More Cargo Cutouts
05-18-2024, 11:57 AM
#61
Gets Weekends Off
Joined APC: Jul 2008
Posts: 745
So why did you come to a place with a pension if it is so bad and so expensive. If Delta is blowing away our pension with an 18% DC plan with cash over cap, then they must have still been better with their previous 16% with cash over cap.
Also, how is their DC plan protected from IRS chafes and changes to the law? Did they get some sort of carve out that protects their 401 that nobody else gets?
So tell me, how much would you have to save to get $169,000 for life after retirement? You talked about dying early, but what if you live well into your 90’s or longer?
Also, how is their DC plan protected from IRS chafes and changes to the law? Did they get some sort of carve out that protects their 401 that nobody else gets?
So tell me, how much would you have to save to get $169,000 for life after retirement? You talked about dying early, but what if you live well into your 90’s or longer?
It’s an example of what a pilot might have in retirement funds at age 65 if his/her career mirrored that of the following “fictitious” pilot, who I’ll refer to as “Stevie Canyon.”
Based on my calculations, Stevie Canyon will have $7,947,454.49 in retirement income available at age 65.
Stevie Canyon’s retirement number is based on the following:
- Hired at age 30 and retired at age 65
- 2019 pay rates (captain and first officer) *Note: No raise - ever!
- Career progression: A220 F/O x 4 yrs; A320 F/O x 4 yrs; A330 F/O x 4 yrs; A350 F/O x 4 years; A220 Capt x 4 yrs; A320 Capt x 4 hrs; A330 Capt x 4 yrs; and A350 Capt x 7 yrs
- Yearly salary based on 80 hrs/mo x 12 months + 5%/yr profit sharing
- Defined Contribution (DC) 16%/yr
- 401k contribution of 10%/yr + $5,000 “catch up” each year starting at age 50
- IRS DC and 401k contribution limit of $69k/yr increasing to $74k with $5,000 “catch up” added at age 50
- Annual rate of return of 7%. *Note: Looking at the S&P 500 for the years 1992 to 2021, the average stock market return for the last 30 years is 9.89% (7.31% when adjusted for inflation)
- No adjustment for training - Upgrade or CQ
- Retirement savings prior to age 30 are not included
- Spousal retirement savings are not included
Total career salary: $9,116,442.73
Average yearly salary: $260,469.79
Final year A350 captain salary: $356,680.80
*Note: In Stevie Canyon’s 21st year (age 51), he/she reaches the IRS limit for 401k and DC contributions. From this year on, excess DC money will be paid as additional salary. This is why I strongly believe it should be “optional” to receive this money as taxable income versus having it put into an additional retirement account that is taxed at a later date. Given the amount of retirement income Stevie Canyon will have, he/she may not want or need more. He/she may still have expenses and quality of life improvements the excess money can be used for.
Financial advisors suggest withdrawing 4% a year from retirement accounts. If you calculate your living expenses at age 65 to be $80k/yr, for example, you will need $2 million in retirement savings. *Note: Additional income, i.e., Social Security, military retirement, PBGC benefits, HSA, etc… are not included in the calculation.
The quickest way to increase the withdrawal power of your retirement nest egg by $1 million is to decrease your living expenses by $40,000/yr.
$7,947,454.49 x 4% = $317,898.18. This amount equates to approximately 89.126% of Stevie Canyon’s final average earnings (FAE) of $356,680.80.
05-18-2024, 12:50 PM
#63
Line Holder
Joined APC: Mar 2024
Posts: 56
It’s also held us back in negotiations. We literally chose 14% DOS pay rates so we could get a pension increase. Laughable.
haha. You’re going to tell someone in their 30s to trust the pension in case you live into your 90s??? Oh okay. We don’t even know our flight schedule come October nor the target amount of pilots the company wants. But you want me to have my retirement be pension heavy and dependent on the company staying in business another 60 years???
I’m not saying get rid of the pension. Just go after the easy money and increase our DC plan for everyone with cash over cap. Give the old guys who love pensions their multiplier bump or some kind of bonus. It’s better risk management than what TA1 proposed.
Last edited by Moneybags; 05-18-2024 at 01:05 PM.
05-18-2024, 01:06 PM
#64
On Reserve
Joined APC: Sep 2020
Posts: 14
Obviously there’s more reasons than retirement to choose an airline. The pension was a drawback of FedEx to me because I see it as a waste of money and it likely won’t be there in current form when I retire.
It’s also held us back in negotiations. We literally chose 14% DOS pay rates so we could get a pension increase. Laughable.
is this a serious question? Do you know what cash over cap is? It’s a contract provision to ensure a pilot receives contributions from the company regardless of IRS limits. If a pilot makes $400k, he will receive 18% of 400k, regardless of the 369k IRS limit. If that IRS limit goes down to 300k the next year, or it stays flat, the pilot will still receive 18% contributions of his salary, regardless of the limit. Obviously anything over the limit is taxable income. But better than not receiving anything. We do not have cash over cap.
about 30k a year assuming a 15 year retirement and 6.5% return.
haha. You’re going to tell someone in their 30s to trust the pension in case you live into your 90s??? Oh okay. We don’t even know our flight schedule come October nor the target amount of pilots the company wants. But you want me to have my retirement be pension heavy and dependent on the company staying in business another 60 years???
I’m not saying get rid of the pension. Just go after the easy money and increase our DC plan for everyone with cash over cap. Give the old guys who love pensions their multiplier bump or some kind of bonus. It’s better risk management than what TA1 proposed.
It’s also held us back in negotiations. We literally chose 14% DOS pay rates so we could get a pension increase. Laughable.
is this a serious question? Do you know what cash over cap is? It’s a contract provision to ensure a pilot receives contributions from the company regardless of IRS limits. If a pilot makes $400k, he will receive 18% of 400k, regardless of the 369k IRS limit. If that IRS limit goes down to 300k the next year, or it stays flat, the pilot will still receive 18% contributions of his salary, regardless of the limit. Obviously anything over the limit is taxable income. But better than not receiving anything. We do not have cash over cap.
about 30k a year assuming a 15 year retirement and 6.5% return.
haha. You’re going to tell someone in their 30s to trust the pension in case you live into your 90s??? Oh okay. We don’t even know our flight schedule come October nor the target amount of pilots the company wants. But you want me to have my retirement be pension heavy and dependent on the company staying in business another 60 years???
I’m not saying get rid of the pension. Just go after the easy money and increase our DC plan for everyone with cash over cap. Give the old guys who love pensions their multiplier bump or some kind of bonus. It’s better risk management than what TA1 proposed.
05-19-2024, 05:19 AM
#67
Gets Weekends Off
Joined APC: Aug 2023
Posts: 438
This was sent by a person at Delta describing the retirement with some assumptions. It was written prior to the last contract:
It’s an example of what a pilot might have in retirement funds at age 65 if his/her career mirrored that of the following “fictitious” pilot, who I’ll refer to as “Stevie Canyon.”
Based on my calculations, Stevie Canyon will have $7,947,454.49 in retirement income available at age 65.
Stevie Canyon’s retirement number is based on the following:
- Hired at age 30 and retired at age 65
- 2019 pay rates (captain and first officer) *Note: No raise - ever!
- Career progression: A220 F/O x 4 yrs; A320 F/O x 4 yrs; A330 F/O x 4 yrs; A350 F/O x 4 years; A220 Capt x 4 yrs; A320 Capt x 4 hrs; A330 Capt x 4 yrs; and A350 Capt x 7 yrs
- Yearly salary based on 80 hrs/mo x 12 months + 5%/yr profit sharing
- Defined Contribution (DC) 16%/yr
- 401k contribution of 10%/yr + $5,000 “catch up” each year starting at age 50
- IRS DC and 401k contribution limit of $69k/yr increasing to $74k with $5,000 “catch up” added at age 50
- Annual rate of return of 7%. *Note: Looking at the S&P 500 for the years 1992 to 2021, the average stock market return for the last 30 years is 9.89% (7.31% when adjusted for inflation)
- No adjustment for training - Upgrade or CQ
- Retirement savings prior to age 30 are not included
- Spousal retirement savings are not included
Total career salary: $9,116,442.73
Average yearly salary: $260,469.79
Final year A350 captain salary: $356,680.80
*Note: In Stevie Canyon’s 21st year (age 51), he/she reaches the IRS limit for 401k and DC contributions. From this year on, excess DC money will be paid as additional salary. This is why I strongly believe it should be “optional” to receive this money as taxable income versus having it put into an additional retirement account that is taxed at a later date. Given the amount of retirement income Stevie Canyon will have, he/she may not want or need more. He/she may still have expenses and quality of life improvements the excess money can be used for.
Financial advisors suggest withdrawing 4% a year from retirement accounts. If you calculate your living expenses at age 65 to be $80k/yr, for example, you will need $2 million in retirement savings. *Note: Additional income, i.e., Social Security, military retirement, PBGC benefits, HSA, etc… are not included in the calculation.
The quickest way to increase the withdrawal power of your retirement nest egg by $1 million is to decrease your living expenses by $40,000/yr.
$7,947,454.49 x 4% = $317,898.18. This amount equates to approximately 89.126% of Stevie Canyon’s final average earnings (FAE) of $356,680.80.
It’s an example of what a pilot might have in retirement funds at age 65 if his/her career mirrored that of the following “fictitious” pilot, who I’ll refer to as “Stevie Canyon.”
Based on my calculations, Stevie Canyon will have $7,947,454.49 in retirement income available at age 65.
Stevie Canyon’s retirement number is based on the following:
- Hired at age 30 and retired at age 65
- 2019 pay rates (captain and first officer) *Note: No raise - ever!
- Career progression: A220 F/O x 4 yrs; A320 F/O x 4 yrs; A330 F/O x 4 yrs; A350 F/O x 4 years; A220 Capt x 4 yrs; A320 Capt x 4 hrs; A330 Capt x 4 yrs; and A350 Capt x 7 yrs
- Yearly salary based on 80 hrs/mo x 12 months + 5%/yr profit sharing
- Defined Contribution (DC) 16%/yr
- 401k contribution of 10%/yr + $5,000 “catch up” each year starting at age 50
- IRS DC and 401k contribution limit of $69k/yr increasing to $74k with $5,000 “catch up” added at age 50
- Annual rate of return of 7%. *Note: Looking at the S&P 500 for the years 1992 to 2021, the average stock market return for the last 30 years is 9.89% (7.31% when adjusted for inflation)
- No adjustment for training - Upgrade or CQ
- Retirement savings prior to age 30 are not included
- Spousal retirement savings are not included
Total career salary: $9,116,442.73
Average yearly salary: $260,469.79
Final year A350 captain salary: $356,680.80
*Note: In Stevie Canyon’s 21st year (age 51), he/she reaches the IRS limit for 401k and DC contributions. From this year on, excess DC money will be paid as additional salary. This is why I strongly believe it should be “optional” to receive this money as taxable income versus having it put into an additional retirement account that is taxed at a later date. Given the amount of retirement income Stevie Canyon will have, he/she may not want or need more. He/she may still have expenses and quality of life improvements the excess money can be used for.
Financial advisors suggest withdrawing 4% a year from retirement accounts. If you calculate your living expenses at age 65 to be $80k/yr, for example, you will need $2 million in retirement savings. *Note: Additional income, i.e., Social Security, military retirement, PBGC benefits, HSA, etc… are not included in the calculation.
The quickest way to increase the withdrawal power of your retirement nest egg by $1 million is to decrease your living expenses by $40,000/yr.
$7,947,454.49 x 4% = $317,898.18. This amount equates to approximately 89.126% of Stevie Canyon’s final average earnings (FAE) of $356,680.80.
First, Stevie's career is 35 years. At Fedex, the pension is maxed out at 25 years. Using the 4% withdrawl that you used, that pension would be worth $4.225 million.
On top of the pension, Fedex also gets a 9% DC plan. In 25 years, that plan could easily be worth $2.3 million using the same 7% ROR. The total worth of the two plans in 25 years is $6.525 million compared to the $7.97 million achieved in 35 years.
The numbers you used also account for pilot contributions of their own money, while the numbers above for Fedex were only company money. If you add in the a pilot contributing to their 401, that increases the amount by $1.6 million. That total in 25 years is now $8.125 million.
These numbers don't include the potential for a Fedex pilot to have 15 years of excess disability payments going into the plan which would increase the company money added or decrease the pilot money added which could be invested elsewhere.
05-19-2024, 05:28 AM
#68
Gets Weekends Off
Joined APC: Aug 2023
Posts: 438
Obviously there’s more reasons than retirement to choose an airline. The pension was a drawback of FedEx to me because I see it as a waste of money and it likely won’t be there in current form when I retire.
It’s also held us back in negotiations. We literally chose 14% DOS pay rates so we could get a pension increase. Laughable.
is this a serious question? Do you know what cash over cap is? It’s a contract provision to ensure a pilot receives contributions from the company regardless of IRS limits. If a pilot makes $400k, he will receive 18% of 400k, regardless of the 369k IRS limit. If that IRS limit goes down to 300k the next year, or it stays flat, the pilot will still receive 18% contributions of his salary, regardless of the limit. Obviously anything over the limit is taxable income. But better than not receiving anything. We do not have cash over cap.
about 30k a year assuming a 15 year retirement and 6.5% return.
haha. You’re going to tell someone in their 30s to trust the pension in case you live into your 90s??? Oh okay. We don’t even know our flight schedule come October nor the target amount of pilots the company wants. But you want me to have my retirement be pension heavy and dependent on the company staying in business another 60 years???
I’m not saying get rid of the pension. Just go after the easy money and increase our DC plan for everyone with cash over cap. Give the old guys who love pensions their multiplier bump or some kind of bonus. It’s better risk management than what TA1 proposed.
It’s also held us back in negotiations. We literally chose 14% DOS pay rates so we could get a pension increase. Laughable.
is this a serious question? Do you know what cash over cap is? It’s a contract provision to ensure a pilot receives contributions from the company regardless of IRS limits. If a pilot makes $400k, he will receive 18% of 400k, regardless of the 369k IRS limit. If that IRS limit goes down to 300k the next year, or it stays flat, the pilot will still receive 18% contributions of his salary, regardless of the limit. Obviously anything over the limit is taxable income. But better than not receiving anything. We do not have cash over cap.
about 30k a year assuming a 15 year retirement and 6.5% return.
haha. You’re going to tell someone in their 30s to trust the pension in case you live into your 90s??? Oh okay. We don’t even know our flight schedule come October nor the target amount of pilots the company wants. But you want me to have my retirement be pension heavy and dependent on the company staying in business another 60 years???
I’m not saying get rid of the pension. Just go after the easy money and increase our DC plan for everyone with cash over cap. Give the old guys who love pensions their multiplier bump or some kind of bonus. It’s better risk management than what TA1 proposed.
So, only the percentage of income contributed to the DC plan is protected, nothing else. I wouldn't say that their plans are protected from changes to the law or IRS rule changes.
So, you can guarantee $169,000 per year for life by investing $30,000 per year. Well, you are in the wrong business then, because using annuity calculators, the best that these investment companies can do is $41,000 per year for 25 years with no survivor benefit. And that is now, one of the best times to purchase an annuity in the last 20 years. Just 5 years ago, that annuity would have been much more expensive.
05-19-2024, 05:36 AM
#69
Gets Weekends Off
Joined APC: Jul 2008
Posts: 745
Thanks for that Viper. There are a few items that do need to be pointed out for comparison purposes.
First, Stevie's career is 35 years. At Fedex, the pension is maxed out at 25 years. Using the 4% withdrawl that you used, that pension would be worth $4.225 million.
On top of the pension, Fedex also gets a 9% DC plan. In 25 years, that plan could easily be worth $2.3 million using the same 7% ROR. The total worth of the two plans in 25 years is $6.525 million compared to the $7.97 million achieved in 35 years.
The numbers you used also account for pilot contributions of their own money, while the numbers above for Fedex were only company money. If you add in the a pilot contributing to their 401, that increases the amount by $1.6 million. That total in 25 years is now $8.125 million.
These numbers don't include the potential for a Fedex pilot to have 15 years of excess disability payments going into the plan which would increase the company money added or decrease the pilot money added which could be invested elsewhere.
First, Stevie's career is 35 years. At Fedex, the pension is maxed out at 25 years. Using the 4% withdrawl that you used, that pension would be worth $4.225 million.
On top of the pension, Fedex also gets a 9% DC plan. In 25 years, that plan could easily be worth $2.3 million using the same 7% ROR. The total worth of the two plans in 25 years is $6.525 million compared to the $7.97 million achieved in 35 years.
The numbers you used also account for pilot contributions of their own money, while the numbers above for Fedex were only company money. If you add in the a pilot contributing to their 401, that increases the amount by $1.6 million. That total in 25 years is now $8.125 million.
These numbers don't include the potential for a Fedex pilot to have 15 years of excess disability payments going into the plan which would increase the company money added or decrease the pilot money added which could be invested elsewhere.
05-19-2024, 06:10 AM
#70
Gets Weekends Off
Joined APC: Aug 2021
Posts: 106
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