With a new year comes new decisions. As an AT&T employee that means making new choices regarding your AT&T benefits. Of course, what you need to do depends on where you are.
Are you in the early or middle stages of your career and plan to work at AT&T for another 10 years or more? Or, are you in the later stages of your working life and plan to retire from AT&T within the next five years?
Here are 2022 AT&T benefits to-do lists for both groups. These moves can help make the new year a financially productive one – and, even better, set you up for greater financial security in the future.
AT&T Benefits To-Do List for Employees Working Longer
Review your AT&T 401(k) investments
If you haven’t checked up on your 401(k) in a while, it’s a good time to do so. Strong market returns over the past couple years could mean your account is more stock heavy than you want. More stock in your portfolio generally means more risk and more volatility.
If that’s the case, you may want to sell some of your investments that have outperformed and buy some of what has underperformed. This is known as rebalancing. It allows you to capture some of your “winnings” while realigning your account with your risk tolerance and financial goals.
While you’re checking out your 401(k), review how much of your salary you managed to save and invest last year. A good rule of thumb is to save about 10-15% of your salary. Of course, it won’t hurt to save a higher percentage if you can. For 2022, 401(k) contribution limits have been raised to $20,500 for people under age 50 and $27,000 for people ages 50 and older. At the very least, you should make the full Basic contribution to maximize AT&T’s employer match. That’s free money!
Diversify your AT&T stock holdings
Also, don’t forget to examine your AT&T stock holdings. While it can be rewarding to own a piece of a respected company like AT&T, it may be risky from a retirement planning perspective. A single stock (in this case AT&T stock) can be riskier and more volatile than a mutual fund or the broader stock market. It’s more appropriate to diversify the investment choices in your AT&T 401(k) account. That means selling your AT&T stock and investing in mutual funds.
Although designed for medical needs, a health savings account (HSS) has various features, such as greater tax advantages than other investment accounts, that make them a valuable asset for saving for retirement, too. Contributions are tax-deductible, funds grow tax-free and withdrawals are tax-free for qualified medical expenses. Further, AT&T employees who contribute to their HSA through payroll deductions may be eligible for a company match. And, funds in an HSA can be carried forward year after year – you won’t lose it if you don’t use it.
While employed, you may be eligible for basic life insurance coverage through AT&T. That means it is provided and paid for by the company. For most employees, basic life insurance coverage is equal to one year of your compensation. If you need additional coverage, you may purchase supplemental life insurance coverage through AT&T’s group plan. This is a cost-effective way to get access to additional coverage.
Learn more about the AT&T life insurance benefit here.
AT&T Benefits To-Do List for Employees Retiring Soon
Choose a retirement date
There are many factors that go into choosing a retirement date. Certainly, when you have enough saved to retire as well as when you are physically and mentally ready. But a big one is when you can actually access your retirement assets.
Here are a couple dates to keep in mind:
Pension eligibility: You are eligible for a vested pension benefit after five years of service, but your benefit will be negatively affected if you do not reach the age and service breakpoints for your employment position. Additionally, you may receive a reduced pension benefit if you take your benefit prior to age 55, unless you are a union employee with 30 or more years of service.
401(k) access: If you retire from AT&T in the year in which you turn age 55 or older, you can withdraw funds from your 401(k) without having to pay an early withdrawal penalty (10%) to the IRS. Should you retire prior to the year in which you turn age 55, you must wait until age 59 ½ to make penalty-free withdrawals. If you roll over your AT&T 401(k) account to an IRA, the age 55 provision does not apply. You must wait until age 59 ½ to withdraw funds from a traditional IRA without early withdrawal penalties.
Learn more about important AT&T retirement dates here.
Get a pension estimate
Your AT&T pension will be one of your primary sources of income in retirement. So, as you begin the retirement planning process, it helps to have a pension estimate to work with. Your pension administrator is Fidelity. Although a separate entity from AT&T, Fidelity has all of your personal information, such as service date, birth date and beneficiary information. Fidelity is who you would communicate with to obtain pension estimates for various retirement dates and other benefit information. You can find this information easily online at: www.netbenefits.com.
Learn more about using the AT&T pension calculator here.
Start considering a lump-sum or monthly pension payout
Upon retirement, AT&T employees can elect to receive a monthly annuity or lump-sum pension payout. There are pros and cons to both. For example, with an annuity, you receive a regular paycheck for life, but there is no cost-of-living adjustment. Meanwhile, the lump sum gives you full control over your benefit to use however you want, but when invested your benefit is exposed to market risk. The right choice for you depends on your personal circumstances. Since your pension will be one of your major sources of income in retirement, it is a decision you want to consider carefully.
The AT&T pension offers survivor benefits. If an employee passes away before retiring, a spouse automatically receives 50% of the monthly annuity or can choose the lump-sum equivalent. This option is only available to spouses. There are multiple survivor options to choose from for the monthly pension, but all are only available for a qualified spouse. Management employees also have the choice to take a partial lump-sum pension with a residual monthly pension.
Learn more about AT&T retirement plan survivor benefits here.
Pay close attention to the Composite Corporate Bond Rate
What is it? It is the interest rate used to calculate AT&T’s pension payouts. Even small changes in this rate will impact the size of your lump-sum pension. Generally, when rates fall, lump-sum payouts increase, and vice versa. The annual rate change is typically announced in November or December, so be sure to contact Advance Capital around that time to determine how the rate change affects you.
Take advantage of catch-up contributions
As retirement nears, try to find room in your budget to save more with catch-up contributions. Individuals who are age 50 or older can save extra in their 401(k)s and IRAs. For 401(k)s, you can save an additional $6,500 for a total annual contribution of $27,000. For IRAs, you can save an extra $1,000 for a total annual contribution of $7,000.
Review your AT&T 401(k) investments
As you near retirement, you should gradually reduce risk in your AT&T 401(k) and other retirement accounts. The more stock you own, the more vulnerable your account is to a loss in the event of a market downturn. Therefore, if you have a high proportion of your 401(k) invested in stocks, start moving more of your accumulated savings to lower-risk investments, such as bonds.
Evaluate your health care needs
One of the biggest expenses for most people in retirement is health care. So, you need to make sure you’re covered. Keep in mind, you are not eligible for Medicare until you turn age 65. Taking the time to review your options can help you plan accordingly and avoid large out-of-pocket costs that could derail your retirement. Eligible AT&T retirees and dependents have the ability to enroll in the AT&T group medical and dental programs at the full cost of coverage.
Unfortunately, AT&T has eliminated the pre-Medicare (before age 65) medical and dental subsidy for management employees. Therefore, AT&T management employees who retire in 2022 or later and are not Medicare-eligible may need to look elsewhere for health insurance coverage. Among those options include joining your spouse’s plan, COBRA or shopping around on the ACA healthcare exchange.
Consider your life insurance needs
Some eligible AT&T employees may receive a basic life insurance benefit after retirement. However, AT&T reduced the amount of life insurance available for retirees starting this year to a flat $15,000. Whether you need life insurance in retirement depends on personal factors, such as if you are married and/or still have dependents.
Check your Social Security statement
Although Social Security is not an AT&T benefit, it will be one of your key sources of guaranteed retirement income, along with your pension. Therefore, knowing your benefit amount is crucial for retirement planning purposes. Go to ssa.gov and, if you have created a My Social Security account, log in and get a copy of your statement.
The size of your Social Security benefit is greatly determined by your age when you claim. You can receive your full Social Security retirement benefit upon reaching your Full Retirement Age, which is age 66 or 67, depending on your date of birth. But you can claim a permanently reduced benefit as early as age 62. Delaying Social Security until age 70 entitles you to a higher benefit of up to 8% per year. A benefit at age 70 will be 76-77% higher than the payout if you start at age 62.
Ultimately, factors such as your other income sources, marital status and health should guide your decision, not just when you can get the biggest Social Security paycheck.
Each AT&T benefit you have earned and accumulated — pension, life insurance and 401(k) account — can be passed on to a beneficiary in the event of your death. Often, people name one or more individuals early in their careers and neglect to ever think about it again. But to ensure that your family is taken care of and that your assets are distributed according to your wishes, you must keep your designated beneficiaries accurate and up to date.
Speak to an AT&T-experienced financial adviser
All these steps can add up -- and are too important to simply wing it. To ensure you’re doing all the right things to achieve a comfortable retirement, work with an AT&T-experienced financial adviser. An adviser can help you put together a plan that takes into consideration your assets, target retirement age, desired lifestyle and expected life span. It will detail how much to save and how to appropriately use your assets to create a sustainable income stream throughout retirement.
Every AT&T employee’s situation is unique, even if their benefit options are alike. Instead of investing on guesswork or simply following what your co-worker does, we would be happy to help you with a free financial plan from a professional financial adviser.
You can also learn more by downloading our go-to guide on AT&T retirement topics: The AT&T Employee’s Guide to Retirement.