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. Make an intentional decision - I.e., plan. Those that do not plan – life happens to them, and they get angry and bitter. If you’re squarely “in the green” - Retire!  70% - 90%  If you LOVE flying – fly part time. 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