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32 year DAL dies, pilot contract...

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macfly

Well-known member
Joined
Apr 13, 2002
Posts
129
My father recently passed away after recoverying from a bypass surgery. He had flown for delta for 32 years and was 2 months away from retirement. He did not get a chance to offically retire and his family is now out OF ALOT of money. ?I'm not even talking about the monthly anuity...That's not an issue. Pilots get a LUMP SUM and a montly anuity upon retirement.

DAL contracts stipulates that you must "offically" retire before you become eliglible to recieve these benefits. My question is; what happens to these families if unexpected misfourtunes happen such as this?

Thanks in advance,

macfly..
 
oppps sorry maybe this was the wrong area to post, i just saw major and went for it..

Newbie I be...

macfly
 
First of all please accept my sincere condolences on your father's passing. Our prayers are with you.

One of the advantages of our 'commuter/regional' retirement at Comair is complete portability. We are fully vested in two years and when we go the money goes with us. Whether we die or quit the money in the 401K and the separate company funded retirement portion is ours. Granted it isn't as much as a mainline defined benefit plan but what use is that if you never get to take advantage of it.

Some of our pilots have run the numbers and if a 25 year old newhire contibuted the max to his 401k, that along with the company match and company retirement contribution he would have in excess of $4 million at age 60 retirement. If he were to die two months prior to retirement his estate would still have that same $4 million. Even at a modest 4% withdrawal rate of $160K per year one can live pretty well and still almost guarantee to be able to maintain the $4 million in assets for the rest of your life and pass it on to your heirs. There are, of course, some tax implications.
 
First, in regards to the question, contact the Delta ALPA MEC retirement committee and they'll sort out the details. I'm sure that this is covered.

As for having all the money in a 401k, etc, that might be a good deal depending on how the market does during your tenure. With 30 year negative trends in the market history it could be less than pretty. The qualified A plan is worth it's weight in gold if that happens. Best to to have the two balanced at the very least. I would personally, and without having more data, say the Delta retirement is probably worth a bit more than any regional out there, and that their retirement committee has dealt with this situation in their contract.
 
If you look at the history of the market you'll find several points that, if you bought at that point, you would be net negative or neutral 30 years later. Much of the time it has been relatively flat. Unfortunately, most people only are aware of what the market has done in the past 20 years or so (in fact, many on this board are too young to have known anything else!), but, as they say, "past performance is no guarantee of future performance"! There really is no way to predict what will happen in any given period. The market is nice, but a qualified A plan can be better.

It is intersting to note the different philosophies within the carriers retirement committees. Some have felt pretty confident with the market, and perhaps less confident with their employer by going mostly with the B-fund (AA, UA, UPS), while others have historically leaned towards the A fund (Delta, NWA, USAir).

For myself, it seems a balance is best. I don't want all my retirement to be in the market with uncertain outcome (I don't feel I can predict that there won't be some crash a year or two before my retirement that I can't recover from in time to retire), and I don't want to place everything with the company defined benefit plan either (even if I can roll it over to a annuity to better protect it when I retire).
 
There is no point since 1929 that I am aware of where the market wasn't up over a 30 year period. Even over shorter time periods, even in the worst markets, stocks eventually go up.
 
Wiggims,

Suggest you take a closer look. No period that was negative? If you bought at the high point in 1929 you wouldn't have recovered for over 30 years. If you bought around 1965 it was flat until about 1980 or so also. Sure, it has been net negative, but if you look at the chart it goes up then goes flat then goes up again, etc. We just had a pretty good run up, do you know for sure that it won't flatten out for the next 20 or more years? Over shorter time periods it's even easier to find negative trends or zero growth.

Look for yourself http://www.lowrisk.com/djia100year.htm
 
Profile (and anyone else)


Best not to refer to refer to the Dow for an accurate reflection of the stock market. The Dow only has, as most know, 30 companies in the calculation. The calculation is not cap-weighted, but equal-weighted. This means the smallest company in the Dow calc has the same impact as the largest. The S&P 500 is used by all Investment Managers in the U.S. and probably abroad to evaluate the performance of the U.S. Market. The S&P 500 being a cap-weighted index of the 500 largest companies (actually 498, with a couple foreign stocks included) in the U.S.

I ran some calculations using S&P 500 data from 1954(that was the farthest back my source went) to 2001.

The average yearly return was 13.49%.
The average 20 year return beginning in 1973 was 12.1%.
The average 30 year return begining 1983 was 12.16%.
The lowest 20 year return was 7.77% in 1978.
The highest 20 year return being 18.56% ending 1999.

30 year, the range was much narrower; 10.72% ending 1984 and 14.87 ending 1999.

I did not run any distributions on the data and it is a sample of data so there is a standard error not reflected in calculating an average. However given the differences in the markets of today to the markets on 1929 (information flow worldwide travels probably a million times faster or some outrageous factor) I believe there is more significance to the last 45-50 years than the last 80-85 years.

The point is there can be a reasonably good expectation the indexed U.S. S&P 500 market will return within a relatively certain range of returns over a period of time. Invaluable information when planning a retirement strategy.

As for preservation of income using the financial markets, diversifying and moving portions to less riskier areas of the market should allay fears for anyone that an equity market crash or downturn will significantly affect their retirement.

Knowing these facts makes me far more trusting of the market for my retirement $$$ than a pension plan funded by an employer. I don't know the laws involved with these fund A's or B's the airlines offer so I don't know if one has more risk of becoming insolvent in the case of a corporate meltdown.

I do know that the Dow is ABSOLUTELY the wrong index to use when evaluating the health of the market and the wrong index to use in planning retirement. It just happens to be widely quoted for the last century or so (I can't recall it's inception) and it's what the general public understands for the barometer of the equity markets performance but no professionals use it.

I don't mean to be a preacher and I probably make a lousy one but refering to the Dow is just wrong. Like refering to only a couple airlines to tell everyone the health of the airline industry.


Mr. Irrelevant
 

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