businessAug 4, 202344:30pending

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

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About this episode

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

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