Important Steps for Spirit Airlines Pilots
Do the recent Spirit Airlines furlough announcements have you feeling uncertain about your financial future? While uncertainty is never easy, there are steps you can take to help ensure your family’s financial security during a period of furlough or job transition.
Key takeaways:
- A great way to keep your finances on track during periods of uncertainty is to establish a comprehensive financial plan.
- You should resist the urge to withdraw from your retirement accounts, given the many downsides of doing so.
- Consider working with a qualified wealth manager who has experience navigating the financial complexities of commercial airline pilots.
#1 – Establish or update your financial plan.
A great way to keep your finances on track during periods of uncertainty is to establish a comprehensive financial plan to guide your decision-making. Your plan can help you keep up with all aspects of your financial life and includes strategies to provide for your loved ones during periods of job uncertainty. Ultimately, a financial plan can help ease your financial anxiety by providing the peace of mind of knowing that your future is secure.
#2 – Find ways to lower your expenses.
As you prepare for a potential furlough, consider how you can reduce your discretionary expenses. This may involve creating a budget and more closely tracking your spending to identify and eliminate unnecessary expenses.
Start by reviewing all your expenses over the last several months to gain an understanding of what you currently spend on both discretionary and non-discretionary expenses. Compare that amount to the income you anticipate having each month. If you’re experiencing a period with limited income, consider how your emergency savings can help cover your living expenses. Do you need to reduce your expenses to live within your current means? Maybe you can eliminate some streaming services, join a less expensive gym or cut back on the number of times you eat out each week.
#3 – Resist the urge to withdraw from your retirement accounts.
During periods of financial uncertainty, you may be tempted to withdraw assets from your retirement plan to help make ends meet. However, there are some significant downsides to doing so. For example, you’ll need to pay ordinary income tax on any assets withdrawn from tax-deferred sources, and you’ll likely face an additional 10% early withdrawal penalty if you haven’t yet reached age 59 ½.
However, the biggest risk in withdrawing from your retirement account is that those assets won’t be available to you when you’re ready to retire. Not only do you miss out on the principal value of your assets to fund your retirement but you also miss out on the potential growth those investments could generate if they remain invested in the market, which can put you in a tough spot once you’re ready to retire and need to establish a steady stream of retirement income.
#4 – Utilize ALPA furlough resources.
The Airlines Pilots Association, International (ALPA) provides a wide range of resources to help you navigate finances, health and well-being, insurance and retirement benefits, educational opportunities, career opportunities and more. For additional information, visit ALPA’s website.
