giant disk with little effort.
■ Check out online backup services, such
as Mozy.com, which automatically copy files
to secure servers over the Internet, where
even a house fire can’t destroy your data. ■
*Source: Switched.com,
“Five Most Stolen Gadgets,”
Jan. 31, 2008
SPECIAL
OFFER
ILLUSTRATION BY JACK UNRUH
USAA has teamed with McAfee
to offer its VirusScan Plus
software at a 50 percent discount for USAA members. For
details, log on to USAA.COM
and use keyword “McAfee.”
U SA A . CO M
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WINTER 2008
USAA MAGAZINE
19
10/31/08 9:33:38 AM
On Course
Find out how planning now can help you and
your parents navigate financial waters later
BY KERRY HANNON
On his 70th birthday, USAA
member Leonard Ratzman didn’t have a
will or any kind of estate plan. “I suddenly
realized that the worst thing I could do as
a father is to pass away and leave my only
heir, my daughter, without a list of things
to do, people to contact and so forth,” the
now-75-year-old recalls.
He created “The Turnover” document, a
two-inch-plus binder that contains a whopping 60 sections of detailed information to
help her manage his estate after his death.
While not everyone will go to such
lengths, learning what’s in Ratzman’s guide
can help you think about information parents can compile and organize to help their
grown children manage their affairs, not just
after they die but as they age and require assistance. Follow these tips to make managing
their affairs easier for them — and for you.
20
USAA MAGAZINE
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U SA A . CO M
10/31/08 9:20:38 AM
ALL IN THE FAMILY
PHOTOGRAPHY BY JEFF NEWTON • PHOTO ILLUSTRATION BY RYAN ETTER
It may not be easy to ask your parents if they need
your assistance with day-to-day finances. “Money
is the last bastion of privacy for many people,” says
Sharon Burns, co-author of How to Care for Your
Parents’ Money While Caring for Your Parents. “There
are all sorts of control and trust issues involved.”
In the end, helping older parents manage their
money may be a necessity and can serve as a gratifying way to give back.
Start the money conversation. The death of a
first parent or a serious medical condition, such as
a broken hip, often spurs the discussion. Stay tuned
in to signals that you may need to get involved:
■ unpaid bills that generate late fees, second notices
and utility cutoffs
■ noticeable changes in spending habits
■ checking account problems, such as bounced
checks
■ credit card problems, such as late payment
charges
■ confusion about what bills have been paid or
about a particular charge
If you spot one of these red flags, schedule a
frank talk.
Get the full financial picture. If your parents
welcome your involvement, ask them to share key
legal and financial papers. They should have in
place several essential documents, including a will,
U SA A . CO M
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WINTER 2008
USAA MAGAZINE
21
11/7/08 9:29:06 AM
“I wanted to
make the overwhelming task of
taking over as
efficient and
painless as
possible.”
living will and separate durable Powers of Attorney for health care and financial decision-making.
Compile other critical papers, such as deeds,
insurance policies, investment accounts, bank accounts, income statements, retirement accounts,
all outstanding loan documents and current bills.
Decide who should manage your parents’
money. In big families, think about who lives
nearby and who has the know-how. One sibling
might be a financial whiz, but make sure he’s
ready to take on the responsibility. “This isn’t
fun work,” Burns says. “You’re dealing with not
only the financial paperwork, but at times allconsuming, emotional handholding.”
22
USAA MAGAZINE
WINTER 2008
FdUSWI08_20-23_Parents_v3_USAA.indd 22
For only children, the burden can seem
heavy. Don’t hesitate to get help from your own
spouse, a knowledgeable friend or even a professional financial advisor. USAA has CERTIFIED
FINANCIAL PLANNER™ practitioners and trust services team members at USAA Federal Savings
Bank who can help.
Understand their budget. Get a handle on
monthly income and expenditures and make
sure a usable budget is in place.
Streamline accounts. Consolidate
redundant bank accounts and consider canceling unused credit cards. Next, consider
combining current credit card accounts and
PHOTOGRAPH BY SETH JOEL PHOTOGRAPHY
—USAA MEMBER AND DAD
LEONARD RATZMAN
U SA A . CO M
10/31/08 9:27:01 AM
accounts, insurance policy numbers, user
IDs and so forth. His daughter will even
have instructions on how to care for his
hanging plants.
Ratzman also tips off his daughter to
the potential value of some of his possessions, including a vintage Hawaiian shirt
that might be a collector’s item. “She would
never know that,” he says. And he supplies
the name of a trusted car dealer to call if
she wants to sell his ’72 Corvette.
Ratzman continually updates the document. “My daughter was grateful when I
told her about it, but didn’t want to know
the details,” he says with a laugh. “It’ll
transferring outstanding balances to a
lower-interest card.
Introduce online banking. If your
parents are comfortable transacting business on their computer, online banking
with automatic bill pay is probably the
easiest way to help with daily finances,
particularly from a distance. Arrange for
direct deposit for income and set up automatic bill pay from your parents’ checking account. You can also request that
dividends and interest payments be reinvested automatically or deposited directly
into the checking account.
If computer use isn’t part of the picture,
develop a bill-paying calendar and remind
your parents to write the checks, Burns
advises. Or, you can suggest taking over the
task yourself.
Hire a pro. If your parents refuse to
let you get involved with their finances, or
if managing their money gets too complicated, consider hiring a financial advisor.
USAA has Certified Financial Planner™
practitioners ready to help. If a bill-payer
is all that’s required, check out the American Association of Daily Money Managers,
at aadmm.com.
Depending on your parents’ situation,
you may also need to hire an elder care
attorney to help with estate planning and
the health care insurance system. The
National Academy of Elder Law Attorneys,
at naela.org, can point you to local experts
in the field.
Ratzman’s “Turnover” document contains
the essentials, including a will, a living
will, durable Power of Attorney and a
Health Care Power of Attorney. But it goes
way beyond the basics, revealing details
in a sequential order, beginning with a
priority list of contact data for insurance
companies and funeral arrangements.
There’s a list of important passwords; a
list of friends and business contacts; and
scans of all the active keys he carries for
his home, cars and the safe-deposit box.
The document provides a list of all
credit card numbers, utilities accounts,
savings and checking accounts, investment
Financial Planning.
Work with a USAA Certified
Financial Planner™ practitioner. Log on to USAA.
COM and use keyword “Financial Planning Services.”
Trust Services. You can
name the USAA Federal
Savings Bank as acting, or
successor, Trustee. A team
of Trust administrative
professionals can help manage your parents’ finances.
Log on to USAA.COM
and use keyword “USAA
Trust Services.”
Medicare-Related
Help. USAA Life Insurance
Company offers Medicare
Supplement Insurance and
USAA Life General Agency
has contracted with Humana
to provide Medicare prescription drug plans and
Medicare Advantage plans.
Call (800) 531-0909, or log
on to USAA.COM and use
keyword “Medicare.”
Long-Term Care Insurance. USAA Life Insurance
General Agency makes
available Long-term Care
Insurance that potentially
can help keep your parents’
nest egg intact. Log on to
USAA.COM and use keyword “Long-term Care.”
photo illustration by Ryan etter
Remember the details
Turn
to USAA
be there when she needs it most, safely
stored in a safe-deposit box.”
Such letters of instruction also can be
stored in a fire-proof safe at home. Make
sure your loved ones have the code to open
it, or that they’re named on a safe-deposit
box so they can access it. n
Power
Play
For more on Power of
Attorney, visit USAA.COM/
USAAMag and click
“Power Play.”
See legal disclosures on page 30.
GHA03DCRR
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W I N T E R 2 0 0 8 u s a a m a g a z i n e
23
10/31/08 9:27:32 AM
MAKING
ALLOWANCES
TEACH YOUR
CHILDREN
For ideas on the best way
to dole out allowance,
log on to USAA.COM/
USAAMag and click
“Making Allowances.”
WELL
BY TERI CETTINA
Your kids learn their
money habits from
you. Make sure
they’re good ones
Christmas, USAA
member Susan Beacham gives her
teenagers coupons for family outings.
A Milwaukee Brewers game. A purse
with an invitation to meet the refugee
women-turned-entrepreneurs who made
it at a local nonprofit. “It’s important that
my daughters — and all kids, really —
see that charity isn’t just writing a check.
It’s about helping real people,” says
Beacham, a former banker who founded
Money Savvy Generation for kids.
Read on for more tips.
with the real thing. “They need to touch
dollars and coins, count them, stack
them and learn that they’re concrete
things,” says Neale Godfrey, author of
Money Doesn’t Grow on Trees.
TEACH THE VALUE OF SAVING
MAKE ALLOWANCES COUNT
USAA member and veteran teacher
Karyn Hodgens and her husband created
a spreadsheet to explain the concept
of compound interest to their freespending son. “Something clicked. He
said, ‘You mean I’ll earn more money
just by letting it sit there?’ He was an
instant convert,” Hodgens says. Soon,
she and husband John, a software engineer, developed KidsSave, a software
program that creates virtual accounts
to track the real money in piggy banks.
Beacham suggests kids pay for actual
expenses with part of their allowances —
such as schoolbook orders. “[It] teaches
kids how to make hard choices,” she says.
WALK THE WALK
Kids watch, more than they listen to
lectures, Godfrey says. Agrees Beacham:
“You may be the greatest money manager in the world, but if you don’t show
and tell your children what you’re doing,
they can’t learn from you.”
GO BEYOND SPENDING LESSONS
Require kids to save, invest and donate.
WINTER 2008
FdUSWI08_24_Teach_6_USAA.indd 24
Matching your kids’ savings — the
way employers match money in a
401(k) plan — can be a powerful motivator. Grandparents might also offer
matching funds.
DON’T BE TOO GENEROUS
Even if you can afford to give your teens
a comfortable allowance — don’t, suggests Godfrey. “By about age 12, kids
should do small, paying jobs for friends
and family members,” she says. “By 16,
they’re capable of getting summer jobs
and saving for year-round expenses.” ■
Bank products provided by USAA Federal
Savings Bank, Member FDIC.
To add your children to your USAA profile, log on to USAA.COM
and use keyword “Preferences.” Click My Profile and Preferences > Personal Information.
Help your teens open a USAA Teen Checking or Savings
account online. Go with them to a Web site created just
for them: MYUSAA.COM. There, they can log on to make
transactions or subscribe to USAA youth magazines.
Tech-savvy kids have plenty of options
for online money-education sites, such
as kids.gov. But before they play with
virtual money, they must be comfortable
USAA MAGAZINE
CREATE MONEY-MATCHING
PROGRAMS
YOU, USAA AND YOUR KIDS
USE TECHNOLOGY
24
“They need to learn that money isn’t just
for spending,” says Godfrey.
PHOTOGRAPHY BY JEFF NEWTON • ILLUSTRATIONS BY ZELA LOBB
EVERY
U SA A . CO M
LB
11/7/08 1:51:38 PM
member savings | Exclusive Products and Services for USAA MEMBERS ONLY
find out how USAA can
help you, too
The day Rick Deese found out that under
new eligibility requirements he could
become a USAA member, he took action.
“I joined that night,” says the retired Air
Force chief master sergeant. Now he’s
saving about $3,700 per year on auto
insurance and enjoying other benefits.
His family has:
USAA Homeowners Policy. Deese
enjoys accessing this policy and his other
USAA accounts on USAA.COM.
■
Deese will share the USAA legacy with
his four children, and he appreciates
USAA’s support of military families: “When
I retire from my current job in the civilian
world,” he says, “I’d like to be the doorman at USAA.”
Photograph by Kemp Davis
■ USAA Auto Insurance Policies
on three vehicles. Deese could hardly
believe his low rate quote on USAA.COM.
“Switching to USAA was a no-brainer,”
he says.
■ USAA Checking and Savings
Accounts. Deese and his wife like using
direct deposit, USAA Web BillPay® and a
debit card that allows them to get ATM
fees reimbursed and to receive points for
debit card purchases.
PAGE 26
Banking Services
You Can Trust
PAGE 27
Great rates on
retirement tools
PAGE 28
usaa home
services can save
you up to $4,300
Tell your family and friends that they might be
eligible for USAA membership.
go to usaa.com, go to My Accounts page, and click
“Share USAA” in the bottom right corner.
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25
11/7/08 9:31:41 AM
BANKING
THE BANK YOU CAN TRUST
New Year’s Solution
A Home Equity Line of Credit from USAA can help.
With variable Annual Percentage Rates as low
as 5.29% and no prepayment penalties, you can
lower your monthly payments, accelerate your
debt consolidation plan or free up the cash your
family needs to make 2009 its best year ever!2
PHOTOGRAPH BY IMAGE SOURCE
HOME EQUITY LINE OF CREDIT
Restrictions apply. See page 30 for details.
USAA MASTERCARD
Apply in minutes online.
GO TO USAA.COM
(keyword: USAAHomeEquity)
A Chance to Give AND Receive
USAA BANKING
Are You with the Right Bank?
Been meaning to make the switch to
USAA? We’ve made it simple to transfer
to a USAA checking or savings account.
Start the process online and soon you can
take advantage of it all:
✓ USAA free checking with no minimum
balance requirements
✓ USAA savings account with interest
rates that grow with your balance
✓ No monthly fees
✓ Free worldwide ATM usage*
✓ Free transfers from non-USAA accounts
✓ Free online bill payment
✓ Mobile access: Check account balances
With no annual fees and your choice of rewards programs, the
benefits of a USAA MasterCard® card are among the industry’s
best. Now, it has another benefit. Sign the sales slip for every
purchase made with your USAA MasterCard®* between Nov. 1,
2008, and Jan. 2, 2009, and you’ll be automatically
entered for a chance to win.
This holiday season MasterCard is giving you
the chance to win two matching holiday gifts
in the Overjoy of Giving Sweepstakes. One to
give away and one to keep for yourself. You
could win two cars, two trips, two Home Depot®
home makeovers or two shopping sprees.
ENJOY
LOW
RATES!
Current USAA MasterCard holders can visit
priceless.com/overjoy. Don’t have a USAA MasterCard yet?
Log on to USAA.COM and use keyword “MasterCard” to apply.
Hurry, the promotion ends Jan. 2, 2009.
All USAA MasterCard cardholders are winners with
your choice of cash rebates or merchandise or travel
discount; industry-leading fraud protection; and
combined rewards points** on debit and credit cards
to earn rewards faster.
at MOBILE.USAA.COM
✓ And much more!
*USAA does not charge a fee for the first 10 ATM withdrawals
and refunds up to $15 in other banks’ ATM usage fees each
month. Currency conversion charges may apply when using
ATMs outside the U.S.
See how easy it is to sign up!
GO TO USAA.COM
(keyword: EasySwitch) OR CALL
(800) 531-USAA (8722)
26
USAA MAGAZINE
FdUSWI08_25-30_membsav.indd 26
WINTER 2008
Get a USAA MasterCard card.
GO TO USAA.COM (keyword: MasterCard)
*NO PURCHASE NECESSARY. Max. $70,000/prize package. Shopping Spree:
MasterCard Gift Card & Home Makeover: Home Depot Store Credit. Void where
prohibited. PIN-based & international transactions ineligible. Starts 11/1/08.
Ends 1/2/09. Restrictions apply. Visit priceless.com/overjoy for Official Rules &
complete details.
**Earn 1 point for every $1 credit card purchase or $2 debit card purchase.
Select ‘credit’ at checkout; PIN-based purchases do not earn points. Other
restrictions apply.
U SA A . CO M
11/7/08 1:52:14 PM
s!
security you deserve
annuities
Safe Havens
Reach for retirement goals with no market risk. All our
annuities are backed by the strength of USAA Life Insurance
Company or USAA Life Insurance Company of New York,
both rated AAA — “Extremely Strong” by Standard & Poor’s.
Savings Annuities
■
■
■
et peace of mind. The money you put in and your interest
G
are guaranteed no matter what happens in the stock market
ax-deferred compounding interest helps you reach
T
retirement goals faster
Photograph by karl gerber
y
RETIREMENT
pply for rates as high as 5.7% with a minimum guaranteed
A
rate of 1-3% with the Extended Guarantee Savings Annuity.
Lock them in for 2, 5 or 10 years3
guaranteed Income Annuities
■
■
Monthly fixed income for the rest of your life
tructured payouts so you (or your beneficiary) get back
S
all the money you put in4
Lock in your rate.
GO TO USAA.COM (keyword: USAAannuities)
Certificates of Deposit
Take Advantage: Great CD Rates
Fixed Rate and Adjustable Rate Certificates of Deposit make
great retirement savings tools. Why? Both are FDIC-insured
and offer guaranteed growth.
Adjustable Rate CDs
■
■
If rates rise, you can opt to make a one-time adjustment
and at the same time add more money. Then, the rate never
goes down
ock in rates as high as 4.75% Annual Percentage Yield
L
with a 5-year term5
Fixed Rate CDs
■
Get 5% Annual Percentage Yield for a 5-year fixed-rate CD5
Secure your rate today.
GO TO USAA.COM (keyword: USAACDs)
Garrett Kost, Certified Wealth Strategist with USAA
Announcing the
USAA Global
Opportunities
Portfolio
management
fees up to
40%
BELOW INDUSTRY
AVERAGE
Stocks are volatile. But you
can’t avoid them altogether if you
want your nest egg to potentially grow. The
USAA Global Opportunities Portfolio is a
managed account that invests your money
in USAA Mutual Funds that have exposure
to stocks from around the world as well as
fixed income securities.
It is designed for conservative members who
want moderate growth potential and seek to
limit their risk.
Find out more from a USAA
investment professional.
CALL (800) 531-USAA (8722)
Investments/Annuities: Not FDIC Insured • Not Bank Guaranteed • May Lose Value
See page 30 for important information.
U SA A . COM
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27
11/7/08 9:33:09 AM
HOME
SMARTER WAYS TO FINANCE YOUR HOME
USAA HOME SERVICES
Are Your Mortgage Payments Hard to Make?
Want to Re-Fi? USAA Can Help.
In light of all the recent economic news, one thing is clear: You need
a lender you can trust. That’s why thousands use our low-rate home
loans to finance their dreams. In fact, now may be a good time to
buy — USAA’s member-only mortgage rates and closing costs make
it even easier.
With a USAA Member-Only Mortgage,
the Savings Add Up
$1,200
+$3,100
UP TO
Average USAA member savings
on points and lenders fees6
Your cash bonus when you buy and sell
your home with USAA MoversAdvantage®
real estate services
YOU SAVE UP TO
$4,300
Mortgage specialists are on call.
GO TO USAA.COM (keyword: MoveEasier)
OR CALL (800) 531-1282
USAA MOVERSADVANTAGE®
Making Moving Easier
Buying or selling your home should be exciting — not stressful. USAA
ensures that the entire process runs smoothly by assigning you a
MoversAdvantage7 specialist who:
Helps you select from a national network of USAA Preferred Real
Estate Companies
■ Monitors your agent’s performance, helping to make sure your needs are
met every step of the way
■ Acts as your advocate, dedicated to providing you with excellent service
■ Provides you with a cash-back bonus of up to $3,100 when you buy and
sell your home with MoversAdvantage
Real estate services you can trust.
GO TO USAA.COM (keyword: MoversAdvantage)
28
USAA MAGAZINE
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WINTER 2008
PHOTOGRAPH BY TIM PANNELL/CORBIS
■
U SA A . CO M
10/31/08 9:09:28 AM
auto
the right car for you
USAA Car Services
Someone
on Your Side
FIND
The Power Of
Choice The USAA Car
Buying Service lets you search
a massive “virtual lot” of new
and used cars so that you can
find the model that’s just right
for you. Read reviews, customize
extras, view multiple photos and
get a price estimate — specially
negotiated for members, with
savings up to $2,600 off MSRP8
for a new car purchase. Find
out what your trade-in could
be worth, too!
BUY
The Power
of Money
Photograph by altrendo images/Getty
With our innovative suite of
services, USAA helps you find the
car you want, with the features
you want, at the price you want.
ENTER THE
1,000
GALLONS OF GAS
sweepstakes!
Go to USAA.COM/
AUTO
No purchase
necessary to enter
or win. A purchase
will not increase your
chances of winning.
See complete rules
at usaa.com/auto.
Money talks, so you’ll definitely
be heard when you enter a new
car showroom holding one of our
checks in your hand. Our member-only USAA Auto Loan rates are
extremely competitive, approval takes only minutes online and
up to 100% financing lets you drive away in your new car having
used our cash!9
insure
The Power of Protection
With low rates, it’s hard to believe that such a
small amount of cash can blanket your car in coverage, but that’s
exactly what our service does. You save up to $600,10 enjoy a
generous accident-forgiveness program11 and get an automatic
assessment of your claim online thanks to our Internet Loss
Report system.
Get it all done today.
GO TO USAA.COM/AUTO OR CALL
(800) 531-USAA (8722)
See page 30 for important information.
U SA A . COM
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11/7/08 9:34:09 AM
THE USAA
EDUCATIONAL
FOUNDATION®
MONEY MANAGEMENT
BUILDING AND M
MAINTAININGINVESTING
GOOD CREDIT
NNING
T
INDIVIDUA
IAL PLA
FINANC
REMEN
R RETI
ACCOUN L RETIREMENT
FO
G
TS (IRA
IN
As)
PLANN
LEGAL DISCLOSURES
The preceding articles should not be
considered tax, legal or estate planning
advice. Consult your tax, legal or estate
planning professional regarding your
specific situation.
Certified Financial Planner Board of Standards, Inc., owns the certification marks
CFP® and CERTIFIED FINANCIAL PLANNER™ in the
U.S. which it awards to individuals who successfully complete CFP Board’s initial and
ongoing certification requirements.
Page 9
With replacement cost coverage, at our
option and subject to policy limits, if you
actually replace the property we will pay you
the lesser of our cost to restore, repair or
replace the damaged property or the amount
you actually spent to restore, repair or
replace the property.
1
Page 23
Trust Services offered by USAA Federal
Savings Bank.
The USAA Educational
Foundation, a nonprofit
organization, has the
resources to help make
your life more manageable.
Planning For
Retirement
Financial Planning
And Goal Setting
Mutual Funds
Making Money
Work For You
Annuities
Building And
Maintaining
Good Credit
Stocks And Bonds
IRAs
#508
Medicare supplement insurance by USAA
Life Insurance Company, San Antonio, TX.
Not available in MA, MN, NJ, NY, WI. Medicare
supplement insurance and USAA Life Insurance Company are not associated with the
federal Medicare Program. USAA Life General Agency, Inc. (LGA) (known in CA and NY
as USAA Health and Life Insurance Agency)
acts as an agent for select insurance companies to provide additional products to USAA
members. LGA representatives are salaried
and receive no commissions. However, LGA
receives commissions from those companies
which can include compensation based on
the total quantity and quality of insurance
coverage purchased through LGA. Plans not
available in all states.
Page 26
#511
#517
#523
#525
#536
#553
#561
To order free publications,
just call (800) 531-6196 or
visit usaaedfoundation.org.
Have your USAA number and
publication number ready
when you call.
The USAA Educational Foundation
does not endorse or promote any
commercial products or services.
Subject to credit and property approval.
Rates shown are APRs. Line of credit rates
are variable and are based on The Wall
Street Journal Prime Rate plus/minus a margin. As of October 21, 2008, line of credit
APRs range from 5.29% to 14.59% based on
the amount of equity in your home, the loan
amount and your credit history. Offer based
on a loan to value ratio of 70% or less. The
maximum APR that may be imposed is 18%.
Fees paid to third parties to open the line are
estimated to range from $92 to $802.50 for
a line amount of $50,000 with typical circumstances, depending on cost of evaluation, title work, and your state’s recording
fees and mortgage taxes, if any. Property
insurance is, and flood insurance may be,
required. Rates subject to change. Consult
your tax advisor regarding the deductibility
of interest. Additional restrictions apply to
Texas home equity loans/lines. Offer not
available in all locations. You may have one
rate lock at a time on your line of credit balance. $4,000 minimum per lock.
2
Page 27
3
Rate effective Nov. 1, 2008, subject to
change. The rate shown applies to a 10-year
Extended Guarantee Annuity with a balance
of $1 million. Extended Guarantee Annuity
earns interest at the rate in effect at the time
of purchase. Rate guaranteed for the period
selected. Afterwards, interest rates may
change monthly, but not below the minimum
guaranteed interest rate. The minimum guaranteed interest rate is subject to change and
may vary by product and state. The minimum guaranteed interest credited to the
contract will be 1%-3%. The minimum guaranteed rate is fixed and will not change after
the contract is issued. Form AEG37641ST
05-01 (varies by state); in NY, NEG38001NY
05-01. Call for details on specific policy costs,
benefits, limitations and availability in your
state. Annuities provided by USAA Life Insurance Company, San Antonio, TX and in New
York by USAA Life Insurance Company
of New York, Highland Falls, NY. Each company has sole financial responsibility for
its own products. Company ratings represent
an opinion of financial strength and the
company’s ability to meet ongoing obligations to policyholders.
Money not previously taxed is taxed as
income when paid.
4
5
$1,000 minimum opening deposit. Annual
Percentage Yield (APY) of 4.75% current as
of 10/24/08, APY of 5% current as of
10/31/08, and may change. Penalty for early
withdrawals may reduce earnings.
Page 28
$1,200 savings figure based on comparison
of $200,000, 30-year fixed rate loan.
6
MoversAdvantage® offered by USAA
Relocation Services, Inc., a licensed real
estate broker and subsidiary of USAA Federal Savings Bank. Not available for employer-sponsored relocations, or for transactions
in Iowa or outside US. This is not a solicitation if you are already represented by a real
estate broker.
7
Cash bonus limited in some states. Bonus
ranges from $350-$1,550 based on sale
price of home sold/purchased. You must
enroll in program before contacting participating real estate firm and be represented
by that firm at closing to qualify for bonus.
Qualify for an additional $100 when you
also finance your home purchase with a
USAA mortgage.
Page 29
Based on actual member sales.
8
Car buying service available for new car/
truck purchases, lowest possible price not
guaranteed. Not available in all locations.
Loans and 100% financing subject to credit
and property approval. Total loan amount
cannot exceed USAA’s determination of vehicle’s retail value plus tax, title and license.
9
Annual savings based on countrywide survey of new customers from 12/01/06 through
11/30/07, and includes a discount for online
purchase or quote. Actual savings may
vary. Savings do not apply in NJ and MA.
Online discount not available in CA, FL, GA,
HI, ME, and NC. Discount is up to $30 in MO
and MA. Discount applies to new policies
only. Restrictions apply.
10
Stay accident-free for five years as a USAA
policyholder and your premium won’t go up
if you have one at-fault accident. Accident
forgiveness is not available in CA, HI, MA, NC,
NY and PA.
11
Page 31
Free shipping offer: applies only to new
orders placed on or before February 15,
2009.
Risk-Free purchase guarantee: Should any
purchase not meet your expectations,
please follow the instructions on the back of
your packing slip. You may return your purchase within 30 days of receipt for a refund
or exchange (less shipping, handling and
return postage). We regret that personalized
items may not be returned unless due to an
error on our part or manufacturing defect.
We will refund shipping and handling
charges on damaged or defective merchandise returned to us. Loose diamond returns
must be accompanied by the diamond grading report or a replacement fee of $150.00
will be charged. Items that show signs of
excessive wear, those that have been altered
or resized by anyone other than USAA, and
items damaged in any way cannot be
accepted for return.
Valuable Personal Property Insurance: $4 a
month provides $2,500 of coverage on
scheduled jewelry. Rates are subject to
change and may vary due to location. Valuable Personal Property insurance provided
by United Services Automobile Association,
USAA Casualty Insurance Company, USAA
General Indemnity Company, and Garrison
Property and Casualty Insurance Company,
USAA Limited (Europe). San Antonio, TX.
Each company has sole financial responsibility for its own products.
property and casualty insurance products.
Ownership rights are limited to eligible
policyholders of United Services Automobile Association. Eligibility may change
based on factors such as marital status,
rank, or military status. Contact us to update
your records. Children of USAA members
are eligible to purchase auto or property
insurance if their eligible parent purchases
USAA auto and property insurance.
Eligibility restrictions apply to purchase of
property and casualty insurance. To be eligible for auto and property insurance, separated military personnel must have been
separated on or after 1/1/1996 with a discharge type of “Honorable.” Once eligibility
is established, it is generally ongoing. Eligibility may change based on factors such as
marital status, rank, or military status. Customers must be in good standing and meet
underwriting guidelines. Rates and benefits
may vary due to eligibility.
Notice to USAA Members
United Services Automobile Association
(“USAA”) continuously works to attract and
retain the services of highly qualified individuals to serve as directors. However, the
potential exposure to corporate litigation
and associated expense of defense can be a
significant disincentive to serve. Accordingly,
the Bylaws of USAA require USAA to indemnify its directors to the maximum extent
permitted by law for matters arising out of
their service to, or at the request of, USAA.
Pursuant to that obligation, USAA will provide
indemnification and has advanced expenses
in a recent lawsuit that names all the directors
as defendants. The Court recently dismissed
the suit. Plaintiff has appealed.
USAA Companies
USAA means United Services Automobile
Association and its affiliates. Property and
casualty insurance provided by United Services Automobile Association, USAA Casualty Insurance Company, USAA General
Indemnity Company, Garrison Property and
Casualty Insurance Company, USAA County
Mutual Insurance Company, USAA Texas
Lloyds Company, San Antonio, TX, and
USAA, Ltd. (Europe), and is available only
to military members and their families who
meet certain membership eligibility criteria. Each company has sole financial
responsibility for its own products. Coverage descriptions are brief and subject to
the terms and conditions of your policy.
Read your policy for details. Applications
subject to underwriting. To find out if you
are eligible, contact USAA. Underwriting
restrictions apply. Investments provided by
USAA Investment Management Company
and USAA Financial Advisors, Inc., both
registered broker dealers. Life insurance
and annuities offered by USAA Life Insurance Company, San Antonio, TX, except in
NY; some life insurance may also be offered
in most states by USAA Direct Life Insurance Company, Omaha, NE; in NY, life insurance and annuities offered by USAA Life
Insurance Company of New York, Highland
Falls, NY. Financial planning services provided by USAA Financial Planning Services
Insurance Agency, Inc. (known as USAA
Financial Insurance Agency in California), a
registered investment advisor and insurance agency. Financial advice provided by
Financial Advice Center as a service of
USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), and
USAA Financial Advisors, Inc., a registered
broker dealer. Credit cards provided by
USAA Savings Bank, other bank products
provided by USAA Federal Savings Bank,
both Member FDIC. Alliance services provided through USAA Alliance Services, LP.
Each company has sole financial responsibility for its own products. © 2008 USAA.
Member
Use of the term “member” does not convey
any legal, ownership, or eligibility rights for
XXXXX
88157
30
USAA MAGAZINE
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WINTER 2008
U SA A . CO M
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member snapshot
Spc. Vincent Hancock
USAA member since 2006
PHOTOGRAPH BY ISSOUF SANOGO/AFP/GETTY IMAGES
W
hen Vincent Hancock first picked
up a shotgun as a boy, he wanted to
shoot. “I was too small, so my dad
held the gun for me,” says the 2008 Olympic
gold medalist.
Now 19 and part of the U.S. Army Marksmanship Unit, Hancock garnered gold in men’s
skeet for his country — and for his comrades.
“Standing on the podium reminded me that I represent American soldiers everywhere,” he says.
Hancock caught the Army’s attention when
he was still in high school. At his first international competition in 2005, the 16-year-old won
four gold medals, three silver medals and broke
three world records. That year, he competed in
seven international events and medaled in all
of them.
Hancock spoke with a recruiter in his
hometown of Eatonton, Ga., and visited
nearby Fort Benning, where the team is based.
“These are the best training facilities and the
best shooters,” says Hancock, who enlisted
through the Army’s Delayed Entry Program as
a high school junior.
The Army helped Hancock mature as a competitor. Today his competition schedule takes
him to countries such as Belarus. Wherever he
goes, he tries to make personal connections
with his opponents. “I want them to know that
Americans are good people,” he says.
Hancock has his sights set on at least the
next five summer Olympics. He’ll be 39 for
the 2028 games. “If your goals are high, you’re
capable of anything,” he says. ■
Standing on the
podium reminded
me that I represent
American soldiers
everywhere.
USAA member Vincent Hancock,
a specialist with the U.S. Army
Marksmanship Unit, won gold in men’s
skeet at the 2008 Summer Olympics.
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