Tackling American Pilot Retirement: Where to Start

Why should you, as an American Pilot, do so much planning and saving for retirement? A successful retirement can come from years of careful retirement savings through the American 401(k) Plan. Knowing how to start the financial planning process can be challenging, but the importance cannot be stressed enough. No one wants to hit mandatory retirement age with inadequate savings. But where to start? This post will review some essential retirement planning and savings tips specific to being an American Pilots.

Determining retirement needs can be a complex process involving various factors. Here are some key factors that can affect retirement needs:

1. Lifestyle and Expenses:
   

   One primary factor determining retirement needs is an individual’s desired lifestyle. This can include factors such as where they want to live and what activities they want to engage in. What will your expenses be in retirement? This can consist of fixed expenses such as housing costs, utilities, insurance and variable expenses such as travel, entertainment, and hobbies. One way to simplify your living needs and budget is taking distributions within a specific withdraw rate.

2. Healthcare Costs:
   

   Healthcare costs are another important factor to consider in retirement planning. As people age, healthcare expenses tend to increase, which can be significant. It is important to consider the cost of health insurance and out-of-pocket expenses such as deductibles and copays.

3. Pension Benefits:

   As American Pilots, you have access to a frozen defined benefit plan. There are several annuity options available when you retire. We believe picking the correct annuity option is important when planning for a successful retirement, as this decision is irrevocable

4. Inflation:
   

   Inflation is the rate at which the cost of goods and services increases over time. It is important to plan for inflation by investing in assets that have the potential to outpace inflation, such as stocks and real estate. It is important to consider the impact of inflation on retirement savings, as it can erode the purchasing power of those savings over time.

Retirement needs will vary depending on an individual’s unique circumstances and goals. It is important to consider all these factors when planning for retirement to help ensure that retirement savings are sufficient to meet individual needs and goals.

The most significant retirement savings vehicle for American Pilots is the 401(k) plan. Within the 401(k), participants have access to invest in core funds, but you also have access to the BrokerageLink option. This option is a brokerage account which allows access to the broader market but also to have professional management. Maxing out your contributions every year is an important step to formulating a successful retirement and retirement plan. Below is the contribution limit breakdown:

• Pilots can defer up to $22,500 for 2023
• If 50 or older, pilots can defer $30,000 for 2023
• American contributes 16% of pay
• Pilots and company total contributions cannot exceed $66,000 for 2023
• If 50 or older, pilot and company contributions cannot exceed $73,500 for 2023

The earlier you start the process of saving and planning for your retirement the better. The importance of financial planning cannot be understated. However, we realize that the topic of retirement can be intimidating. If you still have questions on where and how to begin financial planning for retirement or how to utilize all your options within the 401(k), please contact us. We would be happy to help you.