From Flight School to Financial Freedom: Building Wealth in the Aviation Industry
On this episode of A Wiser Retirement™ Podcast, we talk about how the aviation industry has changed over the years with Casey Smith and Evan Bogan, Airline Captain. They exchange stories, talk about the change in pilot salaries, the state of the aviation industry, and how pilots can be wise with their money.
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Summary:
Financial Struggles for Pilots in the 2000s
Many pilots faced financial struggles in the mid-2000s when major airlines eliminated their pension plans. Many pilots depended on their pensions for retirement, so this was a big deal when they were taken away. Most pilots were not saving in their 401k plans because they were counting on their pensions, so when the pensions went away, it made people start having risky investment behaviors. Casey and Evan both share personal experiences of what it was like to start out in the industry. Pilots started out with very low wages. The aviation industry has changed drastically since then, and pilots can now make six-figure salaries within a few years of joining their airline.
Current State of the Aviation Industry
While having a college degree is no longer always necessary to become a pilot, completing college and training at flight schools like ATP or Skyborn Academy can give pilots an edge in the competitive job market. Airlines like Delta and United are now taking on trainees and shaping them into pilots, using their academies as feeder programs.
Financial Planning for Pilots
It’s important to have a financial plan in place, an emergency fund, eliminate debt, and save adequately for retirement. It’s important to plan ahead. Airline pilots sometimes face financial challenges after their initial two years of employment. There are different strategies to manage excess savings in the aviation industry beyond maximizing 401k contributions. Investing doesn’t have to require complicated schemes or emotional decision-making, but instead, staying invested long-term and keeping your costs low is what’s important. An “opportunity fund” could be a tool to save for non-retirement goals, such as college savings, second homes, a vacation or hobbies. However, it’s important to remember not to neglect the present in the pursuit of savings for the future.
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