One of the benefits of being an AT&T employee is that the company offers solid retirement plans that are flexible for a variety of needs. However, you’ll still have to make a decision which plan is the right one for your future, so having some advice on hand is often a great benefit. You’ll be offered several different options, like a lump-sum pension, monthly payments, or a combination of the two, depending upon your employee classification and whether you belong to a union or not.

Every AT&T employee will need to choose a plan when they retire, which is why the team from Merit Financial Advisors is here to help you better understand how to determine the best plan for your needs.

A Few Things to Consider

Before diving into the details, there are a few important things to consider regarding your pension plan. Firstly, the best plan for you will depend entirely upon your personal situation; there’s no one-size-fits-all solution, which is why it’s often beneficial to assess your needs with a personal financial advisor.

How Your AT&T Retirement Plan is Calculated

Understanding how your plan is calculated is a great way to get a good idea of the size of your pension benefit before making your final decision. There are several factors, such as:

  • Income Level
  • Pension Band (for union employees)
  • Years of Service

After only five years of service with AT&T, employees are eligible for retirement benefits, but letting the factors above accrue before you begin drawing from your pension is often beneficial. This is because the more years of service under your belt and the higher your income is, the better your pension benefits will be.

Additionally, your benefits can be negatively affected if you don’t reach the required age and service years designated for your employee pension position. Those who take their benefits prior to age 55 will likely receive a reduced pension unless they belong to a union and boast 30 or more years with the company.

Survivor Benefits with AT&T

Another great thing about the plans offered through AT&T for retirement is the survivor benefit. If an employee passes away before the time of their retirement, their partner will receive a percentage of the monthly benefit the employee would have received. There’s also the option of getting a lump-sum payment rather than receiving them monthly. However, it’s only available to spouses of the employee.

When it comes to the monthly pension option for survivors, there are several plans to choose from, such as the joint-life annuity plan with a 50% survivor option or a joint-life annuity plan with a 75% or 100% survivor option. However, the lump-sum a spouse can receive will vary depending on the type of plan you’ve chosen, how much was put into the account, and other factors.

The Modified Rule of 75

For retirees under AT&T’s retirement plan, there’s also the option of receiving a medical benefit that’s subsidized. However, this is dependent upon reaching the minimum years of service with the company and the right age requirements. Often referred to as the modified rule of 75 because the requirements usually add up to 75, you’ll need to meet both of the previously mentioned factors to qualify for medical benefits.

So, let’s assume you’re 52 and have been working for AT&T for 23 years, although these numbers add up to 75, you won’t be eligible to receive medical benefits because the minimum years of service is 25 years. Since you haven’t met both components, you’re ineligible.

Monthly Pension vs. Lump Sum Option

Finally, we get to what’s most important, how you’ll be receiving your pension benefits. This is a big decision that everyone who retires from AT&T will have to make. Determining whether you want to receive a monthly payment or a one-time, lump-sum benefit will depend upon your needs. Keep in mind that the one-time cash payout can be rolled into your IRA so it can be an attractive benefit for many.

When comparing the two options, be sure to weigh the PROs and CONs, for example with a monthly pension, you’ll have income for life that isn’t based upon market fluctuations, in addition to spousal survival benefits should you pass away. But this option doesn’t include a cost-of-living increase or take inflation into account and your monthly income will be tied to the longevity of your pension plan.

Those who are interested in the lump sum option will be able to control their income investments, possibly having them accrue over time, and they’re also in a better position to manage against inflation. However, handling your own finances requires self-discipline and does place your pension benefits at the risk of market fluctuations.

Contact us today to learn more about your AT&T retirement plan

If you’re planning for retirement, working with a professional wealth management advisor is one of the best ways to ensure you have a solid foundation for the future. Our financial wellness services are designed to provide you with personalized planning to improve your quality of life, in addition to offering asset allocation and risk management services.

By taking all of your personal goals and expectations into consideration, we develop a plan to help you address all of your needs. It’s important that you understand all of your options, which is why the Merit Financial Advisors team sits down with you and goes over every detail until you feel confident that you’ve gotten a comprehensive view of all of your options for the future.

For more about our financial services and divorce solutions, contact us online today or call (866) 628-3508.

Opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Merit Financial Group, LLC an SEC registered investment advisor. Merit Financial Group, LLC, Merit and Merit Financial Advisors are separate entities from LPL Financial. Merit Financial Advisors, LLC, Merit, Merit Financial Advisors and LPL Financial are not affiliated with AT&T.