In the several years that we have been working with AT&T employees we have helped individuals answer many questions regarding their AT&T benefits. There are many moving parts and everyone’s situation is different, so questions are inevitable. The ideal financial plan takes into consideration your needs and lays out the steps necessary to reach your specific goals. Below are topics that we have been asked frequently and the answers we often give. AT WHAT AGE CAN I RETIRE FROM AT&T? WHAT IS THE RULE OF 55? This is a loaded question but since they are directly related, we can answer them together. As an AT&T employee, you are eligible for a vested pension benefit after five years of service, but if certain age and service requirements aren’t met your benefit will be negatively reduced. The chart below is what is known as “The Modified Rule of 75”, since all the combinations add up to 75. However, you must meet both service and age requirements.
It is important to understand that not all combinations of 75 applies. For example, if you have 23 years of service with AT&T and are 52 years of age (23+52=75) you will receive a reduced pension because, even though it adds up to 75, you fail to meet both requirements.
Additionally, for AT&T employees without 30 years of service, their pension benefit will be reduced if taken before turning 55 years old. Employees with 30 or more years with AT&T are exempt from the pre-55 reduction rules. Also, if you are pension eligible with less than 10 years of service, you will receive your full AT&T pension benefit if you wait until you turn the age of 65.
THE GOOD (AND THE BAD) OF A LUMP-SUM PAYOUT There are two pension options available for AT&T employees upon retirement: taking a monthly payout or opting to convert their pension into a one-time lump-sum benefit. The monthly benefit option pays you an amount each month until the end of your life. The lump-sum can be rolled over into an IRA that is entirely controlled by you. The option that is best for you depends on your financial situation. Below is a chart of the pros and cons of both options:
DO RATES AFFECT MY AT&T PENSION PAYOUT? AT&T uses the Composite Corporate Bond Rate to calculate pension payouts (until 2012, AT&T used the GATT rate). Even the smallest changes in rates can impact the size of your lump-sum pension. When rates are lowered, lump-sum pension payouts increase, and vice versa.
In closing, rate changes may directly impact your decision on when to retire or if you decide you want to work a little longer. It may even decide if you wish to take one pension benefit over another. More information about the different pension options can be found in our complimentary, no-obligation downloadable guide titled “The Simplified Guide to Retirement for AT&T Employees”. You can also give us a call at 866.QUEST.01 (866.783.7801) to speak with a Quest Financial advisor who can give you more information your options and strategies for retirement income that will best fit your needs.
Investment Advisory services offered through ChangePath, LLC a Registered Investment Advisor. ChangePath, LLC and Quest Financial are unaffiliated entities. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Neither ChangePath, LLC or Quest Financial are endorsed or recommended by AT&T.
Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investing involves risk, including the loss of principal. No Investment strategy can guarantee a profit or protect against loss in a period of declining values. Any references to protection benefits or lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity products are backed by the financial strength and claims-paying ability of the issuing insurance company. The information is not intended to be investment, legal or tax advice. The agent can provide information, but not advice related to social security benefits. The agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. For more information, contact the Social Security Administration office, or visit www.ssa.gov.