Originally Posted by
willflyforfud
Just so I understand... if you were an FO and made 300k.. and the company matched 18% with cash over cap.. you would have 54k put in retirement accts... if you then added your own 23k'ish.. you would have a combined 77k retirement input... so your total monthly savings would be 6.4k per month. Compound that for 25yrs at 8% and you will have 5.629MM.
5.629MM will generate approx 225K in retirement income per yr.
Our 2015 contract pension of 130k + my 401k and B fund currently will generate approximately
230k/yr in retirement income.
Of course you may average more than 300k per year over your career and bank more... but you will have to fly. Every year you make less than 300k at the beginning, your compounding window decreases and you may have less. If you retire w/ 5.6 MM and the mkt drops 20%... you will have 4.48MM and a new income of 179k/yr. I will just not touch my 401k and let it recover and live on the pension.
The point is... spitting out arbitrary 18, 20, 25% w/ cash over cap numbers means nothing until you do a realistic run of your career earnings and work it backwards.
Somebody from Delta ran some numbers, *before* the new contract came out:
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.**