Agreed. There is just too much money sitting there to ignore.

The income tax itself was unconstitutional. In pitching the tough ammendment process to allow it, the people were sold on the lie that it was just a tax on a tiny percent of uber high earners and the vast majority of people would never pay it.

The first iteration topped out at a 7% rate and even that was only for dollars earned over the 11 Million per year (in today's dollars) mark.

They absolutely will sell the public on this by doing exactly what you suggest, then "progressively" and rapidly expand it, plus overlapping means testing, taxing unrealized gains, a "wealth tax" and all the rest. And 51% of the electorate simply will not care that "milliionaires" are finally being made to "pay their fair share".

 

It is so simple when put into words. It seems monumtal when action is required.
-Reading financial statements requires a combination of education and desire to learn.
-4th grade math is a cake walk for pilots as long as it's not common core math, that stuff is nuts
-Emotional stability is the cryptonite in the equation. It's surprising given our profession's demonstrated ability to act under pressure.

When you objectively look at western world fiscal policy it is easy to see the long term trends. Within the long term trends identifying top performers further amplifies the returns.

20% returns on 7 figures is like the insta captain phenomenon. Anyone over 1 year could be a captain unless everyone over 1 year wanted to be.

 

TBH, I'm not entirely sure what I was trying to say when I said the bolded; I was sitting in the middle seat on a 4 hour long deadhead and just jamming away on my phone (thanks delayed implementation).

I think I was articulating that going off of 16% DC, when pilots hit the income limit ($330,000) then they're getting spill money unnecessarily, with 4% of $330k being about $13k I was thinking along the lines of $13k that should be in a 401(k) and not in spill/MBCBP.

I articulated my thought poorly and as it was written is just wrong. Sorry about that.

The total inflation over the last 10 years is 30.2%, LIRKX has a total return of 43.5% over that span. For reference, the S&P 500 total return is about 160% over the same time frame. So yes, LIRKX beats inflation, but not by much. Honestly over 10 years that's just about a rounding error.

Regarding ESG; it's not the political side of it that bugs me, it's the lack of financial responsibility. It is BlackRock now being able to say that they will invest their clients' (potentially yours and mine) money into stocks and businesses that score high enough on their ESG metrics regardless of their financial performance. And so far, they're using the ESG schtick as cover for underperforming funds. I don't always agree with Delta's ESG stand, however they believe that it directly contributes to the bottom line and that they're able to monetize it, if so then be it. I don't like the idea that a fund manager can cost me money in the name of ESG. If ESG makes money, then great, let it stand on it's own merits. I'm not going to finance it with my retirement dollars.

For the comment regarding the (2) camp; yes I am trying to maximize my returns while I am at a young age. Right now I have lots of doors that I'm trying to open/keep open so that as I get into my 50s and later, I will have options. I don't want to rely solely on Delta for a paycheck until retirement, I don't want to rely solely on the market conditions and I don't want to rely solely on my real estate. I think that Delta is my most conservative source of income right now, followed by real estate and eventually DoD pension. My equities are the riskiest part of my income portfolio now and into the future. I believe that I have some pretty good back ups that allow me to be riskier at this point in my life. Certainly I will tamp down the risk as I get older, but right now I have nothing but time on my side.

 

Let me provide a counter point for those on the sidelines. As always DYDD, YMMV, etc. Here is my analysis below:

Assumptions that I have starting 2023:

• 35 yo, 6 year NB A. Inflation, pay raises, IRS limits, tax brackets etc. will all be 4% in perpetuity. (Yes I know this isn't how it works, but it's the best guess for today and honestly it's putting in controls when I only want to look at the affect of certain variables).
• 2023 pay rate of $320/hr. 415(c) and 401(k) limits as discussed above.
• 1,000 hours of pay every year.
• 10% personal contribution into 401(k)
• I don't use profit sharing for any budgeting going forward. I always consider that some nice extra and usually have fun with that money; TBH I've never really had a big check since starting here.
• Working withholding rate of 40% (Fed, State and ALPA; yes it's slightly higher than real life, but actually errs in favor of MBCBP).
• Withholding in retirement of 30%.
• 16% DC today, 17% next year and 18% in 2026 and until retirement.
• Retirement at 65.
• MBCBP or equivalent gets 100% excess. Brokerage account gets 60% of excess (40% withholdings).

Results:LIRKX at 4.3%: $1,935,000 | Value after taxes (30%): $1,354,500
MBCBP at 5%: $2,098,000 | Value after taxes (30%): $1,468,000
Brokerage at 7%: $1,634,000 | Value after taxes (15%): $1,388,900
Brokerage at 8%: $1,894,000 | Value after taxes (15%): $1,420,000
Brkge VOO at 11.5%: $3,273,000 | Value after taxes (15%): $2,782,050 --> Honestly the brokerage accounts will actually be worth more because the LTCG is only applied to the gains and not the cost basis, but for simplicity sake I applied 15% to the entire value.

I think it's pretty obvious that anyone with any amount of runway will get a much better value from investing the excess if they get even modest returns. 7% is about the break even point for me and that is not hard to achieve. God forbid someone takes an annuity buy out on the MBCBP then they will really be getting pennies on the dollar for their excess but I digress and won't even go there.

Keep in mind I forecast a total inflation of 225% over that time frame. So $1.35 million in 2053 is like $600,000 today.

 

I'll be in and let it ride. I will probably minimize my excess to control the amount in the MBCBP. I'll take the tax and dues savings now in the hope that 100% helps me hit my number sooner than 60ish%. Either way this won't be a huge impact and I'm already rebalancing the 401k to be more agressive which will help with the timeline. (I hope at least) I'm targeting total beta rather than alpha and value hunting in my brokerage account.

 

Roth lol.

If you think the pols will ignore that ripe fruit in 20 years you're delusional. That will be taxed before 401k's are means-tested.

Equity.

 

Add in the ALPA dues headwind and recompute.

 

Just not contribute any of your own money to the 401k? How much do you figure that will end up in the MBCBP every year?

 

Just $330K overages this year and whatever it increases to next year and beyond. My contributions will only be to max out the total contribution limit at the end of the year when I have a good read on my earnings.

 

TL;DR? It’s in bullet #6…