On this episode of A Wiser Retirement Podcast™, Casey Smith is joined by Evan Bogan, Airline Captain to talk about how the aviation industry has changed over the years. They exchange stories, talk about the change in pilot salaries, the state of the aviation industry, and how pilots can be wise with their money.
Click here to download a FREE 401k allocation for your airline.
Podcast Episodes Referenced:
- Ep 194: Delta, American & United: Who's Got the Best Pilot Retirement Offering?
- Ep 173: Making the Most of Your Airline 401k
- Ep 162: Is your retirement plan ready for takeoff?
Youtube Videos Referenced:
- Delta Pilot's Guaranteed Variable Universal Life (GVUL) - What Action You Need to Take
- Tips for Airline Pilots Approaching Retirement
- A Pilot's Guide to Building a Strong Financial Foundation
Learn More about Wiser Wealth Management:
- Our website
- Schedule a complimentary consultation (learn more about our services)
- Click here to download one of our free guides that covers financial planning topics like retirement, investing, taxes, divorce, and more!
Connect With Wiser Wealth Management:
- YouTube Channel
- Facebook
- LinkedIn
- Instagram
- Twitter
- Casey Smith's Twitter
- Podcast
- Blog
This podcast was produced by Wiser Wealth Management. Thanks for listening!
On this episode of A Wiser Retirement Podcast™, Casey Smith is joined by Evan Bogan, Airline Captain to talk about how the aviation industry has changed over the years. They exchange stories, talk about the change in pilot salaries, the state of the aviation industry, and how pilots can be wise with their money.
Click here to download a FREE 401k allocation for your airline.
Podcast Episodes Referenced:
- Ep 194: Delta, American & United: Who's Got the Best Pilot Retirement Offering?
- Ep 173: Making the Most of Your Airline 401k
- Ep 162: Is your retirement plan ready for takeoff?
Youtube Videos Referenced:
- Delta Pilot's Guaranteed Variable Universal Life (GVUL) - What Action You Need to Take
- Tips for Airline Pilots Approaching Retirement
- A Pilot's Guide to Building a Strong Financial Foundation
Learn More about Wiser Wealth Management:
- Our website
- Schedule a complimentary consultation (learn more about our services)
- Click here to download one of our free guides that covers financial planning topics like retirement, investing, taxes, divorce, and more!
Connect With Wiser Wealth Management:
- YouTube Channel
- Facebook
- LinkedIn
- Instagram
- Twitter
- Casey Smith's Twitter
- Podcast
- Blog
This podcast was produced by Wiser Wealth Management. Thanks for listening!
In the mid 2000s, just about every major airline pilot lost their their pension plan. That's right, and I was in the right seat, still fairly young at the time. I would fly with a lot of those pilots and they were absolutely Honestly freaking out about the loss of this pension because they had all their Retirement plans based on having that. Have a pension in place and you can save in there for one game, exactly exactly because they.
Speaker 1:They didn't need to, because they were gonna get Every month right and unfortunately that led a lot of people into some fairly risky investment behaviors. Where they were, they were hoping and praying rather than using their brains and doing what they had done to get them to that point In their career, which was making intelligent decisions right.
Speaker 2:Welcome to the wiser retirement podcast. We believe the best financial device should always be conflict free. I'm your host, casey Smith. Today I'm joined by airline captain Evan Bogan. Hi, casey, how you doing? Thanks for having me back. Thanks for coming back. We've We've really spent some time together. Evan, here is my own personal Flight instructor flight guide. I'm a flight instructor, but flight Share of good advice. Hopefully he gets all my screenshots. Hey, would you find this? I Anyway, welcome back. Thank you, it's always good to have a conversation with you. I think Today is gonna be very interesting, because today is about building wealth in the aviation industry. If you're not in the aviation aviation industry, there's a lot of stories and tidbits that you can apply to you Absolutely.
Speaker 1:I think a lot of the experiences we have in the industry translate to many other industries as well, so when I started flying back in 2000 and 2002 I Was getting paid.
Speaker 2:I think it was around 17 to 18 dollars an hour. That's a lot. Flying at beach 1900 from Barber main down to Boston and then in the summertime over to and tuck it very nice Martha's vineyard and all that fun stuff. And being based in Bar Harbor but living in Marietta, georgia, I think I spent all my money in the commute and lodging.
Speaker 2:Yes, I was working and there was a 401k plan but there was no matching, you know. And then in 2004 I transitioned out of that little small airline into Atlantic Southeast Airlines, which was Delta connection, and started flying the CRJ. And I want to see my first year pay probably around, probably around 38 to 40,000, if I had to guess that that sounds about right for that time of the industry. Yeah, and so you fast-forward now.
Speaker 1:It's. It's unbelievable for those of us that started on poverty wages. My first job paid $10 an hour.
Speaker 3:Where was my? Instructor up in the Boston area oh yeah it's a vital instructor.
Speaker 1:My first airline job eventually got on with a company called business express. That's right, I made 18 dollars an hour to fly the sob.
Speaker 2:There was, which you found out. What Swedish ain't airplane builders?
Speaker 1:Strangely enough that airplane didn't perform too well in the winter, which you would expect sweetest airplane.
Speaker 4:Yeah, that's why it so does. Yeah, up in that same area.
Speaker 1:It was pretty cool in the Northeast yeah. Prescott Maine.
Speaker 4:Bangor, places like that. So yeah, yeah the.
Speaker 1:The Industry back then was full of many of us that were there because we had a passion for it. There was no one got into aviation for the money back then right, and even prior to that even more so and you had to have that passion to get through those years. Absolutely, there was not a lot of opportunity to put money into a 401k. I tried to a few dollars here and there, right. But times now have certainly changed. Pilots can be making six figures within a year or two, right of of getting into the airlines, and for those of us that came up in the 90s and earlier, that's it's. It's hard to believe so absolutely.
Speaker 2:I mean I get postcards in the mail still just because I have a CRJ type rating of going to the PSA, which would be an American carrier right for the 200, 200 thousand dollar bonus. Yeah right now, just to, just to show up.
Speaker 1:Yeah, yeah, that's great, unbelievable.
Speaker 2:But make even as a captain. Back then you were doing good to break $100,000 a senior captain. Yeah, you're captain right, right.
Speaker 1:So I think when you're making that kind of money, the financial planning is is not something that you're concerned with, because You're worried about how many boxes of ramen noodles you're and how long you can make that last, and you know how many free cups of coffee you can get in the crew room, right?
Speaker 3:your pilots are known for.
Speaker 2:Historically for her could be in penny pitchers and kind of being cheap, but in some sense they came about it honestly, because that's how a lot of us had to start off our career. Absolutely absolutely trying to figure out how to make a dollar stretch out for for longer than most people would make a dollar stretch out.
Speaker 1:Right, right, it was always a dream. Those, those, those big paychecks were. We're often you know, in the distance and we knew that it was gonna take a while to get there.
Speaker 2:Well, the, the major airlines, have always historically had pretty good pay, right, sure. Relatively speaking, but but the lifestyle that everyone thinks above an airline pilot is. It was really only the top 1% Right so it was a tail end of your career that you were. You were panning for.
Speaker 1:Exactly everyone so.
Speaker 2:I'm 64 on top of the seniority list everyone pictured the pan am 747 castin with the white hat and the four strips. The catch me, if you can. Maybe that's exactly.
Speaker 1:That's the image that everybody had. And there we were, flying sob 340, staying at the best Western, hanging out at the breakfast buffet. That's what's nice powder eggs and free coffee.
Speaker 2:When I was at, when I was at Colgan that's where I first started off they didn't have overnights, it was out in backs. Oh right, so, so yeah, it was. You were just literally on your own. Yeah yeah, I did tell the kids like, like you know, I literally had to walk up the hill. I didn't have a car there, so I had to walk up the hill, up the airport drive to get to the airport, to the violins I had to walk uphill, not both ways, unfortunately.
Speaker 2:Right right, I had to walk, had to walk uphill, just get to work.
Speaker 1:Yeah, the. I think we were so focused on on where we wanted to be back then that it was tough to picture how we were gonna get through the the. You know difficult times, right, because you know it was glass half full, because we were getting paid to fly airplanes, and that's all we cared about, right?
Speaker 1:and then you know things like 9-11 Financial crisis. Yeah, covid right, it's tough when you're 22 years old and doing your dream job a year out of college To to think about you know what, if something goes wrong here, how am I gonna buy those drama noodles and you?
Speaker 2:know you Went to Emery Riddle. I did so. You were all sold in airline pilot.
Speaker 1:It was the all eggs and one basket dairy that I call it. I.
Speaker 2:I Probably would have loved to have done that, but my my parents, with some wisdom, said, hey, you need a backup plan. So my dad worked at Delta. He was over in tech ops and right you just observe the volatility of airlines.
Speaker 1:So I grew up.
Speaker 2:They call us a Delta Brats, so we had to wear a coat and ties in order to fly non rev. Of course, we go up to Washington DC for like day trips, and which is really cool way to grow up and experience and see things and but.
Speaker 2:But they were wise and, and so that's why I went and got my finance degree and I had a passion for two things passions for airplane, passions for a passion for finance. But when you, when you're all sold in the world, gets a little more scary because you know we had to. We had to. So I got hired just after 9-11, by some miracle, right at Colgan. And then I wanted to be at ASA. I had, I submitted a resume on the first of every month for two years. For two years before I was I was hired. I would sit next to ASA guys on like Commuting up in to Boston and back on air tram remember, oh yeah.
Speaker 2:On air train and I would have my resume in my flight. Can I say can you walk this in ASA for me, because I wanted to be home, yeah, I wanted to be one of flight of Harzville and want to be home and, and you know, I Got. I got the job and then it was like a year later, everything just switched at the regionals where you just had to have a pulse right, right and now, instead of having 2,500 hours, I dropped to 600 hours and it dropped to do you speak English? I?
Speaker 1:Think, one of the one of the big takeaways. I was trying to figure out how to frame this and I thought about that. We we talk a lot about generations and the different experiences that the different generations have, but even that is too broad to talk about the Experiences that airline pilots have in the industry, because a generation might span was at 12 years, 15 years. Within that 12 year time frame there's probably three or four different airline pilot experiences, you could say, depending on when you got hired, and one of the examples I use is I got furloughed in the post 9-11 downturn In 2003, so you, you were already at the I was at my major airline job at that point and everything was great, yeah.
Speaker 1:And I was fortunate that I had some seniority, about a little over a thousand numbers below me. So I only got the tail end of the furlough. But had I been hired six months earlier, I would have missed the furlough and kept my job, had I been hired six months later, I would have been thrilled for five years.
Speaker 1:I remember those guys five every number counted back then and that's one thing that I still tell people. It's hard for the current generation of pilots, with with the hiring that's going on now, to to think in those terms.
Speaker 2:But oh yeah, I you know we work with hundreds of pilots and I, the Delta piles especially. I talked to a 25 year old you, I think it upgraded captain if you wanted to at this point. Yes, yeah, I was like this is when market bait the bar, their market based cash balance plan was coming out and I said I just had pause for a second. I said do you understand how good you have it? And uh, he's like I do.
Speaker 1:I do, I think most of them do. I work with a lot of people in that Generic, of that age and in that generation and you know you don't want to be the old guy, you kids, but Um, uh, most of them seem to have an appreciation of the, the fact that they have an incredible opportunity because of, honestly, when they were born and when they got in the industry right, and you know they recognize that those of us in the other seat might not have that same experience.
Speaker 1:Yeah, the you know, we still, we still get the opportunity to I call it the captain privilege of dispensing, uh unasked for financial advice. You know, because that's what I All those years in the right seat from the guy sitting next to me.
Speaker 2:So um I when I was at asa. So I remember I started wise wealth management almost immediately after Joining asa because I was like, okay, this, this flying thing may not work out for me and I still have this is a passion for financial planning, so we start. It was a slow start, but we started it and uh, uh, so I had. The point is, I had additional income right and so, as a um captain, I would Regularly buy the entire crew meals the whole trip. I would just buy everyone's meal the entire trip.
Speaker 1:That's unheard of at the regional. Yeah, it's a herd of regional airline.
Speaker 2:But remember that in our rj there's only one flight, 10. Well, right, one fo. But I mean, I remember, uh, a guy, so com air was a regional airline that shut down Right, and asa took a lot of the com air guys. Um, I don't know if you know, if there's even an interview, I just know that a bunch of them had had shown up, uh, captain, long time captain at com air, and he would just, we would fly, he would just be sitting there staring out the window and uh, finally, I said, so how, how were you doing? Like, how, how were you and your family adjusting to this? And you know, because, being the planner, I'm sure this guy's gotta be freaking out right now, right, right.
Speaker 2:And as a pilot, I'm like how stable is my first officer? And basically he's like we came, we came in like pay-per-mortgage, right, right, and I said, uh, do you have family help? He's like nope. I said, okay, I'll tell you what you, you are, we're gonna find the best meals we can for the next four days and we're, we're just gonna kind of forget about that for a minute. Yeah, yeah, and that's all you could do. But that was the state of the industry at that point no one was thinking about how Do we build wealth? Everyone was just like how do I make my payment? How do I make my house payment?
Speaker 1:You know and it wasn't only Pilots in that in that situation as well, in the mid 2000s, just about every major airline Pilot lost their their pension plan. That's right, and I was in the right seat, still fairly young at the time. I would fly with a lot of those pilots and they were absolutely honestly freaking out about the loss of this pension because they had all their Retirement plans based on having that have a pension in place and saving their 401k, exactly exactly because they.
Speaker 1:They didn't need to, because they were gonna get that check every month right and unfortunately that led a lot of people into some fairly risky investment behaviors. Where they were, they were hoping and praying rather than using their, their brains and and doing what they had done to get them To that point in their career, which was making intelligent decisions right, and I know we talked a little bit about Some of the crazy stories that we heard from pilots over the years Ponzi schemes, risky investments in real estate and crazy locations and it always it always ended up with a what should have been a red flag. So and so promised me 30% if I put in this money on this strip mall and you know this random place and you know Iowa, or something like that. One of the things we talked about was the. The concert promoter who took was a former airline pilot and took a lot of Investment money from pilots and they trusted him because he was a former airline pilot said oh, this guy, he's one of us, he's not gonna stare us wrong.
Speaker 2:Yeah, he did?
Speaker 1:he was running a Ponzi scheme. He ended up in jail and all those pilots lost a ton of money.
Speaker 2:That's us like I had a went in from a medical one day and it just so happened that I had an article published in the newspaper and there's a guy sitting across from me. He's really reading the newspaper. I'm not thinking thinking about that at that time, but he he Lowered the paper, raises paper back. I was like, hey, you're the guy in the paper. I have a question for you. And this is a.
Speaker 2:This is an airline pilot that had invested his entire savings like IRA money, everything like. I think he even took the attack, paid the taxes and gave it all to his brother-in-law, which you know. We always know where that ends sometimes. But it basically developed for some different way Florida development land and basically the bank. This is back to financial crisis, when banks were calling even good notes. So they called the note and he wanted to know my opinion of how much money he would get back. I was like, well, you don't give the bank a dollar and then get three dollars in the bank and then, if they call the note, you know you wouldn't get any money back. Right, and all I could think about for months was like man that poor guy.
Speaker 2:It's like what possessed him to put all his money into a leveraged development program. You know right, we, we. How does that happen? We're smart people.
Speaker 1:When we were discussing this, we talked about the term expectation bias, and that's a term we use in the aviation safety industry to describe the root cause of accidents or incidents. In some cases, once we wrap our head around a specific outcome and decide that this is how it's going to work out, we tend to shut ourselves off to any other possible alternatives. Hey, this is going to work out great, because the person giving me advice is a fellow airline pilot, and a fellow airline pilot would never steer me wrong, or my brother-in-law, or my brother-in-law. So we we we enter the situation with blinders on and we can't see how maybe this promise of 30% return is is not unrealistic.
Speaker 3:It's unrealistic.
Speaker 2:Even 10.
Speaker 1:Even 10, right, and maybe any investment advisor that would promise you any specific number is maybe leading you down the path that you know they were trying to get you on, and we should have a little bit more awareness of being sold. A bill of goods, I think, is the term. Yeah.
Speaker 2:I was very passionate about protecting our pilot community and I started when I was at ASA. We did pilot workshops. I got by the name of Sterling Roach at the time was our R and I chairman and he was a captain on one of my trips and at the end of the trip he's like you've got to come do workshops, right? I was like I don't know about that. There was really no risk for me. The union covered the covered all the expenses. But basically I took a little bit of Dave Ramsey, right, and because we had, we had regional airline guys that retiring, but mostly it was younger guys coming in. And so like you can't, you can't get ahead of yourself here. You got to try to live this debt-free lifestyle. And what people you know I don't know how many guys you've met and gals with student loans right now but back then it was a double whammy. You'd come out with $150,000 to $200,000 in student loans from Emory Riddle, from a flight safety wherever.
Speaker 2:and then you had a low-pay scenario for almost a decade, Absolutely. And then what was really bad is when you met your spouse. You fell in love with someone also with $200,000 to student loan debt, also an airline pilot, and now you're together, you're making $60,000, $70,000 a year and your loan payments are bigger than your income. Right.
Speaker 1:That was a big problem back in my day. My wife's a teacher, so she had the same situation she came out of school with a lot of loans and a fairly low-paying starting job, and we had to work at it and it took 10, 15 years for both of us to dig out of those debts In the last five years I've gotten emails from a lot of the people that helped counsel during my ASA days to say finally got them paid off.
Speaker 1:Yeah, and they still remember you because when I fly with someone from ASA from that generation. I mention your name and they say, oh yeah, he was the money guy. That's like so that's your legacy.
Speaker 3:That's my legacy.
Speaker 2:The airline's gone, but you were the money guy. That's funny.
Speaker 4:Hey, fellow aviators, before we dive back into this episode, I've got some awesome news to share. On our website, we've got a freebie just for you. Our team of financial advisors has done the legwork to provide you with free 401k allocations for all the major airlines. Getting your hands on your airline's specific allocation is a breeze. Just click the link in the episode notes or head over to pilotretirementcom. Now let's get back to the good stuff in this episode.
Speaker 2:So there's something that's very passionate to me and, Evan, I don't expect you to chime in on this this is my crusade. Sure, Right now. You know there's a company called RAA that was started by airline pilots here in Atlanta, sold to a company called Allworth Financial back in 2019, a 2020 range from what I can tell but we've gotten probably 20 plus clients from that firm. People come over and I ask questions about their experience at their firm one, because I'll make sure they don't have that experience here. What I found out here recently is something that's really disturbing in that they are growing their business by paying airline pilots to refer other airline pilots and I thought, huh, that's interesting. So I guess there's just airline pilots like me that are just a part of, or like I was, but it would just be a part of a big firm and they're referring people. So I start looking into it. I'm my team here start looking into it and actually, with all they're doing is there's some loophole in Texas that they can get pilot registered, but they've never taken a series 65 exam, series seven exam. They're not CFPs, Most of them are not CFPs and what's happening is you could be flying with someone that could be really pushing RAA, saying this is a great company, it's a great company. At the same time, they're receiving compensation for you going to that company and that's a huge conflict of interest. That's kind of like a multi-level marketing program is what it is.
Speaker 2:I don't think that it should be allowed. The SEC does allow for it. It has to be disclosed. But I promise you no one digs the way we did to find the disclosures. But I think the people that are doing this should be I don't mean exposed, as they're doing something wrong. There's nothing illegal happening, but I don't know that they're actually telling people Technically. If I flew with you and I said, hey, you should really come to Wiser Wealth Management, I would need to disclose to you that I was receiving compensation because we're a fiduciary firm. We're also a fee-only firm and so any conflict of interest or any commission that we are beginning would have to be disclosed. I don't know that that's being done and what's disturbing is I don't know if the people who are referring are really qualified to be referring. If you know what I mean, To really give advice like that.
Speaker 1:One of the reasons why we decided to work with you several years ago was that, as we got to the point where we were finally making enough money to consider investments and such, it occurred to me that I had one course in college, a 200-level economics course. That was my entire financial background. It's really easy to get a degree from the University of Google these days, and think you know everything there is to know.
Speaker 1:In airline pilots. One of the other cliches is that we think we know a lot about everything, more so than we actually do. My wife and I recognized that it was about time we got some professional guidance and the fact that the fee-only that you mentioned we can meet with you once a year, twice a year and pay you for your time and receive the advice and take it or leave it, and it's worked out real well for us.
Speaker 2:So we're just thank you for that, but we're passionate about. For the airline community, 401k plans have come such a long way. In fact, other industries should probably mimic what Delta, american United, Spirit, jetblue are all doing with their 401k plans in that their low cost mostly being offered as index funds inside the plan.
Speaker 2:Average cost of the Delta plan and our models is around five basis points or point zero. Five of a percent Americans about the same. United is a little bit cheaper, one basis point cheaper, point zero. Four percent, the the what?
Speaker 2:The problem I'm having with companies like RAA and what they're trying to do is they're trying to move your investments out of the 401k plan into the brokerage link, which is still a part of the umbrella of the 401k plan. Statistically, over a 20 year period, you have a two percent chance of beating the S&P 500. Right, so a lot of our models are pretty heavy S&P and you diversify around that, so you've a two percent chance. But then when you move it out of the Delta plan into the brokerage link, your cost goes up. It goes up typically by five X. So you're now you're five times more expensive to be outside the Delta plan and what these companies are doing is they're buying a lot of the same funds that are already in the plan, but the reason they don't use the plan is because they can't get compensated. So it has nothing to do about asset management necessarily. I mean, that's the surface of the providing is asset management, but in the end they're they're collecting a fee and in that fee is paid to them in perpetuity.
Speaker 1:And that adds up and it adds up.
Speaker 2:So when you add up a half a percent fee and to say you're a, you know you got hired. My example and how we did the math here is like oh, I'll say you get hired at Delta around 32 to 35. Oh what? We didn't account for the 25 year old. So it's going to be a lot worse for a 25 year old, but basically between age 32 to 65, it's just over $3 million in fees. That's amazing.
Speaker 2:So today's podcast is about building wealth. We're going to get into that here in a second. But that is the wealth destroyer. Adding a half a percent, I, and quite honestly, it's really hard for us to see any other firms performance inside the brokerage link and just in how it's reported. But what I've seen thus far, and and and the 20 plus people that come from this one firm, is it's underperforming, and that's a lot. A lot of people complain to say, well, I was in this fun, but it's underperformed. The S and P over this time period, right, that's like, well, there's a reason for that, but let's put everything back. Let's put. Put everything back. On the traditional side. We have free allocations. That's how passionate about this If you don't know what to do with your 401k.
Speaker 2:We monitor all the airline 401k plans. You can go to our website, click on the airline pilot link and you can download a free allocation for your 401k plan. All the major airlines Alaska, jetblue, spirit, frontier, delta, american United they're all part of that list. We monitor those on a monthly basis. And and you can have that because the important part is not the asset management you can buy if you don't know what to do, go buy the target date fund. But if you don't trust our models, trust the target fund. The important part is is financial planning. It's looking at the whole picture and understanding that, hey, there's a property casually risk there's. Hey, some mistake, planning needs to get done here. Or hey, what does even life look like in retirement? Let's, let's forecast what you're saving. I mean most major airlines now are 17 or 18% of what you earned going into the 401k plan? Right? What happens if you don't put money into your money, your own money, into the plan?
Speaker 2:Let's talk about tax planning. Like, where, what buckets do you want to have available to you at 65 so you can have a lower tax in retirement, because, thankfully, you're in a high tax bracket now for most pilots, right, right, there's a few still hanging out there. The Atlas guys are a little rough. Yeah, I saw someone recently at a Mariflight and that pays not that great, right, so there's still some jobs out there that haven't quite caught up. But for but for all the major carriers, it's looking pretty good. It's looking pretty good. So I'll get off my soapbox on that, but just just know that you know we're, we're a close knit group. Airline pilots are, and you just don't, you just, but you still have to be careful, you have to have your guard up, absolutely.
Speaker 2:You have to ask questions and hey, maybe you're a really happy RA client. I just, I, just, I, just, I, just, I, just, I, just, I, just, I, just, I, just, I, just, I, just, I just don't think that how they're conducting businesses in the best interest of of airline pilots Understandable. Um. So let's take a minute, let's let's kind of shift gears and talk about building wealth as an airline pilot right now. So we're, we're, we're past this. Um, don't make any money. Uh, phase Right, you come out of, you've done some recruiting over at Auburn through your, your airline. What, what, um, uh, what are the endeavor guys starting off now? Do you know, If you go to endeavor, is it around 80?
Speaker 1:or six, I don't know off the, off the top of my head, but I see their, I see their pay scale, but then they have all these incentives for sticking around Exactly so.
Speaker 2:I think that stuff adds up to being 60 to $80,000 maybe first year, I would say so yeah. So I mean that's that's, but it's still going to cost you a hundred grand a year to go to Auburn and the aviation program. Well, yeah, if you can get in, if you can get in is there a line?
Speaker 1:It's it's very competitive, very much so. Yeah, so if you're in Georgia, where would you go now? Uh, middle Georgia state has got a fantastic program now.
Speaker 2:And probably the hope would cover some of that Hope would.
Speaker 1:Yeah, uh, I've been down there on a on recruiting visits it's it's a really really fantastic aviation program down there as well.
Speaker 2:That's awesome.
Speaker 1:Uh, in a fairly rural area, so there's not a lot of distractions down there, which, uh, they all, they always tell us when you go down there, right, um, and I think that's a fantastic choice for for Georgia students in state and state.
Speaker 1:And then you know there's there's 20 plus big aviation programs around the country now you know, um, and anywhere from, from state run schools to you know, to the big names that you read about in the magazines and stuff like that, and at the end of the day, every single one of them is going to finish you with a degree and your ratings and you're going to be as well qualified. Yeah, for those jobs.
Speaker 2:What about a traditional four year school and um, you finish and you do like an ATP type thing? There's plenty.
Speaker 1:there's plenty of folks that are coming up through that, through that way as well. Um, and you know I can't speak to that. That's not, that's not how I entered the industry, but, um, the the state of the industry is such now that if you have a degree, you don't even. You know, in many cases you don't need a degree, although it does make you a lot more competitive is from what I hear, yeah, the um, I would say you know that needs a degree.
Speaker 1:You know the, the, the college experience. Plus you know getting your ratings at a place like ATP or one of the other uh large flight schools is going to make you just get out of the flight safety too.
Speaker 2:Um right, Can't you just go down the flight safety? And I don't think they're not doing initial training anymore.
Speaker 1:No, they sold out years ago. Okay, and that is now the Skyborne Academy, which actually Delta just bought into.
Speaker 2:Okay.
Speaker 1:And they're using that as their uh, you know ab initio.
Speaker 2:That's right, I forgot about that. United has something too, I see.
Speaker 1:United has the AVA at Academy. Oh, that's right, arizona. Uh and same deal they're they're taking. They're taking applicants and they're they're molding them from day one to be the airline pilots that they want to hire.
Speaker 2:Taxi on the centerline on the assessed note. That's very one.
Speaker 1:Speak with the deep voice. Yeah, there was a.
Speaker 2:uh, I came back from uh Montrose, colorado recently in in the uh the captain like he was 12 years old, it was a seven three. I was like man, young, young, young crew I, I, he just loved being a pilot. You could tell Um, but he, he did. Uh, I think four weather briefings with. The weather was in Atlanta on the way back over the PA. You know, we have free wifi now. We have cell phones. They just want to watch their movies, Right?
Speaker 1:But I I could tell he was uh, he was enjoying it right.
Speaker 2:Enjoying his, his, uh, his flight and that, and that's cool, totally get it. Um. You know, we talked a little bit earlier about um, about cliches and and it seems kind of funny because you would think that anyone that is interested enough in finances to be listening to your podcast.
Speaker 1:Would know these things but I think they're still valid and probably still worth reinforcing. You know, um, have that emergency fund in the future. I think that's a good thing. I think that's a good thing, still worth reinforcing. You know, um, have that emergency fund and you know, live within your means, invest fairly conservatively and and let your money compound over years. It seems, it seems like basic stuff, but at least to me you know from where I'm coming from it's worth reminding people of, I think, because I do fly with those 25 year olds and they're talking about their half million dollar house and their $75,000 car and I'm happy for them that they can do that. I'm happy for them that they can afford that at that age. Yeah, but it's still, you know, in the back of my mind. I think you know what is. Is that the best use of your money at that age and at this point in your career? Because what happens next?
Speaker 2:year. What happened the year after? They haven't experienced um the deeper session.
Speaker 1:Exactly, and yeah, 9 11 is something in the history books. That's if they were even alive.
Speaker 2:Yeah, that's very true. Yeah, so you think about principles of financial planning in general and, and number one, anytime we have Pilot families or any family come through here. Number one is debt Use. What kind of debt do you carry?
Speaker 2:And a lot of the People that call us have low debt, but occasionally people come through there. They're within 10 years of retirement and I'm like, hey, you got to start. You guys start picking up some extra trips. You got to start eliminating this debt and I try to give them a path. I want everyone to have a path to success, right, but a lot of times it's not saving for your future right away, it's eliminating debt Once we, because we want to go into retirement debt free, ideally, right, and so Eliminating debts number one.
Speaker 2:Number two is establishing that emergency reserve fund and, as a pilot, you don't think about you, don't? You know? I don't think you know, I don't know if you think about losing your job right now, because things there's not enough of you, right, but what if it's not your job you lost? What if it's your health? Right, exactly, so that could sit you on the sidelines? And so, american Delta we actually have a Comparison. We did American Delta United comparison on benefits and, and all of them are doing a little differently, but they're they're the same. You're pretty good for two years. Right after that you might start feeling, you might start feeling a crunch if you're living on every dollar that you made right, because you're looking at 50%, if you're lucky exactly exactly so.
Speaker 2:Yeah, so it's. How much of emergency savings should you have have built up? Number Number three is going to be forecasting your retirement projection. Are you saving enough for retirement? It's hard to meet a 25, 30, even 40 year old Delta American United right now, or even spirit. They had a new contract. Alaska is another one With their new contract that is not saving enough in their 401k plan because you're having anywhere from 16, 17, now 18 percent Contributed of what you make in to go to your 401k plan.
Speaker 1:That's unheard of in any of any other industry right now, right, and you're at the point where you need to worry what happens when you fill it up and you hit that max. Yes a captain at any of those airlines by July or August is going to max out their maximum retirement.
Speaker 2:That's right. So now we're projecting that out and then say, okay, what do you do with the excess? Your 401k is getting maxed out at 66,000. Then we're gonna go calculate Well, you can put money into your market-based cash balance plan. American launch there's January of this year, I believe. United is online as well, delta's had theirs for guess technically since October, I believe.
Speaker 2:Southwest does theirs a little differently, but basically as much as that you can defer. Of that, 16 to 18 percent is not getting taxed. So if you're already maxing out your 401k plan, more than likely you're in a 32 to 37 percent federal tax bracket. So that's why we want to use those programs is to Defer as much as possible and withdraw at a lower tax bracket in the future. So you're already building wealth through your 401k. You're building wealth through your, through your excess, your overflow of that company to find contribution into your 401k plan. Then the next thing we'll go solve for is college savings for families. Say, hey, how we can get the kids to college. User some strategies. Every family has a little different strategy there. And then we get to the fun part and this is where most airline families are at now is what do you do with the extra dollar? So right, historically, we spend our extra dollars and it disappears in 20s and hundreds and we don't know where it went boats, airplanes, cars, condos and exotic locations.
Speaker 2:So there's we call them opportunity funds and so you want to establish an opportunity fund to throw that extra dollar in. You know, you pick up extra trips, you've got a bigger paycheck. What does that money go? Goes into your opportunity fund. It's not counted for retirement. It typically is invested a little more conservatively than maybe you how you'd allocate your 401k plan. But it comes for an opportunity. So hopefully, not for concert promotion, hopefully, hopefully not turning it over to to you know something that you you don't get a return on long term, but ideally it looks like a second home. It's maybe this big family vacation you want to take, build a legacy, right, it's, it's, it's Maybe an investment opportunity. You know we have, we have pilot family here that Owns a very expensive dressage horse, wives of that and she loves showing the horse and they want to build an equine facility for, for training, therapeutic training, like water tanks, oh right, yeah, all kinds of stuff, right.
Speaker 2:So you're talking millions of dollars in equipment and property to get set up. So their opportunity fund is for that. It's. It's a hey. In 10 years It'd be great if we could have a down payment to start this business. My wife could leave being a full-time vet and Focus on her real passion. So that that's that's. The important part is is understanding, like having goals and Saying this is where I want to be in 10 years, is where I want to be in 20 years, this is. And then you back off of that and you go okay, what do I have to do? This year? Maybe it's cleaning up the cleaning up the credit cards, you know. The next year it's, you know it's something else, right?
Speaker 1:Yeah, yeah. And one thing that occurs to me as well is you don't want to Avoid the opportunity to live for today by saving for tomorrow, so much Does it make any sense. You know we're most of us are in a position that we never expected to be in when we started. We always hoped to be here and Taking the the a few dollars out of that that you know paycheck to enjoy things today with the family.
Speaker 1:Like you, mentioned building a legacy those those trips and you know stuff that your kids will remember in the future. It's just, I think, is important as putting every dollar away and you know eating the ramen noodles, you know even today, so that when you turn 65, you you don't have to.
Speaker 2:Very true and that's part of our retirement projections is we have this you remember the, the probability of success meter, right, right. And so you don't want to be at 99%. You want to be like in the 80s because the software so conservative. But the reason why we show that is like you're on track for retirement. That's great. So that gives you the freedom to be able to do other things. Sure, what you're talking about? I'd say 30% of the people that we work with People are still the pilots, are still very tight with their Assets because they remember the battle scars of the past, certainly, certainly. And when you're able to show them that, hey, you're, you're in a great track and this is, these are the, your numbers. Yeah, I couldn't take someone else numbers and apply it to you. Everyone has it's their own unique plan, but you can breathe in this. Just the stress that comes off of that man. I love my job, that's awesome. Just, we just took this guy's anxiety got completely. Yeah, sleep great. Yeah, he's gonna start picking up every extra trip.
Speaker 1:Exactly. Be home with the kids a little more. Don't have to work 25 days a month. Exactly.
Speaker 2:Yeah, exactly, and I think I think one thing I'll add is Investing should never be complicated. There's no secret sauce. And people think that there's a secret sauce. Oh, I have this option strategy. Oh my god, I flew with so many guys ASA that were subscribed to some op options. Email newsletter.
Speaker 1:Right and.
Speaker 4:I think every single one.
Speaker 2:I've lost all their money with a year. But there's no. There's no secret sauce. It's time and compounding.
Speaker 2:Yes you know and and you know we, we, we tend to try to outsmart things, thinking that I'm gonna go to cash, I'm gonna sit on the sidelines until this gets better, and Really what we're doing is we're just making emotional decisions. There's really no data, hard data, that supports any of it. If you go back and look at the real data, it says you stay invested, keep the cost of investing low and and just it kind of takes care of itself.
Speaker 1:Yeah, I think that was one of the things that surprised me most when we started working with you is is as I expected. I'm gonna, I'm gonna, I'm gonna pay this professional and he's gonna give me this. You know this complicated investment scenario that I never could have possibly concocted and it wasn't the case at all. It was actually fairly simple. It was easy to understand when you explained it to me in the terms you just explained it to and you know it's not in 47 different funds.
Speaker 1:It's it's it's it's fairly basic and it's easy to understand and it's easy to see where it's going and for me that's helpful because you know it's not my passion dealing with my money. You know it's not something I want to sit down and worry about and think about and wonder if this fund is correct or that fund is correct, and and seeing that it doesn't have to be that complicated was was helpful to me.
Speaker 2:Yeah, thank you. Well, you know, it's Airline industry, the airline profession is very interesting. I love Living vicariously through our, through our clients I get. I think someone sent me a actually someone sent me a text message yesterday flying out of Vegas, and it was the sunrise and I do check out the sunrise, you know, and someone else sent.
Speaker 1:I know exactly what that picture looked like the sun taking off to the west. So as the sun comes up, it illuminates those mountains to the west of Vegas. It's beautiful absolutely.
Speaker 2:And then we had a beautiful picture out of Seattle, the mountains in the background, on a dusk arrival. So I love getting the almost definitely it's weekly pictures from somebody or some story. You know that call-ups at duty won't believe what happened. We won't talk about those on a podcast, but I totally get where those come from. But it's a great career if you have someone that has a passion for this. There is a man, there is a wide road, easy path. To be an airline pilot right now Doesn't mean that you know you won't struggle through training and learning and all that process. But Right, right, but you know it's a lot easier than it was for sure it is.
Speaker 1:It's slightly off topic, but I will say that, although that road right now is fantastic, that passion has to be there because it's not always gonna be that well and when you do hit those hard times, those black swan events, the 9-11s, the COVIDs, the financial crisis if you don't have that passion for the job to back up yet why you're there, it's gonna be tough to get through.
Speaker 2:No, that's very true, and there'll be difficult times. Still, you know you go through your initial training trying to figure out what a hold is and how you hold and how you fly this iOS and how you fly this. Of course you got much better instruments than when I was doing it. And then you know you usually a Sim or two in Doc that you have a trouble with. You know, sure, but I think that there's a lot of rewarding parts. It's also can be a lonely job too. I will just put that out there it's. I learned kinda midway through my aviation career that saying that you're a 777 pilot and flying around the world is very different than actually being a 777 pilot flying around the world.
Speaker 2:Certainly certainly yeah. So it's great to say you're that at the party, but to actually go do it. I just remember walking around concourse E and F and Harzville and I was like holy crap, that guy's probably 50, but he looks like he's 95.
Speaker 1:Yeah, that international flying can be tough on you. It works great for some people. It's not something that interests me. I prefer short haul and being in my own bed as often as I can.
Speaker 2:Well, you and I are civilian guys. I think it's the military guys that they're a lot more used to it. They're more.
Speaker 1:Yeah, they're more built for that.
Speaker 2:They've been doing it since the early 20s, I feel like, but that's cool. Well, evan, thanks for coming on and doing this with us. It's a great time to be an airline pilot. It's a great time to be a lot of things. Honestly, there's a lot of industries that I think are operating at peak reward right now, and this just happens to be airplanes and finance, two things that I'm very passionate about, absolutely. Thank you for having me. Thanks for listening today's episode.
Speaker 2:If you're interested in learning more about Wiser Wealth Management, I want to schedule a consultation to meet with one of our fiduciary financial advisors. You can do so by going to wisermessorcom. You can click at the link in the episode notes as well. We have three other airline related podcasts you might be interested in episode 194, delta American United who's got the best pilot retirement offering. Episode 173, making the most of your airline 401k. And then episode 162 is your retirement plan ready for takeoff? We also have a YouTube channel called A Wiser Retirement. There we have linked various videos that we've posted related to the airline industry. Thanks for listening. We'll see you on the next episode.
Speaker 3:Thanks for listening to a Wiser Retirement podcast. We hope you enjoyed today's episode. Make sure to subscribe wherever you're listening. That way you don't miss any new episodes. We'd also appreciate if you could leave a rating and review. If you have any questions about anything that was discussed today, head to wisermessorcom and reach out. This episode was produced by Edward Versandes.
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