Noworkallplay

How do you come up with 4.3 mill? You can buy an open market annuity for 130k annually for 2.5 mill or less currently.


https://www.annuityadvantage.com/res...annuity-quote/

NotMrNiceGuy

He literally told you in the first sentence. He used the 3% rule.

I’m fine with 4%. Mine comes out to $3.25 million.

BTW, the link you posted takes you to a quote page for an annuity firm. Who is going to give a random annuity company their email for spam?

The Walrus

Honest question. Does the annuity have a survivor benefit?

Noworkallplay

Annuities are like most retirement plans in that they can be tailored to your needs. You can build in a survivor benefit as well as an inflation increase. Im not a fan of them but this is a very good document explaining how they work and options.

https://nationwidefinancial.com/medi...963.1602728772

Noworkallplay

You can get a fixed income through numerous other products paying 130k with no survivor benefit for well under 3 mill. Remember our pension doesn't pay 130k with a survivor benefit.

A simple google search will answer many of your questions. I also posted a document explaining the numerous options with an annuity.

DLax85

ALPA endorsed financial advisor - Schwab

As of 15 Oct 2020 - $130,000 annually = $10,833 monthly

60 year old male, single annuitant/no survivor benefit, lifetime annuity = $2,593,953

65 year old male, single annuitant/no survivor benefit, lifetime annuity = $2,269,325

Which clearly demonstrates the company is “saving” on equivalent A fund payouts as pilots work longer....and payout period become shorter

In this example, the “cost” to fund such an annuity drops by $324,628

This demonstrates while our pension has become more expensive due to lower Actual Return on Assets, the company has Benefited from reduced pension liabilities / payouts as pilots work longer.

Research Broadly, Think Critically, Demand Transparency

In Unity,
DLax

DR K

Always diverting posts from their point, your methods are so tiresome.

The point here was not to debate the merits of an annuity vs simply drawing down from one's tax-advantaged retirement plans like 401ks and IRAs, but you have tried to make that the point. Many retirees don't want to purchase annuities with a lump sum from their 401k because of lack of flexibility in case of increased life or medical expenses, high administrative fees, the expensive nature of annuities with survivor plans, and a host of tax issues that should be addressed in a conversion from a retirement plan. These retirees would probably reference the 3 or 4% rule for their withdrawal rates from their existing vehicles, which is why I brought it up. So, once again, please stay on track whoever you are and quit diverting, because I'm not talking about converting a 401k/B fund into an annuity.

So I'll try again - this post was to summarize the total balance required in a retiring pilot's B fund/401k/IRA in order to withdraw a yearly income from that sum equal to 130k. I don't care that you can google annuities and throw more confusion into the air. It is a very different animal to have a pension fund or annuity earned by us as a retirement benefit with a survivor plan paid for by the company versus converting almost all of our B/fund 401k to an annuity and not have much left in that account.

So, once again, if you want to use the 4% rule to estimate how much you would need in a B fund/401k to withdraw 130k a year, it would come out to 3.25M like NotMrNiceGuy stated, and if you use the 3% rule as many recent retirement experts including Dr Wade Pfau PhD (professor of retirement income) state, then you would need about 4.3M in your B fund.

To learn about the pros and cons of annuities without being on a sales website, these looks pretty good...
https://www.thebalance.com/annuities-overview-315086

For the basics of the 3 or 4% rules for withdrawing from a B fund to last all of one's retirement, this is also good...
https://www.thebalance.com/dont-conf...f-thumb-453920

The basic takeaway is - when compared to a B plan alone, the A plan has a sizable equivalent balance. And that A plan is incredibly well administered and almost as risk free as you can have a retirement plan be. AND we still have a B plan on top of that A plan, and we should improve both instead of becoming test subjects as though we work for a financially sketchy company. Dr K

CloudSailor

We need the solid, no BS perspective you've posted over the years, to be heard by our NC before Section 6 Negotiations. Hopefully our membership's survey leaned in that direction.

USMCFDX

I am not going to hold my breath - PM and his committee are on a single train track and they will not stop

kronan

That's 40 years into the future. That prognostication is for a 25 year old newhire that retires at 65. Someone whose salary is predicted to be in the $1M ballpark at retirement.

A Traditional Pension benefit calculation, with the same salary cap, is Superior to any PSPP. (Compared strictly to the Floor Benefit. I personally think the average returns on our Pension Trust would result in some of the much-maligned Maple Syrup added to the pancakes, but I prefer to compare results\numbers without an added variable)
It's Superior because it's an Average of your best years of earning versus a year by year accumulation.
As another way of thinking it, dividing the same number by 5 versus the same number by 25 is going to wind up larger.

I, personally, think we are more likely to achieve an improvement to our Pension Benefit by switching to the PSPP model. The plan goals are a soft freeze for everyone on the property. Years of Service would be frozen at the existing level. High 5 would continue to improve as newhires\FO's move into Capt seats. Everyone on Property automatically vested in our current Pension.
Yes, all of which is language that is yet to be negotiated.

The closer a Pilot is to Retirement, the less beneficial switching to a PSPP plan is. Right now our Pension Benefit is effectively $5200 a year (up to 25 years). A PSPP year (for 2020) maxes out at $5700. So, a year 24 guy would gain a whopping $500.

Where PSPP does better, is for those already at\near 25 YOS and another 5-10 years til their planned retirement.
An extra 4 YOS gain in the PSPP is equivalent to modifying our Current A plan to a $300k+ salary cap.

IMO-those with only a few years to go have this impression that modifying our Current A plan's salary cap would be retroactive versus phased in. Say we take it 320k as the max, why I've already earned more than that for the past 5 years so...bam, my A plan will pay out 160k when I retire in a few months. Something that I just don't think will occur, instead that increase will be phased in over the next 5 years.
Or, the elimination of the 25 YOS cap to better reflect what's actually happening for those fortunate enough to have been hired before 40.
Why, I already have 30 years of service....so bam, just like that my Pension gains another 10%. Again, a change that I think would be phased in over time. So, the 25+ years crowd would start at 25 and gain an extra year for every subsequent year.