We are in a unique position to work with professional pilots (financial/retirement planning) ranging from brand new first officers to pilots well into their retirement years. Personally, I think they bring a fascinating collection of knowledge, experiences and financial perspectives. What we’ve learned is that on the one hand, all of us have unique lives and financial circumstances. On the other hand, the habits and practices that make pilots wealthy are more similar than we realize.
For example, we have airline-pilot clients in their forties, fifties and sixties who save a tremendous amount of money outside of their airline retirement plans simply because they took the time to design a spending plan that allowed their increase in income to quickly outpace their spending habits. When I ask them how they have accumulated so much savings outside of their airline retirement plans, they shrug their shoulders and simply say that they just don't spend as much money as they make. When I peel this onion back a little more, it becomes clear that they developed disciplined spending and saving habits very early in their flying career.
As in your professional career as an airline pilot, trying to crack the code on becoming a great pilot is unnecessary. It’s already being done. Finding a unique, fancy shortcut to fly from LAX to ATL might mean introducing unnecessary risk leading to arriving five minutes early at best. Clearly not worth the added risk of cutting too close to a thunderstorm over the Midwest or the extra fuel used in the process of saving five minutes—unless it’s the last day of your four-day trip and you might miss your commuter flight! Just kidding, been there, done that. Not worth it!
We get to warn young pilots about the financial pitfalls that may derail the opportunity of a lifetime—a career that some studies have shown will pay off more than medical doctors and other high-paying professions. In many ways, we get to see into the financial future of the young pilots we serve.
Unfortunately, it is very challenging visualizing our future, older selves. As a young FO, I could not imagine (and maybe didn’t even believe) that one day my income would no longer be a source of stress in my life and marriage. In fact, there is a scientific reason why this is so challenging, and it’s called the recency bias. A generally accepted definition of the recency bias is a cognitive bias that causes a person to remember the most recent events, activities or people, among others, more clearly than the past or envision the future. This bias can influence judgement and decision-making, because we over emphasize the importance of recent experiences or information.
In fact, I believe the very definition of planning for anything is bringing the future into the present so we can take action. An article from MindMapJournal.com titled “Future self-visualization for better decisions and a happier life” recommends four techniques to picture your future self:
- Generate an aged image of yourself – Use age-progression software or AI tools to create realistic images of your older self. Google “create old image of myself” or use the old filter in your photo app.
- Engage in dialogue with your future self – While looking at the old image of yourself, have conversations with your future self, asking what they would want or need.
- Regular visualization – Make it a habit to visualize your future self and consider their perspective when making decisions.
- Create a vision board – Compile images and descriptions of your desired future to keep your goals visually present.
At this very moment I know many of you are scoffing at the ridiculous thought of talking to a picture of your much older self. Me too! However, how many of you sat in a chair in your hotel room during new-hire training and visualized an entire simulator profile for the next day? All of you! It feels silly, but science says it works!
The MindMapJournal article goes on to say, “Close your eyes and picture yourself 20 years from now. What do you look like? How’s your health? Your relationships? Your finances? Now, imagine that future self could travel back in time and chat with you today. What would they beg you to do differently? What regrets would they urge you to avoid? This surreal bit of mental time travel may sound like sci-fi, but it’s actually a powerful psychology hack for making better decisions. And with AI image generators, it’s easy to do.”
So, let’s get to it! What would your future-self recommend you do? What would your 65-year-old-self beg you to do now so that you can have as much fun in retirement as you did flying airplanes as a brand-new pilot.
Here’s what we’ve learned from listening to our clients, researchers and real-life examples:
Relationships are critical to a great retirement, and most men suck at them.
Retirement satisfaction has been directly linked with the quality of relationships in retirement. We just hosted Dr. Michael Finke, retirement researcher and Professor of Wealth Management at The American College of Financial Planning on the Pilot Money Guys podcast (Episode/Flight #114). His research delves deep into what makes retirees happy and relationships are consistently at the top of the list.
I may have overstepped when I said men suck at relationships, however, it is true that currently most airline pilots are men and it’s really hard to develop strong friendships outside of work. Obviously, part of this is because of the travel requirements for professional pilots.
Take the time before you step away from your flying job to invest in quality relationships outside of your marriage. Guys, your spouse will be tired of seeing you home all the time in retirement, so you’ll need a friend group to go to when she asks if you can somehow go pick up another four-day trip!
Without your health, wealth is useless.
Author and physician Peter Attia’s book “Outlive: The Science and Art of Longevity” should be required reading for retirees. He discussed VO2 max extensively, highlighting it as a key predictor of health and longevity.
Consider tracking and even improving your VO2 max so you can actually do the activities you want to do in retirement. Become a person who is healthy. Read the book!
Guaranteed income allows you to spend more money with less stress in retirement.
Many military retirees will have pensions from their time in the service. All of you (hopefully) will have social security pensions for you and a spouse, if you’re married. All of these are sources of guaranteed income. Dr. Michael Finke’s research shows that if retirees have one or more sources of guaranteed income that cannot be outlived, retirees feel comfortable spending more in retirement
We are not huge fans of all annuities as they are often overloaded with fees and oversold by aggressive sales pitches and free steak dinners, but there are some annuities that can reduce the stress of running out of money in retirement.
Currently single-premium immediate annuities (SPIAs) are at their highest payout levels in over a decade. For example, depending on age, gender and exact payout options chosen, a $100,000 SPIA could pay out as much as $600 per month for the rest of your life.
Below are seven more lessons learned from our experience with clients in retirement backed up by various research and anecdotal evidence.
- An optimistic attitude leads to a better life and a better retirement.
- Buying “stuff” only leads to temporary happiness, unless that stuff helps you to develop more relationships.
- Having Long Term Care insurance (boring!) helps to reduce stress of health uncertainty in retirement and may allow you to spend more in retirement knowing that future long term health care costs are accounted for.
- Work to build a pile of Roth (tax-free) savings while you're young, early in your aviation career and take advantage of Roth conversions early in retirement.
- Avoid all financial gimmickry and any get-rich-quick schemes.
- Do NOT confuse what you do with who you are. In other words, your personal identity is not what your career is.
- If you think golf, pickleball, and vacationing is all there is to retirement you will be depressed (sometimes literally) by age 66. You must have a purpose and reason to get out of bed every day in retirement. View this Tedx Talk by Dr. Riley Moynes about “The 4 phases of retirement”
I hope you can take the time to digest these lessons we learned from your peers. I recommend taking more time to read and learn about each one of the lessons. Each one can fill the pages of a book for sure.
I believe the key to a great future and successful retirement is having intentionality about what the future might look like. Of course, we have no idea what tomorrow will hold for us, much less twenty to thirty years from now, but the alternative is to stick your head in the sand and let life happen to you. That never leads to successful outcomes in life or in flying!
So go ahead, visualize your next flight to make sure you're prepared and while you're at it, bring out the AI-generated picture of your old, wrinkly self and talk to them about your future!
Fly safe!
Charles Mattingly, MBA, CFP® | CEO & Lead Planner
Leading Edge Financial Planning
865-240-2292 Office
865-328-4969 Cell/Text
Please tell us if we can help you on your journey to financial peace and prosperity! Hopefully, you found this article interesting and helpful. If you have any questions, contact us at 865-240-2292 or [email protected]. Check out our Pilot Money Guys podcast where we regularly discuss these types of financial topics along with some fun airline news updates and interesting guest interviews. Even the editor and founder of Aero Crew News – Craig Pieper!
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