These days, it seems as if there is an endless supply of ads selling products designed to boost your confidence. Whether for the office, the gym or the bedroom, there’s sure to be a pill or device out there that claims to make you feel your best and help you succeed.
One area people could use a confidence boost is in their feelings about retirement. Only 18% of American workers feel very confident in their ability to afford a comfortable retirement, according to the Employee Benefit Research Institute.
Unfortunately, you can’t just buy a “happy retirement pill.” Though some companies selling financial products try to make it seem as if you can. In reality, you can only make smart financial choices with the retirement tools at your disposal.
As an AT&T employee, your AT&T benefits likely make up the bulk of your retirement toolbox. Here are ways to use those AT&T benefits to help you feel more confident in achieving a comfortable retirement.
Take advantage of catch-up contributions
The secret to building wealth is that there is no secret. The most effective way to improve your chances of financial independence is to simply save.
At age 50, you qualify for catch-up contributions, an extra amount up to $6,000 (2017) that you’re legally allowed to contribute into your retirement accounts. These additional dollars, saved in a tax-advantage retirement account such as your AT&T 401(k) or IRA, can help you get on track or give your retirement savings a big lift.
Increase your pension payout with this one simple trick
Work longer. That’s probably not what you want to hear. But, working just a little longer could make a big difference in your AT&T pension.
That’s because one of the factors that determines the size of your AT&T pension benefit is years of service. Therefore, the longer you work, the larger your benefit.
Also, while you’re eligible for a vested pension benefit after five years of service, your benefit will be negatively affected if you do not reach certain age AND service breakpoints for your employment position. This is commonly known as the modified rule of 75 since the combinations add up to 75 in most cases. However, you must meet BOTH minimum age and service requirements. You don’t want to mistakenly cut yourself short by retiring too early.
For more about how the modified rule of 75 applies to the AT&T pension: read this blog.
Once a year check the Composite Corporate Bond Rate
AT&T uses what is known as the Composite Corporate Bond Rate to calculate pension payouts (until 2012, the company used the GATT rate). Even small changes in this rate will impact the size of your lump-sum pension. Generally, when rates are lowered, lump-sum payouts are increased (and vice versa). Therefore, if you’re close to your desired retirement age and the rate drops, it may be a good time for you to consider retiring early.
The rate change is typically announced in November or December, so feel free to contact an Advance Capital adviser around that time to determine if the rate change affects you.
Get financial certainty with a financial plan
Perhaps nothing can give you more confidence in the future than a detailed plan. A financial plan can merge all your financial resources -- in this case, your AT&T benefits -- and show how to use them collectively to achieve your goals.
It can provide a feeling of financial confidence that will last. One retirement survey found that of those who have a written retirement-income plan, 91% are confident with it and 92% are happy with it.
Avoid unnecessary costs
A penny saved is a penny earned. There are ways to use your AT&T benefits to avoid unnecessary costs and save money, which gives you more income for your retirement needs.
Supplemental Medicare coverage
One of the biggest retirement expenses for most people is health care. Once you turn age 65 you are Medicare-eligible and must transition out of AT&T’s retiree health care plan and into Medicare. However, Medicare likely won’t cover all your health care needs.
At age 65, you will also receive information from Aon Hewitt, AT&T’s health care benefits service provider for Medicare-eligible retirees. Through Aon, you will select a plan that provides supplemental insurance to fill in gaps in your Medicare coverage. Most individuals have a dozen or more choices from which to choose, so it’s important to work with Aon to pick the plan that best suits your needs.
Supplemental life insurance
While employed by AT&T, you may be eligible for basic life insurance (coverage that is provided to you and paid for by AT&T) and supplemental life insurance (an option to purchase additional life insurance beyond basic coverage). Buying supplemental insurance through AT&T’s group plan is a cost-effective way to get access to additional coverage.
However, you certainly don’t want to buy more life insurance than you need. Younger families and single-earner households generally need more life insurance. As you age, and your financial obligations decrease, you may want to reduce your coverage. That way, you can avoid wasting valuable retirement dollars on unnecessary coverage. An online life insurance calculator is a great tool to help you determine how much you need.
As they say, knowledge is power. You can feel more confident in your ability to plan for retirement by learning more. So, we encourage you to download “The AT&T Employee’s Guide to Retirement” below to help you better understand how to get the most out of your AT&T retirement benefits.