The 3 segment rates increased again. Hoping they level off a bit by the time we get closer to November. Sizable drop in $$, Might pivot to annuity if I work 2-3 more years.
36 replies (most recent on top)
I think my thought process is shifting from lump sum payout to the annuity. The lump sum will look less favorable after this year. And I think my annuity will continue to grow. I’m 55 and have hit rule of 75. Lump sum can’t grow anymore and will be decreasing when rates reset in 2023. Maybe annuity is what I will focus on in next 3-4 years before retirement.
Some good information and advice through this thread. I might add a couple of resources. First planning where every dollar goes prior to retirement gives you a good picture of what retirement spending will look like. Make sure to add a few cushion items for flexibility. A couple of resources I used helped me leave in 2021at 52 (26yrs of service) - Fidelity planning tool, Dave Ramsey, Heritage Wealth Planning, Advance Capital (good material regarding AT&T benefits), youtube videos for social security planning. Wish you all well. Remember no one looks out for YOU! or your family.
I ran the numbers and my lump sum dropped 2.5%! The annuity, or monthly pay-out, saw a very slight increase.
I retired a few years ago and took the lump sum. I took it because we are not big spenders and have a good mix of investments but also since we can 'will' this to our daughter when wife and i pass. The montly pension is lost when worker and spouse die. If you are responsible with money you will do fine and everyone on this site should know that the market goes up and down. There has been a lot more winning than losing going on the last 40 years in the market. Just my opinion though.
No impact on my pensions (I have two)
I’m craft and when I made the inquiry to Fidelity last November regarding dates and rates whenever he plugged in any retirement dates in December the next years segment rates (whatever those would happen to be ) defaulted so it appears you must retire prior to 11/30 but can elect to collect your pension by 12/30 Thanks for that info T~man interesting that Fidelity handles the process almost 100%
Using the Fidelity website estimator,, my lump sum drops approx $150k when I plug in the April segment rates (and assume a retirement date of 1/1/23).
"It's way too depressing. I won't even look at my 401K. Wake me up when the recession is over. "
First of all, the stock markets are not the economy. We're not in a recession, yet, and it's not a given we will be. And! Some stocks actually do well in recessions! In a recession, consumers tend to move toward lower cost providers and inexpensive entertainment.
That said, if you're properly allocated, stop looking and sit tight, don't move. Time is on your side.
What you do, if you are management, get all paperwork done with Fidelity. I finalized all my paperwork in September. Adjusted the last day on payroll, once.
My final day on payroll was Dec 27th. I resigned/intent to retire to Jeremy Legg, that very day.
Until that morning, no one in the company knew I was retiring. They had everything done, in just a few of hours.
The key, have the fidelity paperwork done. As I recall, there was one form that had to be notarized and then faxed/emailed back in.
The retirement date, can be changed. The retirement can be cancelled. You just need to get the paperwork done ahead of time, and you will get the 2022 rates. You must leave the payroll by December 30, with December 31st as your latest commencement date.
Get that goofed up, and you'll get the Nov 2022 rate :(
Mine is down 20% as of April versus 11/21 segment rates. Anticipate them being down at least 30% ( probably more) when they reset again in November but do be aware you will not know for certain what they’ll be until late December and by then it will be too late to take advantage of 11/21 segment rates
It's way too depressing. I won't even look at my 401K. Wake me up when the recession is over.
“Regardless, what is the average drop in lump sum from November 2021 versus April 2022 “
Mine is down 20% as of April versus 11/21 segment rates. Anticipate them being down at least 30% ( probably more) when they reset again in November but do be aware you will not know for certain what they’ll be until late December and by then it will be too late to take advantage of 11/21 segment rates
"Rule of thumb is subract you're age from 110 and that should be your stock allocation."
I was about 90% stocks, split between several indexes, domestic and international in my 401(k). I have other assets outside of the plan.
My rule of thumb is to stay away of advisors who quote "rules of thumbs", or "Pie Chart Guys" as I affectionately call them, without holistically investigating the entire investment picture of the client.
The point was you claimed you have been properly allocated since 1987, then you said you lost half your retirement savings in 2008. That would have been 100% stocks at 41 years old. Rule of thumb is subract you're age from 110 and that should be your stock allocation. Not trying to tell you what yours should or shouldn't be.
Note that my numbers below reflect about a 1.5% drop in lump value, but didn't the age / service crediting rate also change? I know it was stated to change, but I can't remember the effective date.
"Regardless, what is the average drop in lump sum from November 2021 versus April 2022 ? "
I have my 401(k) and pension numbers spreadsheeted back to 1992. I'm not sure if the Fidelity site will let you calculate on past dates. From my sheets:
If I retired 11/30/21 - $981,584.53 4/30/22 - $967,439.62
So, a tick over $14k... People can plug in their own info, I'm not sharing any personal info on where the number above came from.
"At 41 proper allocation would have been at least 30% in Bonds, yould would have been able to reballance and been way ahead. BTW, bonds beat stocks from 2000 to 2019. "
That depends if dividend reinvestment is included, when each investment was specifically purchased, and which stock index you choose.
I'm amazed that you can tell me how I should have been allocated at 41. You don't know about pensions accrued, my personal risk tolerance, other assets and investments or anything else about my situation.
Regardless, what is the average drop in lump sum from November 2021 versus April 2022 ?
Lots of smarty pants here, hedge fund managers. 😜
At 61 proper allocation would be 50% Bonds. In 2008 a 61 year old would have only lost 20-25%
At 41 proper allocation would have been at least 30% in Bonds, yould would have been able to reballance and been way ahead. BTW, bonds beat stocks from 2000 to 2019.
"You contradict yourself, If you have always been properly allocated, you would have not lost "HALF" your retirement savings when only the stock market declined 50%!
Not a contradiction at all. That was 20+ year money at the time. I was 41, so I was all in.
Note that the value returned almost 4x over the following decade. The loss was simply on paper.
Now consider if I was 61 at the time...
@1puf+1gTwksKR
"Having been through Black Monday '87, early 90's bear markets, the y2k Tech crash, 9/11, 2008, the COVID crash, I've been properly allocated to my need every time and didn't make any changes. It always paid off."
and this;
"In 2007-8 I watched my retirement savings lose HALF of it's value. I did nothing and simply kept buying every paycheck. Those who sold out usually got back in way too late,, to their detriment."
You contradict yourself, If you have always been properly allocated, you would have not lost "HALF" your retirement savings when only the stock market declined 50%!
“ The monthly payment can be changed, reduced or eliminated at the company's discretion”
Stop spouting misinformation and educate yourself. That statement is completely false.
"I disagree. They most likely put it in a diversified market portfolio 4 months ago on the advice of their financial advisor, and have now seen their retirement savings probably drop 15%+ over the past 4 months. Wonder what their advisors are telling them now. "
"@1wsv+1gTwksKR" here again...
I also forgot to mention, folks with 10-15-20-30 years until retirement will be fine.
Anyone near retirement who isn't properly allocated or is trying to time markets or chase returns is an id--t, their advisor is an id--t, or both.
Having been through Black Monday '87, early 90's bear markets, the y2k Tech crash, 9/11, 2008, the COVID crash, I've been properly allocated to my need every time and didn't make any changes. It always paid off.
In 2007-8 I watched my retirement savings lose HALF of it's value. I did nothing and simply kept buying every paycheck. Those who sold out usually got back in way too late,, to their detriment.
So... make or stick to YOUR plan for your situation, turn off the media noise, and don't look if it's too painful.
"I disagree. They most likely put it in a diversified market portfolio 4 months ago on the advice of their financial advisor, and have now seen their retirement savings probably drop 15%+ over the past 4 months. Wonder what their advisors are telling them now. "
Stocks tend to fluctuate.
Good advisors will have clients properly allocated with several years of safe money set aside and a long term perspective. This will reduce overall gains during bo-m times, but it helps to keep the client from having to sell assets when they are down.
I'm still working, thinking of leaving in '24 or '25, but we set aside 3 years of full-on life style spend, not just basic necessities, last summer. That was basically all house money gained over the previous 11-12 years... In the meantime, I'm still buying low cost index funds, as the shares I'm buying now is money I won't need for at least 5-6 years from now. If the market comes back sooner, I can leave my safe money alone, sell off of gains, and continue to move on. If it doesn't I'm fine, and if it's really bad, I could easily cut my life style to make my 3 years of safe money last 6.
The 401(k) Stable Value fund pays a tad over 2% right now, which I feel is fine for safe money.
Took a 25-30K hit not going last year but in hindsight it was probably a blessing. Not so sure that will be the case if I stay past 11/30
drop 15%+ over the past 4 months. Wonder what their advisors are telling them now.
They will fire the advisor because "accountability" and "they can do better". Then they will hire a new advisor who they know is "better". The new advisor won't mention to them that they were fired by their previous client because "accountability" and "they can do better".
It's all a beautiful merry go round.
Prior poster said:
“Although those who left last year and took the lump sum made a wise choice in hindsight”
I disagree. They most likely put it in a diversified market portfolio 4 months ago on the advice of their financial advisor, and have now seen their retirement savings probably drop 15%+ over the past 4 months. Wonder what their advisors are telling them now.
Not feeling nearly as anxious with my lump sum potentially dropping $200,000.00 knowing bonds are paying a higher yield now. Should sleep much better at night now
T-man has a good answer with one caveat: the formula used to calculate your pension does use the Fed funds interest rate in the calculation so if Jerome Powell raises rates your monthly payment will drop. This drop is small compared to the large fall in the lump sum. Right now the pension is only funded at 82% using a conservative metric and 96% using an unrealistic optimistic metric. I would not worry about a complete pension fund failure but a partial one is possible. There are strict rules to pension termination including 100% funding. So AT&T would need to come up with $9B to go that route. Don’t worry about a closed fund that’s reasonably funded. It will most likely be there for you. Although those who left last year and took the lump sum made a wise choice in hindsight
If the value of your lump goes down that's reflecting the fact that better bond returns are available to you as an investor. It's actuarially equivalent.
Most Americans are mathematically illiterate. Folks like that prefer to fixate on bright shiny objects, such as the current Powerball jackpot or the present cash value of a pension.
As of April mine is down over 100K and will only continue to get considerably worse through November and would not at all be shocked if it down 200K after all is said and done. Depending on your age and amount of your lump sum this is something to indeed be concerned with. If I decide to ride it out for three more years I would be taking a $66,000.00 haircut for those three years, all the while hoping rates recover is a fools game
If your taking the monthly that comes with a different set of concerns
Someone is severely misinformed about pensions.
- The company can not reduce, change or eliminate the pension payout at the companies disretion.
- Pension plans in America, require certain levels of funding. When not meeting those levels, companies can be required to add funds to help boost the fund to the required levels
- Companies are generally only permitted to dip into pension funds, during M/A type activity. AT&T has dipped into the pension funds during several mergers.
Again, the company can only get so much while maintaining funding levels
- The company declares bankruptcy. PBGC will become responsible for the pension payout. There will be changes, possibly hit payout limits, although they are typically pretty high, think mostly just airline pilots hit those limits
The big difference, is that Lump Sum options will no longer be available.
I took lump sum, because I compared the AT&T monthly payouts to an annuity that I could purchase. With very little shopping involved, I found something that was ever so slightly less.
Flexibility of having the nearly 1M in my bank, and taking it when I want, turned out to be the best choice for me
Be prepared to ride it out. Don't worry about your lump sum, it will take care of itself. You may need to work a few years longer than you planned, but that's more money in your 401K. It's highly unlikely a recession will last more than a year.
I think people get confused (maybe that's what they want) when they use the term "annuity".
The company does NOT purchase an annuity with you as the benefactor.
The correct term is "monthly payment" and is paid as long as the company sees fit to keep paying it. The monthly payment can be changed, reduced or eliminated at the company's discretion.
If an actual "annuity" is appealing to you it might be safer to take the lump sum payment,, have it placed into an IRA in your name and then purchase an actual annuity or ladder several annuities over the years in IRA''s.
Get with a financial advisor for all the specifics but make sure you know that whatever ATT company you retire from, they will NOT purchase an annuity in your name.
Annuity=trusting AT&T to be frugal with your $$$.
Foolish.