MBCBP implementation announced…
#371
Gets Weekends Off
Joined APC: Oct 2014
Posts: 904
#372
Line Holder
Joined APC: May 2013
Posts: 49
So I listened to the engage podcast. They said it was an 8% return even though they are mirroring the black rock fund that has a sub 5% return for the last 10 years. With the plan having to stay 60/40 where are they getting that number?
#373
Gets Weekends Off
Joined APC: Sep 2005
Posts: 1,125
Every financial advisor that has looked into this for the most part says to OPT IN based on tax savings and wealth maximization.
But there is more to life than just maxing every cent you can for your later stages of life.
For those of us getting spill cash, we are already on track to have a wonderful retirement.
We’ve already won.
I use my spill cash every year to fund IRAs, and a taxable brokerage account and also some fun money. Some years more, some less.
This is win/win for us. Either get the forced savings, or choose what you want to do with it including having some fun. Absolutely nothing wrong with either path.
I want the optionality. Same reason I fly here and not Southwest or a similar “single fleet” airline.
I’m OUT.
But there is more to life than just maxing every cent you can for your later stages of life.
For those of us getting spill cash, we are already on track to have a wonderful retirement.
We’ve already won.
I use my spill cash every year to fund IRAs, and a taxable brokerage account and also some fun money. Some years more, some less.
This is win/win for us. Either get the forced savings, or choose what you want to do with it including having some fun. Absolutely nothing wrong with either path.
I want the optionality. Same reason I fly here and not Southwest or a similar “single fleet” airline.
I’m OUT.
#374
Gets Weekends Off
Joined APC: Apr 2018
Posts: 3,237
Why are you taking it so personally?! Just because I opted out doesn't mean that I'm saying your choice is wrong for you. My choice might not even be right for me! As things stand I don't want my money forced into an untouchable account..I want to try to invest it myself and/or buy fun things with the extra.
#375
I'd have to listen to the podcast again, but I believe they said "prior to the covid stock crash", it was making 8%/yr. During that time, it faired better than peers.
#376
Gets Weekends Off
Joined APC: Sep 2014
Posts: 4,994
But maybe you nailed it. I’ll know for sure in a few decades.
#377
Gets Weekends Off
Joined APC: Mar 2017
Posts: 861
My personal take on this so far as someone who has potentially over 30 years left is I'll be opting in. I am not a financial advisor nor do I consider myself an expert. When it comes to money I ask professionals and consider their pros and cons to make a decision. I look here and talk to pilots to get a sense of what others are doing, not to derive a decision but to bring up the feedback to my financial advisor and see what they say.
The chief complaints here are the relatively low return on this plan, having to make a one-time decision and not having the freedom to spend this money as we please. I view tying this money out of my direct control but under my name as a good thing since it keeps my life style creep in check and I can always invest or buy toys with the rest of my discretionary income. As for the low return, this could be an opportunity to rebalance my portfolio elsewhere and increase risk.
So far I've had a few entities recommend opting in while only pilots leaning toward opting out.
- My financial advisor, who benefits financially from my opting out (more money available to invest with them) has recommended staying in the plan.
- My union, which benefits from more dues money, has recommended this plan.
- The unions for United and FedEx have shown interest in this sort of plan for their pilots.
- A friend who works for Fidelity but has no skin in the game with regard to my finances told me that it sounds like a great deal and they'd take it without thinking twice.
Just offering my situation. I think anyone on the fence should consult with a professional. It's great that we are given the option to decide instead of being forced on way or another.
The chief complaints here are the relatively low return on this plan, having to make a one-time decision and not having the freedom to spend this money as we please. I view tying this money out of my direct control but under my name as a good thing since it keeps my life style creep in check and I can always invest or buy toys with the rest of my discretionary income. As for the low return, this could be an opportunity to rebalance my portfolio elsewhere and increase risk.
So far I've had a few entities recommend opting in while only pilots leaning toward opting out.
- My financial advisor, who benefits financially from my opting out (more money available to invest with them) has recommended staying in the plan.
- My union, which benefits from more dues money, has recommended this plan.
- The unions for United and FedEx have shown interest in this sort of plan for their pilots.
- A friend who works for Fidelity but has no skin in the game with regard to my finances told me that it sounds like a great deal and they'd take it without thinking twice.
Just offering my situation. I think anyone on the fence should consult with a professional. It's great that we are given the option to decide instead of being forced on way or another.
#378
Are these real people you talk to who feel this way? The supporters I know like the guaranteed deferred taxes and reduction in dues expenditure. I also find it hard to believe that all the financial advisors who are losing money by recommending their clients participate have universally fallen for a fallacy.
But maybe you nailed it. I’ll know for sure in a few decades.
But maybe you nailed it. I’ll know for sure in a few decades.
As much as I am against the plan being forced on every new hire, I may opt in for the short term dues savings. This plan works for me because of age, minimal spill cash, spousal income and passive income. Overall the plan is designed to keep money invested in Wall Street for decades to come. It does a disservice to new hires who could benefit from higher mid career liquidity.
-If you are over 60, opting in requires little thought. ALPA and DPMA arbitrage are players even if you go right back and remove the money at the beginning of the plan year. Short term tax deferral is also a reasonable play. This group is most likely to also have a financial advisor that agrees with their opinion. It makes sense and the advisor should be one with a fiduciary responsibility. That advisor will likely see a rollover into a managed account in a few years. Taken as cash, tomorrows rollover account could become today's boat or non managed account.
-The 50-60 crowd has a little more math to do based on a longer time horizon. The decision is likely based on too many external factors for a forum post.
-The under 50 crowd isn't as likely to have a financial advisor. Those that do are probably worried more about down payments and college savings than retirement tax planning. There are so many things that can happen between their current age and 65 that the minimal tax savings is marginal error in the final outcome. Using that cash to invest in a small NNN or apartment syndication is a better use for mid career financial stability. Sequestering MBCBP cash is retirement hoarding, not life planning.
In general short time horizon and or limited financial literacy support opting in. Long time horizon, especially paired with financial literacy favors opting out.
The over 60 opt in crowd are more inclined to be the ones singing the praises of MBCBP. I have yet to meet an under 30 pilot excited about the plan.
#379
Gets Weekends Off
Joined APC: Sep 2014
Posts: 4,994
…which is unfortunate, IMHO. I don’t even care if they “have one”. There’s value in simply consulting one on a recurring basis for anyone without significant formal financial training. No need to dive into any lifelong relationships or lock into large or perpetual fees - folks should just connect with a pro if for no other reason than to have a competent set of eyes checking your work. Course corrections under 50 are quite a bit easier than big changes or catch-up efforts later in life.
#380
I'm in the under 50 crowd and right now I'm thinking I'll opt out. I already have TSP, 401k and IRA the market, I'm not sure I need for another vehicle in the stock market. My issue with adding another stock market vehicle is the fact that I have to sell that asset to use it in retirement. I'd rather have more cash to add to my small stable of real estate properties that make me money now, even better, I don't have to sell them in retirement to get the cash flow. One thing keeping me on the edge is the fact that I try not to work that hard, so hitting the IRS limits hasn't been an issue (for now), so it might not be all that much. One the flip side, trying to plus up my Roth IRA via the Mega backdoor is severely hindered by this plan (if you don't want a bunch in the MBCBP). Having the ability to opt in/out down the road, or simply being able to direct how much of the overage went to cash vs mbcbp, would have been a nice choice, but I get the IRS doesn't like the us to have any semblance of control.
The other thing keeping me on the edge is that I like to live now, when I'm still physically able to freely move around. I used to never think much about that, but seeing more than a few people save, save, save, only to pass away within a year or so of reaching their "golden years," kinda changes your mindset. How am I supposed to blow all my cash on my aviation habit if it gets locked into a plan I can't use for 20+ years?.
The other thing keeping me on the edge is that I like to live now, when I'm still physically able to freely move around. I used to never think much about that, but seeing more than a few people save, save, save, only to pass away within a year or so of reaching their "golden years," kinda changes your mindset. How am I supposed to blow all my cash on my aviation habit if it gets locked into a plan I can't use for 20+ years?.
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