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AT&T is in the process of cutting costs. Just recently AT&T announced it was cutting spending on healthcare benefits. The new healthcare cut could cost an individual household over $80,000 in healthcare expenses if they do not retire in 2020. According to AT&T’s Summary Plan description, eligible former employees receive an HRA credit of $2,700 for themselves and $1,500 for an eligible dependent. This adds up to a total HRA credit of $4,200 per year. For a couple with a 20 year life expectancy this could account for $84,000 in total HRA credit. AT&T recently announced that employees who retire after January 1st, 2021 will no longer receive this benefit. This cut is a part of AT&T’s bigger plan to reduce spending by $10 billion. AT&T has also conducted layoffs in certain areas as another cost-cutting measure.

In times of recession corporations have traditionally decreased or suspended benefits. In the 2008 recession almost 20% of corporations who employ at least 1,000 people decreased or froze their 401(k) matching contributions. During the current recession several major companies including ExxonMobil, Tenet Health & Amtrak have suspended their matching contributions. A study has shown that employees who don’t take advantage of the company match program miss out on over $1,000 of potential retirement savings each year.

If your company match program does end, it’s a good idea to calculate exactly how much this will affect your retirement savings plan. Maintaining your retirement personal 401(k) contributions and possibly increasing them if you have the funds can help compensate during the period where benefits are suspended. If a company does decide to suspend 401(k) matching benefits it is typically employees who find themselves in the middle or later stages of their career who are hurt the most. It is wise to speak with a financial advisor about your options in this situation.

Securities through FSC Securities Corporation, member FINRA/SIPC and investment advisory services offered through The Retirement Group, LLC, a registered investment advisor not affiliated with FSC Securities Corporation or AT&T. Office of Supervisor Jurisdiction: 5414 Oberlin Dr #220, San Diego CA 92121. 800900-5867

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AT&T Summary Plan Description HRA. AT&T, 2018, pp. 10, 11.

Tags: Financial Planning, Lump Sum, Pension, Retirement Planning