AT&T Unexpectedly Cuts Retiree Benefits

A glass jar filled with dollars was placed on the table

AT&T has angered many former employees by reducing life insurance and death benefits as of January 1 for approximately 220K former workers.  One former employee, Dean Allison, told The Wall Street Journal that he accepted an early buyout offer to retire in 1998 and was promised a death benefit of $63K would go to his wife.  AT&T notified him that they will pay no more than $15K if he dies.  Managers who retired had their life insurance pegged at 1x their annual pay.  That number has been reduced to just $15K.  Putting more flames on the fire, the company has excluded executives from the death benefit reduction.  The heirs of Randall Stephenson, who left the company in 2020 after serving as its CEO, will receive a massive payout of $3.6 million under his current life insurance plan.  AT&T’s finance chief John Stephens has the most to gain from the benefits reduction.  The company offered to pay him an extra $500K if he meets any one of three financial targets, one of which is cutting $1 billion or more from AT&T’s obligation for retiree pension and benefits.

https://www.wsj.com/articles/at-t-slashed-promised-life-insurance-for-former-workersand-time-runs-out-at-year-end-11640544022

Some Investment Advisors Throwing Out The 4% Rule For Retirees

A glass jar filled with coins and dollars

A long-time rule of thumb for retirees is that they can safely take out 4% of their nest egg each year without the possibility of running out of funds before they pass away.  However, with the bull market run we have recently seen, many question whether this is still a safe bet.  Of course, much depends on your asset allocation.  If you are in all cash, you are probably looking at only a 2% withdrawal rate until interest rates start rising significantly.  Those who keep 20-50% in stock can reasonably draw between 2.5-2.8% per year and the money should last for 40 years, a little over 3% and it should last for 30 years, and just over 6% if you want the portfolio to last for 15 years, according to Morningstar Direct.

https://www.barrons.com/articles/retirement-withdrawal-strategy-4-percent-rule-51639177201

Pacific Grove, CA Tips On ROTH IRA Conversions

Tax rates are likely to go up under the Biden administration, and one hedge against this is to convert an existing IRA or 401(k) to a Roth IRA.  You will have to pay taxes on the amount converted but then the IRA grows tax free.  Talk to a tax advisor—and make sure you wait closer to year-end before doing it in case tax rates increase this year.  Or let Monterey Bank or one of our other local banks walk you through the rules.  There are few—for instance, there are no Required Minimum Distributions from this type of IRA.  Talk to Monterey Credit Union, Monterey County Bank or many of the other local financial institutions to open an account, or a financial advisor for advice.

Pebble Beach, CA Retiring? Think About Decluttering

The November 2020 issue of the Kiplinger Retirement Report had an article on retiring and getting rid of all of that extra junk that you have lying around—while making a profit!  For instance, called Decluttr (available on both the Apple iPhone and Google Android) where all you have to do when selling electronics (as well as accessories like video games, DVDs and CDs) is input the make and model.  They will email you a price quote that is good for four weeks and a shipping label for mailing the item.  No need to send in photos or any information, just wipe all personal data clean and send the equipment in.  Another interesting app is The RealReal which will buy designer clothes.  You just bag them up and mail them in and they apparently give a decent price for used clothes. If you have things to give away, I recommend the Church Mouse, which is owned by the First United Methodist Church in Pacific Grove.  They have always been kind to us and god bless them!

https://butterflychurchpg.wixsite.com/butterflychurch/ministries

Monterey, CA Retiring? Think About Decluttering

The November 2020 issue of the Kiplinger Retirement Report had an article on retiring and getting rid of all of that extra junk that you have lying around—while making a profit!  For instance, called Decluttr (available on both the Apple iPhone and Google Android) where all you have to do when selling electronics (as well as accessories like video games, DVDs and CDs) is input the make and model.  They will email you a price quote that is good for four weeks and a shipping label for mailing the item.  No need to send in photos or any information, just wipe all personal data clean and send the equipment in.  Another interesting app is The RealReal which will buy designer clothes.  You just bag them up and mail them in and they apparently give a decent price for used clothes.