As a trusted financial adviser to many AT&T employees and retirees, we wanted to inform you about recent interest rate changes that will affect your pension payout. If you are planning to retire soon, please review this important information.
Your AT&T lump sum pension is calculated using the Composite Corporate Bond Rate, an interest rate published each month by the IRS. Each year, the company uses the rate published the previous November. That means 2018 lump sums are calculated based on the November 2017 rate. Next year’s lump sums then will be based on the November 2018 rate, which won’t be publicly released until around December 15.
While we won’t know the exact number for several more weeks, the rate for October 2018 is 4.14%. If this holds steady through November, it would lower lump sums collected in 2019.
How recent rate changes may affect you:
- Your lump sum pension will likely decrease. When interest rates rise, lump sum distributions fall.
- If you collect your pension in 2018: you will likely receive a higher lump sum payout
- If you collect your pension in 2019: you will likely receive a lower lump sum payout
The impact of this higher rate:
|If your lump sum in 2018 is:||Your approximate lump sum in 2019:|
How does this impact your retirement plan?
Your pension is an important income source for retirement. These changes may affect your decision whether to retire early, or to take an annuity or a lump sum payout at retirement. However, it is only one part of your overall financial picture. There are many more factors to consider before you decide – and we’re here to help.
Advance Capital has helped thousands of telephone company employees make smart financial decisions. If you have any questions about your pension or would like us to help you build a sound retirement plan, please contact us to arrange a meeting or telephone conversation.