Financial Reasons To Be Against Age 65

[ToThePain]

I’ve grown tired of reading all the reason why “junior guys” should want to work till 65. We will make more money and have more saved up for retirement. I decided to run the numbers myself. This is based off CAL current contract, which is a concessionary contract and will get better which will further skew the numbers against the junior guys.
These calculations are based off:
1. 2008 contract rates:
2. Figuring 20% 401k (includes companies 12% defined contribution)
3. 76 hours guaranteed (also a low number but that’s our reserve B number) any increase the difference between delay and no delay.
4. 6% compounded interest over the career to the age of 60.
5. All these numbers are base on a 3 year delay in upgrade. (Just a guess, no one really knows the exact affect, obviously more than 3 makes it worse on the junior guys, less makes it better)

No delay-
Total salary earned $3,096,968
Total 401k savings $1,257,321
Total $4,354,289

With delay
Total salary earned $2,821,468
Total 401k savings $1,182,318
Total $4,003,786

Total difference $350, 503. This means that I would have to work an additional 2 ½ years to break even with the loss of income putting me at 62 ½ years of age, essentially working for no pay given that I would have had that with no delays. That leaves me 2 ½ years to “make more money” These numbers are all conservative, you can see that with a better contract the differences in total income would increase. This also does not include the quality of life issues especially with PBS. There are also several recent studies that show the longer you work the average person has a shorter life span. I have listed a current report ALPA has. Here is the link to it, very interesting: http://www.mytruebrain.com/Creativity%20&%20Longevity.pdf
I don’t plan on working past age 60. I am planning on the age change to happen and am increasing my retirement savings to 24% a year (including CAL contributions) to offset this loss in wages. I shouldn’t have to.

 

[GuppyWN]

You forgot to add the compounding on the difference in capt pay and fo pay for the time between when you would make cappy and 60. It could EASILY double your number.

Gup

 

[Patriot328]

How funny that the people who want Age 60 to change cite their loss of pensions and associated economic hardship as reasons they need to change the rule. They need to work the extra years to make up for lost money. It looks like the junior crowd is going to lose MORE than the pilots that lost pensions and will have to work longer to make up for it. It will be a LOT more when you consider what GuppyWN is saying. If at your compay pays $70k/yr difference between what you are getting as an FO and what your CA pay would be, that's up to $350,000 difference. Doubtle that because of compound intrest over 20-25 years and that's another $700,000 in the hole. Guess I will be working to 65 to make up for my ecomonic loss, just like the senior crowd.

Talk about passing the buck....

 

[shearedshaft]

You forgot to add the compounding on the difference in capt pay and fo pay for the time between when you would make cappy and 60. It could EASILY double your number.

Gup

Um...compounding the money you DIDN'T earn? I don't get it.

 

[Black Hawk]

I’ve grown tired of reading all the reason why “junior guys” should want to work till 65.

And more than a few of us are tired of an antiquated safety rule being misused to artificially manipulate the financial aspects of the job. Just negotiate whatever retirement age your union wants with to have with your company. If pilots at your company want to quit at 60 the go for it.

 

[ToThePain]

And more than a few of us are tired of an antiquated safety rule being misused to artificially manipulate the financial aspects of the job. Just negotiate whatever retirement age your union wants with to have with your company. If pilots at your company want to quit at 60 the go for it.

No labor contract would stand up in court if it forced pilots to retire at an age earlier than the federal government allows for. This has nothing to do with age discrimination and everything to do with money on both sides. If it was an age discrimination issue then most if not all of the guys that are lobbying for the change are hypocrites. Did they march on D.C with their disgust for this "age discrimination" years ago when they were FO's? Did they refuse early upgrades on principle to show their disdain for what they deem to be an unfair law? Did they actively pursue change within ALPA or their respective union? The answer in most cases is not just no but heck no. They are looking out for their best interest and the interest of their families. While I understand this it should not be a reason to change a rule that the overwhelming pilot base is against. If you look at the history of most of the pilot contracts they are usually in favor of the older pilots because it is known that they would have to leave at the of 60.

 

[Black Hawk]

No labor contract would stand up in court if it forced pilots to retire at an age earlier than the federal government allows for. This has nothing to do with age discrimination and everything to do with money on both sides. If it was an age discrimination issue then most if not all of the guys that are lobbying for the change are hypocrites. Did they march on D.C with their disgust for this "age discrimination" years ago when they were FO's? Did they refuse early upgrades on principle to show their disdain for what they deem to be an unfair law? Did they actively pursue change within ALPA or their respective union? The answer in most cases is not just no but heck no. They are looking out for their best interest and the interest of their families. While I understand this it should not be a reason to change a rule that the overwhelming pilot base is against. If you look at the history of most of the pilot contracts they are usually in favor of the older pilots because it is known that they would have to leave at the of 60.

That's all true enough. What I know is that when the age retirement age gets bumped up, unions, companies and pilots will all make adjustments based on their own best interests and not because of some altruistic principle.

 

[Superpilot92]

How funny that the people who want Age 60 to change cite their loss of pensions and associated economic hardship as reasons they need to change the rule. They need to work the extra years to make up for lost money. It looks like the junior crowd is going to lose MORE than the pilots that lost pensions and will have to work longer to make up for it. It will be a LOT more when you consider what GuppyWN is saying. If at your compay pays $70k/yr difference between what you are getting as an FO and what your CA pay would be, that's up to $350,000 difference. Doubtle that because of compound intrest over 20-25 years and that's another $700,000 in the hole. Guess I will be working to 65 to make up for my ecomonic loss, just like the senior crowd.

Talk about passing the buck....

Its just another chance for the Old Guys to throw the Junior Guys under the Bus AGAIN!! Why should the group that established the "B" Scale stay for 5 more years? Dont forget the phenominal move to allow the the "RJ"s to be flown off of a mainline seniority list Because they were TO good to fly an "RJ" uke:

 

[PreContact]

That's an awesome avatar Superpilot92~

 

[Superpilot92]

That's an awesome avatar Superpilot92~

Thanks I like Her Too!!imp:

 

[T-Bags]

You forgot to add the compounding on the difference in capt pay and fo pay for the time between when you would make cappy and 60. It could EASILY double your number.

Gup

actually, what you need to do is take the annual compensation numbers you've come up with and discount them back to today (at a reasonable 4% or so a year).

 

[Porch]

Your numbers are too vague, not based on fact. Too many assumptions, therefore your math is meaningless and holds no merit. For all you know, you'll be on the street at age 57 going on your 3rd wife and 4th kid...wishing you could fly to 65. I have an idea, why dont you make an extra 1.5m between now and age 60 so you could just quit then. You could hire some firemen to shoot an early retirement load on you at 60 instead of waiting to 65.

 

[ToThePain]

Your numbers are too vague, not based on fact. Too many assumptions, therefore your math is meaningless and holds no merit. For all you know, you'll be on the street at age 57 going on your 3rd wife and 4th kid...wishing you could fly to 65. I have an idea, why dont you make an extra 1.5m between now and age 60 so you could just quit then. You could hire some firemen to shoot an early retirement load on you at 60 instead of waiting to 65.

Wow,
Thanks for an insightful and well though out response. I used the only numbers available, was conservative in the math. Ill be happy to give you are current pay scales from our concessionary contract and let you do the math. By the way I would have no one else to blame but myself if I had 3 wives and 4 children and would not expect the rest of the pilot base to suffer because I was irresponsible.

 

[skywdriver]

Wow,
Thanks for an insightful and well though out response. I used the only numbers available, was conservative in the math. Ill be happy to give you are current pay scales from our concessionary contract and let you do the math. By the way I would have no one else to blame but myself if I had 3 wives and 4 children and would not expect the rest of the pilot base to suffer because I was irresponsible.

Thanks for taking the time to put these numbers out there. I have a degree in finance and would totally agree that your numbers are super conservative. Another side that should be considered is the health side. It is hardly arguable that this job takes its toll on your body healthwise. Nobody knows exactly how much, because nobody outside the profession gives a $hit. However, i can only imagine that more damage is done exponentially as your body gets older. And the argument of "if you don't like it, then do something else" isn't valid, because this is all in response to the additional effects of extending the retirement age. It is very sad to see that the industry is continuing to split, with pilots of one airline against another, and now senior vs junior. I would imagine that very few of the guys getting close to retirement really care whether or not the rule gets changed the day after they retire (always an exception, and commendable to those who are doing this because they believe it benefits the whole). It is hardly an argument based on principle in most cases, or the good of the profession as a whole. It is a selfish push, that ends the day one retires. Without pilots sticking together in the past, and giving from time to time for the good of the whole, this job would probably not be worth doing. The pilots who have enjoyed the good old days of not being harassed by TSA, of good contracts, and of planes filled with people that appreciated a ride and wore more than a wife beater, had their day. Too bad about the pensions, I am quite sure that the next generation of pilots will have their challenges as well, like competing against airlines from lesser developed parts of the world flying old airplanes for dirt cheap from point to point within the United States. Who is going to make up for my lost income? I certainly hope that our generation will realize that this job has always been a roller coaster and not sacrifice our young to make up for their bad fortune, or the fact that their career ended on the down swing. Just a thought.

 

[HalinTexas]

Couple of questions:

Is this the figures for age 60?

Why don't you run the numbers at 63, 64, 65 and include SS, Medicare, supplimental medical coverage costs, and drawdown of your retirement.

At 41, I can't take full SS bennies until 67, at 62 I only get 70% bennies.

Medicare won't kick in until I'm 65.

Last I checked, cobra or other independent self-paid health coverage costs $800+ per month out my pocket.

And, then calculate drawn down at 80% of last year's earnings for 3,4, or 5 years as the case above warrants.

Remember, those airlines with pensions are few in number. Those with "other than 401(k)'s" are rare as well. It will take 5-10 years to regain earnings that were realized before the BK festival of the post 9/11 era.

 

[Black Hawk]

Thanks for taking the time to put these numbers out there. I have a degree in finance and would totally agree that your numbers are super conservative. Another side that should be considered is the health side. It is hardly arguable that this job takes its toll on your body healthwise. Nobody knows exactly how much, because nobody outside the profession gives a $hit. However, i can only imagine that more damage is done exponentially as your body gets older. And the argument of "if you don't like it, then do something else" isn't valid, because this is all in response to the additional effects of extending the retirement age. It is very sad to see that the industry is continuing to split, with pilots of one airline against another, and now senior vs junior. I would imagine that very few of the guys getting close to retirement really care whether or not the rule gets changed the day after they retire (always an exception, and commendable to those who are doing this because they believe it benefits the whole). It is hardly an argument based on principle in most cases, or the good of the profession as a whole. It is a selfish push, that ends the day one retires. Without pilots sticking together in the past, and giving from time to time for the good of the whole, this job would probably not be worth doing. The pilots who have enjoyed the good old days of not being harassed by TSA, of good contracts, and of planes filled with people that appreciated a ride and wore more than a wife beater, had their day. Too bad about the pensions, I am quite sure that the next generation of pilots will have their challenges as well, like competing against airlines from lesser developed parts of the world flying old airplanes for dirt cheap from point to point within the United States. Who is going to make up for my lost income? I certainly hope that our generation will realize that this job has always been a roller coaster and not sacrifice our young to make up for their bad fortune, or the fact that their career ended on the down swing. Just a thought.

This is the best post yet on the subject.

 

[ToThePain]

Couple of questions:

Is this the figures for age 60?

Why don't you run the numbers at 63, 64, 65 and include SS, Medicare, supplimental medical coverage costs, and drawdown of your retirement.

At 41, I can't take full SS bennies until 67, at 62 I only get 70% bennies.

Medicare won't kick in until I'm 65.

Last I checked, cobra or other independent self-paid health coverage costs $800+ per month out my pocket.

These numbers are a comparison between what I would have if age 60 stayed in place and I retire at 60 and what I would have at 60 with the age 65 rule. Understand I also didn't compound the interest of the salary difference which comes out to about $140K assuming 17 years compounded interest and a 28% tax from uncle sam. Also understand that these numbers are very conversative, when new contracts are agreed apon the difference will increase, making it worse for junior guys and better for senior guys. Any amount of time worked beyond 76 hours also works in favour of the senior guys.

 

[Flopgut]

That's all true enough. What I know is that when the age retirement age gets bumped up, unions, companies and pilots will all make adjustments based on their own best interests and not because of some altruistic principle.

RIGHT ON! Because 65 is sooo much less an "altruistic principal" than 60!

 

[Vastly Underemp]

Please also see thread entitled "CAL ALPA supports age 60 change" or something like that