Thread regarding AT&T layoffs

I read the entire article mentioned above; my thoughts based upon having retired during the separations in March, 2015:

Once retired, protecting against the risk of losing the asset is the most important thing to know because you won't be getting it back again.

1) It was said the annuity doesn't go down. An issue with the annuity is inflation risk. Using this inflation calculator - https://westegg.com/inflation/ - and entering $50,000 and setting the start year to 2008 and the end year at 2018, you'll see an additional $9,604.04 would be needed to have the same purchasing power. You'll be falling behind if all your income is from the annuity. Another ten years and you may need to withdraw from other assets to make up the loss. BTW, health care costs have exceeded the normalized rate of inflation by as much as 4%, so that is 7% annually and you'll need even more income.

2) Again regarding the annuity, a comment on what happens if the federal government's Pension Corporation takes over. They will pay a MAXIMUM of $54,000/year as of 2018. If I wanted to generate the same amount of money, I'd need $1,350,000 earning 4%. However, if my lump sum is greater than $1,350,000, and I can generate 4% or more with an investment company, I see no reason to risk my entire pension with AT&T and also receiving only $54,000 with the Pension Corp. taking over. And they may decide I'm not even entitled to that.

3) The alternative to a pension annuity is a portfolio managed by an investment firm, perhaps like Fidelity or Vanguard, and the creation of a balanced portfolio of stock and bond mutual funds. Stocks provide growth to stay ahead of inflation. An example is the S&P 500 Stock Index which has grown an average of 6.8% since 1926 through all the depression and all the recessions. And bonds generate income, money you need for living. This combination reduces the risk of losing your assets or having your income eroded by inflation.

4) Is it risker to have an annuity or an investment at a company like Fidelity, or Vanguard? It's said never invest only in one company. I see that as being AT&T. I can diversify via mutual funds. Sure some will go down and other's up. But if one fund tanks, I have the remainder of my assets to carry me through.

5) If you're not near retirement, more than ten years away, you can afford the ups and downs of the markets. Actually, you want them to go down when you don't need the assets so you can buy more at lower price and with time, stocks have always gone up. If they never do again, then everyone will be complete broke and we'll be farming for food.

The lump sum goes down but the annuity does not. Well played... just sorry you both work here, must make for painful dinners. Good luck

If you are lucky enough to have both spouses employed with a pension plan, I like that the article mentioned one should take the lump sum and the other could take the annuity. That is probably exactly what we will do since one of us gets the higher lump sum leaving by April 1, 2019 and the other will not, so could take the annuity since the lump sum will be substantially reduced by the time they get surplussed most like later this year.

Thanks for posting. I am a fan of Dave Ramsey and agree with most of what he teaches around personal finance. This topic comes up often. He is almost always a "take the lump" guy. I read this article which provided some good arguments against Dave's advice: https://retiremitten.com/2018/07/18/disagreeing-with-dave-ramsey-regarding-the-lump-sum-pension/

At the end of the day, it's a personal decision as to what's right for you and your family...and there is no right answer for everyone...but after reading this I am leaning more toward a monthly pension as opposed to lump sum.

From a previous post:

To end the 75% funding claim repeated from the news articles- No participant in any PBGC covered Pension Plan can get a Cash Balance payout if the plan funding level is below 80% per the Pension Protection Act of 2006. AT&T continues to payout millions to retiring employees that request the cash balance method of payment.

From The IRS Filing that AT&T is required to make yearly for the Pension Plan. I would imagine the wireless tracking stock is included here. I hope just because it says 75% in a news article someone might fact check it before you post it as fact. The Intern that wrote the article might not have passed math class.

Funding Target Attainment Percentage

2017 96.5%

2016 98.5%

2015 98.7%

Single-Employer Program Continues to Improve

PBGC’s Single-Employer Insurance Program covers about 28 million participants in more than 22,000 plans. Last year’s report projected the program could potentially emerge from deficit by FY 2018 and was likely to emerge by FY 2022. The program forecasts have improved, with a larger chance of emerging from deficit by FY 2018 and emergence likely by FY 2019. The projections for FY 2027 show a wide range of potential outcomes, including the possibility for future deficits that could range in excess of $100 billion, but with an average positive FY 2027 net position of $26 billion in future dollars ($20 billion in today’s dollars). Improvements in the program’s financial position over the 10-year period are due to the general trend of better funding of pension plans and projected PBGC premiums exceeding projected claims.

AT&T PENSION BENEFIT PLAN AT&T Inc. 431301883 903-910-4201 Single-employer

@1lou, appreciated your post. As everyone with health concerns, children or even grandchildren are most vulnerable they should do what comes natural and feels comfortable.

For those of us that have side stepped those issue, and in a married couples position , a monthly annuity....flanked by two Social Security checks, pays the bills and lets the rest of our investments run their course. No guessing how to invest a lump sum into existing accounts, or searching for new ideas on where to invest.

We have 401K’s, we have IRA’s....and other taxable accounts, taking the Annuity brings to mind a Forrest Gump go too line....”Okay, one less thing!" And that’s exactly how we feel.

BTW, interest rates have a minimal effect on an Annuity monthly payout.

Good luck no matter which choice you make Grasshoppers.

Blah blah blah. Take the lump and roll into 401K.... don't be a dummy. You're 50 something, it's a couple hundred grand....why would you rely on T for the rest of your life? Take the money. Roll into your 401K. You'll be a millionaire. Live on the earnings. Leave something for your family.

To poster “1lou”, I share the same philosophy and financial situation and have also taken the annuity option. Thanks for sharing.

roll it into your 401k

*There are PRO’s and CON’s on deciding on a Lump Sum vs. Monthly Annuity. *

The number one consideration, both for this decision and when to collect Social Security would be health considerations. And among this stuff is various annuities options, like 10 year certain, spousal considerations and so forth.

If the lump sum is rolled into a regular IRA, there is going to be mandatory distributions at 70½ or 71. If it is rolled into a Roth, there is going to be a tax bite right away.

I already have a Roth, and I have a 401K that I contributed supplemental contributions over the years. And I currently have no life shortening health considerations.

So, my roll of the dice was to take an annuity. Currently, I have not turned on Social Security. I lightened the load a bit at the 401K because cheaper tax brackets were available.

But health is still #1 consideration. Any issue there tilts the situation towards taking the lump sum. For instance, type 2 diabetes on average knocks 10 years off life expectancy. That's the kind of stuff that has to be thrown into the calculus.

And then we have a borrow and spend government. What's going to happen with inflation? How do they pay off the burgeoning national debt without inflation cheapening that debt?

Well, right now inflation is tame. And I've gotten a third of my lump sum out of them on an annuity, at a fairly low tax rate. We'll see where this goes insofar as inflation is concerned.

There are only Pro's eveything else is #fakenews, good riddance