Best Places

In This Issue
Credit Card Tips for Travelers 7
Best Tax Refund Uses 9
Break Free From Debt 19
m aga z i n e
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 ty
10
Best
Places
For Military Retirement
the top picks may surprise you
Page 20
Plus
Spring 2011
Economic Outlook
What’s ahead? PagE 14
We know what it means to serve.®
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Welcome TO USAA Magazine
«
message from the president and ceo
»
Moments of Truth
Photography by Paul Elledge
Moments of truth can arrive during life’s most
joyous events or in times of loss or economic
uncertainty. The purchase of your first home.
A fender bender in an already hectic day. The
birth of a child — or figuring out how to pay
for college. A storm that threatens your home.
A new deployment — or coming home. The
sudden realization that you need to get serious
about retirement planning.
You can count on USAA to be there for you in
your moments of truth. We’ve continued to build
our financial strength over the past 88 years — last
year returning $1.3 billion to our members and
customers in dividends, distributions, and bank
rebates and rewards — so there’s no question that
you and your family can turn to us during the next
88 years and beyond. Being there for you also
means expanding our service offerings to help meet
your changing financial needs. That’s why we can
help you manage debt. Save for college. Research,
buy and finance a home or car. Plan for retirement.
Protect your family and property — and save
money along the way.
Helping you toward greater financial security is
our mission. Whatever your stage of life, whatever
your financial need, you can turn to USAA in your
moments of truth.
Josue (Joe) Robles Jr.
Major General, USA (Ret.)
President and Chief Executive Officer
Whatever your stage of life, whatever your financial need,
you can turn to USAA in your moments of truth.
usaa.com
spring 2011 usaa magazine
3
Spring 2011 | Volume 47 Number 1
A Member’s Guide to Financial Security
USAA
This icon indicates you can find more information online
or via your mobile device.
m aga z i n e
Contents
5
Features
The front
6
Money
Life Insurance, Traveling
With Credit Cards
8
Invest
Saving for Retirement,
Tax Refunds
10
Auto
Umbrella Policies,
Adjusting Car Mirrors
12
Home
Roof Check, Prepare
for High Water
19
Jean Chatzky
Break Free From Debt
Mission
14
The New
Economic
Outlook
20
Best Places
for Military
Retirement
iN EVERY ISSUE
26 USAA ON THE GO
Quick, Easy, Everywhere
27
Member savings
Tools, Services, Offers
24
On the cover
10 Best Places
Photography by
© Waco Convention
& Visitors Bureau; Getty
Images; © 2011, Texas
A&M University;
University of Wisconsin,
Jeff Miller; Joshua Paul
Mail Call
USAA
Managing Editor
Suzanne McAuliffe
Production and Circulation Manager
Lisa Severson
Assistant Vice President,
Corporate Communications
Justin Schmitt
Failure
Is Not
an Option
USAA’s mission is to facilitate the
financial security of its members,
associates and their families through
provision of a full range of highly competitive financial products and services; in so
doing, USAA seeks to be the provider of
choice for the military community.
Editor
Lance Elko
Executive Editor
Alicia Miller
Senior Editor
Melissa Byrd
Assistant Editor
Ben Fromson
Copy Editor
Sarah Lindsay
Contributors
Sara Aase, Ron Bournes, Robert Brokamp,
Jean Chatzky, Lisa Fann, David Hanson,
Jane Hodges, Morgan Housel, Rex Moore,
Liz Seymour
Design Director
Larry Williams
Art Director
Lisa Summerell
Account Executive
Robin Sutton Anders
Assistant Account Executive
Carrie Pacifico
pacecommunications.com
Senior Vice President, Custom Content
Jacqueline Hughes Ponzoni
Chief Marketing and Sales Officer
Craig Waller
President and Chief Executive Officer
Bonnie McElveen-Hunter
To comment on magazine content or submit story ideas, call 800-531-8646, or log on to usaa.com and click Contact Us.
Strengthening
Resolve
I liked “Resolution
Solutions” [Winter 2010]
a lot. People tend to
start the new year with
great intentions, but as
the months go by, their
resolve falls by the
wayside. It’s great to
hear helpful tips on how
to be successful with
your goals — whatever
they may be.
Finding Your Way
Grateful Reader
The cover story
[“Seeking Direction,”
Winter 2010] was very
informative. It was full
of good ideas and
advice that make sense
in today’s uncertain
economic environment.
Many thanks for
posting my “gift” [“The
Greatest Gift,” Winter
2010] and for raising
awareness about organ
donation. I would also
like to thank all the
readers who contacted
me with kind wishes.
Staff Sgt. Lester Parham
U.S. Army
Kapolei, Hawaii
Danielle Bevilacqua
McGinnis
Apex, N.C.
USAA products and services are available only
in those jurisdictions where USAA is authorized by local law to promote and sell them.
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. For information about
reprinting material from USAA Magazine,
please write to Lisa Severson at the address
on Page 26. Requests must be in writing.
© 2011 USAA.
Tierney McNames
Long Beach, Calif.
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.
4 usaa magazine Spring 2011
800-531-USAA (8722)
USAA Magazine
In This Section
MONEY
A Member’s Guide to Financial Security
INVEST
auto
home
Joining
Ranks
Photography by Jeffery Salter
Marine Corps veteran
and USAA member
Ryan Gonzales is helping
to bring the nation’s
largest veterans
organization into a new
era. As creative director
for The American Legion
Department of Florida,
Gonzales is the man
behind Cyber Post 208,
the first Internet-based
Legion post. “We reach
out to our service
members in places like
Iraq and Afghanistan and
keep them informed
about what’s happening
back home,” says
Gonzales. “We want to
reach out to our younger
members via social
media, and we want to let
all of our veterans know
what they’re entitled to in
terms of VA benefits.”
Last year, The American
Legion — with 2.4 million
core members — and
more than a dozen
other military affinity
organizations named
USAA the preferred
provider of insurance
and financial
services.
Marine Corps veteran
Ryan Gonzales,
USAA member
since 1998
Talk To Us | TWITTER® | FACEBOOK® | E-MAIL | call | WRITE | For more details, go to Page 26.
usaa.com
Spring 2011 usaa magazine 5
the
FroNT
money
invest
auto
home
Life Insurance You Can Live With
Consider these alternatives for tough times.
Blame the recession for yet another casualty: life insurance. The number of households with individual
coverage is the lowest in 50 years, according to LIMRA, an industry research and consulting organization.
“People who lose their jobs tend to cut corners,” says Greg Blake, USAA’s executive director of Protection
Product Development. But if your family’s finances are already strained, leaving your loved ones without a
safety net would make things much worse. “You should consider life insurance that you own outside of your
job, especially if you have children,” says June Walbert, a Certified Financial Planner™ practitioner for USAA.
Here are some policies to consider when money is tight:
type
function
Annual
Renewable
Term
This may be the most affordable insurance, but use it as a short-term fix, since
premiums will increase every year. Consider choosing this type of policy if you’re out
of a job and can afford no other options.
Level Term
Choose level term as soon as you’re able. Term policies can be very affordable, and
“level term” means coverage and monthly premiums remain unchanged until the
policy expires. The right amount of coverage varies by individual but should pay off
any debts, such as a mortgage, and replace at least some of your income.
Professional
Group
Professional organizations may offer group insurance coverage to members. These
tend to be inexpensive and are worth checking out.
Servicemembers’
Group Life
Insurance
SGLI provides up to $400,000 of protection during active duty, Reserve or National
Guard service. For anyone eligible, this policy is truly one of the best values out there.
But set up an additional individual policy to protect insurability in case of injury or
health issues, or for the time when you leave the service. SGLI coverage expires 120
days after your service term has ended.
See additional legal information on Page 30.
30%
U.S. households with no life insurance,
up from 22 percent in 2004
Source: Trends in Life
Insurance Ownership
study, LIMRA, August 2010
Bonus Bucks: Use Wisely
Illustration by ULLA Puggaard
If you’re employed, you may have seen a jump in your
take-home pay — thanks to a reduction in Social Security
taxes instituted only for 2011. For many, the difference
is more than chump change. USAA Certified Financial
Planner™ practitioner J.J. Montanaro suggests
redirecting the extra cash as soon as possible so that
it doesn’t get lost in your everyday spending. Possible
uses? Shore up an emergency fund, pay down debt
or bump up your investments for the future.
Curious about how other provisions from
the tax law may affect your financial planning?
Go to usaa.com and search Tax Laws.
6 usaa magazine spring 2011
800-531-USAA (8722)
Smart Traveler
Five tips for using plastic on the road
Whether headed out for business, pleasure or
deployment, use credit and debit cards wisely
to avoid getting burned. Consider this advice:
1
Share your plans. Banks look out for purchases that vary from your usual spending
pattern. So, whether you rent a car in Tahiti or
make a $3 gas purchase in another state, your
action could trigger a fraud alert at your bank.
To avoid hassles, notify your card company of
your travel plans.
2
Factor in fees. Before deciding which cards to take on
your trip, study how much each
charges for cash advances, ATM
withdrawals and foreign transactions. A little homework can save
you money.
3
Photography by Gary Yeowell/Getty Images; Jetta Productions/Getty Images
Slim down your wallet.
Decide which cards to leave
behind and lock them up. You’ll
eliminate bulk and secure
your cards.
4
Say, “Local currency,
please.” When abroad, you’ll
be asked if you’d like to have
your card transaction processed
in U.S. dollars. Choose local currency instead. Why? Merchants
may tack their own currency conversion charges on top of your
card’s foreign-transaction fee.
5
Make copies, and store
them safely. If your cards
are lost or stolen, you’ll need
your card and bank contact
information handy so you can
act promptly. Scan or copy both
sides of the cards, but don’t
keep the copies in your luggage,
wallet or purse (in case of theft).
Instead, leave them with a
trusted friend or relative you can
contact immediately.
Before traveling with your card,
log on to usaa.com and search
Manage Travel Notifications to
let us know where you’re headed.
U.S. magnetic stripe credit cards are sometimes refused in countries that have converted
to newer chip-and-PIN smart card technology, which offers an additional layer of security.
But merchants who accept MasterCard, Visa and American Express are obligated to accept
your card. Notify your card provider if you have problems, and to be on the safe side,
carry another form of payment.
usaa.com
spring 2011 usaa magazine 7
the
FroNT
money
invest
auto
home
Oops, I Forgot to Save
for Retirement! Can you relate? Don’t despair.
If you think you’ve missed the boat and that
your retirement dreams are just, well, dreams, think
again. These strategies can help shift those regrets
into action.
»Save like mad.
Start saving $1,000 a month right now, and in 20 years,
it could grow to more than $400,000, assuming an
average annual return of 5 percent. Think you can’t
save that much? Not so fast — you don’t have to cut
your spending by that same amount. If you contribute
to a tax-deferred retirement account, it’s not costing
you as much out of pocket as you might think. If
you’re in the 25 percent tax bracket, for example,
a dollar in your retirement plan cuts your tax bill
by 25 cents. And if your employer matches half your
contributions, adding $1,000 a month to your account
may cost you as little as $500 in reduced spending.
»Spend smart.
Cut back on frills. Go for basic cable — or no cable
at all. Bring lunch to work. Borrow videos from the
library, and reduce the extras on your cell phone
service that could be costing you hundreds of
dollars a year. A picnic or candlelight dinner at
home sure beats the cost of a restaurant meal.
Shaving expenses on nonessentials could add up
to a savings of $500 a month — if invested at 5
percent, in 20 years that could be more than
$200,000 of retirement money.
»Choose a better life.
It’s not too late to make a change — even a big
one. Most professions don’t have age restrictions,
and anyone can go back to college to take courses
or finish a degree. And don’t forget, that hobby
you love could turn into supplemental income (and
retirement savings).
Call USAA at 800-472-8722 to discuss
investment opportunities with a licensed
retirement advisor.
This article was written by Robert Brokamp,
a Certified Financial Planner™ and retirement
professional for The Motley Fool®. It was reprinted
and edited with permission from The Motley Fool.
Investing in securities products involves risk, including possible loss of principal.
Certified Financial Planner Board of Standards Inc. owns the
certification marks CFP® and Certified Financial Planner™ in the
United States, which it awards to individuals who successfully
complete CFP Board’s initial and ongoing certification
requirements.
Examples given are hypothetical illustrations and not
necessarily an indication of the benefits or features of any
USAA product.
See additional legal information on Page 30.
*
*The due date for filing 2010 federal income tax returns is
April 18 instead of April 15 because of the Emancipation Day
holiday observed in the District of Columbia.
8 usaa magazine spring 2011
Reminder: April 18, 2011*, is the
deadline for regular 2010 IRA contributions. If you want to convert your IRA to
a Roth for 2010, your IRA distribution
must be either transferred directly to
your Roth IRA or deposited into your
Roth IRA within 60 days after receiving
it to avoid taxes and penalties. A special
provision for 2010 conversions: You can
defer and spread the tax over 2011 and
2012 if you took your IRA distribution in
2010 and will deposit it into a Roth IRA
by March 1, 2011.
Conversions from a Traditional IRA to a Roth
are subject to ordinary income taxes. Please
consult with a tax advisor regarding your
particular situation.
See additional legal information on Page 30.
800-531-USAA (8722)
Illustration by Ulla Puggaard
Mark Your Calendar
When it comes to tax refunds (or even bonus money),
think smart — and be creative.
Buy a bike.
Or some running
shoes. Or a gym
membership. Getting
in shape can help you
feel better about
yourself and save you
a lot in health
care costs.
Make a bet
with yourself.
Set a major goal (like
losing 10 pounds) to
accomplish by April 2012.
If you don’t meet your
goal by then, put your
refund into an IRA. But if
you do hit the mark, spend
the money on anything
you want.
Get your
affairs in order.
If you’re not prepared for an
untimely demise, lawyers — not
your family — will ultimately
enjoy the fruits of your labors.
Use the refund to hire someone to make sure your money
and property will go where
you want it to if you’re
not around.
Buy a new
computer.
Then turn it on and Google
the phrase how to avoid
a tax refund. That check
you’re getting back is, after
all, just your interest-free
loan to the government.
So review your W-4
at work.
think
retirement.
Sure, it’s a predictable
suggestion, but we’d be
doing you a disservice if
we didn’t emphasize that
investing in your retirement
is probably the best
possible use for
your refund.
Give it
all away.
Studies show that
people who focus on
generosity are better
off than those mired
in materialism.v
illustration by chris whetzel
Start a
side business.
“Spending Money on Others
Promotes Happiness,” Science,
March 21, 2008.
v
See additional legal
information on Page 30.
If you’ve wanted to turn
a hobby into a side business
but lacked the startup
capital, a tax refund could
be just what you need.
Remember, it takes money
to make money.
Save money on tax filing.
USAA members get
25 percent off the cost of
filing online with TurboTax®.
Go to usaa.com and search
TurboTax for details.
This article was written
exclusively for USAA by
Rex Moore of The Motley
Fool®, a writer and stock
analyst at fool.com.
spring 2011 usaa magazine 9
usaa.com
When It Rains,
FroNT
It Pours
the
Umbrella policies provide
extra protection for
on-the-road mishaps.
Auto
home
Most of us understand the need for auto and homeowners insurance,
but the less-familiar umbrella policy could be your best protection against
financial catastrophe.
A quick primer: Umbrella policies serve as extra liability protection
beyond the limits of auto, homeowners, rental home and even boat coverage. Umbrella policies kick in only after your other property and casualty
policies have been paid out.
Do you need one? Ask yourself what happens if you veer into another
lane on the highway, causing an eight-car pileup with damages that surpass
your auto coverage limits. Let’s say you’re found liable for $100,000 in
property damage and another $700,000 in bodily injury damages. Chances
are, your auto policy’s liability coverage won’t cover such a huge bill. But
with a $1 million umbrella policy, you’d be able to compensate the other
drivers without draining your own assets, which can include retirement
accounts, college savings and future wages.
Surprisingly, most umbrella claims are not the result of a dramatic
event. A 2010 USAA study shows that 85 percent of recent umbrella claims
are the result of routine auto-related accidents, including failure to yield
(52 percent), loss of control (14 percent) and rear-enders (11 percent).
Have two minutes to spare? Go to usaa.com
and search Umbrella to get a policy quote.
See additional legal information on Page 30.
Looking for adventure? do it safely!
Before heading out on your motorcycle this spring, make sure your
skills are up to speed. Hew Wolfe, acting deputy assistant secretary
of the Army for environment, safety and occupational health,
recommends riders renew training at least every three years.
To find a Motorcycle Safety
Foundation rider-training
program in your state, visit
msf-usa.org and click on
RiderCourse Info.
Flat chance
Do you know
what this symbol
represents? One
out of three drivers
doesn’t. Required
on all new cars
starting with the
2008 model year,
this safety alert
lights up on your
dashboard display
when one or more
of your tires
falls 25 percent
below the
recommended
pressure. But
don’t wait until
you see the light:
Check tire pressure at least once
a month. The
National Highway
Traffic Safety
Administration
estimates that tire
problems are a
factor in 660
fatalities and
33,000 injuries
each year.
Bonus! Proper inflation can improve gas
mileage by more than
3 percent, according
to an estimate by the
Energy Department.
Source: Schrader
International,
tpmsmadesimple.com
10 usaa magazine spring 2011
800-531-USAA (8722)
Illustrations by CSA Images/Getty Images; istock; Oliver Munday
money
invest
Mirror, Mirror
on the Car
Seeing is believing. And seeing
correctly is critical to safe driving.
To reduce blind spots — and
reduce your chances of a collision
— make sure your sideview
mirrors are properly adjusted.
1
driver-side mirror
Place the left side of your
face against the driver-side
window and adjust the mirror
so that you can barely see
the left side of your car.
2
passenger-side
mirror
Sit in the center of the front
seat (or lean as close to the
center as possible) and adjust
the mirror so you can barely
see the right side of your car.
»Vehicles approaching from
behind should be apparent in
your sideview mirrors before
they leave your rearview
mirror and in your peripheral
vision before they leave your
sideview mirrors.
TK
illustration by Kate Francis
1
2
Source: SAE International
usaa.com
spring 2011 usaa magazine 11
the
FroNT
money
invest
auto
home
Roof Review
Has the winter been hard on your house?
Here are five warning signs you may need to call a contractor.
»Shingles missing or damaged
The National Roofing Contractors Association
advises that buckling, cracking and bending shingles
be replaced. If your roof has lost multiple rows of
shingles, it may be time for a new roof. Also look out
for flashing that appears to be damaged or has pulled
away from the roof.
»Heavy ice buildup
Have you noticed lots of ice on your roof this winter?
Overly warm attics can cause rapid melting and
refreezing of snow. This produces heavy ice that
can dam up and harm the gutters and the roof. This
problem may require ventilation and insulation work
in the attic.
»Water stains on roof decking
Go to your attic and look up: Check the underside
of the roof for water stains and damaged wood,
especially around plumbing pipes, vents and chimneys.
Make sure the roof is completely sealed and that no
daylight penetrates through roof cracks.
»Soggy yard
Check the ground around your home’s perimeter. If
you have clogged or damaged gutters, excessive water
runoff can eventually harm foundations.
»Loose gutters
If gutters are growing loose from the strain of ice and
snow, repair or replace them. Otherwise, you risk water
damage to your home’s structure that can reveal itself
at any time — even after warmer weather arrives.
What do repairs cost? Replacing asphalt shingles
can run $1.25-$3 per square foot, but using moreexpensive roofing materials (cedar, slate, etc.) can run
$4-$8 per square foot. Gutter replacement typically
costs $3-$5 per linear foot. Fixing flashing on chimneys
and skylights costs $300-$500.
Renovation Ready Remodeling your home this spring? Choose projects that add the most
value today and help you recoup the cost when you decide to sell. Don’t forget: Review your homeowners
coverage when spending more than $25,000 — or 5 percent of your home’s cost, whichever is less.
Recouping Your
Investment
Minor kitchen
remodel
Bathroom
remodel
Master suite
addition
Sunroom
addition
Home office
remodel
National Average Cost
$21,695
$16,634
$108,090
$75,224
$28,888
Recouped Amount of Cost
72.8%
64.1%
63%
48.6%
45.8%
Source: Remodeling Cost vs. Value Report 2010-2011, Remodeling magazine
12 usaa magazine spring 2011
800-531-USAA (8722)
Photography By Steve Wisbauer/Getty images; Illustrations by Oliver Munday
Time is running out for certain U.S. military, foreign
service and intelligence service personnel who served overseas
to take advantage of the first-time homebuyer tax credit
extension. You must sign binding
For more information,
contracts by April 30, 2011, and close go to usaa.com and search
by June 30, 2011. Restrictions apply. Military Tax Credit.
With every inch of flooding, your house — and wallet —
suffer dramatically. Be prepared.
Are you ready if a
storm hits your area?
Flood maps have
recently changed, so
you may be in a flood
zone and not know
it. Also, keep in mind
that last year, about
25 percent of claims
paid by the National
Flood Insurance
Program were not in
high-risk areas. Call
USAA at 800-5318722 to find out
about the risks and
whether flood insurance is right for you.
Cost of Damages
(for a 2,000-square-foot house)
4 ft.
3 ft.
Illustration by Peter and Maria Hoey
2 ft.
1 ft.
6 in.
Source: floodsmart.gov. Estimates are for illustrative purposes only and should not
be used to estimate any actual flood loss. A flood-certified insurance adjuster
making a room-by-room, item-by-item detailed estimate of covered flood damage is
the only estimating method approved by and acceptable to the National Flood
Insurance Program. These estimated costs are based on an average U.S home of
usaa.com
$74,580
$68,100
$62,880
$52,220
$39,150
2,000 square feet, built on a slab and with typical household items, including
furniture. Costs vary from state to state and home to home.
Flood insurance provided by USAA General Indemnity Company, San Antonio, TX,
through an arrangement with the Federal Emergency Management Agency. The
Federal government has financial responsibility for underwriting losses.
spring 2011 usaa magazine 13
14 usaa magazine SPRING 2011
800-531-USAA (8722)
Glass half empty? Half full?
The experts weigh in on jobs, housing … and what’s next.
By Morgan Housel, The Motley Fool® for USAA
H
ere’s the good news: We’re moving in the right direction. The
economic devastation of 2008 and 2009 was, more than likely, the
worst of this historic downturn. As we move into 2011, the question
now is what this nascent recovery will bring us. Here are some things to expect.
Help Wanted
photography by Andrew Unangst/Getty Images
The old quip that “a recession is when your
neighbor loses his job; a depression is when you
lose yours” has rung true for tens of millions of
Americans. There’s no way to put it gently:
We have a jobs crisis.
Sadly, the pain of this jobs crisis will likely be
with us through 2011. “A recovery from a financialcrisis recession is inherently more difficult than a
recovery from a regular recession. The effect on
jobs is dismal. It will likely take until 2013 to recoup
the jobs lost to the recession as we struggle with
subpar growth,” says Diane Swonk, economist,
usaa.com
author, and advisor to the Federal Reserve Board
and White House Council of Economic Advisers.
“The only silver lining is that it could have been
worse, especially in light of the magnitude of the
crisis, but that provides little solace for the record
number of people who have already been unemployed for a record length of time.”
Why has it taken so long to restore jobs? There
are three big reasons. First, employers don’t have
enough business — or they’re too frightened — to
create significant new positions. Job growth is
returning, but it’s very slow. Meanwhile, population growth still brings some 100,000 new job
SPRING 2011 usaa magazine 15
economic
outlook
“the jobs that are open don’t have
applicants that are qualified
to do them.” — Bill Clinton, former U.S. president
A third, more controversial reason is that
today’s job searchers may not be qualified for the
jobs that are available — a theory called “skills
mismatch.” Former President Bill Clinton elaborated on this during a TV appearance last year,
saying, “For the first time in my lifetime, literally in
my lifetime, when coming out of a recession,
posted job openings are going up at twice the rate
of job hires.” The chief culprit for this, he said, is
that “the jobs that are open don’t have applicants
that are qualified to do them.” It takes time to
retrain workers for a new economy.
We’re digging our way out of this jobs crisis,
but it’s going to be a long
and painful slog for many.
“The American job machine is
in the repair bay,” says Clark
Howard, a nationally syndicated radio talk show host and
USAA member. “I expect that
a meaningful, legitimate
Clark Howard
recovery is in the range of four
On Jobs
to nine more years.”
If there’s a ray of hope, it’s the
recent two-year extension of the Bush-era tax cuts.
In light of the extended cuts, most economists have
raised their forecast of 2011 economic growth
considerably, to around 3.5 percent. Many think this
could help create jobs faster than some imagine.
But not everyone is optimistic. While the tax-cut
extension could fuel the year ahead, some worry it’s a
U.S. Unemployment rates over time
U.s. Unemployment Average
25%
20%
15%
10%
5%
0%
Great
Depression
Historical
Events
1920
1930
WWII
1940
Baby
Boom
Economic
Stability
1950
1960
Man on
the Moon
1970
Inflation
Cold War
Ends
Dot-Com
Boom
1980
1990
2000
Bailouts
2010
Sources: U.S. Census Bureau, Bureau of Labor Statistics
16 usaa magazine SPRING 2011
800-531-USAA (8722)
photography by Yury Kuzmin/Getty Images; courtesy of Carlos Gutierrez; courtesy oF Clark Howard; by Travelif/Getty images
seekers into the work force every month. The
economy has to create enough new jobs to employ
these new workers before making a dent in the
ranks of the unemployed. As 2010 wound down,
the economy was barely creating enough jobs to
keep up with population growth, causing the
unemployment rate to stagnate. Many economists
expect more of the same in 2011.
Second, millions of homeowners owe more on
their mortgage than their house is worth, essentially
prohibiting them from moving
to where the jobs are — a
problem economists call
strained labor mobility.
“Americans will have to
increase their mobility. Many
of tomorrow’s jobs won’t be
where yesterday’s jobs were,”
Carlos Gutierrez
says Carlos Gutierrez, former
On Jobs
CEO of Kellogg Co. and
secretary of commerce under
former President George W. Bush. “Many people
are living in the wrong places. Housing policies,
real estate company programs and retraining
centers should take this into account.”
shortsighted fix with negative long-term implications. “The economic value of extending the Bushera tax cuts for high-income earners is, at best,
questionable, especially considering the amount the
extension will add to the national debt,” says Ali
Velshi, chief business correspondent for CNN.
photography courtesy of RoberT Shiller; Courtesy of USAA; By Travelif/Getty images
Real Estate Reality Check
This recession began in the housing market and
won’t end until housing regains its footing. Most of
2010 brought signs of housing optimism as the
federal government’s tax credit for first-time
homebuyers drew people into the market, helping
to lift prices. The idea was simple: Give people a
cash incentive to purchase a house, and they’ll buy
in droves. And it worked marvelously while it lasted.
But it was temporary. With the housing credit
now expired, predicting what home prices will
do in 2011 is a very tricky matter, even for the
experts. “It is very hard to forecast now, since the
homebuyer tax credit has no
precedent,” says Robert Shiller,
a Yale economist and worldrenowned housing expert.
“We do see signs that confidence
has been coming back a bit, but
as of now these signs are not
persuasive evidence against
Robert Shiller
further price declines.”
On Housing
The strength of housing
ultimately boils down to two
basic factors: the number of buyers — that’s demand
— and the number of available homes for sale —
that’s supply. As Shiller notes, forecasting demand is
exceptionally difficult heading into 2011 because the
This recession began in the
housing market and won’t end
until housing regains its footing.
expiration of the housing credit has no historical
precedent. Standard prediction models get thrown
out the window. Forecasting supply is no easy matter
either. One might think measuring supply is simply a
matter of counting the number of “for sale” signs. But
it gets tricky when what economists call “shadow
inventory” is factored in. Shadow inventory consists
of homes that should be for sale but haven’t yet hit the
market. It includes foreclosed homes that banks
usaa.com
6 Tips to live by in 2011
Ready to take control of your economic
future? Our money pro is here to help.
Scott Halliwell is a Certified
Financial PlannerTM practitioner
with USAA and an advisor on
debt reduction, investing and
saving for retirement. Here are
some of his tips.
1
Focus on the basics. There was a lot of press
coverage in 2010 about Americans going back to
basics by paying off debt and increasing savings. I
personally think this strategy is great for 2011 as well.
Even if your personal situation begins to look more
stable this year, keep up the frugality.
2
Expect the unexpected. Prepare for
a possible job loss by tightening up your budget
now. Then start directing any excess money into a
large cash reserve. I always recommend maintaining
cash reserves equal to three to six months of committed expenses — even when jobs are stable.
3
Don’t sink further into debt. If you were
one of the unfortunate millions of people to lose
your job during the recession, don’t keep living like you
didn’t. I know cutting back hurts, but running up debt to
sustain a lifestyle you can no longer afford will only
make things worse.
4
Reconsider homeownership. Over the short
5
Can’t sell your home? Consider adding two
term, homeownership may not be all that it was
once cracked up to be. With experts predicting home
prices will fall further in 2011 or, at best, stay flat for
the foreseeable future, it really is worth it to secondguess the homebuying decision.
new titles to your life: landlord and renter. This
approach can allow you to postpone selling until the
market recovers in your area.
6
Keep cash safe. The deterioration of interest
rates on safe places for cash — savings
accounts, money markets and CDs — has led many
savers to invest in riskier options. For cash reserve
funds, this is usually a very bad idea. Remember,
these aren’t your “get rich” funds; they’re your “stay
rich” funds. Avoid the temptation to get greedy and
put them in harm’s way.
SPRING 2011 usaa magazine 17
History has a remarkable
tendency to deliver prosperity
after misery.
One reason the housing bubble got so out of
control was that many people bought homes for the
wrong reason. For most of the last decade, houses
were seen not as secure and affordable places to live,
but as assets bought solely for making money. With
housing’s outlook so uncertain, buying for the right
reason — because you need a place to live and can
afford what you’re buying — has never been as
important as it is today. “People still largely believe
that home prices cannot fall and will go up dramatically in the long run,” Shiller says. “But in fact, as
real estate economists pointed out a half-century
ago, technological progress in the construction
industry, and the willingness to keep increasing
supply, puts downward pressure on home prices,
an important fact that has been almost forgotten.”
18 usaa magazine SPRING 2011
Daring to Be an Optimist
“This is the greatest country in the world,”
Gutierrez says. “We are still the most innovative,
the most optimistic, the country with the most
freedom. It’s ours to lose.”
As painful as the past few years have been, one
maxim remains true: This, too, will pass. History
has a remarkable tendency to deliver prosperity
after misery. The Great Depression and World
War II were followed by the economic success of
the ’50s and ’60s. The great inflation of the early
’80s was followed by one of the most prosperous
booms this country has ever seen.
“There is always reason
to be hopeful,” Swonk says.
“We have survived worse and
will survive this. Moreover, we
are on the verge of the next
phase of the tech revolution,
which will help even the least
educated gain access to the work
Diane Swonk
force eventually by innovating
On outlook
around skills shortages.”
Booms tend to follow busts.
Busts tend to follow booms. If the historical trend
of downturns holds true, the coming decade will be
much more prosperous than the last. Digging our
way out of this bust will be a
challenge, but it’s that same
challenge that will plant the seeds
of a new era of prosperity. In his
book The Rational Optimist,
Matt Ridley closes by noting,
“The 21st century will be a
magnificent time to be alive.
Matt Ridley
Dare to be an optimist.” »
On outlook
Morgan Housel is a columnist for Fool.com. He
wrote this article exclusively for USAA. His
coverage of the financial crisis won a 2010
Best in Business award from the Society of
American Business Editors and Writers.
Certified Financial Planner Board of Standards Inc. owns the
certification marks CFP® and Certified Financial PlannerTM in
the U.S., which it awards to individuals who successfully
complete CFP Board’s initial and ongoing certification
requirements.
The views and opinions expressed in this article are solely
those of the individuals and do not reflect the opinions of
USAA and its affiliates.
800-531-USAA (8722)
photography by Yury Kuzmin/Getty Images; courtesy of Ali Velshi; courtesy of Diane Swonk; Courtesy of Matt Ridley
economic
outlook
haven’t listed for sale, or homes owned by those who
want to sell but are waiting for a better price. At the
end of 2010, there were roughly 4 million homes
officially for sale nationwide. Estimates of shadow
inventory, however, could potentially increase that
figure by an additional 5.6 million homes. Some
economists and analysts think that could drag home
prices even lower through 2011.
“There are a lot of people
who probably want to sell and
know that this isn’t an ideal time
to put their house on the market,
with all of the unsold inventory and the foreclosures added
every month,” says Velshi.
Ali Velshi
Shiller elaborates: “Shadow
On Housing
inventory is still a problem; it
could take years to be cleared
out. But even that fact does not rule out a possible
continuation of the rebound. These are just exceptionally uncertain times.”
Velshi agrees, adding that prices may already be
low enough to handle the additional supply.
“The market has priced this all in, and interest rates
still remain a more important variable. If, like me,
you think interest rates are more likely to increase
than decrease, then buying now trumps waiting for
proven home-price stabilization.”
Expert Advice
If you owe, here’s what you should know.
By Jean Chatzky
About a year ago, I did a money makeover for a friend and her husband. I recommended
that they boost retirement savings, look into disability insurance and reduce debt. When I saw her
last month, she said, “The debt — we paid it all off.” Her smile was so huge you would have thought
she won the lottery. That’s what getting rid of debt can feel like. Here are a few suggestions for
tackling debt in today’s difficult environment.
photography by David Yellen
» Refinance your mortgage. At the
end of last year, a 30-year fixed-rate mortgage was
around 5 percent, and a 15-year fixed was a half
point lower. But sooner or later, rates will rise,
and if you don’t act while the window is open,
you’ll wish you had locked in a mortgage that
would allow you to pay off your house for a lot
less money.
So when should you consider refinancing? First, if you can save significantly on your
mortgage rate. Generally, a difference of threequarters of a point could be enough in many cases
to consider refinancing. Second, if you’ll be in the
house long enough to recoup your closing costs.
In 2010, the average closing costs on a $200,000
house were $3,741, according to bankrate.com.
You can figure out if it makes sense to do the deal
by dividing your estimated closing costs by the
dollar difference between your old and new
monthly rates. The answer is the number of
months you must stay in the house for a refi to
make sense. And third, if you can swap from a
30-year loan to a 15-year without seeing a big gain in
your monthly payment. You could save a boatload
of interest. Before you make any move, check your
current mortgage to see if you are subject to any
early payoff penalties or other restrictions.
» Consider a balance transfer.
One way to lower your credit card interest:
Do a balance transfer. First, call your credit card
company and ask if they’ll lower your rate. If not,
go to lowcards.com and look for a card with a low
teaser interest rate (aim for 0 percent with a long
duration — 12 months is better than six) and a
usaa.com
Jean Chatzky is an
award-winning journalist
and best-selling author.
She has written this
personal finance column
just for USAA members.
good balance-transfer fee (say, 3 percent). Then
make sure what you’ll save in interest exceeds
what you’re paying in balance-transfer fees.
»look into income-based
repayments for federal
student loans. Not a week goes by that I
don’t hear from students or their parents about
six-figure debts. For them, there’s a new
solution. It’s called income-based repayment,
and it caps your required monthly payment
at a percentage of your income — less
than 10 percent for most people.
Moreover, any debt remaining after 25
years of income-based repayment
will be forgiven, in most cases.
And if you work in a helping
profession (for a nonprofit or
for the government, as a
teacher, or doing service
time in the Peace Corps,
for instance), your
student loan debt is
forgiven after 10 years.
For more information
and to see if you qualify,
visit ibrinfo.org. »
This article is provided for
informational purposes only and
is not intended to substitute for
obtaining professional financial advice.
Please thoroughly research and seek
professional representation before acting on
any information you may have found in this
article. This article in no way attempts to
provide financial advice that relates to all
personal circumstances.
Spring 2011 usaa magazine 19
When it’s time to move on from your military career,
you’ll be faced with choices and more choices.
Likely at the top of your list: where to live.
P
erhaps you’ve seen these happy words on a bumper
sticker: “Retired — and loving it.” It’s a statement most of us
hope to be able to make. For some, retirement comes at 65.
But the average age is 42 for enlisted military personnel
and 46 for officers, leaving plenty of time to discover a new career
through education or taking military skills to the private sector.
Whatever the age, a happy retirement doesn’t just magically begin
the day you can stop setting your alarm clock. It starts with a plan.
To help you choose the best city for your retirement, USAA
teamed up with military.com, the largest military and veteran
membership organization, and Sperling’s BestPlaces, a research
group responsible for more “best places” studies and projects than
any other single organization. A wide variety of factors were
considered, including employment, health care, military base
proximity, educational opportunities, real estate prices, cost of living
and state tax structure for federal retirement pay.
We talked to USAA members who have retired from the military
in three of the top 10 cities to get the locals’ scoop on what makes
these towns so desirable. Their insight may come in handy when it’s
time to make this important choice for your own retirement.
Padrón on the Waco
Suspension Bridge
over the Brazos River
By David Hanson » Illustration by Lonnie Busch
Photography by Allison V. Smith and Joshua Paul
20 usaa magazine spring 2011
800-531-USAA (8722)
1 Waco, Texas
Military Installation
Fort Hood (46 miles)
Federal Pension Taxed No
VA Hospital Proximity Local
Education
One four-year college
Waco’s reasonably priced
housing helps military retirees
find an affordable home. The
area has low unemployment, a
strong economic base and
Baylor University, all of which
offer solid opportunities to
start a new career.
why Waco wins
Erasmo PadrÓn | Staff Sergeant, U.S. Marine Corps, Retired |
Member since 2000
“Waco was my last duty station,” says 42-year-old Erasmo
Padrón. “I got transferred to the Ordnance Maintenance
Company, a Select Marine Corps Reserve unit, where I was
personnel administration chief until I retired.”
Why did he choose to stay? “Moving around so often for so
many years, you really build a close-knit community with the
other families stationed at your base,” Padrón says, “and we’ve
got that here in Waco. Even though I’m retired, it feels like a
small Marine family community.”
Padrón works full time with a private contracting firm that
supports military operations. He enjoys remaining connected to
the military. It makes for a great second career. Padrón also has
interests outside of work: “I’m taking classes at McLennan
Community College. I don’t know what I want to be when I grow
up, but I’ve got plenty of time!”
There’s another educational opportunity, specifically for
Texans, that Padrón can access for his family. “The Hazlewood
Act allows me to transfer my GI Bill education credit hours
toward my sons’ college expenses,” he says.
Padrón and his family live 20 minutes from downtown,
where new condos and restaurants are filling historic
building spaces in a broad initiative to revitalize the urban
center. “Waco’s not too big and not too small, and it has a
college-town feel to it,” he says. “We’re right in the middle of
the state, so we’ve got leaves changing in the fall, and the
winters don’t get too cold. It does get hot, but not too hot.
It’s Texas, man!”
usaa.com
Spring 2011 usaa magazine 21
10 Best Places for Military Retirement
City, 2 Oklahoma
Okla.
Military Installation
Tinker AFB
Federal Pension
Taxed Yes
VA Hospital Proximity
Local
Education
13 four-year colleges
Military Installation
Fort Hood (89 miles)
Federal Pension
Taxed No
VA Hospital Proximity
Within 66 miles
Education
Two four-year colleges
Housing in Oklahoma City
is affordable, and the
economy is solid, even in
these challenging times.
The University of Oklahoma,
located in Norman about 20
miles south of downtown,
provides educational and
cultural opportunities.
3 Austin/Round
Rock, Texas
College Station/
4 Bryan,
Texas
Military Installation
Fort Hood (57 miles)
Federal Pension
Taxed No
VA Hospital Proximity
Within 58 miles
Education
Nine four-year colleges
Austin has earned a
reputation as a hip and
quirky place, in part due to
the energy of the 50,000
students at The University
of Texas. Arts, culture,
restaurants and mass transit
are good draws for those
considering whether to call
the city home.
The College Station/Bryan
area has a low cost of living,
and the economy is stable.
Sports fans are well-served
here, thanks to the presence of
Texas A&M University. College
Station is a good central
location for access
to Austin (85 miles),
Houston (100 miles)
and Dallas (150 miles).
5 Harrisburg/
Carlisle, Pa.
Military Installation
Carlisle Barracks
Federal Pension
Taxed No
VA Hospital Proximity
Within 29 miles
Education
Six four-year colleges
The Harrisburg/Carlisle area
is about 100 miles west of
Philadelphia, so plenty of
cultural activities are within
reach. Harrisburg also boasts
low crime rates, quality health
resources and affordable
home prices.
learn more For additional
facts on the cities in the top 10 list,
visit usaa.com/bestplaces.
22 usaa magazine Spring 2011
800-531-USAA (8722)
hometown harrisburg
Sheryl Rozman | Lieutenant Colonel, U.S. Army, Retired | Member since 1980
Sheryl Rozman lives far from her hometown in Oregon. She was sent
to Fort Indiantown Gap in Pennsylvania for helicopter flight instruction
in 1984. That’s where she met and fell in love with her instructor, Gerry
Hess. They married in 1985 and set up residence in Harrisburg.
“We are both retired from Army aviation now,” says Rozman. “Gerry
continues instructing at Fort Indiantown Gap, where he works for a
private contractor training aviators in flight simulators. He spent 33
years as a helicopter pilot and instructor, so he has plenty to share with
today’s aviation troops. Also, having so many private governmentcontracting firms in central Pennsylvania keeps a lot of retired military
folks in the area. We have a fairly large military community of friends.”
The 54-year-old Rozman stays busy in her retirement. “I’ve been
able to get very involved as a volunteer. My teaching degree enables
me to substitute teach at the Episcopal school that my children attended,
and I am also very involved with volunteer work at the American Cancer
Society, as well as at the Fort Hunter French and Indian War site.”
The city of Harrisburg is surrounded by historical sites and is within
easy driving distance of major cities such as Pittsburgh, New York,
Baltimore and Washington, D.C. Harrisburg maintains an enjoyable
small-town feel and provides excellent post-secondary educational
opportunities through numerous four-year colleges in the area.
Another benefit for retired military is the availability of the health
clinic and commissary at nearby Carlisle Barracks. “The town hasn’t
really changed much over the last 25 years,” says Rozman. “It has
grown some, as towns do, but the majority of our ‘freeways’ are still
two-lane roads.”
Rozman and Hess at
Fort Hunter along the
Susquehanna River
in Harrisburg
6
Angelo, Texas
San
Military Installation
Goodfellow AFB
Federal Pension Taxed No
VA Hospital Proximity
Within 125 miles
Education
One four-year college
San Angelo has a distinct
Western character, along
with Spanish/Mexican
influences. Home prices and
unemployment are low. The
city’s Angelo State University
has been named one of
Princeton Review’s Best
Colleges in the U.S.
7 Madison, Wis.
Military Installation
Fort McCoy (91 miles)
Federal Pension Taxed No
VA Hospital Proximity Local
Education
Two four-year colleges
A healthy lifestyle and plenty
of recreational opportunities
are key for residents of
Madison, home of the
University of Wisconsin. Home
prices are higher than in other
cities on our list but have held
their value well during the
recent downturn.
8 Pittsburgh, Pa.
Military Installation
Carlisle Barracks (144 miles)
Federal Pension Taxed No
VA Hospital Proximity Local
Education
25 four-year colleges
Pittsburgh still benefits from
the infrastructure put in place
during its former life as an
important industrial hub.
usaa.com
Today the city offers strong
cultural opportunities and
three professional sports
teams. Its mature, affordable
neighborhoods provide plenty
of housing choices.
Tucker at
Dinosaur
Bar-B-Que in
Syracuse
Orleans/
9 New
Metairie/Kenner, La.
Military Installation
New Orleans NAS
Federal Pension Taxed No
VA Hospital Proximity
Local
Education
11 four-year colleges
The culture of New Orleans
is one of the most interesting
in the world. Military retirees
who make this their home
will never be at a loss for
dining choices, music and
arts venues, or sporting
events. While some areas
continue to recover from
Hurricane Katrina, there
are many housing
options available.
10 Syracuse,
N.Y.
Military Installation
Fort Drum (80 miles)
Federal Pension Taxed No
VA Hospital Proximity
Local
Education
Eight four-year colleges
Residents of Syracuse enjoy
a low cost of living, with a
stable economy and affordable housing. Syracuse
University offers a wealth of
educational and cultural
opportunities.
Staying in Syracuse
Darol Tucker | First Sergeant, U.S. Army, Retired | Member since 1998
In a part of the country where winters can be harsh, summers
had better offer a consolation worth waiting for. In Syracuse and
upstate New York, they do. This area packs plenty of merriment
into a festival-filled summer and fall calendar that 50-year-old
Darol Tucker partakes in wholeheartedly.
Post-military education kept Tucker in Syracuse. “After being
transferred to a Syracuse station, I started taking college courses
and established roots in town. I didn’t want to go anywhere else,
and by the time I’d earned my bachelor’s degree, I had established
a good network here. Now I work for the IRS as a revenue officer.”
What else does he like about living here? “Syracuse still feels
like a small, friendly town,” says Tucker. “There’s a lot going on.
We have the Taste of Syracuse festival, where all the restaurants
in town have a booth and wine sellers offer tastings. There’s the
blues festival, the German festival, the Italian festival and the
African-American Juneteenth Festival.”
Tucker adds, “The cost of living is great here, and we have a
huge VA hospital, which makes a big difference. There’s also a
big American Legion presence, so the military community is
strong. I have extended family in The American Legion Post 404
in Vernon, N.Y., so I had some connections in the area.”
And the winters? “You know, I don’t like it when it snows all
the way up to Mother’s Day, but we get four very distinct seasons
and they all have their bonuses,” Tucker says. “Some people love
snowmobiling in the Adirondacks in the winter. I prefer taking my
Harley up there when it’s warm or when the fall colors are
changing. There’s something for everyone.” »
How soon can you retire? USAA’s online tools can help you figure
it out. Go to usaa.com and search Retirement Calculators.
Spring 2011 usaa magazine 23
Is Not an
Gene Kranz,
the man behind
Apollo 13, is still
on a mission.
By Liz Seymour
Photography by Brent Humphreys
Ever since his wife, Marta, started the
tradition of making Kranz a vest to wear
for each new mission, he’s been known
for donning the iconic white, five-button
vests. A similar Marta original is on
display at the Smithsonian National Air
and Space Museum.
24
usaa magazine Spring 2011
800-531-USAA (8722)
member profile
Although he has been retired from NASA
since 1994, USAA member Gene Kranz,
with his distinctive flattop and chiseled profile,
is still recognizable as the unflappable man who
helped put America on the moon and brought
the astronauts of Apollo 13 safely home.
T
he Presidential Medal of Freedom honoree, bestselling author and former flight director of NASA’s
Mission Control has assigned himself a mission: Keep
the NASA values — discipline, morale, toughness
and competence — alive. During the years spent
working in the high-risk, high-stakes manned space
program, he added teamwork, courage and vision to his list
of values. These principles are key to the message he
delivers in his frequent speaking engagements, whether he’s
addressing elementary schoolchildren or Green Berets.
“I was blessed to have and work for great
leaders, starting with my mother, who was widowed
young in an era before life insurance,” Kranz says. “She
operated a boarding house to support her three children,
and the young soldiers who stayed there became my first
heroes. From my mother, I learned integrity.” Later, he
would learn teamwork and trust from his Air Force flight
instructor, passion and integrity from his flight-test
director, and the ability to live with risk and make risk
pay off from the legendary Chris Kraft, NASA’s first flight
director. “I want to pass all those lessons on,” he says.
In 1956, as a 23-year-old Air Force pilot
trainee, Kranz qualified to fly the F-86 Sabre, the
Photography courtesy of NASA
hottest fighter jet of its time. Within two years, he
became a lead flight-test engineer, adapting decoy
systems to the B-52. Then, in 1960, he answered an ad in
Aviation Week and joined NASA’s year-old Project
Mercury, inaugurating a career in the space program that
would last more than three decades.
If there is a single mission that stands out in
Kranz’s long career, it is Apollo 13. After an onboard
explosion in a spacecraft headed for the moon, the
astronauts and the Mission Control team spent four
white-knuckle days in April 1970 improvising what
would ultimately be a safe return home. In 1995, actor
Ed Harris played Gene Kranz in the movie Apollo 13
and introduced the statement “failure is not an option”
into the public vocabulary.
Like Apollo 13, not every mission in life comes
out the way it was planned, says Kranz. “The challenge
then becomes one of leading the team to find acceptable
alternatives that salvage as much of the mission as
possible. Often, like in Apollo 13, it comes down to
the primary objective of saving the crew. It’s at times
like that when a great team works best,” says Kranz.
“Give us problems, and we’re happy. When things get
tough, when somebody needs a hand, we’re there for
each other.”
Ten years ago Kranz added “best-selling
author” to his resume when Failure Is Not an Option,
a memoir of his years at Mission Control, was published. Newly retired, Kranz had been busy building an
acrobatic biplane in his garage when an agent persuaded
him to put his memories on paper. The biplane never
flew — it was damaged in a hurricane — but the book
rose to the top of the best-seller charts and remains
a must-read for anyone interested in learning
about the space program. It turns out that for
Gene Kranz, even
To watch Gene Kranz talk about
in retirement,
his career in the space program,
failure is not
go to usaa.com and search Apollo 13.
an option. »
Houston, We’ve Got a Policy
In 1958, the only space program Gene and Marta Kranz were
thinking about was how to make room for their growing family. The couple bought a car, and since Kranz was
recently discharged from the Air Force, they insured it with USAA.
Kranz’s half-century-plus relationship with USAA boils down to one thing: “Trust,” he says. “When [Apollo 13
Flight Commander] Jim Lovell called down to say, ‘Hey, Houston, we’ve got a problem,’ all we had to go on was a
great team and a lot of trust. That’s the way I feel about USAA.”
usaa.com
Spring 2011 usaa magazine 25
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Got an iPad®? Now you can use it for your USAA transactions.
Review your savings balance? Check. Transfer funds? Check. Place a
trade? Check. Get proof of insurance? Check. You can also read articles about managing your money, watch videos and more. Get started
by downloading the USAA app for iPad — for free — from iTunes®.
For info, go to
usaa.com/iPad.
Putting Brats Back in Touch
Reconnect with a new online tool.
For the once-itinerant military kid, finding long-lost friends may get
easier. BratConnect™, a USAA-sponsored Facebook™ application that
lets you search for military brats by name, base or posts where you lived,
is now being tested. That means you have a chance to try it out and
offer feedback that could help make this online community a success.
Go to bratconnect.com, nose around, and e-mail bratconnect@usaa.com
with your questions, suggestions or technical concerns. But don’t
delay — capacity is limited to the first 25,000 users during testing.
Check out
bratconnect.com.
Vote the Rock!
Check out songs by USAA members and pick your favorites.
USAA’s fourth annual Garage Band Playoff, sponsored by USAA’s
Auto Circle™ and Home Circle™, starts Feb. 25, featuring weekly
musician matchups until one artist is crowned champion. Go to
garagebandplayoff.com to vote for your favorite songs by USAA
members, download free MP3s and enter to be one of five to win an
iPad®. The winner will be featured in a future issue of USAA Magazine.
Go to
garageband
playoff.com.
No purchase necessary to enter or win. Purchase of a product will not increase
your chances of winning. See official rules at garagebandplayoff.com.
See additional legal information on Page 30.
Talk to Us
There are more ways than ever to tell us what’s on your mind.
Twitter®
Facebook®
E-Mail
Call
Write
Twitter users
can follow USAA at
twitter.com/usaa.
Join our Facebook community.
Log on to
facebook.com/usaa.
E-mail us. Log on to
our website at usaa.com
and click Contact Us.
Call us. We’d love
to hear your feedback.
800-531-8646
USAA Magazine, Mail Call,
E-1-E, 9800 Fredericksburg Road,
San Antonio, TX 78288-3533.
Please include a daytime
telephone number.
26 usaa magazine Spring 2011
800-531-USAA (8722)
Photography by amana productions inc./Getty Images; Jon Feingersh/getty images; PURESTOCK/GETTY IMAGES; Richard Newstead/Getty images
Investments/Insurance: Not FDIC Insured • Not Bank Issued, Guaranteed or
Underwritten • May Lose Value
To take advantage of mobile.usaa.com or USAA apps, you must be registered on usaa.com.
System availability, account access and trade executions may vary due to network
See additional legal information on Page 30.
availability, market volatility and other factors.
Exclusive Products and Services for USAA Members Only
USAA Magazine | Spring 2011
insurance
Banking
photography by Larry Dale Gordon/getty images
Moving
Made Easy
Simplify your
homebuying or
renting experience
with Home Circle.
investments
Financial Planning
shopping & discounts
Moving can be exciting, complex and confusing, but with
Home CircleTM you will have all the tools and services you need.
From professional guidance to helpful calculators, powerful property search tools, and financing and insurance options, it’s all in
one place — Home Circle.
» Search for your next home with Home Circle’s property search,
available online or on the USAA app for smart phones.
» Receive up to $3,100 cash back for buying and selling your
home through a USAA MoversAdvantage® Preferred Real
Estate Agent.1
» Save an average of $1,200 in mortgage points and lender fees
when you finance your next home with USAA Bank.2
» Protect your home and belongings with competitive insurance,
including homeowners, renters and life.
It’s easy. It’s free.3 And it’s USAA.
Go to homecircle.com or call
800-531-HOME (4663).
See additional legal information on Page 30.
usaa.com
spring 2011 usaa magazine 27
Member
Savings
Knowing
more
begins
now.
investments
Retirement Solutions, Not Just IRAs
For those in or near retirement, USAA focuses on the big picture.
•
» We aim high for performance and
low for costs:
56 percent of our mutual fundsv and 67
percent of our bondC funds have beaten
their one-year Lipper averages for the
period ending Dec. 31, 2010.
USAA Target Retirement Funds offer
expense ratios significantly below Lipper
category averages.
Our brokerage services allow you to make
trades as low as $5.95.H
•
•
•
v
•
•
•
The IRA From USAA: Your Building
Block for a Better Retirement
As a full-service financial services organization, USAA has the ability to build your
Consider the investment objectives, risks, charges and expenses
of the USAA mutual funds carefully before investing. Contact us
at 800-531-8910 for a prospectus containing this and other
information about the funds from USAA Investment Management Company, Distributor. Read it carefully before investing.
Investments/Insurance: Not FDIC Insured • Not Bank Issued, Guaranteed or
Underwritten • May Lose Value
Investing in securities products involves risk, including possible loss of
principal.
The risks of the Target Retirement Funds reflect the risks of the underlying funds in
which the Funds invest. The target date is the approximate date when investors plan
to start withdrawing their money for retirement purposes. In general, the Target
Retirement Funds’ investment program assumes funds will start being withdrawn
for retirement purposes at age 65. The principal value of the Target Retirement
Funds is not guaranteed at any time, including at the target date. The Funds’
objectives do not change over time.
Based on average annual returns, 25 out of 45 funds beat their Lipper averages
for the one-year period ending December 31, 2010. For the five- and 10-year peri-
v
28 usaa magazine Spring 2011
personalized IRA with a full range of mutual
funds, brokerage services, CDs, annuities
and more. You get the tax advantages of an
IRA with our proprietary mix of products.
For accounts of more than $50,000, a
USAA Managed Account offers personalized money management. We can manage
your portfolio based on your goals, your
risk tolerance and market conditions.=
If you haven’t spoken to a USAA
retirement advisor about consolidating
your portfolio, now’s the time.
s
For your free copy of the
USAA Retirement Guide,
call 800-292-8620 or visit
usaa.com/retirement.
ods ending December 31, 2010, 59 percent (23 out of 39 funds), and 65 percent
(24 out of 37 funds), respectively, beat their Lipper averages. Results will vary for
other time periods. Source: Lipper, Inc.
C
Based on average annual returns, 8 out of 12 funds beat their Lipper averages
for the one-year period ending December 31, 2010. For the five- and 10-year
periods ending December 31, 2010, 67 percent (8 out of 12 funds), and 92 percent
(11 out of 12 funds), respectively, beat their Lipper averages. Results will vary for
other time periods. Source: Lipper, Inc.
Brokerage account holders who trade stocks 25 or more times per quarter or who
trade stocks 16 or more times per quarter and have $50,000 or more in eligible
assets with Brokerage Services qualify for $5.95 Internet or self-service telephone
trades. Other restrictions may apply. Commissions may change without notice. For
more information and a commission schedule, visit usaa.com.
H
An investor will indirectly bear fees and expenses charged by the underlying funds
in addition to direct fees and expenses charged by the portfolio as applicable.
=
Please note there may be tax consequences associated with the transfer of assets.
Indirect transfers may be subject to taxation and penalties. Consult with your own
advisors regarding your particular situation.
s
800-531-USAA (8722)
photography by Jim Erickson
USAA Retirement Solutions offers
a comprehensive approach based on shared
military values of honesty, integrity, loyalty
and service. Our retirement advisors are
salaried and are committed to serving your
retirement needs. They work for you —
integrating expertise in investments and
IRAs, retirement income, and life insurance
and health care.
» Speak to a USAA retirement advisor to:
create a retirement income plan.
understand the impact of taxes on your
retirement.
prepare for unexpected medical costs.
help you share what you have earned
with those you love.
USAA Member Services
insurance
Keep Your Money Where It
Belongs — With You
Get additional coverage and greater peace of mind.
You’re well on your way to pro-
photography by Veer; Jim Erickson
viding for yourself in retirement. But do
your future plans include protection in
the event of an accident or lawsuit? In
an environment where lawsuits can be
all too plentiful and unexpected, USAA
umbrella insurance protects your assets.
Umbrella insurance starts where your
home or auto insurance stops, making
up the difference and protecting you.
Even though you can’t predict how
each day will unfold, it is easy to
prepare yourself financially against
unfortunate circumstances. USAA
umbrella insurance can provide
coverage in cases such as:
» an accident in which injury
costs extend beyond a home or auto
insurance policy.
» legal defense costs.
» lawsuits for libel, slander or
invasion of privacy.
A lawsuit or an accident that causes
injury to another person can be a
devastating occurrence — financially
and emotionally. With USAA umbrella insurance, you can be assured
you’re covered by an insurer that
shares your values.
Like one-stop shopping? With
USAA, you’ll get your auto, home and
umbrella policies from the same trusted
provider. And it’s a great value. For as
low as $19 a month, you can enjoy
coverage up to $1 million.4
You work hard for your money. That’s
why it’s crucial that you keep it safe. Let
USAA help you protect your assets, and
you’ll have greater peace of mind.
For more information on
USAA umbrella insurance,
visit usaa.com or call
800-531-5732.
insurance
» Auto Insurance
» Home and Property Insurance
» Life Insurance
» Annuities
» Medicare Solutions
» Long-Term Care Insurance
» Major Medical Insurance
» Insurance for Other Needs
banking
» Checking
» Savings
» Certificates of Deposit (CDs)
» Credit Cards
» MoversAdvantage®
» Mortgage
» Home Equity Products
» Car Buying Service
» Auto Loans
investments
» Mutual Funds
» Brokerage Services
» College Savings Options
» Personal Asset Management
» IRAs
» Market News & Research
Financial planning
» Personal Financial Plans
» Wealth Management
shopping & discounts
» Diamonds & Jewelry
» Cruise & Travel Services
» Rental Cars
» Flowers
» USAA MemberShop®
» Home Security
800-531-USAA (8722)
See additional legal information on Page 30.
usaa.com
SPRING 2011 usaa magazine 29
Legal disclosures
Investments/Insurance: Not FDIC Insured • Not Bank Issued, Guaranteed or
Underwritten • May Lose Value
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.
Page 8
The trademarks, logos and names
of other companies, products and
services are the property of their
respective owners.
acquired from other sources.
$1,200 savings figure based on
comparison of $200,000, 30-year
fixed rate loan for borrowers with
excellent credit.
2
Financial advice provided by USAA
Financial Planning Services Insurance Agency Inc. (known as USAA
Financial Insurance Agency in
California, License # 0E36312),
and USAA Financial Advisors Inc.,
a registered broker dealer.
The USAA
Educational
Foundation
The USAA Educational
Foundation, a nonprofit
organization, has the
resources to help make your
life more manageable.
Managing Credit
and Debt
#501
Buying or
Refinancing a Home #502
Basic Insurance
Coverages #530
Life after the Military #539
Managing Assets
and Expenses
in Retirement #588
Protecting the
Elderly from Fraud
and Abuse
#589
Financing College #513
Safe on the Road #570
Suicide Prevention
#581
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.
30 usaa magazine spring 2011
3
Restrictions, fees and costs apply
to certain Auto Circle™ and Home
Circle™ products. Third parties are
solely responsible for their
performance. Visit usaa.com for
complete Lowest Price Guarantee
terms and conditions. Insurance by
USAA or its affiliates do not provide United Services Automobile Association and affiliates, San Antonio,
tax advice. Taxpayers should seek
Texas. Bank products by USAA Fedadvice based upon their own
eral Savings Bank, Member FDIC.
particular circumstances from an
Equal Housing Lender.
independent tax advisor.
Page 9
Intuit Inc. is not affiliated with USAA
and is solely responsible for the provided information and content.
USAA cannot guarantee that the
information and content supplied is
accurate, complete or timely, and
does not make any warranties with
regard to the results obtained by its
use. Quicken TurboTax for the Web
is a service mark, and Quicken and
TurboTax are registered trademarks
of Intuit Inc., and are used with
permission.
Pages 10 and 29
Umbrella insurance provided by
United Services Automobile Association, USAA Casualty Insurance
Company, USAA General Indemnity
Company, and Garrison Property
and Casualty Insurance Company,
San Antonio, Texas. Each company
has sole financial responsibility for
its own products.
Member
The term “member” does not convey legal, ownership or eligibility
rights. Ownership rights are limited
to eligible policyholders of United
Services Automobile Association.
Eligibility
Membership eligibility restrictions
apply to purchase of property and
casualty insurance. Eligibility may
change based on factors such as
marital status, rank or military status. Rates and benefits may vary
due to eligibility. 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.
Purchase of a non-property and
casualty insurance product, or an
insurance policy offered through
USAA General Agency, does not
establish eligibility for or membership in USAA property and casualty
insurance companies.
$19-a-month policy provides $1 million
liability coverage. Rates may vary due
USAA Companies
to location and other rating factors.
USAA means United Services Automobile Association and its affiliates.
Page 26
The trademarks, logos and names
Property and casualty insurance
of other companies, products and
provided by United Services Automoservices are the property of their
bile Association, USAA Casualty
respective owners.
Insurance Company, USAA General
4
Page 27
1
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 U.S. This is not a solicitation
if you are already represented by
a real estate broker. Obtaining a
mortgage from USAA is optional,
not required to utilize the MoversAdvantage® program, and can be
Indemnity Company, Garrison Property and Casualty Insurance Company, USAA County Mutual Insurance
Company, USAA Texas Lloyds Company, San Antonio, Texas, and is
available only to persons eligible for
P&C group membership. Each company has sole financial responsibility
for its own products.
Investments provided by USAA
Investment Management Company
and USAA Financial Advisors Inc.,
both registered broker dealers.
USAA Brokerage Services is a divi-
sion of USAA Financial Advisors Inc.,
a registered broker dealer. Financial
planning services and financial
advice provided by USAA Financial
Planning Services Insurance Agency
Inc. (known as USAA Financial Insurance Company in California, Lic.
#0E36312), a registered investment
advisor and insurance agency, and
its wholly owned subsidiary, USAA
Financial Advisors Inc., a
registered broker dealer.
Trust Services offered by USAA
Federal Savings Bank. Credit cards
provided by USAA Savings Bank,
other bank products provided by
USAA Federal Savings Bank, both
Member FDIC.
Life insurance and annuities
provided by USAA Life Insurance
Company, San Antonio, Texas, and
in New York by USAA Life Insurance
Company of New York, Highland
Falls, N.Y. Each company has sole
financial responsibility for its own
products.
Other Product-Related
Disclosures
Property and Casualty Insurance
Product or service requirements,
price, and features can depend on
the member’s choices as well as
laws and the product or service
contracts, which may vary by
location. We encourage you to
read your USAA policies and contracts carefully. Underwriting
restrictions apply.
Important Information on
Consumer Report Accuracy
If you believe we provided inaccurate property and casualty or life
insurance information about you to
a consumer reporting agency, contact us at USAA, P.O. Box 34973,
San Antonio, TX 78256-3743.
Investments
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.
All USAA and non-USAA products,
brand names, logos and company
names are trademarks or registered
trademarks of their
respective owners.
© 2011 USAA
800-531-USAA (8722)
We know what it means to serve.®
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Enlisting Help
Photography By roger Davies
Beth Wilson, USAA member since 2005
Beth Wilson’s efforts to connect enlisted military spouses with
resources — and with one another — are paying off. After hearing
a show about domestic violence on Wilson’s Enlisted Spouse Radio
program, one military wife told Wilson that she finally had the
courage to reach out for help. And a couple who heard a show on
finances used the tools provided to recover from financial disaster.
The wife of a sailor, Wilson knows that a vital part of thriving in
military life is connecting with others who understand the realities
of long-distance relationships, loneliness and frequent moves.
Wilson volunteered as a Navy command ombudsman at three
commands over a four-year period, assisting military families with
everything from obtaining an ID to handling a major family crisis.
But, she says, “I really wanted to be ahead of the crises.” To
find other ways of reaching out, Wilson went to the newspaper on
base. There wasn’t a budget for a military spouse column, so she
offered to write it for free. The column spread to 17 military and
civilian publications.
Now, Wilson also writes about military life on her two blogs:
homefrontinfocus.com and myviewfromthepier.com. Since 2006,
she has hosted Enlisted Spouse Radio on blogtalkradio.com. USAA
subject matter experts, including USAA Certified Financial Planner™
practitioner June Walbert, who is also a lieutenant colonel in the
Army Reserve, are featured guests on the show. “It’s a natural fit,”
Wilson says. “The services and products USAA provides have the
potential to really serve us as a military community.”
Wilson’s commitment to connecting spouses just keeps
growing. She recently launched an e-zine on her website,
enlistedspousecommunity.com, and in February she
introduced Enlisted Spouse TV, a YouTube channel
for and about military spouses.
“Military life is tough,” says Wilson, “but misery is optional.
I want to build a sense of community among enlisted spouses
so we will become strong advocates for ourselves.”
Wilson was named USAA’s February Military
Blogger of the Month for going above and
beyond to advocate public financial health,
provide military audiences with valuable
money tips and offer support for troops and
families. To learn more, go to usaa.com and
search Military Bloggers.
“Military life is tough. I want to build a sense of community among
enlisted spouses so we will become strong advocates for ourselves.”
123381-0211