Our Professional Opinion on the USAA Fixed Guaranteed Growth Annuity
USAA Fixed Guaranteed Growth is a straightforward fixed annuity from a great insurance company, but the USAA name alone is not a good enough reason to buy it. You get a guaranteed rate for three, five, or ten years. That is useful if you want to know exactly how your money will earn interest. The part we dislike is limited access in the first year, and the three-year option requires a $50,000 minimum deposit.
USAA Life Insurance Company has an A++ (Superior) financial strength rating from AM Best. That is great and comfortably above our A− minimum. A great company rating, however, does not tell you whether its annuity has the best rate for your money.
USAA sells this annuity directly through its own retirement specialists. That captive-style channel focuses on USAA’s lineup, so it does not automatically give you a side-by-side comparison across insurance companies. USAA also distributes some other annuities through outside financial institutions. Compare the same guarantee period, deposit, withdrawal rules, and insurer strength with fixed annuities from other companies before choosing.
What We Like
- Great insurance company: USAA Life’s A++ rating is among the strongest available.
- Predictable interest: The interest rate is guaranteed for the initial term you choose.
- Three term choices: You can compare three, five, and ten years instead of settling for one timeline.
- Access after the first year: One withdrawal of up to 10% per year is generally available without a surrender charge.
What We Don’t Like
- First-year access stinks: An ordinary withdrawal in the first year can trigger a surrender charge.
- High minimum on the shortest option: You need at least $50,000 for the three-year contract.
- Shopping is limited through USAA: Its direct sales channel focuses on its own offerings, so you need a separate comparison to see alternatives.
- The initial rate does not last forever: You need to pay attention when the guarantee period ends.
USAA Fixed Guaranteed Growth Annuity Overview
Fixed Guaranteed Growth is a single-deposit deferred fixed annuity. It is a multi-year guaranteed annuity, or MYGA: the interest rate is guaranteed for the initial period selected when you buy. Your money is not invested in the stock market.
- Insurance company: USAA Life Insurance Company, or USAA Life Insurance Company of New York for New York contracts.
- Initial terms: Three, five, or ten years, subject to availability.
- Deposit: One initial deposit; minimums vary by term. The three-year option requires $50,000.
- Interest: A fixed rate for the chosen initial guarantee period; the offer can depend on your state and deposit amount.
- Withdrawals: After the first year, generally one withdrawal of up to 10% annually without a surrender charge.
- Surrender charges: An early withdrawal outside the allowance can incur a charge during the applicable surrender period.
Choosing a Three-, Five-, or Ten-Year Term
The three-year annuity makes sense when you want a shorter commitment and have at least $50,000 to deposit. Five years gives you a middle ground. Ten years locks in a rate for longer, which can be valuable if interest rates fall, but it can also leave you wishing you had more flexibility if rates rise.
Do not pick a ten-year guarantee just because the initial rate looks attractive. Match the term to when you expect to use the money, and compare the same term and deposit with other insurers. The rate is guaranteed for the selected period, but a withdrawal reduces the balance left to earn it.
Withdrawals and Surrender Charges
USAA allows one withdrawal of up to 10% of your money annually without a surrender charge after the first year. A first-year withdrawal or a later withdrawal above the free amount can trigger a surrender charge. The schedule depends on the term and state. Keep emergency money elsewhere; this is a lousy place to park money you may need in the first year.
Ask whether your contract includes a critical-care withdrawal and what conditions must be met. Even if a waiver applies, it only helps in the circumstances covered; it is not a substitute for money you can use whenever you want or for long-term care insurance.
If you plan to live on the interest, compare the income with an annuity offering a guaranteed lifetime withdrawal benefit (GLWB). Taking interest from this MYGA does not itself guarantee a paycheck for life. Compare the same deposit, income start date, and people covered.
If you want withdrawals but do not need lifetime income, compare an annuity that credits an upfront bonus to the actual account value. The larger starting balance can sometimes leave more money after the same withdrawals even at a lower rate; compare the accessible values and charges.
If you are in poor health or planning for a shorter retirement, also compare an annuity with a bonus that fully vests and is payable upon a qualifying death. It could leave more to your beneficiaries. The MYGA pays its applicable death benefit, but it does not pay years of interest that were never earned.
What Happens When the Guarantee Ends?
The original rate is guaranteed for your chosen term, not for life. USAA says the rate moves to the contract’s minimum guaranteed rate after the guaranteed period; the minimum is re-established at the end of a guarantee period for most states. For California and New York contracts, the minimum is fixed when the contract is issued. Renewal choices can depend on the endorsement and state.
We would review your choices before the term ends instead of letting the money sit without checking its rate. Ask what rate will apply, whether a new commitment is involved, and how long you have to make a decision.
What Happens When You Die?
Name your beneficiaries and ask USAA how the death benefit is calculated for your contract. If your spouse is your beneficiary, ask whether spousal continuation is available. When permitted, it can allow an eligible surviving spouse to continue the annuity instead of immediately receiving the benefit. Confirm the applicable beneficiary and contract rules before relying on that option.
Who Should Consider USAA Fixed Guaranteed Growth?
Consider comparing this annuity if you want guaranteed interest for a defined period, value USAA’s exceptional financial strength, and can leave the money alone through the first year. The three-year option is worth considering only if you meet its higher minimum and want that shorter term.
Look elsewhere if you need immediate penalty-free access or want to make frequent first-year withdrawals. If your main goal is guaranteed income for life, compare a GLWB with USAA’s option to use the savings to purchase an immediate annuity; the latter can change your access to the money used for payments.
What We Recommend
We like USAA as an insurance company. We would buy Fixed Guaranteed Growth only when its rate and access rules hold up against other strong insurers for the same term. If a different company meeting our rating standards offers a better guarantee and comparable flexibility, we would take the better offer instead of paying for brand loyalty.
Contact The Annuity Expert for free annuity quotes and a personalized comparison. We can help you compare the guarantees, access, and insurance companies before you decide.
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