Don't Follow Your Passion
03-03-2015, 07:21 AM
#121
Self Employed.
Thread Starter
Joined APC: May 2005
Position: Corporate Pilot
Posts: 7,119
Add the negative
Originally Posted by Cubdriver
Opportunity cost is a REAL problem in this career. I ran some numbers to show the point.
1. Assume a typical interest rate of 7% on IRA contributions.
2. Assume another person, not a pilot, enters the regional workforce at age 25 after graduating college and works their whole life making regular IRA contributions ($4k a year). That's worker A.
3. Assume a new regional airline pilot enters the airline work force at age 25, but makes crap money at their regional the first 5 years of their career and waits until age 30 to start retirement planning. That's worker B. He or she delays making contributions to their IRA account because they are broke the first 5 years. We all know that's a realistic scenario, if not worse.
4. Worker C really has a hard time at the regionals and works for say Great Lakes, or any of several other bottom feeders and does not start making any IRA contributions until they are age 35. That's worker C.
Here's the difference in lifetime earnings.
Worker A retires with $1.2M in their IRA.
Worker B who started at age 30, makes $.86M.
Worker C who starts at age 35 makes only $600,000.
Between workers A and C there is a half million dollar opportunity cost from when they started making contributions to their IRA accounts.
The argument can be made that a successful pilot starts late in the retirement game but goes on to a higher salary in middle age, then makes larger IRA contributions when the money starts rolling in flying for a major. I assumed they can make twice the contributions per year ($12k) and ran the numbers (see PILOT below). You can draw your own conclusion about how much of an argument that really is.
1. Assume a typical interest rate of 7% on IRA contributions.
2. Assume another person, not a pilot, enters the regional workforce at age 25 after graduating college and works their whole life making regular IRA contributions ($4k a year). That's worker A.
3. Assume a new regional airline pilot enters the airline work force at age 25, but makes crap money at their regional the first 5 years of their career and waits until age 30 to start retirement planning. That's worker B. He or she delays making contributions to their IRA account because they are broke the first 5 years. We all know that's a realistic scenario, if not worse.
4. Worker C really has a hard time at the regionals and works for say Great Lakes, or any of several other bottom feeders and does not start making any IRA contributions until they are age 35. That's worker C.
Here's the difference in lifetime earnings.
Worker A retires with $1.2M in their IRA.
Worker B who started at age 30, makes $.86M.
Worker C who starts at age 35 makes only $600,000.
Between workers A and C there is a half million dollar opportunity cost from when they started making contributions to their IRA accounts.
The argument can be made that a successful pilot starts late in the retirement game but goes on to a higher salary in middle age, then makes larger IRA contributions when the money starts rolling in flying for a major. I assumed they can make twice the contributions per year ($12k) and ran the numbers (see PILOT below). You can draw your own conclusion about how much of an argument that really is.
I would also add the additional $ 100-150K in student loans that the pilot has plus ever present and commonly experienced risk of furlough. Additionally other common professions still offer a full ride retirement such as the military, postal service, and other government jobs. A traditional full ride retirement is priceless.
When one starts out deeply in debt the prospect of retirement saving is greatly diminished.
Skyhigh
03-03-2015, 07:30 AM
#122
Self Employed.
Thread Starter
Joined APC: May 2005
Position: Corporate Pilot
Posts: 7,119
True
Originally Posted by TonyC
Run all the numbers you want. If you want to run more numbers, consider being a CPA, and run 'em all day long.
There's more to life and happiness than an IRA.
.
There's more to life and happiness than an IRA.
.
We all agree with that statement, "there's more to life and happiness than an IRA". My question is; at what cost? What does it profit a man to blow his financial security on a self indulgent profession? How is it an advantage to sacrifice most other opportunities in ones life to spend it in the flight deck? Access to family, friends, hobbies, and other satisfactions such as being able to live where and how one wants are very important to a well balanced life.
I sat next to plenty of single 55 year old burnouts who had little left to show for a lifetime of aviation sacrifice; no spouse, no hobbies, no retirement, no children (or they were estranged and called another person mommy or daddy). The sum total of their net worth fit inside a rented two bedroom apartment. Make no mistake this profession is very costly. Plenty acknowledge it and move on anyway and that is fine. Others here however would not be happy with that outcome.
Skyhigh
03-03-2015, 07:52 AM
#123
Self Employed.
Thread Starter
Joined APC: May 2005
Position: Corporate Pilot
Posts: 7,119
Success in life
USA Today ran an article last summer proclaiming that the average American Dream for a family of four costs $130,000 per year. In summary it costs $130,000 for an average family of four to fund the cost of a comfortable middle class existence plus being able to pay off student debt, save for retirement and for their kids college, plus enjoy a few extras like a two week vacation every year.
In my experience it is a benefit and common goal of parents to have a stay at home spouse while the kids are young. People are commonly in their 20's-30's when they are having children. In a common aviation career if it comes at all the 130K arrives well past 45 and more commonly 50-55. Past the point when it is needed the most to get healthy financial momentum underway. Past the point when saving holds its maximum benefit.
To start out so deeply in debt and behind the financial curve puts into doubt the successful outcome of a family life at all. It makes the prospect the achieving the American Dream at great risk for even the most rosy of planned career projections.
In my case if my aviation dreams had fully come true we would be in grave financial distress right now. We certainly would not have been able to develop the family life we have or momentum we have been able to create. It seems to me that if one holds the dream of being a parent and having a stay at home spouse it is an extreme long shot to be able to accomplish that with an aviation career.
On the other hand if you are a confirmed bachelor who dreams of a studio apartment and is married to the sky then you are in luck. Aviation is your bastion of martyrdom and self indulgence.
Skyhigh
In my experience it is a benefit and common goal of parents to have a stay at home spouse while the kids are young. People are commonly in their 20's-30's when they are having children. In a common aviation career if it comes at all the 130K arrives well past 45 and more commonly 50-55. Past the point when it is needed the most to get healthy financial momentum underway. Past the point when saving holds its maximum benefit.
To start out so deeply in debt and behind the financial curve puts into doubt the successful outcome of a family life at all. It makes the prospect the achieving the American Dream at great risk for even the most rosy of planned career projections.
In my case if my aviation dreams had fully come true we would be in grave financial distress right now. We certainly would not have been able to develop the family life we have or momentum we have been able to create. It seems to me that if one holds the dream of being a parent and having a stay at home spouse it is an extreme long shot to be able to accomplish that with an aviation career.
On the other hand if you are a confirmed bachelor who dreams of a studio apartment and is married to the sky then you are in luck. Aviation is your bastion of martyrdom and self indulgence.
Skyhigh
03-03-2015, 09:57 AM
#124
Organizational Learning
Joined APC: Nov 2005
Position: Directly behind the combiner
Posts: 4,948
Originally Posted by SkyHigh
USA Today ran an article last summer proclaiming that the average American Dream for a family of four costs $130,000 per year. In summary it costs $130,000 for an average family of four to fund the cost of a comfortable middle class existence plus being able to pay off student debt, save for retirement and for their kids college, plus enjoy a few extras like a two week vacation every year.
USA Today added up their estimated costs of living the American dream:
- Home ownership -- 10% down on a new home of $275,000, 30-year loan @ 4%, annual maintenance costs of 1% of home value -- $17,062
- Groceries -- USDA's figure of $12,659/year
- 4WD SUV - $11,039/year
- Medical insurance and out-of-pocket medical expenses - $9,144
- Education Expenses (for 2 children) - $4,000
- Apparel - $2,631
- Utilities (gas & electric) - $1,956
- Family summer vacation - $4,580
- Entertainment - $3,667
- Restaurants - $3,6662
- Cable, Satellite, Internet, Cell phone - $3,100
- Miscellaneous Extra Costs - $2,000
- Taxes (Federal, State, and Local) - $32,357
- College Savings for 2 children - $5,000
- 401(k) Maximum contribution - $17,500
No mention of paying off student debt -- you just made that up.
No mention of 2-week vacation -- just a vacation -- you made up the length.
And here's the important point of the article which you conveniently failed to share here. Only 16 million households, or 1 in 8, earned that much in 2013.
1 in 8
When you're telling us that pilots can achieve that level, you should be celebrating, not condemning the profession. How many of that 12.5% of the population are living the American Dream as pilots? I suspect there are a lot. I personally know many, many, many. The lament I hear this time of year is about the Alternative Minimum Tax!
Originally Posted by SkyHigh
On the other hand if you are a confirmed bachelor who dreams of a studio apartment and is married to the sky then you are in luck. Aviation is your bastion of martyrdom and self indulgence.
That is a lie.
You do no one a service by repeating it.
.
03-03-2015, 01:19 PM
#126
Moderator
Joined APC: May 2006
Position: ATP, CFI etc.
Posts: 6,056
The other thing I thought is if S-H left a couple of things out like the vacation time and the educational loan payback, that would actually make the required income even higher. If you did say $500 a month on a student loan and took another week of vacation, that's nearly $140k to support a small family. These days a decent middle class lifestyle for a nuclear family means both spouses work full time earning north of six figures apiece per year. I think the martyr/vanity rhetoric is uncalled for though. Piloting is a respectable profession and always will be. It ranks among doctors and lawyers at the higher levels.
03-03-2015, 02:48 PM
#127
Retired
Joined APC: Feb 2008
Position: whale wrangler
Posts: 3,527
Originally Posted by TonyC
In summary, you've stretched the facts and misrepresented the article. Fortunately, it's still available on the internet for anyone to read for himself (and it was very easy to find). Price tag for the American dream
USA Today added up their estimated costs of living the American dream:
No mention of paying off student debt -- you just made that up.
No mention of 2-week vacation -- just a vacation -- you made up the length.
And here's the important point of the article which you conveniently failed to share here. Only 16 million households, or 1 in 8, earned that much in 2013.
1 in 8
When you're telling us that pilots can achieve that level, you should be celebrating, not condemning the profession. How many of that 12.5% of the population are living the American Dream as pilots? I suspect there are a lot. I personally know many, many, many. The lament I hear this time of year is about the Alternative Minimum Tax!
Your recent theme seems to be that flying is only for old, bitter, bachelors and divorcees, only the selfish and the martyrs.
That is a lie.
You do no one a service by repeating it.
.
USA Today added up their estimated costs of living the American dream:
- Home ownership -- 10% down on a new home of $275,000, 30-year loan @ 4%, annual maintenance costs of 1% of home value -- $17,062
- Groceries -- USDA's figure of $12,659/year
- 4WD SUV - $11,039/year
- Medical insurance and out-of-pocket medical expenses - $9,144
- Education Expenses (for 2 children) - $4,000
- Apparel - $2,631
- Utilities (gas & electric) - $1,956
- Family summer vacation - $4,580
- Entertainment - $3,667
- Restaurants - $3,6662
- Cable, Satellite, Internet, Cell phone - $3,100
- Miscellaneous Extra Costs - $2,000
- Taxes (Federal, State, and Local) - $32,357
- College Savings for 2 children - $5,000
- 401(k) Maximum contribution - $17,500
No mention of paying off student debt -- you just made that up.
No mention of 2-week vacation -- just a vacation -- you made up the length.
And here's the important point of the article which you conveniently failed to share here. Only 16 million households, or 1 in 8, earned that much in 2013.
1 in 8
When you're telling us that pilots can achieve that level, you should be celebrating, not condemning the profession. How many of that 12.5% of the population are living the American Dream as pilots? I suspect there are a lot. I personally know many, many, many. The lament I hear this time of year is about the Alternative Minimum Tax!
Your recent theme seems to be that flying is only for old, bitter, bachelors and divorcees, only the selfish and the martyrs.
That is a lie.
You do no one a service by repeating it.
.
03-03-2015, 05:28 PM
#128
Organizational Learning
Joined APC: Nov 2005
Position: Directly behind the combiner
Posts: 4,948
Originally Posted by Rama
Actually $130 for a family of 4 is not that much. Housing costs in any particular area really make a difference. Where I live the housing cost is more than double and utilities about 50% higher than the article.
Originally Posted by Cubdriver
The other thing I thought is if S-H left a couple of things out like the vacation time and the educational loan payback, that would actually make the required income even higher. If you did say $500 a month on a student loan and took another week of vacation, that's nearly $140k to support a small family. These days a decent middle class lifestyle for a nuclear family means both spouses work full time earning north of six figures apiece per year. I think the martyr/vanity rhetoric is uncalled for though. Piloting is a respectable profession and always will be. It ranks among doctors and lawyers at the higher levels.
He also implies that a family should be able to do this while the mother stays at home with the kids. A noble goal, to be sure, but that's not what the article said.
So, anyway, here's another article from last summer. In the July 2014 edition of Forbes Magazine, The 10 Best-Paying Jobs Of 2014 cited a Career Cast article of a similar title. Here are the Top 10, along with the annual median salary:
- Surgeon - $233,150
- General Practice Physician - $187,200
- Psychiatrist - $178,950
- Orthodontist - $149,310
- Dentist - $146,340
- Petroleum Engineer - $130,280
- Air Traffic Controller - $122,530
- Pharmacist - $116,670
- Podiatrist - $116,440
- Attorney - $116,440
Now, going back to the USA Today article, it would appear that only the Top 6 paying jobs are in the "American Dream" range, and 5 of them come with pretty hefty education costs. BUT -- and I'm just going off what's being held out here in the thread -- if the goal is to achieve this level of income, and discourage all other enterprises, then I think it would be hypocritical to advocate the pursuit of any career other than these top 6.
So, SkyHigh -- which of these are you?
Rhetorical question, we all know you're none of the above.
But guess what. I make more than any of those "Top 10". I've got a more expensive house than the USA Today American Dream family, I've got a 3-car garage and a dozen cars, a wife and seven kids that love me, 3 dogs, a cat, a rabbit, and a couple thousand guys and gals on the seniority list above me that are doing even better. I could go on, but I've already revealed more details than I probably should. The point is, success is very achievable if you put your mind to it and decide it's worth some of the hardships along the way. Sometimes the sacrifice is worth the reward, and I'm getting a little tired of listening to the fox tell us how the grapes were probably sour.
They're not. They're very sweet and delicious.
.
03-03-2015, 09:07 PM
#130
Gets Weekends Off
Joined APC: Nov 2011
Position: Volleyball Player
Posts: 3,982
Originally Posted by TonyC
So, anyway, here's another article from last summer. In the July 2014 edition of Forbes Magazine, The 10 Best-Paying Jobs Of 2014 cited a Career Cast article of a similar title. Here are the Top 10, along with the annual median salary:
- Surgeon - $233,150
- General Practice Physician - $187,200
- Psychiatrist - $178,950
- Orthodontist - $149,310
- Dentist - $146,340
- Petroleum Engineer - $130,280
- Air Traffic Controller - $122,530
- Pharmacist - $116,670
- Podiatrist - $116,440
- Attorney - $116,440
Now, going back to the USA Today article, it would appear that only the Top 6 paying jobs are in the "American Dream" range
So when looking at Delta and American or Jet Blue and Southwest and what a Captain earns, you have to remember those are usually pretty "maxed out" numbers, not the median.
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