Unlike most professions, FAA regulations require that pilots retire at age 65. As a pilot, you are in a unique position because you know, without a doubt, your flying years are finite.
This requires thoughtful retirement planning to ensure your retirement savings will yield the annual income required to provide a desirable quality of life for you and your family.
The goal then, is to assess the age you are now, determine your lifetime earning potential, and decide the best course of action to grow your money in a way that will sustain you after your retirement.
Meet with a financial advisor
It's always best to meet with a financial advisor to discuss retirement goals and to create a solid financial plan. Even a single consultation can provide valuable information and insight regarding the smartest and safest ways to "grow your money."
Maximize airline 401(k) contributions
Contribute as much as you can into your airline’s 401(k) plan. The IRS has set the 2016 contribution limits for 401(k) retirement savings accounts at $18,000 per year. If you’re 50 or older, you have the opportunity to make catch-up contributions of an additional $6,000 per year. The goal is to maximize your 401(k) savings, so the more you can contribute now, the better off you’ll be in retirement.
Start making Roth contributions
Your 401(k) and/or pension plan is probably a tax-deferred plan. This means the money is taken out before taxes, which benefits you now. The problem is that this money will be taxed later, after retirement, when you make withdrawals or take minimum required distributions. Many plans now allow you to make Roth contributions, or after tax contributions that will grow and be distributed tax free to you and your heirs. This is a way to pay lower taxes if you believe that your tax rate will be higher in the future or to balance out your taxable and non-taxable income for retirement. Every situation is different, so please consult with an advisor or CPA before making this decision
Make your budget a priority
Evaluate your budget on a regular basis. Each time your income changes, you should take a look at your finances to make sure you are still on track. It’s important to know how much you need to save in order to achieve the retirement you desire.
A certified financial advisor can provide guidance on these strategies and help you determine the best way to increase the potential sustainability of your retirement savings.
Contact Retirement Advisors of America to learn more or to schedule a consultation using the button below.
Disclaimer: This blog is intended for informational purposes only and should not be construed as individual investment advice. Actual recommendations are provided by Retirement Advisors of America following consultation and are custom-tailored to each investor’s unique needs and circumstances. The information contained herein is from sources believed to be accurate and reliable. However, Retirement Advisors of America accepts no legal responsibility for any errors or omissions. Investments in stocks, bonds, and mutual funds may increase or decrease in value. Past performance is no guarantee of future results. Any of the charts and graphs included in this blog are not recommendations for the purchase and sale of any security.