Filler and stuff.

 

Your earned benefits can't be reduced. Pretty sure ALPA could be sued if they only improved one group's retirement against another as well.

If a 30 year old new hire is resentful about not having a pension that is eaten away by inflation and hasn't been increased in 24 years instead of some other lucrative alternative in their name that counts all their years of service, then that person is an idiot.

If hired at 50, then different story maybe.

 

I agree with you.. I mentioned removing that liability too. But like I just showed... the math on a percentage or cash over cap is by no means less risky or guaranteed to generate more retirement income. Contracts are also bargained for the median pilot .. not the 100% upgrade work 20 days a month till age 67 person. Your results may vary.

 

People always say the pension is eaten away by inflation... true. BUT, market returns are also affected by inflation and there is no doubt that tax legislation will affect everyones reality when you turn your massive cash over cap fund into retirement income. Also RMD's and the associated tax consequences.

seriously, who besides congress, California teachers, cops and fireman have a 169k pension??... even 15 yrs from now? It is a gd start.

 

Agreed. You'd want to compare your hypothetical DC fund using min BLG and a realistic retirement age for you.

Our pension/401k mix is nice. Not arguing that. But it appears seriously increasing both is unlikely without some tradeoff, like ending it for new hires or a MBCBP.

Market returns are measured nominally, so it includes inflation. There's no cap on the upside (or downside..). The fixed payment of a pension will always be that, and inflation reduces its value.

What private employer offers a pension of 169k? I'm sincerely curious. It has to be very few if any. Another thing working against us to increase it even further in the next TA.

 

I agree with you.. I had to simplify by using a 300k career avg to keep it easy. I don't have a 300k/ yr career avg... and this does affect the compounding. You are smart to figure your numbers and see what you need.👍

 

But.. your 401k annualized returns ARE affected.
quote from googling:
"The average yearly return of the S&P 500 is 9.862% over the last 30 years, as of the end of September 2023. This assumes dividends are reinvested. Adjusted for inflation, the 30-year average stock market return (including dividends) is 7.146%.Oct 24, 2023"

so people likely aren't going to earn 10.5 over their career.

 

The market is a better hedge against inflation than a fixed payment from a pension that doesn't have a COLA.

 

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.**

 

let's get both 👍

MEC bargains for me... get what we deserve and not limit our request on what we think the company will or won't do. I understand your skepticism regarding getting an A plan bump, B fund bump and not sunsetting for newbies. But I'm a hard NO for creating a B scale like Merle said.