A Wiser Retirement®
Ready to take control of your financial future? A Wiser Retirement® Podcast breaks down the strategies, insights, and real-world lessons you need to build lasting wealth and retire with confidence.
Each week, we cut through the noise to simplify complex financial topics, covering everything from smart investing and retirement strategies to practical financial planning you can actually use. You’ll hear real success stories and actionable tips designed to help you make informed decisions at every stage of life.
Whether you’re just getting started or fine-tuning your retirement plan, this podcast is your roadmap to financial freedom.
A Wiser Retirement® Podcast is produced by Wiser Wealth Management in Marietta, Georgia, where we specialize in comprehensive wealth management and financial planning services.
Take the next step toward a smarter financial future, schedule your complimentary consultation with one of our fiduciary advisors: https://wiserinvestor.com/schedule/
A Wiser Retirement®
350. Can a Pilot Retire at 55? Running the Real Numbers
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Many people dream of becoming an airline pilot, while many pilots eventually dream of retiring early. Retiring at 55 offers more time for family, travel, hobbies, or a new chapter outside aviation, but it is not simply an age decision. It is a financial and lifestyle decision.
In this episode of A Wiser Retirement® Podcast, we discuss what pilots need to consider before leaving the cockpit 10 years before mandatory retirement.
Related Podcast Episodes:
Ep 259. What Pilots (& Others) Should Consider 5 Years Before Mandatory Retirement
Ep 322. How Airline Pilots Can Make the Most of Their Profit-Sharing Bonus
Related Financial Education Videos:
Will New Aircraft Technology Boost Pilot Pay?
What Would a Change in FAA Retirement Age Mean for Pilots?
Learn More:
Founded in 2001, Wiser Wealth Management is a fee-only fiduciary financial planning and wealth management firm helping individuals, families, and business owners make informed financial decisions.
Have questions about your financial plan? Schedule a Complimentary Consultation to discover how we can help you achieve financial freedom.
Access Our Free Guides: Gain valuable insights on building a financial legacy, the importance of a financial advisor for business owners, and the tax impact on inheritance, and more!
Stay Connected:
Follow Wiser Wealth Management on Social Media: Facebook | Instagram | LinkedIn | Twitter
Subscribe to A Wiser Retirement® YouTube Channel for more financial education videos and podcast episodes.
This podcast was produced by Wiser Wealth Management. Thanks for listening!
The Big Question And The Stakes
SPEAKER_02Many young men and women dream of being a commercial airline pilot, but many airline pilots dream of retiring early. But retiring at 55 may not just be an age decision. It's a math decision. Today we're looking at whether a pilot can retire at 55 and what the numbers need to show before making that call.
SPEAKER_07Welcome to a wiser retirement podcast, where we cut through the noise and bring you real, honest conversations about investing, retirement, and building lasting wealth. No sales pitches, no gimmicks. Just insights to help you stop guessing and start planning your financial future.
SPEAKER_02Welcome to a wiser retirement podcast. I'm Casey Smith. Today I'm joined with Grace Pavel, Financial Planning Associate, here with us. We will be discussing can a pilot retire at 55? Good morning, Grace.
SPEAKER_03Good morning.
SPEAKER_02How are you doing?
SPEAKER_03I'm good.
SPEAKER_02Grace is preparing for the CFP exam.
SPEAKER_03Yeah. So if I look like I'm tired, I am.
SPEAKER_02You've been working very hard. You come in uh early in the mornings to study. I understand you're studying after work. You're putting in the time. Yeah. So hopefully you'll be rewarded.
SPEAKER_03Hopefully it pays off.
SPEAKER_05Yeah.
SPEAKER_02A lot of people, a lot of people don't get through the first time. It's I think it's all the stress.
SPEAKER_03I know. It's anticipation. Like I'm two weeks out from the exam right now. And it's already hitting me. Like I'm already, I'm like, oh my gosh, I'm struggling to sleep already. Like I'm thinking about it all the time. I'm like, I gotta chill. Right. Because that's like 90% of the game is just being able to like have your head straight going.
SPEAKER_02I feel like when you go in the second time, you know what to expect. There's no surprises.
SPEAKER_03Right. But I'm trying just to calmer.
SPEAKER_02So we have to pretend this is the second time. So you get to it. I know.
SPEAKER_03Let's trick my brain.
SPEAKER_02Well, uh, what no better distraction than a podcast.
SPEAKER_03Right. Yeah. So talk about pilots.
SPEAKER_02And we get to talk about pilots. Grace does uh a lot of work with me, and we work with uh quite a few people in aviation. So this is right down your alley. Yes. Um, all
The Key Ages That Change Everything
SPEAKER_02right. So retiring at 55 means you'll be leaving the workforce 10 years early. Um pilots have a mandatory time at right now at age 65. Um, so your age, your age really matters.
SPEAKER_06Yeah.
SPEAKER_02Uh there are uh several, I guess, um uh markers that we could think of here. Uh 55 is important because at age 55, you can pull money out of your 401k plan without a 10% penalty. Right. But if you roll it to an IRA, you can't without a 10% penalty. So early retirees need to leave their money inside their 401k plans, right? Before the next marker is 59 and a half. That's the general age at which you can start withdrawing from really any retirement account without any any tax penalty. Um, next one is 62. That's the earliest you can take Social Security, but you'll take a permanent penalty for taking it early. So you're gonna get it much less than waiting until your full retirement age. Uh, but before we get to full retirement age, for most listeners who are born in 1960 or later, that's age 67. There's another marker which is age 65. That's your Medicare eligibility age. So that's also the age at which a Part 121 commercial airline pilot has to stop working, uh, is age 65. So age 65, mandatory retirement, age 67 is when you get your first full Social Security. And then the last big number is age 70. If you delayed Social Security, uh, you would get an increase in your benefit from 67 to 70 at 8% per year. So age 70 is the maximum amount you can get in social security. If you wait past 71 to 71 or later, you are leaving uh money to the government. Right. And you'll never get that. They don't pay you back though, they don't give you back
Do Airline Pilots Actually Die Early
SPEAKER_02pay. So here's something this is why I love doing podcasts because it forces me to dive into other research that I may not dive into normally.
SPEAKER_06Yeah.
SPEAKER_02Uh for years, and I think I even said on this podcast, for years, my assumption is that airline pilots probably die early.
SPEAKER_03Exactly. I've heard the same thing.
SPEAKER_02I mean, I flew for 12 years. I remember riding the escalator up the you know concourse uh E over at Hartsfield, and you see all the big international planes. I had the better uh food options, so I'd go over there and eat sometimes. Of course. And I'd see these pilots coming down the escalator, and they're probably in their 50s and it looked like they were 80 years old.
SPEAKER_05Right.
SPEAKER_02I'd be like, man, I don't know if I want to keep doing this forever. These guys look really old, right?
SPEAKER_05Aged.
SPEAKER_02And so I thought, uh, and there was a study out that evidently um had some faulty uh assumptions to it, but but I had read something in the past that oh, they peep pilots die sooner because of exposure to radiation and all these different things. So I went into Grok, uh, which is X's AI, and I said pilots die early because of these reasons, correct? And then it comes back with actually, and then it shows me all these studies. So I was able to get uh use the use the references uh for each of the studies and dive directly into them. So I thought I'd share the some of that just to get this started because if you're thinking, man, I'm gonna get out of there as soon as I can because this is not good for my health, yeah. Um actually the the research, uh modern research is showing that that's not necessarily the case. But I'll kind of go in in chronological uh chronological order. So this is this is probably the data that uh I originally saw uh was there was a 1995 study on U.S. airline pilots, analyzed 1,494 pilots from US major U.S. airlines like American or Delta United, um, who retired at the mandatory age back then, 1968 to 1993, at age 60. So research has used um lifetable analysis to estimate survival after retirement and compared it to the U.S. general population for 60-year-old white males. So that was the 1980 census. Again, we're using we're using some older data, but it would the year was uh 1995 when they did this. So half the retired pilots were expected to live past age 83.8 versus 77 for the general uh comparison group, which would be the the general population here in the US of white males. Um really so really living five years longer than the average person. Um so we you know we see, we see uh we saw that study. Um they say why why do they live a longer life? Uh basically it's called the healthy worker effect. Pilots undergo rigorous repeated FAA medical examinations throughout their careers, leading to early detection and treatment of health issues. Unfit pilots are removed from flying duties, so you're you tend to want to try to get back to work in most cases, right? Other factors likely include higher socioeconomic status uh and better access uh to health care. You know, another study done in 2014 examined 5,964 former commercial cockpit crew members, pilots, co-pilots. It standardized um the mortality ratios and compared it to the general U.S. population. Uh all cause mortality. So basically, for all the reasons you might die, pilots uh had a decreased uh mortality. So they were healthier, they were they were living longer. Cancer uh greatly decreased versus the general population. Cardiovascular disease mortality uh greatly decreased. Uh obviously, aircraft accidents. So the general population is not gonna be in an aircraft accident, most likely. So uh it was highly elevated. Uh and there's only not that many accidents statistically. So obviously um that's a that's a work hazard, um, but but you would expect that in this finding. Yeah. Um they also had significantly lower lung cancer mortality. Um and then uh, but they did have um an increase in um brain cancer versus the general population, and that's related to uh cosmic radiation to exposure long time periods. So if you do a flight to Europe, it's not that one flight that's getting you. Yeah, it's doing that flight hundreds of times in your career that that is uh making you have uh um brain cancer potentially over a general population. So I I thought that was interesting. There, there's um uh also other data. So so where did this come from? A lot of this data came from that if you read the chat boards, everyone says, Oh, we all die early. I literally have a uh neighbor of the street who's a FedEx pilot, he passed away at 64 and is overnight in Germany.
SPEAKER_03Wow.
SPEAKER_02And I'm like, oh see, that's it. That's proof. So if you look at all the chat boards, all the chat, all the pilot chat boards, there's all everyone dies early. But actually that's not that's not the case. Um you know, really it it um uh it goes back to cosmic radiation is a real thing. Um there is there is um uh higher so if your pilot's gonna miss work, it's pretty typically because of cardiovascular disease. Okay, and so there's a lot of sitting going on in your airline pilot. So uh all the pilots out there, you know, do your weekly or daily or do your daily, weekly workouts. Three times a day is my doctor, or uh not three times a day, three times a week. Three times a day. Yeah, this is what my doctor says. Three you do it three times a week.
SPEAKER_03At least go on a walk.
SPEAKER_02Yes, do something three three times a week, right?
SPEAKER_03Yeah.
SPEAKER_02Anyway, I I I thought I just I went I went through all those. Like, is this true? Is this really true? So I just started reading them all.
SPEAKER_03I know, I agree. I feel like that's the opposite of what you normally hear.
SPEAKER_02So kind of bringing this back into what we're talking about. You if you want to leave it, if you want to retire at 55, you've gotta get you've gotta plan on getting to at least 88. And we always assume 95 when we do our planning.
SPEAKER_06Yeah.
SPEAKER_02But you you gotta assume at least getting to 88 according to these studies.
SPEAKER_06Yeah.
SPEAKER_02And that's assuming you're you're a healthy, you're a healthy pilot, right? There's obviously outliers, yeah, but they say on average, uh you you have you tend to live five years longer because you tend to be taking better care of yourself and you're you're more physically fit than the general population.
SPEAKER_03Exactly. I agree. I mean, you're not over here running medical exams on us working here, so um like they are at a pilot. So I agree. You are ta definitely having to take better care of yourself. That's that's interesting though. I feel like even since working here, I've always been told like pilots they're said to die sooner just because of all the radiation and stuff. So this is an interesting study. It will probably even surprise um pilots listening too, I feel like.
SPEAKER_02Yeah, exactly. And do your own do your own research. Um you will see that the the study that was done in Germany on German pilots uh in the early 90s does show that pilots were dialing synergically sooner than the general population, but it was later proven that the data set they were using was incorrect, how they are calculating the averages was incorrect.
SPEAKER_06Okay.
SPEAKER_02And but that's that's the one that gets referred to quite a bit. And that was a long time ago, especially when you have new these new studies with three times the the um three times the the data uh at at um at ages where uh or I'm sorry, it it in in modern era flying too.
SPEAKER_03Yeah, for sure.
SPEAKER_02People aren't smoking Marbos crossing the Pacific anymore.
SPEAKER_03There could have been a lot of things that went into those studies.
The Golden Decade You Walk Away From
SPEAKER_02Okay, so why is pilot planning retirement planning uh different? Uh different for many reasons.
SPEAKER_05Yes.
SPEAKER_02Uh one is uh just because you have high income doesn't mean you're ready for retirement. I think most people listening would probably say you duh, right? Yeah. Uh I thought this was interesting. The Bureau of Labor of Statistics reported in 2024 that the median annual wage was $226,000 for airline pilots, including captains and first officers. Uh average air commercial airline pilot is projected to grow his income, his or her income by 4% uh per year. That's that's about right. They have stop raises typically around three, and then you have contract increases every typically six years, hopefully. That would lead to that. So what the issue is in my mind is you have this what's called the golden decade. So between 55 and 65, you have the high, those are the highest earning years.
SPEAKER_06Yes.
SPEAKER_02You're typically flying aircraft that are larger, going further, you're getting thus paid more money. Um, all the major airlines are contributing 18% into your 401k plan. That really adds up the more money to make. You're making $600,000 a year and you're getting 18%. It's very different than when you're a new hire getting paid $150,000 a year, right? So, so that is um that's hard, that's really gonna be hard to walk away from for a lot of people. But I would say that you know, we and we do hundreds of pilot plans every single year. Uh, one of the ones that you and I worked on recently was a situation where the commuting was hard.
SPEAKER_06Yeah.
SPEAKER_02Lived in a different country, yeah. In the end, it wasn't so much about the money, it was just about the lifestyle.
SPEAKER_06Exactly.
SPEAKER_02And and maybe he's a healthy person, but the commuting was was was killing his uh his family life, right? Because he had to leave so early.
SPEAKER_03Oh, for sure. I mean at that age, you are um only having, you know, you can drop trips, you can take a certain amount of trips per month, but whenever you're having to commute literally from a different country, that kind of eats up some of the days off that you have.
SPEAKER_02So So what I would do is compare it at different ages. So look, yeah, maybe 55 is when you want to retire, but look at look at the retirement numbers, the income expectations at 58, 60, 62, and 65. Look at all these side by side, compare and contrast. Uh, because once you leave, it's really you can't go back and get that scenery number. Once you leave, you you're gone. 65, you don't have a choice, but 55, you you're leaving 10 years on the table. Um perhaps it's a different scenario. Maybe you received an inheritance and that 10 years isn't as important to you anymore, and you're you're just kind of done. And there's no place to hide out, and you just don't want to do any more qualification, uh qualifications. You don't want to do any more, any more trips, period. You want to travel for yourself.
SPEAKER_06Yep.
SPEAKER_02And you get one life to live, and maybe that's maybe that's the reason to to hang it up.
SPEAKER_06Yeah, makes sense.
SPEAKER_02So we can't, I don't want to judge anyone who thinking who thinks they should they should do that. But typically my my answer is drop drop as many trips as you can and fly the minimum schedule and keep the health care. Yeah, yeah, exactly.
Spending Targets Before You Quit Flying
SPEAKER_02Um, so I would say first place you gotta start is with the spending number. It's like what what is it gonna cost you to live? I I kind of chuckled when I saw this. The average household, this is according to the BOS consumer expenditure data via Fred. That's the uh federal government's uh uh where they generate all the stats and everything. Uh households between age 55 and 64 had an annual expense of $84,000. This is across the US. Uh, 65 and older have an average annual expense of 61,000. Now I'd say most people that probably come to us are well above average in their spending because that seems a little low to me.
SPEAKER_03It does, yeah.
SPEAKER_02But uh that's that's the starting point. So if you want to know what the average spending is and you don't have country club memberships and you don't have boats and you don't have airplanes, and you right, you just live in a just live in a three-bedroom, two-bath house at 2,000 square feet, then then that that can probably be you right there. Nothing wrong with that. Nothing wrong with that. Uh, but that that's you know what what are our core living expenses? What does it take to to make sure that we keep a roof overhead and and our cars in good order and and food, right? And then you have your travel, your hobbies, and your lifestyle. Add that to the mix. Um your uh debt servicing or hopefully your debt free. Uh I'll add here that if you're gonna retire early, you really should have you really should have definitely if you're retiring early. Then you probably could live on $80,000,000 a year. So take into account any debt uh or major purchases you have to make during retirement. Uh and then here's the big one health care. That's that's really the biggest issue. We'll get into that in a second. But what are your health care costs before you get to Medicare age and then after Medicare age?
SPEAKER_05Yeah.
SPEAKER_02Uh we have tables that um can help that fill that in for depending on which state you're in. Uh, and then obviously taxes, how much do we need to pay in taxes? That's that's the easiest thing to calculate in my mind. Right. In this list.
SPEAKER_03Depends what accounts you have, though, available to you.
SPEAKER_02Yes, yeah, very true.
SPEAKER_03It's different per person.
SPEAKER_02So what is it? What does retirement cost when you are no longer flying?
Healthcare Costs Before Medicare
SPEAKER_02You finally have time to do things you want to do, enjoy the lifestyle that you work for. What does that cost? That that's that's step number one number one.
SPEAKER_06Yeah.
SPEAKER_02Right. Number two is gonna be 55 to 65. If we want to do this, your healthcare is gonna be stupid expensive because there's not even airlines that are offering retiree health care.
SPEAKER_05Right.
SPEAKER_02So you're gonna have to go in company Cobra. You can only do that for so long. You can't do it for 10 years. Uh, if depending on where your assets are, so if your assets are mostly in brokerage accounts and you can keep keep your income low, yeah. You could you can um get credits through the marketplace, right? For now, affordable health care acts still exist. Uh, you can get some credits, you can really lower your healthcare cost. Uh I wouldn't go without health care costs. Those are years that you need healthcare the most, most likely. Uh but between 55 and 65, that is gonna be your um that that's gonna be your biggest uh issue is how do I pay for my health care? Um in our plans, a person retiring early for a couple, married couple in today's dollars, we probably estimate what about 25 to 30,000 a year.
SPEAKER_03Yeah, I would say sometimes it gets a little out there, but average 25 to 30.
SPEAKER_02That includes some co-pays.
SPEAKER_03Yeah. Um that's like the best of the best, is kind of what we're trying to project. Um, being super conservative, because you could get something that may be cheaper, but we just wanna that's what we're projecting out. But it breaks a plan sometimes.
SPEAKER_02Oh yeah, and then that number increases by 5.3% for 10 years. It's gonna keep getting bigger. Yeah. And if you're projecting that number out, you're gonna retire, you're at 45 and you want to retire at 55, then then I would guess to make probably something closer to $40,000 a year is what healthcare is gonna cost.
SPEAKER_03Yeah, for a couple for sure.
SPEAKER_02So that in addition to your spending money and all your fun stuff. Now once you turn 65, that'll drop significantly.
SPEAKER_03It does, yes.
SPEAKER_02So that uh that's something you have to work into your into your calculations.
SPEAKER_01Not all financial advice is created equal. Available now. Everything your financial advisor won't tell you. An eye-opening book that reveals what's really happening inside the financial industry and what it takes to build a plan that actually works. Because what you don't know could be costing you.
SPEAKER_02So then we go, all right, we have our number, let's say it's 100 grand a year, uh, we have our healthcare added to that, so it's another 25,000 a year, so 125 is what we need.
Funding The Gap With The Right Buckets
SPEAKER_02Where does this money come from?
SPEAKER_06Yeah.
SPEAKER_02So if if it's 55 and 60 to 65, we'd we have access to our 401k plan because we retire, we leave the money in the custodian at the 401k, and then we can pull out money to live on, yes, which is taxable in most cases, unless you have Roth money. Um the first option it would be a brokerage account. So this is money that you've set aside in addition to your retirement savings. So if you're 35 years old and you want to retire at 55, max out your 401k, but then put additional money into a brokerage account.
SPEAKER_03It requires some planning if you know you want to retire at 55. Um, contributing to a burgage account would be super beneficial to you. Um, because the age 55, the 72T also has a lot of like stipulations with it. You have to take substantial equally payments at least for five years. You can't stop it before five years. So that'll get you to age 60 minimum. Um, those are just some things that people don't know either. But a burger account would be best case scenario, but not everyone has that, you know.
SPEAKER_02And if if you rolled money into an IRA, you can't access it without 10% penalty. That's where that 72T comes in. Yes. So you can pull money out of an IRA, but yes, but you're gonna have to take substantial equal payments, like you said, uh, for five years. And it might be a bigger number than you want, which is don't put it, you put you in a tax bracket. You don't get to choose your number. Um, there's a formula set by the government that you use for that. So yeah, we want to avoid IRAs. Roth IRAs, you could technically get your principal back if you've if it's been in there for five years, but you still can't take your earnings out until it's done half.
SPEAKER_03Yeah.
SPEAKER_02So that's so limited. Yeah, yeah, that's somewhat limited. And you kind of want to leave that for for later in life as well. So a brokerage account's ideal. Maybe there's inheritance you've received um that's that's outside of retirement accounts. Um if it's a inherited IRA, you could get access to it without having to pay the 10% penalty. So that that's um would probably be another first area to go to. Yeah. Uh could be from other things, like maybe you just need some money from your 401k, but you're gonna do some a part-time job somewhere.
SPEAKER_06Yeah.
SPEAKER_02You know, you're working five hours a week or something, you know. You can supplement. We see that a lot too. Or if there's a sp you have an older spouse um you know, that has access that we could access their their resources uh to live on that without penalties, uh, that that could be another another area. Um, every family is just so different. If you have access to pensions, typically that's not gonna work unless it's a military pension. Yeah. So you can live off a military pension. So there's so many different ways to slice it. How our software looks at it is you have these different buckets to choose from. Right. And it's going to optimize where to pull from with no penalties or low penalties. And then it'll calculate the maximum. So it might be spinning down some of your brokerage account money really fast, but it's doing that to preserve the IRA or the Roth. And then it might be spin that down fairly quickly to preserve a higher Social Security benefit in the future. And then there's other things that make it more complicated. There's nobody retiring with a PBCG right now. That's going to be 55, right? All that's the generation above them. But you could have pensions from other parts of your life or a spouse might have a pension. These are all things that that get calculated into this. But ideally, uh you you don't want to um you don't want to spend down any IRA money. You want to keep money in your 401k, uh withdraw it from there, use a brokerage account first if you can. Uh and then after that you just file a 72T and and do a uh do a withdrawal. Your withdrawals, yeah. Do a withdrawal that way. Uh being debt free is gonna be super important uh for 55 retirement. There's also, you know, we didn't really uh talk about in this uh in our show notes, but some people medical out.
SPEAKER_06Yes.
SPEAKER_02And that's not a horrible thing.
SPEAKER_06Yeah.
SPEAKER_02Uh you're gonna get about 85%, I believe, your first year, at least at Delta, American United are very similar. Uh then it drops by your third year, you get about 50% of your of your pay that you were getting in the year prior. Um, and then most airlines are still putting in your 401k contribution, so it's not a bad situation, it could be a lot worse. Uh, but again, it depends on your debt level and how much debt how much debt, if that's gonna cover all your expenses. Um, retiring early also creates other opportunities. I mean, if you were in a situation where again, where you have brokerage cap money, you're living on that, your income tax is gonna be super low, maybe zero. And in that case, uh that's the case, then you have a great opportunity to convert IRA to Roth during that time span. Um, you could probably convert $150,000 a year pretty easily for a married couple if you had zero income otherwise. Income, right? So that's so there's a lot of options uh from a tax standpoint that you need to be considering um even if if you retire 55. Now, if you're on disability and it's a pretty decent amount of money, you may not be able to do that, but you you might have some window, but it's not gonna be hundreds of thousands of dollars, it might be 20,000 or 10,000 that you can convert uh fairly easily. Yeah. So what I would do is is if you think about early retirement, break it down into different um uh different categories.
Comparing 55 Versus 60 Versus 65
SPEAKER_02So we we have a what we call what if worksheet, and we have we can create these different scenarios so we can show you side by side 55, 60, or 65. And those are just numbers, and then you have to apply the lifestyle. Yeah, you'd say, Well, I know 65 is better than 60, but I've got some things I want to do, right? You you you talked about earlier is that retiring with purpose. Do you have a do you have a purpose? I don't think I've never had anyone come to you and say, I'm just lazy, I don't want to work. Typically, there's a reason.
SPEAKER_06Yes.
SPEAKER_02So that reason might be worth whatever the difference is for sure in income. We just gotta work with you to make sure that it it's gonna work, that you're not that your budgets are realistic, that that everything makes sense, and you don't jump and go, oh, I forgot my parachute.
SPEAKER_06Yeah, right.
SPEAKER_02So there's some pros and cons to all this. Um, you know, retiring 55, more time and freedom, ability to leave aviation earlier, um, more years in active retirement. Um the the pressure point is gonna be 10 years of health care before Medicare. Um, you're gonna have a longer portfolio drawdown period because what we learned at the beginning of this segment is pilots actually live longer than the general population. Uh more exposure to sequence of return risk. That means that um you retire, but then market goes down, down, down, down. Right. And then so you have to weather that storm before you can get up to other now. We we we have a whole cash bucket system that helps uh doesn't eliminate that, but helps reduce the effects of that.
SPEAKER_04Yeah.
SPEAKER_02Um but the sequence of return risk is really important uh to think about um uh from a from a super early retirement period. Uh and also you're leaving your peak earning years on the table. You're not getting um the biggest paychecks uh for those last 10 years. If you retire at 60, uh you got five years fewer uh to worry about until Medicare. Uh five year, five more years of possible contributions and compounding. Uh it may still allow for a substantial early retirement period, meaning that you get five years, you retire at 60, it's five years sooner. Yes, you're leaving some money on the table, but it you had five more years of compounding to get there. Pressure points, still got this five years you got to cover. Those are gonna look expensive to you, especially with healthcare. Um social security claiming strategy needs a careful review here because most people are gonna want to run to that age 62 and start taking that money, and that's probably not the best scenario. You probably still need to be waiting until 67, uh 70, ideally.
SPEAKER_06Yeah.
SPEAKER_02Um, you have to be careful about your lifestyle spending, what's happening at age 60? Are all the kids out of college? Is all that good? Uh, or do you still have potential for really high expenses? You have to think about that. Age 55, same same pressure point as well. Um, if you go to 65, hey, that aligns with Medicare agility. So that eliminates the the health care, crazy healthcare expenses, uh, preserves your maximum career earnings for many pilots, it reduces the number of years of the portfolio, must fund you uh before you know major retirement benefits benefits begin. Um, and but the planning pressure is that might not be the lifestyle or a health perspective that you want for yourself. Yeah. Um, you might, you know, age 65 is the limit, right? For um pilots. So if you're not ready for retirement and you get to 65, yeah, there's some options, but it's not as lucrative as the option you have right now. Yeah. Right. We've seen that uh over the years, right? And then your social security timing uh is really important. You don't want to retire at 65, and you probably don't want to just take social security Reddit at 65. That typically the math doesn't work there. You want to wait till full retirement age on your portfolio first, potentially age 70.
SPEAKER_06Yeah.
SPEAKER_02So there's a lot of um, there's a just there's so many things that you have to think about um prior to retirement, not just early retirement, any retirement.
Sequence Risk Inflation And Return Assumptions
SPEAKER_02Uh, what happens if the market falls 20% in the first couple of years? Yeah. You got to stress test that.
SPEAKER_05You gotta be able to worry about it.
SPEAKER_02Are you are you ready for that? Do you have enough cash reserves for that? Um, the healthcare shock with which we've been talking about, one we haven't covered yet is inflation. Yeah. If inflation is is we, you know, the Fed targets 2%, we use 2.5%. Uh, I'm starting to wonder if we should start using three percent based on what's happening and with inflation. But if you know a lot of people calculate this stuff on their own, and so they calculate retirement, say, this works. And then 15 years from now, they're gonna be like, this doesn't work anymore. And it's because they didn't take into account the rising cost of living.
SPEAKER_03Just living, yeah.
SPEAKER_02They they assume they assume that their income stays the same the entire time. They didn't inflate it.
SPEAKER_03Yeah, and it's kind of hard for them to know how to build a portfolio too, to weather that. Um, and that's gonna look different at 55 and 65. Yeah, you know, because like our average retirement portfolio at 65 isn't gonna look the same at 55 because you need a weather longer to be able to get through inflation.
SPEAKER_02Well, a lot of people they uh they come in, talk to us, they they think, oh, well, I'm gonna move to like a dividend strategy and I'm gonna buy these stocks and they pay this much yield, and I'm gonna live just off the yield.
SPEAKER_03They want the income.
SPEAKER_02Yeah, and that that that's not gonna work. Unfortunately, a lot of the big companies are paying these big dividends are having to borrow money to pay the dividends. So you have some risk there. Is those can these companies keep this up? Are they gonna turn into the next GE? Yeah, you know, ATT has a thread of that potentially. Um so and and then if you buy the the index funds, which we recommend typically to build portfolios with low-cost ETFs, um, the the income gets diluted a little bit because you have thousands of companies in there.
SPEAKER_05For sure.
SPEAKER_02So you it's really hard to live off just income these days. You have to look at income and growth. So the income investors um have not done as well.
SPEAKER_06No, yeah.
SPEAKER_02Um, just because of that. So you have to you have to look at a total portfolio. Yes. Um, other things we haven't really talked about is longevity of your spouse. Like we've met with some people recently that the spouse is like, every family's made it to 100.
SPEAKER_06Yeah.
SPEAKER_02So we might plan for 105 for you because this is a modern medicine time now, right? Uh also uh large one-time expenses are things you have to take into account. So if you want to renovate your home or you need to support adult children, weddings, uh, family caregiving. I just went through that. Second home cost, these are all large one-time expenses that have to get work into your plan. You can't ignore those. No. Uh also tax law changes. Um, how sensitive is your plan to higher taxes? Um, I personally don't think that we're gonna be in a higher tax environment. And that could we have a whole we could have a whole podcast just on that. But just seeing with the advances and efficiencies with AI, um, I I I think that the tax rates probably stay about about where they are. Yeah, giving the government more money doesn't mean they're gonna balance their budget, typically means they're gonna spend more money. Yes, that's that's typically not gonna be the solution to the long-term change. Um, and then reduced uh spending flexibility. So what you know, do you have the ability to cut your budget should the market decline? Um we we typically don't plan that way. Right. Uh there are firms out there that say, hey, live this kind of lifestyle, but if things get bad, we're gonna cut you half. We're gonna cut it all by half. And I was like, I don't, I don't want to make that phone call. I don't want to call up somebody and say, I want you to live your best life, but I don't I don't want you to be in a situation where the market's bad this year, you know, you're gonna cut everything out. Cut it half. That's that's not gonna no that's not gonna work.
SPEAKER_03We're gonna have unhappy clients too. Right. Everyone's gonna be unhappy.
SPEAKER_02But there's firms that do that. Uh it's a whole philosophy, whole podcast on it. Uh, don't I don't I don't want to be that volatile with uh with my my spending. I want to know, kind of know this is I can stay within this range and no matter what, for sure. I think I think most of our clients live below their means, so they do that automatically anyway.
SPEAKER_03They do.
SPEAKER_02We're usually typ typically telling them to spend more money.
SPEAKER_03I know. Always having to tell people do what you want, spend more money, enjoy retirement.
SPEAKER_02So anyway, it's the retirement plan only works uh as strong enough for a 55-year-old as what the market can support in the stock market and how we invest. Uh so you have to take into account so many different variables. Uh, we use a Monte Carlo, which looks at a thousand different stock and bond market scenarios, come with a probability of success. So we want retirees to be around 82% chance of not running on money before age 95. Uh, most people aren't gonna look at it that way. They're gonna use uh if you if you look at individuals and they plan, they go get an 8% rate of return and I'm gonna do this. And uh again, eight percent's a little strong. Uh I would probably be planning on six and a half. And if you get the double digits returns we've had in the last 10 years, that's great. Just looks better. We just keep increasing the what you can do and spend. Uh, but I would not bank on the market giving you eight percent every year for retiree portfolio. For sure. That's only probably about half in the market in the end. So, anyway, um hope this helps. Uh, I I think that you know, the purpose is I don't think there's many pilots that are gonna try to retire at 55. Yeah, but these are all things you should even be thinking about for an age 65 retirement. Yeah, you can't sit there and hope that they come out with age 67 retirement because you need two more years to
Retiring With Purpose After The Cockpit
SPEAKER_02save. Uh, the guys that I've known that have gone to uh to uh uh corporate flying aren't super happy post-65. You just probably came off a flying A350 or A330 or super senior guy on a on a uh on an A320 uh in Atlanta, and now all of a sudden, you know, you you're a nobody. Right. And you're fine this, you're flying just kind of uh someone calls you and says, I need to go somewhere. Yeah. Uh or or you might be in a like a flexjet. I had a guy who went to flexjet and he was really unhappy because they don't run it like an airline. Yeah, it was running more like a small business, and they didn't like that feel. It wasn't very professional. Yeah, and also too, you know, you're the big time airline pilot coming into the more corporate feel, and there's gonna be some animosity there. Yeah, uh, I think. Now, other guys have been successful um at like Delta Professional Services and doing sim instruction and teaching the next generation of pilots, and uh that's been more enjoyable, and they've been very happy in those positions, and they also get to choose their schedule, right? So there's there are there is life after retiring and if you need to keep working, um, but let's let's plan ahead. So that's optional.
SPEAKER_06Yes.
SPEAKER_02Um, you said it best before we started uh when we're doing our prep for this podcast, which was pilots need to retire with purpose.
SPEAKER_03With purpose. Yeah, no, for sure. We have a lot of them. I just feel like, you know, there's we have pilots come in and they have like bad weeks, bad months, or whatever. They're like, I'm so over this job, you know, I'm annoyed with whoever I'm flying with, and or the um the you're you're on on the way there, like it's just a bad commute, is what I'm trying to say. Um because we have a lot of people that aren't in base, you know, they I mean they're flying just to fly. Flying just to fly. That's right. We see that a lot. And no, you don't want to just say, you know what, I'm done. I'm tired of it, I'm done. Cause like you said, you can't go back. And then you retire and you forgot about the purpose that you're retiring to. Um and it's just you have to have, and this is with anyone, not just pilots, but especially pilots. Still, you have to retire to a purpose because that also helps with longevity if you retire into a purpose. Um and whether that is you do want to travel on your own time, whether you want to be with your kids more, your wife more, whatever it is. I think that you just need to have that set in stone before you just all of a sudden make the decision.
SPEAKER_02You have a need to have a game plan.
SPEAKER_03Yeah, a game plan for sure.
SPEAKER_02I mean, I stopped way early. I stopped playing in 2014, but I'll I'll say I struggled for a little bit.
SPEAKER_03Yeah. Well, it's a shift.
SPEAKER_02That was that was that was me. That was that was so much a part of my life. And then but I obviously it's an identity. I was building a company. Yeah. So I but I had this to focus on.
SPEAKER_06Yeah.
SPEAKER_02Uh but something to do. I mean, I I left willingly. I didn't didn't leave because someone asked me to. For sure. I was like, okay, I can't keep doing both. Yeah, I gotta pick a career path. And this is the one I chose. Um, but it was a it was a tough transition. I see that with with other pilots, and they're you know, a lot of them are men, they're not trained to talk about this stuff, they gotta swallow their feelings. Uh but the reality is you you you you probably don't miss work or you but you probably miss some aspects of it. Yeah. Uh, but you you have to you definitely have to have uh what what what are you gonna do when you're when your feet hit the floor in the mornings? What do you what are you working on?
SPEAKER_03Yeah.
SPEAKER_02You know, it it could be something really simple, but it just Yeah, it could be redoing your backyard, right?
SPEAKER_03Renovating your entire house. I don't know. We always hear, I feel like as soon as someone retires, they have all these renovations, all these plans. They want the second home. Yeah, whatever it is, you don't have to be traveling at all. A lot of pilots just want to stay home.
SPEAKER_02Yeah, they don't want to travel anymore.
SPEAKER_03So whatever it is, just have that in mind before you just make the decision, especially if you want to retire early.
SPEAKER_02Yeah, these are all good things
Free Pilot Tools Planning Options And Closing
SPEAKER_02to think about. And uh obviously um we're here, our planning team's here. We have uh Michaela is really good with uh pilots and who uh have military background. She's uh gonna start working on a certification for military uh people and their benefits, but uh the reality is she never she already knows a lot as as it is. So so it's it's uh reach out to us. We have lots of resources. Um you can actually go well uh a lot of people think we're you're here just to manage assets. We're we we derive most of our revenue from managing assets, but yeah, but we also have a flat fee financial planning program, and that's what we uh offer to our pilots that are still working. Right. And uh that program's been really successful. Our competitors uh want to manage money inside of Brokerage Link. And I was like, that's not the important part. The important part's the planning. And so uh uh we have free models. We what everyone else is charging one to one and a half percent for we give away for free on our website. You can go to wiserinvestor.com and click on the pilot section and you can find your airline, you can download our allocations. Andrew, Andrew has built those. Take a risk questionnaire. Uh obviously younger, be on the more aggressive side. If you're older, be in maybe more to the moderate side, especially within maybe a couple years of retirement. Right. But these are all free resources that are available to you to download. You don't have to interact with us. We're not gonna call you. Yeah, it's just these are out there because I'm like the pilots need this. They don't need they need they need uh in-depth financial planning. They don't need an asset manager um at at uh for their 401k plan um at this point. So uh be sure to to go and find that um that free resource uh and and then the planning part. This is where we would like to work with you. Yeah. Um, we have some other episodes uh related to this episode 259, uh, what pilots and others should consider five years prior before mandatory retirement. Um, episode 322, how airline pilots can make the most of their profit sharing bonus. That's something to think about too, as your profit sharing time period rolls around. Maybe you need to be applying that to debt so that you can live uh you can live debt-free. And then if you want to retire sooner, that gives you um uh an opportunity to do that. But thanks for joining me on this discussion, Grace. And thanks for listening to today's episode. If you're interested in learn learning more about wiser wealth management or want to schedule a consultation to meet one of our fiduciary financial advisors, you can do so by going to wiserinvestor.com or you can click on the link in the episode notes. We'll see you guys again next week.
SPEAKER_00Thanks 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 wiserinvestor.com and reach out. This podcast is strictly for informational purposes only and is not to be considered as investment advice or solicitation to buy or sell any financial products, securities, digital assets, or any other investment vehicle or a basis to make any financial decisions. Wiser Wealth Management Incorporated is a registered investor advisor with the SEC. The host and or guest may personally own securities, digital assets, or other investment vehicles mentioned on this podcast. Neither the host nor guest of the show are compensated for their participation, and no referral fees are paid to or received by any host or guest for clients, listeners, or similar interests. Investments involve risk, and unless otherwise stated are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional, andor legal professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
.jpg)
.png)