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Preflight Your Retirement

Steve Lofgren

Director of Financial Education

Last Updated
February 16, 2022

Walk arounds are the first part of our preflight inspection before every leg. They can be dreaded, like in Montreal in January when it’s -30C, or enjoyable, like the last one I did on the ramp in Cabo San Lucas. As pilots, we all know how critical, yet sometimes laborious, the walk around is as part of our daily routine. The same is true with your retirement and wealth management plan. It has to be done with a critical eye, regardless of where your finances stand today. If you’re not yet age 40, and/or new to the airlines, this article is for you — and this preflight walk around is like a sunny day in Cabo.

The airline industry is officially reborn after the crisis of 2020 due to coronavirus, and virtually every airline is hiring by the hundreds or even thousands. The influx of new pilots, many of whom are under age 40, gives us a fresh opportunity to help get everyone off to a great start to their careers. One of the items of interest for all pilots is how to maximize their retirement savings in their company’s 401(k) and make sure that when their time in the skies is up, their labor will have produced handsomely for both their companies and themselves.

Just like how we have a well-planned walk around, taught to us in ground school and during IOE, we must have a similar preflight plan as we begin making retirement contributions and managing our wealth.

Here are five important things you need to address in your retirement preflight:

  1. How much are you contributing to your retirement, and how much is your company contributing? If you don’t know, you need to find out. The goal is to use your contributions along your company’s in order to max out your 401(k) every year (according to the limits set by the IRS).
  2. Who administers your airline’s retirement account? The two big brokerages in the airline industry are Schwab and Fidelity. Do you know how to access your account? Can you self-direct the securities in your account, or are you in a target-date fund?
  3. Can you use “other dollars” to contribute to your retirement account? Some airlines allow you to sell back parts of your vacation in order to have an equivalent dollar amount put into your 401(k). This affects how much you should contribute every month yourself.
  4. What happens after you retire? There’s a lot to consider after you’ve left the airline, and waiting until that time to plan for it is like stopping your walk around midway through. Preparing your finances and having a solid understanding of what happens after retirement is vital to being ready when the day comes.
  5. How does your family fit into your wealth management plan? As much as we all want to think we will live a very long life, for many it’s cut short too soon. Having things like an estate plan, will and legally designated beneficiaries for all that money you made is crucial to protecting your loved ones.

For those of you just starting at your dream airline, congratulations! It’s a fantastic feeling to make it to the majors. If you’re under age 40 and can stay healthy, you have decades of earning and investing power that few can match. I remember my first walk around inspection on the Airbus A320. I was grinning from ear to ear and still pinching myself that after 14 years of regional flying, I had made it. Performing a solid preflight inspection on your retirement account will pay dividends for decades and leave YOU grinning from ear-to-ear when the day comes for you to turn in your wings.

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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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