Flight #62: What is a Cash Balance Plan and is it Right For You?

Airline/Aviation News:

United AIP, American, FedEx AIP segway

Questions From The Flight Deck:

• What if age 67 passes? What is Hybrid retirement?

  • https://www.nbcnews.com/news/amp/rcna95349

• • The Senate still needs to pass its own version of the bill before the current authorization expires on Sept. 30.

    1. Make an intentional decision - I.e., plan.

       • Those that do not plan – life happens to them, and they get angry and bitter.

    2. If you're squarely "in the green" - Retire!

       • 70% - 90%

    3. If you LOVE flying – fly part time.

    4. If you don't love slipping the surely bonds BUT you're on the financial bubble – Hybrid retire.

       • Do NOT save in your retirement accounts!
         • Additional $30k plus in your pocket for spending.
         • Fly part-time – 1-2 trips per month.
       • 2 years of NO retirement distributions:
         • ~8% improvement or more income
           • VSP ~ $1000 per month 5 years
         • Social Security Strategy – wait till 70?
         • Insurance against bad stock market
         • $7mm left over versus $4mm

Meat of the Mission:

What is a cash balance plan?

• Cash Balance Plan Basics:

• • Pension-like, Hybrid...DC versus DB.

  • Big picture – a better way to save more money!

• • Is it guaranteed or not? Fiduciary responsibility.

• • • Market-based plans are a type of cash balance plan where the account's growth is tied to the actual return on plan assets. This contrasts with a traditional cash balance plan that typically has a fixed interest credit rate.

• • Pros/Cons in relation to 401k, in relation to Pension.

• • • MBCBP – may underperform...

• • • • Think annuity-like versus market like...what does the average investor get for investment returns?

• • • • Flexible – unlike Non-Qualified "spill-over" plans

Differences at airlines? Decision points for FedEx, Delta, American etc.

https://www.msn.com/en-us/money/companies/american-airlines-pilots-want-bargaining-do-over-after-united-bests-on-pay/ar-AA1e5RMo