tennisguru

For all this talk about improving retirement, would anyone be really bummed if in C2019 we didn't touch retirement at all but still got a strong boost in hourly pay rates, big soft pay changes (vacation, training, per diem, ADG, etc), and good QOL improvements (commuting policy, sick policy, DH policy, days off, etc)?

I'm not saying that's how it should work out in the end, but more wondering why there seems to be this hyper focus by the union on retirement?

Denny Crane

Ok, here is a novel thought. You should be beyotching about being forced to put it in your 401k!!!! I mean you don't have a choice do you? You can make more getting the money after tax any way.

My point is we do NOT have a choice where the 16% goes until the company contribution gets to the max at $275,000. Why should we have a choice if there is another type retirement plan available for the money to go into? The 16% is a "retirement" contribution and should go towards a retirement plan. That should stir the pot a little!!!

Denny

Trip7

Good try Denny. I control the investments in my 401k. I have zero control over the MBCBP plan investments. I'm a grown man. I can control my own money. Do not touch my DPSP Cash.

Secure the Bag

Bainite

Too late for guys that were here though bankruptcy, paycuts, stagnation and only have a few years left. Myself as an example, couldn't hold Capt on anything for first 16 years, making narrow body FO post BK wages for majority of career. Sure I'm finally making good money now after 20+ years, but not a whole lot of time left to try to make up for stolen pension.
I have over 7 years left so not as bad off as many who will age out sooner.

Tummy

I'll be disappointed if we don't get 20% DC, but I could see myself voting for it if the other parts were worth it.

I'll vote no to almost anything that includes a DB plan. It's almost a litmus test issue for me.

snowdawg

If recall our retirement was 60% of FAE of your last 3 years. I don't think its' out of reach for someone to be making $350,000 average. $210,000 a year would have been ones retirement income. That's $17,500 a month til you and your spouse pass. Again I don't remember the exact details of our retirement but I think the above is close.



Now the company pays 16% of your gross income, $350,000 x 16%= $56,000 a year vs $210,000 a year in retirement. One has to turn their monthly 16% contribution 4 times to equal what we had.



I think there's lots of room to go after the company to fund more and not us funding our own retirement. I don't mind pitching in but there's a disparity between what we get and what we would've had in retirement.

tennisguru

Most financial advisers recommend targeting a 4% yearly withdrawal from your retirement accounts to prevent actually reducing your nest egg. $210,000 is 4% of 5.25 million, so you'd need that much in investments at retirement to reach your hypothetical 60% FAE.

If you ONLY invest the 55k limit each year for 25 years, you'll end up with 4-5.5 million with an annual rate of return between 8-10%. You should pretty easily have a good chunk more than that if you do any decent amount of investing on top of that. Someone starting today with 30+ years to go should have a net worth at retirement of 8-10 million, if not more depending on your balance of saving vs spending. That means they could hit that 60% FAE earnings in retirement if they want.

All that is to say that right now the 16% DC will put you in the ballpark of the 60% FAE target at retirement. Naturally the math gets cloudier the older you are right now, and there are a lot of variables as to how people have spent their lives up to this point saving money vs spending it. It is probably harder for them to get close to that number right now with only a few years to go.

Schwanker

I don’t do the mega back door roth. It can be marginally beneficial for some folks in our position. It provides for some flexibility and a hedge on future taxes. It’s most beneficial to high earners whose company put a much lower % into there DC plan where hitting the $55K per year isn’t possible between company contributions on the 1st $275k and the $18.5k personal contribution. However, I do the standard backdoor Roth IRA.

I’m against this plan as it only defers the taxes, aims for a mediocre growth target, and costs are unkown. The salesjob is misleading. You either pay taxes now or when you withdraw funds from a tax deferred account. I’d much rather pay taxes now and aim for much better returns and cash in on long term capital gains and qualified dividends vs. what is being proposed. I’m certain I’d be far better off.

Tummy

Respectfully, the fact that a previous DB plan was 60% of FAE is irrelevant. For many people, that DB plan ended up at 0% of FAE.

The pertinent question is what value would a DB provide compared to the value we could extract with an equivalent amount of negotiating and research capital invested elsewhere.

badflaps

Delta has never paid a reasonable retirement.(Except management) I doubt whether they will start now.