Originally Posted by O R C A

Only conjecture and a far stretch at that. I don’t actually know of any foul play. I do know ALPA has a calculator they won’t release. Basically ALPA is going to release a FAQ document and not much more. I just don’t know why some advisors seem geared to sell the plan to all pilots.

I would think advisors would recommend young pilots with long time frames to Opt Out. Subpar returns over long periods of time really hampers performance. In a land of possibly really high mortgage rates, unknown future taxes, unknown inflation, and a plethora of other variables, it seems there are big pitfalls to being locked into this plan and they aren’t being talked about.

Originally Posted by NuGuy

Actually, there is a good dose of good ole' Wall Street greed involved as well. As I'm sure you know, Wall Street is just a casino, albeit one where the players are stratified, and their odds change depending on where they are in the pecking order. If you're juiced in, you have better odds to turn a buck. If you are a retail consumer, then you're odds are not as good. But the key here is that is like a casino, Wall Street only makes the good coin with the churn.

Money kept in pension plans is conservative money that is all locked up in bonds and VERY stable equities. A very nominal rate of return, along with a historically average interest rate is all it takes to keep DB plans funded. 30 year mortgages? Same thing. The money is locked up, and it does Wall Street no good just sitting there (the home buyer doesn't figure into this calculation, AT ALL). In either case, there is very little opportunity for Wall Street to make any money off of that.

So how does Wall Street get their grubby little hands on it? Push people out of pensions and into 401k style plans where it is the complete opposite. 401ks are nothing but churn, and people are practically mandated by the government to contribute every two weeks. Where would Wall Street be without the billions of dollars flowing into those index funds every two weeks? Mortgages? Same thing, lets let people cash out the stable equity in their homes with home equity loans. When even that wasn't enough, hey, sub-prime loans so we can get more suckers playing the game.

In both cases, Wall Street preys on people's inherent nature to get sucked into gambling, like it's the track, and to do everything they can do to not save money.

I would argue that if you want to be a real estate wealth builder like GF, DC plans are not the ideal setup. If you are interested in that program, you'd be much better off in a classic DB pension, where you contribute nothing, have guaranteed income on the back end, and use all of your available cash towards investing in real estate and related activities, without a requirement to use any of your own money for retirement.

Originally Posted by Gunfighter

Thanks for the additional perspective. I guess a more correct statement would.have been "In the absence of pensions, 401k plans provide incentive to work longer". I'm not saying it's a conspiracy, it's actually good economic policy to keep people contributing to GDP longer.

Originally Posted by Trip7

Agreed 100% IMO 401K should be a retirement supplement at our income level. Folks should focus on building assets and wealth outside the 401k before maxing it out. Only thing I make sure to max out is the HSA.

Originally Posted by myrkridia

ALPA is not selling this to you. They negotiated for a plan that they believe will benefit most pilot's retirement plan and gave current pilots the option to opt out. ALPA gets less dues money the more pilots opt out. As an anecdote, my personal financial advisor (who also benefits from me having more money to put in my investment accounts) also came to the conclusion that I should opt in.

There is no nefarious incentive for anyone to sell this to you, other than they believe it's a good deal.

Originally Posted by bozo99

Pursuing high risk asset classes outside of qualified plans prior to saving for retirement leads to high variance outcomes. IMO it is also dangerous advice.

For many pilots, Delta's non-discretionary employer contributions likely saves them from themselves.

Originally Posted by bozo99

Pursuing high risk asset classes outside of qualified plans prior to saving for retirement leads to high variance outcomes. IMO it is also dangerous advice.

For many pilots, Delta's non-discretionary employer contributions likely saves them from themselves.

Originally Posted by ancman

I didn’t see Trip implying that pilots should build wealth outside of a 401(k) using high-risk asset classes.

Those who want to invest primarily in high-risk assets have likely already opted out and will continue doing so. The more fiscally conservative pilots who are still on the fence about this decision likely aren’t going to be the ones putting all of their eggs in a high-risk basket.

I know there are a few notable examples of pilots being reckless with high-risk investing, but I believe that the vast majority of the pilot population doesn’t need this plan to save them from themselves.

Originally Posted by Planetrain

ALPA gets MORE dues money when pilots opt out. I think you said it backwards.

Originally Posted by bozo99

Bro, that’s exactly what he’s saying. The very previous post he was advocating for putting 100% of his portfolio in concentrated domestic small caps.

Also “fiscally conservative” is a government economic policy description and does does not really apply to asset allocation. I think you are trying to articulate the concepts of conservative vs aggressive asset allocation. “Conservative” means something completely different in an investment context.