Big Beer Belly said:
Whistlin ... here's a recycled post I've made before when an old fart tries to con a younger guy into believing he won't be harmed financially by an age change from 60 to 65.
>>Say you are 40 now and delay your upgrade to 45. In those 5 years you would lose 100k/yr (salary and B-fund) at my airline. I don't have a FV calculator handy at the moment, but at 45 you would have given up approx 700k by not upgrading. 700k over 20 yrs (age 45-65) at market 50 yr avg of 10% (actually 10.3%, but we'll round) return would yield approx $5.5 MILLION!
You will need to be paid in excess of $1 MILLION/yr by your airline from age 60-65 to come close to breaking even! The young guys are getting conned by the old geezers into believing this is a good thing for the younger pilots. Quite the opposite, this is a huge financial loss for the young pilots!! <ng> <<
BBB
Your numbers sounded suspiciously high to me, so I ballparked them myself, using values published in Airline Pilot Central for the top 3 cargo carriers and again the top 3 pax carriers. I discounted the top and bottom numbers in both categories.
The actual difference in pay rates between left seat and right seat tends to run between $50 and $60, not the $100 you indicated. That's pretty significant, because you're using 100% of that difference, compounded over 20 years, to generate these "million dollar" figures you're quoting. In reality, the numbers are MUCH less.
If you use $55/hr as the average difference in pay, it equates to about $55,000/yr in gross salary. BUT...the government isn't going to let you keep all of that. Neither are your wife, your ex-wife, your kids (or ex-kids), your mistress, your Pastor, or your ego. You'll be very lucky to put away $20,000/yr of that, meaning that your total contribution, compoounded, at the end of those 5 years will be closer to $100,000-$125,000, not the $700,000 that you quoted.
Six units of accounting and a CPA for an ex-brother-in-law didn't leave me with the numbers-crunching accumen that you have, but I would guess that the actual numbers at retirement, assuming that you're still married to the same woman (not a given by any means in this business) would approach $1,000,000, not the $5,000,000 you quoted.
Now let's look at what the job is likely to
pay 20 years hence. Again, you probably have ready access to some general information in that area, but I think it's safe to say that most people still doing the same job they were 20 years ago are now making close to double the salary for doing it. I don't have any trouble believing that a $200K widebody Captain of today will command $400K for the same job 20 years from now. Five years at that rate equals...???
Any estimate of what health insurance runs for a couple between 60 and 65? It's a number you ought to know, because you'll be paying for it out of pocket every month for those 5 years. That's every month,
at the rate that will be in effect 20 years from now...
Again, this whole argument is specious. It's like trying to explain the concept of delayed gratification to a 5-year-old. As in the example I cited in my prior post, they don't understand that what somebody else has now,
they too will have in due course. A 5-year-old has little if any concept of "taking turns." All they know is that somebody else has something that
they want.
Let's face it...company-funded and guaranteed retirements are all but
gone in this industry. And given the lessons taught by our recent history, the few of us who may still have them aren't counting on them. Social Security isn't going to be there for us at retirement either. Unless you're one of the very few who have invested prodigously (and wisely) you ARE going to be working for
somebody between the ages of 60 and 65, and maybe beyond. The only question to be answered is whether you'll be wearing a blue uniform or a blue smock while you're doing it.
