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Originally Posted by Gunfighter
(Post 2578317)
The first step should be a 20% DC, so we can hit the IRS max with company funds. Subsequent steps can explore less efficient options like annuities.
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Originally Posted by Gunfighter
(Post 2578317)
No matter how you slice it, annuities are loaded with fees. As Planetrain points out in the linked article, the expected returns are lower than an equity mutual fund. Additionally as BMEP100 points out, ALPA National or even DALPA's best interest may not serve our individual best interest. We have a responsibility to keep our eye on the R&I folks.
I applaud the efforts by our R&I team in finding enhancements to our retirement plan. The first step should be a 20% DC, so we can hit the IRS max with company funds. Subsequent steps can explore less efficient options like annuities. |
Originally Posted by Hank Kingsley
(Post 2578608)
Increasing the DC doesn't help guys with only a few years left. We need more than that to meet expectations. Something not linked to market volatility. Maybe a choice. But something for the FNG too.
Option 1: Use all of the money to buy your own annuity (Or let ALPA or Delta broker one for us). At a 5% rate of return that will give you $2000/mo for 20 years in retirement. Option 2: Take that signing bonus, pay tax on it now, and optionally fund a Roth 401k or just save it to self fund the $18k personal contribution to DC/DPSP every year for the next 16-17 years. Both options have equal present value. Option 1 carries little risk, but low return. Returns are traded for security. Issuing insurance company takes big fees and high commissions. Option 2 carries market risk, but arguably higher returns. (Joe pilot at 45 years old invests the $304,000 in a low fee index fund, leaves it alone for 20 years, makes a conservative 8% annual returns, and would have $1.5 million at age 65... PLUS all the other retirement from the 16% DC). If the $304,000 signing bonus times 15,000 pilots seems like a reach for our NC, maybe it is. My point is jump starting a DB-like-annuity is incredibly expensive, even a modest $2000/mo for 20 years. Even $1000/mo for 20 years under the same assumptions would need to be a $152,000 signing bonus. Im open for R and I's presentation, but I dont see how even a modest DB is going to get started now. |
Originally Posted by Gunfighter
(Post 2578317)
No matter how you slice it, annuities are loaded with fees................
Subsequent steps can explore less efficient options like annuities. A friend who recently retired told me he purchased an annuity when he retired, from the unscrupulous "advisor" he hired. The look on his face when I told him he already had a~ $3500/mo. annuity ".....it's called social security. :eek: |
Originally Posted by BMEP100
(Post 2578716)
It amazes me when educated professionals pay money for an annuity. There is a saying, "Annuities are always sold, never bought"
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Originally Posted by Gunfighter
(Post 2579092)
Fully agree, the commissions and fees destroy the value of annuities. I like Planetrain's signing bonus idea, with a 3rd option to remove the funds entirely from the market and invest in real estate. That is the worlds best annuity, especially when smartly leveraged into a $1,000,000 portfolio.
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Originally Posted by Planetrain
(Post 2578666)
I think I have a solution. C2019 $304,000 signing bonus. Old guys and FNGs get the same.
Option 1: Use all of the money to buy your own annuity (Or let ALPA or Delta broker one for us). At a 5% rate of return that will give you $2000/mo for 20 years in retirement. Option 2: Take that signing bonus, pay tax on it now, and optionally fund a Roth 401k or just save it to self fund the $18k personal contribution to DC/DPSP every year for the next 16-17 years. Both options have equal present value. Option 1 carries little risk, but low return. Returns are traded for security. Issuing insurance company takes big fees and high commissions. Option 2 carries market risk, but arguably higher returns. (Joe pilot at 45 years old invests the $304,000 in a low fee index fund, leaves it alone for 20 years, makes a conservative 8% annual returns, and would have $1.5 million at age 65... PLUS all the other retirement from the 16% DC). If the $304,000 signing bonus times 15,000 pilots seems like a reach for our NC, maybe it is. My point is jump starting a DB-like-annuity is incredibly expensive, even a modest $2000/mo for 20 years. Even $1000/mo for 20 years under the same assumptions would need to be a $152,000 signing bonus. Im open for R and I's presentation, but I dont see how even a modest DB is going to get started now. I'm no expert, but I'm pretty sure with annual compensation north of $300k, you are way above the income limits permitted to contribute to a Roth. Sent from my iPhone using Tapatalk Pro |
Originally Posted by StartngOvr
(Post 2579356)
I'm no expert, but I'm pretty sure with annual compensation north of $300k, you are way above the income limits permitted to contribute to a Roth.
Sent from my iPhone using Tapatalk Pro Income limits only apply to a Roth IRA. No income limit on a Roth 401(k). Sent from my iPhone using Tapatalk |
Originally Posted by StartngOvr
(Post 2579356)
I'm no expert, but I'm pretty sure with annual compensation north of $300k, you are way above the income limits permitted to contribute to a Roth.
You’re probably thinking of Roth IRAs, which do have income limits for contribution eligibility. Those limits are circumvented fairly easily using the Backdoor Roth technique (google it) If you like Roth money, you may also be interested in the Mega Backdoor Roth technique, (also easily found via google) which our DPSP allows for. |
I’d be good with the idea of a $304K signing bonus but to actually receive $304K, you’d need about $420K......
Denny |
Something to remember. Probably 80% of airline pilots since the Stinson never got the retirement benefits they thought they were going to get.:eek:
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Originally Posted by badflaps
(Post 2580459)
Something to remember. Probably 80% of airline pilots since the Stinson never got the retirement benefits they thought they were going to get.:eek:
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Originally Posted by tomgoodman
(Post 2580508)
Or the spouse they thought they were going to get, or the elected officials they thought they were going to get, or .......:D
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Originally Posted by tomgoodman
(Post 2580508)
Or the spouse they thought they were going to get, or the elected officials they thought they were going to get, or .......:D
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