Understanding the Modified Rule of 75 – AT&T Retiree Benefits

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An abundance of people “retire” from AT&T, but are you aware, that doesn’t necessarily make you an official “retiree” under the classification of benefits?  Will these dental, medical and life insurance benefits be competitive to those you received while you were an active employee…

Here are a few examples of the varying types of retirement —

1) I’m done working and don’t intend to seek another job, so I’m “retired.”

This is significant, but it doesn’t mean you’re qualified to collect a pension, social security or qualify for retiree discounted services through the company.

2) I’m 65, and I plan on retiring

Congratulations, at the age of 65 you deserve to retire. In the eyes of the federal government, you are officially “retired”, but this is not the case at AT&T. To AT&T, unless you have worked for at least 10 years, you simply don’t become an official “retiree” with retiree benefits” with a retirement party and retiree discounts. Even though the government may say so, to AT&T, you must meet certain qualifications to be considered a “retiree”.

3) I intend to leave the company, I’m not retiring from work, but I am an official retiree.

This category pertains to me.  I’m too young to be retired as in done working/earning, collecting social security and a pension but am at an age I wouldn’t typically consider retiring at.  This just means I have qualified through the retiree criteria by AT&T and will leave with retiree benefits.

AT&T Retirement Benefits

It is significant to note that the reference to retiree benefits for the intention of this conversation has nothing to do with pension money, 401K or social security. It’s intention is to determine medical and dental insurance and in some cases, life insurance provided at subsidized levels for eligible retirees.  In addition, any product/service discounts provided by AT&T to those who qualify is comprised in the “retiree benefits”.

In order to retire from AT&T and receive these particular retiree benefits,  you must meet the criteria of what’s called the “modified rule of 75.”  It was initially refered to as the “rule of 75” but it was then changed along the way some years ago, hence the addition of “modified.”

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AT&T’s modified rule of 75

An individual is deemed eligible for retirement benefits through the modified rule of 75 when a person’s age plus years of service totals 75. Important to consider that only net credited service counts, for example if you were employed for the company for 15 years, but took a 12-month leave of absence, then your years of service would be 14 instead of the 15 as leave of absences “stop the clock” on any pension accumulation.

The current Modified rule of 75 reads:

Age and service must equal 75, and you must be a minimum of 50 years old with one exception — you qualify for retiree benefits when you have 30 years of net credited service at any age.

Here’s how it maps out:  You are qualified if you are:

  • 50 years old with 25 years of service
  • 55 years old with 20 years of service
  • 65 years old with 10 years of service
  • or any age with 30 years of service

Net credited service, in regards to pensions, is calculated down to the very DAY so be sure you are aware of your exact NCS date.

How the Number 75 Affects Your AT&T Retirement Benefits

Anyone nearing retirement should know his or her number. That is, how much you need saved to retire. As an AT&T employee nearing retirement, there’s another important number to know. You could say it’s just as important as the target amount you plan to save in your AT&T 401(k) plan to help supplement your AT&T pension. The number is 75, and it can greatly impact your AT&T retirement benefits.
That’s because AT&T relies on the “modified rule of 75” to determine an employee’s retirement eligibility, pension and retiree medical benefits.


You are eligible for a vested pension benefit after five years of service, but your benefit will be negatively affected if you do not reach the age AND service breakpoints for your employment position, as shown in the chart below. This is commonly known as the modified rule of 75 since the combinations add up to 75 in most cases. However, you must meet BOTH minimum requirements.

Other Important Things to know

The AT&T modified rule of 75 can be misleading since not every combination of 75 points applies.

For example, let’s assume you have 24 years of service and are age 51. Although the combination adds up to 75 (24+51=75), you do not qualify because you fail to meet both minimum requirements at each breakpoint.

Additionally, you may receive a reduced pension benefit if you take your benefit prior to age 55, even if your combination meets the 75-point rule. If you’re are a union employee with 30 or more years of service, however, the pre-55 reduction does not apply.

For AT&T management employees who meet the 75-point rule but don’t have 30 years of service, their pension benefit will be reduced if taken before age 55.

If you do not meet the 75-point rule yet are pension eligible (5 years of service), you will receive your earned AT&T pension at age 65. Taking it prior to age 65 will result in a significant reduction.

Further, employees who satisfy the modified rule of 75 may be eligible for subsidized retiree medical, dental, vision and life insurance benefits.

When it comes to planning for retirement, it’s difficult finding financial planning help for your specific situation. After all, how many planners know the ins and outs of your company’s pension benefit, 401(k) plan, etc. And in your case, as an AT&T employee, the Composite Corporate Bond Rate.

The one exception to modified rule of 75

There is an exception to the rule that exists. The one exception occurs when there is a special retirement package offered that adds age and/or service to your existing age and service to further the amount of employees eligible of the Modified Rule of 75. In this scenario, a 5/5 offer would add 5 years to both your age and service. Therefore, a 45 year old with 20 years of service can qualify for the Modified rule of 75 now as this special would bump his/her age up to 50 years old with 25 years of service, therefore making them eligible for the retiree medical and dental insurance and possibly supplemental life insurance.

Find out Where You Stand

If you are surplussed or right sized in that location or hub and are short of the important 75 points (Rule of 75), do everything possible to stay at the company until you hit these magical benchmarks.  Also, carefully go over the fine print.   AT&T offers to get you to 75 points but that extension only applies to ATT Health Care, which we delve into in this article(See article).  A key piece to keep in mind is that if you are laid off or surplussed from AT&T and are rehired within two (2) years after your Termination of Employment, this absence does not deem as a break in service (See ATT Rehire Article).   Some companies terminate jobs in one location or hubs but the job may be available in another city or hub.  Relocating is a common way many folks are able to reach Rule of 75 points, which will give you a vested pension and retirement healthcare.  If necessary,  transfer to a new city and rent a cheap apartment or even become a roommate for a year or two to get to 75 points You have the freedom to go home every weekend as you build up your credits.  When we talk to candidates who lost their job but have the ability to keep employment if they relocate, a majority choose not to.   This can be a huge mistake and could end up losing in some cases an excess of $100,000 in their pension benefits. The Rule of 75 most companies offer also provides for retirement healthcare, and could be a $1000 a month additional perk unavailable at your new job.

For more information or to find out how to maximize your benefits from the Rule of 75, speak with a retirement specialist.

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