Due to the unique financial factors of being an airline pilot, it’s not uncommon to see some pilots make a few errors when planning for retirement. Learn to avoid these airline pilot planning retirement mistakes and glide into your golden years smoothly.
5 Airline Pilot Retirement Planning Mistakes to Avoid
1. Not Having a Plan
Airlines don’t always have financial advisors to help guide pilots through retirement planning. Since pilots don’t often have the time or financial expertise to plan a perfect course into retirement, it’s not uncommon for their financial portfolios to be lacking in some areas.
During pilots’ working years, it’s important for them to build a meaningful relationship with a Certified Financial Planner™ professional they can trust. Continuing that relationship into retirement brings further success.
2. Improper Asset Allocation
Although pilots are limited in the amount of time they may fly per week and per month, it’s still a demanding job. Most pilots would, understandably, rather not spend all of their off-time meticulously tweaking their portfolios.
Without an expertly-managed investment portfolio or retirement fund(s), it’s difficult to pinpoint the right asset allocation strategy to achieve and exceed financial goals. However, with a Certified Financial Planner™ professional, it’s easy to avoid this pilot retirement planning mistake.
3. Emotional Investing
Inexperienced investors may panic and sell off their investments or avoid buying in when the stock market takes a hit. However, the market always bounces back and investors tend to recoup their losses, and even make financial gains afterwards.
Investment advisors take the emotion out and keep you grounded. Think of an investment advisor as you would think of autopilot: they control investments with machine-like precision, but you always have the final say. You have as much or as little control over your investments as you would like.
4. Underestimating Costs
Retirement is often expensive. It’s during retirement that many people tend to travel frequently, buy a second home or gift/loan money to loved ones. These costs can add up quickly.
Even for people who don’t have expensive tastes, it’s common to underestimate the following during your working years:
- Health care costs
- Life expectancy
- Long-term care
- Taxes and fees on retirement funds
Just because airline pilots have a relatively high-income career, doesn’t mean they’re guaranteed to have enough money to cover costs in retirement. A Certified Financial Planner™ helps you anticipate retirement expenses and exceed them.
5. Ignoring Inflation
Inflation is practically inevitable, and it’s most likely never going to stop. During your working years, you’re less likely to feel the impact of inflation since your wages tend to rise alongside the price of goods.
The United States Federal Reserve aims to limit inflation to 2 percent per year. If they were able to successfully maintain a 2 percent inflation rate for 20 years, $100,000 of savings (without interest) will have approximately $67,000 worth of today’s buying power, to give an example.
A Certified Financial Planner™ professional deals with the numbers to effectively inflation-proof your retirement savings.
La Ferla Group celebrates a long and proud history of working with airline pilots and their families for more than 35 years. In order to avoid these common airline pilot retirement planning mistakes, we invite you to schedule a consultation.