Here’s how to decide between your AT&T Lump Sum or Monthly Pension

As an employee of Corporate Employee, one of the most important financial decisions you’ll make comes at the end of your career, as you quickly approach retirement: Should I choose a lump sum or a monthly annuity pension?

If you choose a lump sum, you receive a large sum of cash which you are able to invest however you want. Choose a monthly annuity, and you are guaranteed a monthly check for the rest of your life.


Given that there is no single right answer, you should look at the big picture instead. Make sure you also identify the size of your 401(k) account, social security benefit, and other potential assets.

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This is not an easy decision, because both options offer unique pros and cons. In certain cases, AT&T employees are in a position where they must make a life-altering choice in a limited amount of time. This article should give you a more grand idea of how to go about your benefits the correct way given your financial situation.


Learn how AT&T calculates your pension


There are three main factors that play a role in determining the size of your pension benefit: your years of service, pension band (for union employees only), and your income level.


The higher you score one each of those factors, the higher your pension benefit.


AT&T employees are eligible for vesting in their pension benefit after five years of service, but your benefit will be negatively influenced if you do not reach the age and/or service requirements for your employment position. Additionally, you may receive a reduced pension if you choose to elect your benefit before the age of 55, unless you are a union employee with 30 or more years of service.


Evaluate the Pros and Cons of A Lump Sum Pension


The primary benefit of choosing a lump sum pension is the high degree of flexibility that comes with it. You have complete control over how the money is invested, as well as how and when withdrawals are made.


Additionally, you have full authority over who is assigned as your beneficiary. The remaining balance of your accounts can be given to your children, charity of choice, or anyone else.


The main drawback of choosing a lump sum pension is that because these funds are meant to be invested, your capital is at risk when market downturns take place. This means that you will be responsible for managing this great sum of money through the rest of your life, you also have the option to partner with a financial professional who will hold your best interest in mind, and help you achieve your financial goals. With a sensible investment plan, you are able to reduce some of the market risk, while reaping the full benefit of any growth.


Evaluate the pros and cons of a Monthly Annuity Pension


Outliving your money is simply not an issue after choosing a monthly annuity pension. You are guaranteed a monthly check every month for as long as you live. Also, you won’t have to worry about market fluctuations or managing portfolio cash flows, as such factors won’t interfere with your elected pension plan.


If you are in good health conditions and have a family history of longevity, a monthly annuity pension may actually be the option that provides the most income overall.


On the other hand, because your annuity isn’t indexed to inflation, the purchasing power of those checks will decrease over time, meaning your income won’t be adjusted to the cost of living going forward. Contrary to this, a lump sum pension invested in an IRA offers you the full ability to choose investments that may drive your money to grow above the inflation rate.


Another characteristic of monthly annuity pensions you may want to consider are survivorship limitations. Only your spouse is eligible to become a beneficiary.


Monitor the Interest Rate


One variable that can influence your decision in selecting a pension is the corporate bond rate. AT&T often uses this data figure in order to calculate your lump-sum offer.


You should pay close attention to the interest rates used to calculate your AT&T pension payout, which is often called the composite corporate bond rate. The rate reported in November of the year before your commencement date will become the deciding factor in the amount of your lump sum.


In general, when rates are lower, lump-sum payouts increase, and vice versa. This means that rate changes may affect your decision on whether to retire early or continue working, as well as to take your annuity as a lump sum, or a monthly annuity.


Partner with an AT&T-Focused financial advisor


Once you have reviewed all the previous factors, your next step should be to speak to an AT&T-focused financial advisor, to answer any potential doubt as to what will work best for you.


You will want a financial advisor who can analyze your specific situation, and compare options for you. Your pension is a vital source of income for retirement. However, it’s only one part of your overall financial situation. There are many other factors to consider before choosing the option that’s best for you. Such factors include your AT&T savings, Social Security, marital status, and any other potential sources of income.


The Retirement Group is here to help.


As a company which has worked with AT&T employees and retirees for more than 30 years, we can create a complimentary AT&T-based financial plan for you within a single day.


In addition, here are some great questions to ask yourself before making your decision:


  • Will I need that income now, or later?
  • Am I concerned about the sustainability of AT&T’s pension plan?
  • Do I care about my remaining pension, for my children or charity?
  • How long am I likely to live?
  • How much do I really need for income from my investments of choice?
  • How much income will I require to protect my spouse upon my death?
  • Do I have an emergency fund for unexpected events?


At the end of the day, this is a very difficult decision, and it depends on your specific situation financially. Be sure to consider your options carefully, and preferably, with the guidance of an experienced and knowledgeable financial advisor.

The Retirement Group is not affiliated with nor endorsed by,,,,, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that focuses on transition planning and lump sum distribution. Neither The Retirement Group or FSC Securities provide tax or legal advice. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

The Retirement Group is a Registered Investment Advisor not affiliated with FSC Securities and may be reached at


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