Airline Pilot Forums

Too many variables when depending on a 401 K due to the connection with stocks .
Interesting read.
Boomers Find 401(k) Plans Come Up Short - WSJ.com (http://online.wsj.com/article/SB10001424052748703959604576152792748707356.html)

Shocker. :rolleyes: The Me Generation will go down in history as the most financially irresponsible generation ever.

People like to point the finger at the Baby Boomers yet we have a generation of people here who seem to throw caution to the wind in regards ot the way they earn a living.

If Boomers can not make it in retirement after a lifetime of high earnings, 401K investments and social security a typical regional pilot is doomed. By the time most of us retire after a career of mediocre earnings in an era of no pensions, poor stock market performance and a well earned fear of home ownership the only solution will be soilent green.

Big and more painful changes lie ahead. I can not believe that social security will exist in 20 years and it seems likely that state and federal government will be forced to cut or eliminate many of the entitlements that government workers depend on.

A paradigm shift is needed.

Skyhigh

People like to point the finger at the Baby Boomers yet we have a generation of people here who seem to throw caution to the wind in regards ot the way they earn a living.

If Boomers can not make it in retirement after a lifetime of high earnings, 401K investments and social security a typical regional pilot is doomed. By the time most of us retire after a career of mediocre earnings in an era of no pensions, poor stock market performance and a well earned fear of home ownership the only solution will be soilent green.

Big and more painful changes lie ahead. I can not believe that social security will exist in 20 years and it seems likely that state and federal government will be forced to cut or eliminate many of the entitlements that government workers depend on.

A paradigm shift is needed.

Skyhigh
Your first point would be true if it were not for the fact that the wages in some industries lag so far behind in regards to adjusting for inflation on a yearly basis that it's not even funny.
Sure you may get a 10 or 12 % pay increase over 4 years but one must consider whether or not you're breaking even or falling behind even with said raise due to inflation .
How does one cover a loss to ones 401 K while in retirement ?


Cpt.J.F.Jimenez

Lots and lots of people have some serious financial making up to do in order to be able to retire. If you want to have just $4-$5k a month you need a couple of million in the bank, and even amount that would be hard to take our each month for any serious length of time. Sad :(

Shocker. :rolleyes: The Me Generation will go down in history as the most financially irresponsible generation ever.

Wow, unless you have 7 figures in the bank for retirement, all earned and not given... this is one of the most shallow and uneducated comments on this board. Personally I think my own generation is the most financially irresponsible "Me, instant gratification" generation ever.

Disregard, someone advocating the break up of the United States probably thinks the gov't should take care of them and provide for their retirement. I remember a time when socialist/communist rhetoric would land you a free ride out of the country, or at least the shame to leave on your own... sigh.

Wow, unless you have 7 figures in the bank for retirement, all earned and not given... this is one of the most shallow and uneducated comments on this board. Personally I think my own generation is the most financially irresponsible "Me, instant gratification" generation ever.

Disregard, someone advocating the break up of the United States probably thinks the gov't should take care of them and provide for their retirement. I remember a time when socialist/communist rhetoric would land you a free ride out of the country, or at least the shame to leave on your own... sigh.
Unfortunately that mentallity has gained steam in the last 20-25 years and will probably continue.
The one way around running into financial trouble during retirement is to find a place where you can live comfortably and that may include living outside the U.S ie Belize ,etc.
It's something to look into if you think the money you will be getting is not enough to cover living stateside.

Cpt.J.F.Jimenez

Your first point would be true if it were not for the fact that the wages in some industries lag so far behind in regards to adjusting for inflation on a yearly basis that it's not even funny.
Sure you may get a 10 or 12 % pay increase over 4 years but one must consider whether or not you're breaking even or falling behind even with said raise due to inflation .
How does one cover a loss to ones 401 K while in retirement ?


Cpt.J.F.Jimenez

Pilots who are starting a career today are doing so at a wage that does not even suggest how they will be able to even earn back the initial cost of college and flight training let alone think of how to fund a retirement.

The cost of college and training are coming close to that of a starter house. Why not just buy the house instead and work at the post office? It really is a better idea than the prospect of initiating a flying career today.

Skyhigh

I left a freight job after 18 years making a base pay of $63,000 per year. Spent a couple of years at a low paying ($32,000) job, but came away with good experience and a useful type rating (the company had no training contract). Now I am in management (still flying) and make a respectable salary. The pilots who work for me start out at the lowest end with $45,000 for a pilot with about 1,500 hours. We bump them up to $55,000 plus within one year. We do have a training contract to protect the wages of those who choose to stick around. Pilots coming with 3,000 hours or so generally start at $55,000 per year. The neat thing at the present company is we are employee owned and have 7 diversified companies within the mother company. Average growth of company stock has been slightly better that 15% per year. Employee owners who contribute to a pretty standard 401K receive a nice company match in company stock. Even at only 8 % annual increase an employee earning only $30,000 per year will have over $2 million in matching funds alone (plus the 401K) if they stick around for 30 years. I have no problem with young pilots chasing the dream to become airline pilots, but there are alternatives and receiving a decent paycheck at a reputable company with little chance of being laid off is not something a pilot should look down their nose at. Drive a freighter around, work for a sound charter company and you may reap the benefits. I have been a professional pilot for nearly 30 years, never been laid off and have an acceptable retirement nest egg to look forward to. Never made the money the UPS and FEDEX guys do but I have always been comfortable.

I left a freight job after 18 years making a base pay of $63,000 per year. Spent a couple of years at a low paying ($32,000) job, but came away with good experience and a useful type rating (the company had no training contract). Now I am in management (still flying) and make a respectable salary. The pilots who work for me start out at the lowest end with $45,000 for a pilot with about 1,500 hours. We bump them up to $55,000 plus within one year. We do have a training contract to protect the wages of those who choose to stick around. Pilots coming with 3,000 hours or so generally start at $55,000 per year. The neat thing at the present company is we are employee owned and have 7 diversified companies within the mother company. Average growth of company stock has been slightly better that 15% per year. Employee owners who contribute to a pretty standard 401K receive a nice company match in company stock. Even at only 8 % annual increase an employee earning only $30,000 per year will have over $2 million in matching funds alone (plus the 401K) if they stick around for 30 years. I have no problem with young pilots chasing the dream to become airline pilots, but there are alternatives and receiving a decent paycheck at a reputable company with little chance of being laid off is not something a pilot should look down their nose at. Drive a freighter around, work for a sound charter company and you may reap the benefits. I have been a professional pilot for nearly 30 years, never been laid off and have an acceptable retirement nest egg to look forward to. Never made the money the UPS and FEDEX guys do but I have always been comfortable.


So where is this magical place, and are they hiring? :D

The one way around running into financial trouble during retirement is to find a place where you can live comfortably and that may include living outside the U.S ie Belize ,etc.
It's something to look into if you think the money you will be getting is not enough to cover living stateside.

Cpt.J.F.Jimenez

Here's another perspective on that:

Article (https://www.kimsnider.com/blog/index.php/2010/08/is-running-out-of-retirement-money-a-fate-worse-than-death/)

Here's another perspective on that:

Article (https://www.kimsnider.com/blog/index.php/2010/08/is-running-out-of-retirement-money-a-fate-worse-than-death/)
Good articla DAL thanks for posting.
Let's say someone is in retirement and the same thing that happened in 08 happens again ,what are those who are in their 70' -80's supposed to do to cover a loss to their retirement funds ?

We have a family member who was told by her financial advisor to give her assets away to her children over a ten year period to avoid steep taxes when she passed and she did just that. Now she is in her late 70's and destitute. The kids all blew the money and she has no means of support.

Getting old is not easy or fun. Especially when you are broke. Wealthy people tend have more control and family influence when old than broke people do. Hold onto your money and let the kids pay the taxes.

Skyhigh

Good articla DAL thanks for posting.
Let's say someone is in retirement and the same thing that happened in 08 happens again ,what are those who are in their 70' -80's supposed to do to cover a loss to their retirement funds ?

I don't know of a way to post it here, but you can go to this LINK (https://www.kimsnider.com/SniderAdvisors/Web/InvestorEducation/WhitePapers.aspx) and download what I think is a very good answer to that question. It's a report titled, "How to Not Just Survive, but Thrive in Turbulent Financial Markets." You may have to give them your email address to download it... but I know this company (Snider Advisors) very well, and you don't have to worry about them sharing your info with anybody else or bothering you with unwanted emails. Hope it helps.

I don't know of a way to post it here, but you can go to this LINK (https://www.kimsnider.com/SniderAdvisors/Web/InvestorEducation/WhitePapers.aspx) and download what I think is a very good answer to that question. It's a report titled, "How to Not Just Survive, but Thrive in Turbulent Financial Markets." You may have to give them your email address to download it... but I know this company (Snider Advisors) very well, and you don't have to worry about them sharing your info with anybody else or bothering you with unwanted emails. Hope it helps.
I,ll take a look at this and thanks again DAL.

We have a family member who was told by her financial advisor to give her assets away to her children over a ten year period to avoid steep taxes when she passed and she did just that. Now she is in her late 70's and destitute. The kids all blew the money and she has no means of support.

Getting old is not easy or fun. Especially when you are broke. Wealthy people tend have more control and family influence when old than broke people do. Hold onto your money and let the kids pay the taxes.

Skyhigh

The financial planner should have been sued for such bad advice, and they carry insurance for just such an event. For the vast majority of Americans, federal estate tax is a complete non-player. Giving away one's wealth to avoid estate taxes is a problem for the very rich only. And if she was that rich, it was likely she would not have been able to give any significant amount of wealth without running afoul of gift taxes anyway. I mean, heck, unless you and your spouse have 10M in assets nowadays, you don't even have to think about federal estate taxes (may have to worry about state though).

Good articla DAL thanks for posting.
Let's say someone is in retirement and the same thing that happened in 08 happens again ,what are those who are in their 70' -80's supposed to do to cover a loss to their retirement funds ?

What you do is not invest a large portion of your investable net worth in an asset class that is so volatile, ESPECIALLY late in life. Equities (i.e. stocks) are very volatile. People invest in them because historically equities have on average out performed just about every other asset class out there, and they hope the future mimics the past. However, equities are very risky, and that risk is sort of danced around by many investors and heck many professionals.

So what do you do if you are in your 70's to 80's when you may not have enough time to recover from a severe downturn? You do 't put a large portion of your wealth in equities (or other volatile investments) in the first place! You save enough early in your life so that you're not "rolling the dice" and taking big risks because you NEED to in order to make up for shortcomings in your savings in your younger years. You could use a portfolio of other securities that are a lot less volatile like investment grade bonds or government bonds. You could purchase an insurance product like a single premium immediate annuity (stay far away from VUL's!) that is guaranteed to pay you a stream of income until you die (but only buy up to your state's guarantee limit). And as a 70 year old, you also have social security. If your spouse is still alive, you have both social security payments.

And one would hope by retirement age that your house is paid off. If you really got stuck, you could do a reverse mortgage, although those are expensive and probably should be used only as a last resort.

What you do is not invest a large portion of your investable net worth in an asset class that is so volatile, ESPECIALLY late in life.

I would agree with that statement, but with one very significant modification:

"What you do is not invest for capital appreciation a large portion of your investable net worth in an asset class that is so volatile."

I would agree with that statement, but with one very significant modification:

"What you do is not invest for capital appreciation a large portion of your investable net worth in an asset class that is so volatile."


What investments would one possibly make that would not be for the expectation of capital appreciation? Is that not the whole point of investing? To earn a real return? Just because one is invested in conservative investments and/or drawing down their principal as one might do in the later stages of life does not mean there is not an expectation of real capital appreciation on the invested assets.

What investments would one possibly make that would not be for the expectation of capital appreciation? Is that not the whole point of investing? To earn a real return? Just because one is invested in conservative investments and/or drawing down their principal as one might do in the later stages of life does not mean there is not an expectation of real capital appreciation on the invested assets.

For what I think is a very good answer to that question, download and read the report I posted about earlier. It directly addresses your concerns... and does so in a much more thorough manner than would be practical for me to do here. I would copy/paste the report into this thread, but it's in a .pdf format with some graphics and charts, and I don't think it would copy/paste very well.

For what I think is a very good answer to that question, download and read the report I posted about earlier. It directly addresses your concerns... and does so in a much more thorough manner than would be practical for me to do here. I would copy/paste the report into this thread, but it's in a .pdf format with some graphics and charts, and I don't think it would copy/paste very well.

Sorry, but I am not interested in the products Ms. Snider has to sell, and I already know the answer to the question. We had this discussion about Ms. Snider before. You posted a link to her website, and she had mathematical errors on her site, which I tried to point out. We also had a discussion about computing an internal rate of return, which I believe you dismissed so you'll notice that I ended posting on the subject because it was obvious that you were going to stick to computing returns on investments that were mathematically incorrect.

As I said to you before, good luck with Ms. Snider's products. They are not for me.

Sorry, but I am not interested in the products Ms. Snider has to sell, and I already know the answer to the question. We had this discussion about Ms. Snider before. You posted a link to her website, and she had mathematical errors on her site, which I tried to point out. We also had a discussion about computing an internal rate of return, which I believe you dismissed so you'll notice that I ended posting on the subject because it was obvious that you were going to stick to computing returns on investments that were mathematically incorrect.

As I said to you before, good luck with Ms. Snider's products. They are not for me.

Sorry. I remember discussing this here before, but I didn't remember who had participated in the discussion or what they had said. I'm not trying to sell products for Snider Advisors to anyone. A question was asked, and I think the report I referenced provides a good, complete answer to the question. You asked a question, and I think it answers your question as well. Feel free to look at it, or not. I don't really care.

I don't remember the specifics of our previous disagreement, but it sounds like it revolves around the way Snider Advisors calculates yield for the Snider Method. I believe it is appropriate to use this type of measurement for a cash flow investment like the Snider Method, and it would be inappropriate (and misleading) to use the "internal rate of return" calculations you reference. That's my opinion. Of course, you are free to disagree with that and to look at your investments any way you want to look at them.

Again, I'm not trying to sell anything to anyone and don't really care whether you or anyone else is interested in Snider Advisor's products. If what I post is helpful to others, then that's great (and my intention). If not, then disregard.

Another interesting read .
What's Retirement Mean? - The Invested Life (http://theinvestedlife.msnbc.msn.com/article.aspx?articleid=25779384&source=msn&GT1=25074)



Ally

Retirement and wills, tips, planning to retire, videos - MSN Money (http://money.msn.com/retirement/video.aspx?vid=41e8fe18-57b9-451b-bf1b-2f9be2aed7fa&from=en-us_money?GT1=33013)

Another slow exodus.:)



Ally