Regional Retirees?

[Singlecoil]

Many of the financial advisers I've studied recommend putting only what your company will match in the 401K and putting the rest of your retirement savings into an IRA. I guess it's kind of a gamble based on how much you think taxes are going to be in the future. I tend to think they'll be high.

Anyway, thanks for the advice, I don't plan on relying on any company for my retirement. I also plan on having at least one other income stream, hopefully a few. It's discouraging though to see people who have worked their whole adult lives in this industry with nothing to show for it when age 60 comes calling.

Again, I'm no financial guru, but I have done a lot of computer modeling of retirement plans. I believe you can only put $3,000 a year tax free into an IRA, while you can put $14,000 tax free this year into your 401K, $15,000 next year. As long as you don't have to invest the money into company stock (never, ever do that) you have more headroom in the 401K.

 

[91100 100 set]

Funny thing is that you dad's retirement package is better than the one the mainline guys have left.

Karma, man. He's a good guy, didn't sweat the small stuff like the rest of us do, just ran a clean, safe, professional operation. A few weeks back I ran into an old Suburban guy (from '82 to '84 I think he said) and he remembered him quite vividly and had nothing but kind words about him. He's fortunate and more than a little lucky in the long run.

BTW Lear, FS's retirement party was this evening. I don't think he ever made it back to the line after his heart attack, but I heard awhile back that he is doing quite well (perhaps because he has been removed from all this?). Don't know how that (not getting back online) will affect his pension and bridge, but the party was a good time according to my folks (I'm in PA at the moment, but I didn't attend). Lots of old timers from before our time.

 

[Bluto]

...by the time you retire El Centro and Banning will be on the beach.

Eeeeeexcellent. My real estate investment plan is coming together nicely. Muahahahaha!

Single coil, I think it was Suze Ormond who suggested the minimum 401K coupled with the roth IRA strategy. The whole point of the IRA is that you pay taxes on it now, while they are relatively low, rather than when 30 years from now when they'll be rather high. I understand that, once retired, you shouldn't need to take much out of the account, just basic living expenses, but it's still a gamble. Who know's what the tax code will look like in 2037?

Oh and Dointime, if my company chooses to have domiciles in the most expensive counties in the world (ever shopped for a house in MRY? or SBA? They make the O.C. look like Tijuana price-wise) it really limits my options. Could you give me some examples of pleasant places to live with reasonable cost of living? I've looked with marginal success. It helps if it's within a short flight or drive to the west coast so my little girl can know her grandparents.

 

[Stinkbug]

I think Denver's pretty reasonable these days. Seems to be a glut of housing on the market. Beautiful place to live, and just a short flight to the west coast.

 

[skiddriver]

Just make sure you put your money in a Roth IRA because a traditional IRA is pretty much the same, tax-wise, as a 401k. Small but important distinction.

The only thing to think about is that 401K is pretax money, so you get the tax break in the year you contribute. It can be advantageuous to max the 401K beyond the matched amount, depending on how long you have until retirement and your current and anticipated tax bracket (federal and state). They only way to make that decision is to make some assumptions and run the numbers, just like making the decision between a Roth or traditional IRA.

 

[nonstop]

Again, I'm no financial guru, but I have done a lot of computer modeling of retirement plans. I believe you can only put $3,000 a year tax free into an IRA, while you can put $14,000 tax free this year into your 401K, $15,000 next year. As long as you don't have to invest the money into company stock (never, ever do that) you have more headroom in the 401K.

You can put up to $4,000 into a roth IRA starting 2005. It's also not too late to contribute for 2004! You still have a few weeks left to contribute for 2004 ($3,000 max for '04). So if you don't know what a roth IRA is, or haven't invested in one, I'd STRONGLY suggest learning real quick and getting a contribution in for 2004.

The best thing to do for most people eligible, is put up to the max your company will match into your 401k, and then max out your roth. Anymore you can afford put toward your 401k.

I'd suggest maxing out both if you really want to retire anywhere near 60, considering we can't count on SS and we certainly can't count on a pension.

I feel a total lack of understanding for savings and inflation, not to mention offspring education savings, is a reason many people are blissfully ignorant with their regional pay.

Six figures was an attractive salary in the 80's. Today it's a necessity IMO.

 

[nonstop]

The only thing to think about is that 401K is pretax money, so you get the tax break in the year you contribute. It can be advantageuous to max the 401K beyond the matched amount, depending on how long you have until retirement and your current and anticipated tax bracket (federal and state). They only way to make that decision is to make some assumptions and run the numbers, just like making the decision between a Roth or traditional IRA.

You really have to consider what tax bracket you'll be taxed at now, and when you retire. I expect taxes to keep increasing, or at the very least to remain stagnant.

I also expect, personally, to live a little better when I get older. I assume my income generated from my savings when I retire to be greater than they are now, thus being taxed in a higher income tax bracked. If you can pull some money out now and only have it taxed at 15-25 percent to throw in a Roth to never be taxed again while it generates income for the next XX years.... do it!

 

[pilotdad]

Hit the nail on th head

Nindiri and Singlecoil have hit the nail on the head. You put away the max that your company will match in a 401K, then I would suggest that if you are young enough and can pay the tax, put any remaining funds into a Roth IRA. The principal you put into a Roth can be taken out at any time wothout a penalty. So it acts like a savings account. Hey, anything your company matches is free money. Can you say 100% return? If you have not listened to Suzy Orman, better get one of her books and read up. There are some things I disagree with but mostly she is right on target.

 

[rattler]

Yeah....if you choose to live in one of the most expensive counties in the world you will probably have a tough time of it. However, for most counties in America (even many that are very nice places to live) regional pay will provide a better life style and retirement possibilities than 90% of Americans. Nobody is ever forced to live beyond their means, at least not in America.

This is complete B.S.!!!! If the company has a base in EWR, LGA or JFK I should not have to move to IAH so I can afford to live! Our pay is an outrage, all across the board. Simply put, a nice 3 bedroom house in IAH cost $150K, the exact same house in NJ is $400K. I am sorry, but a new hire FO living in the Northeast is very strapped for cash. I am not talking about a county, I am talking about every county in this region.

I did a quick yahoo search. Here's what $150K can buy in Houston vs. Jersey City. (I choose Jersy City, B/c you just can't live in Newark).

IAH- Nice 4 bedroom, 2 bath, 3000 sq/ft home in quiet neighborhood.

EWR-3 bed, 1 bath CONDO, Condo fee's not listed, no parking, Association involed in legal proceeding(Red Flag). I would probably lock my door in this area.

 

[Slim]

Many, not all, those who retire from CMR, ASA, other like sized carriers, are also retired military. Of that number, most retired from active-duty and were receiving their military pensions while starting their airline careers.

The formula I've heard, and practice, for the most part, is max out your 401k contribution that the employer matches! Then, in the following order, contribute to a Roth IRA followed by saving in an account (credit union, taxable mutual fund, etc.), then maximize your 401k unmatched contribution. The third step creates the rainy day fund that you hope you never have to use. I've only had to use it once.

The trick is holding yourself to a payment schedule. Payroll deduction and EFTs (electronic fund transfers) from checking accounts work nicely.
Fly safe!