By Mike Cordak, RICP®
Working in the cockpit of a Delta Air Lines aircraft can lead to an exciting career full of responsibility and adventure. But pilot financial planning remains a challenge.
Because of the rigorous schedule, lack of financial skills, and possibility of later career starts, pilots often feel behind on their retirement funds. But there’s hope! There’s still time to get back on track despite the shortened timeline.
As a Delta Air Lines pilot myself for the past 20 years, I’m very familiar with the financial, retirement, and wealth management needs of Delta pilots. I want to share the proactive strategies I recommend for Delta Air Lines pilots to streamline their retirement preparation.
Optimize Your Savings
Let’s start by diving into strategies for optimizing your retirement savings.
- 401(k) contributions: One of the more powerful steps toward effectively optimizing your savings is to take advantage of Delta’s employee retirement matching program. I recommend contributing the full amount allowed. For 2024, the contribution caps are $23,000 for all pilots and $30,500 for pilots aged 50+. Remember, Delta automatically contributes a percentage of your paycheck to the Market-Based Cash Balance Plan (MBCBP) retirement plan. I recommend this plan to all my Delta pilot clients. If you choose to opt out of MBCBP, you can get more cash in your paycheck but you’ll get taxed on that extra cash. Of course you’re free to invest that extra cash however you want, but as a pilot financial planning professional, I prefer the MBCBP option because it’s tax-deferred and invested in your individual account.
- Additional Savings Options: For even more tax-advantaged savings, think about funding IRAs in addition to your 401(k). If you qualify, consider opening a health savings account (HSA) to lower your taxed income and save money for approved medical costs.
Manage Your Debt Effectively
Another way to boost your retirement nest egg is to aggressively manage your existing debts. Here are a few tips:
- Identify High-Interest Debt: Not every debt is created equally. Prioritize paying off high-interest debt first. Over time, credit card debt can result in substantial interest costs.
- Avalanche vs. Snowball Method: The snowball method and the avalanche method are the two main strategies for managing debt. Regardless of your balance, the avalanche method pays off the loan with the steepest interest rate first. In contrast, the snowball method prioritizes paying off the smallest debt first irrespective of the interest rate. The snowball method can give you a sense of success and possibly motivate you to stick to your budget. Select the approach that most closely fits your financial circumstances and personality.
- Debt Consolidation: Think about getting a single, lower-interest loan to combine all of your debt into a single loan. This can streamline your payments and possibly result in interest cost savings. But be cautious about extending the time frame for repayment and make sure you don’t take on more debt.
Live Within Your Means
The other big way you can catch up for retirement is actually quite simple—do not live above your means!
I know it’s very tempting to go buy that boat or add that deck to your house because you’re sure you’re about to get a bonus to pay for it. But please try to discipline yourself away from this mindset.
Remember that living within your means is key for any Delta Air Lines pilot to improve their retirement readiness. A smart strategy for accomplishing realistic spending is to conduct a thorough budget review to identify areas where you can cut back on unnecessary expenses.
Then prioritize your needs over wants, explore cost-saving alternatives, and consider downsizing expenses. The goal is to free up more cash that you can redirect toward aggressive retirement savings strategies.
Finally, don’t forget to prioritize your health and well-being throughout this pilot financial planning process. Every additional dollar you can save today translates to a better retirement tomorrow.
Partner With a Professional
Optimum Wealth Management, LLC serves the financial, retirement, and wealth planning and management needs of Delta Air Lines pilots. We do this starting from when a pilot is first hired all the way through the transition to retirement and beyond.
So whether you’re just starting out or you’re a seasoned Delta pilot, we’re here to help you create, grow, and optimize your wealth.
To schedule a complimentary meeting, get in touch online, call (678) 778-2694, or email mcordak@optimumwlth.com.
About Mike
Mike Cordak is founder and owner of Optimum Wealth Management, a Registered Investment Advisor serving the financial, retirement, and wealth planning & management needs of airline pilots—from hiring all the way through the transition to retirement and beyond. As a Delta pilot himself for more than two decades, Mike’s goal is to cultivate authentic life-long relationships with pilots to help them and their families create, grow, and preserve their wealth. As someone familiar with the pilot lifestyle and their unique goals and concerns, he offers a different investment strategy than the average advisor. Combining a fee-only business model with a fact-based tactical investment management style, he creates an environment that allows him to fulfill his mission of bringing clients financial peace.
Mike received his finance degree from Gies College of Business – University of Illinois Urbana-Champaign before pursuing a career as a pilot. After losing the defined-benefit plan at his airline in 2006, he entered the financial industry, inspired to create his own firm and take control of his finances to pursue financial stability after retiring as a pilot. He obtained the Retirement Income Certified Professional® designation, which means he has a legal and ethical duty to put clients’ interests first.
Mike and his wife, now empty nesters, love getting together with their kids as often as their schedules allow. Outside of reading financial news, he enjoys flying his own plane, golfing, hiking, skiing, and playing tennis and pickleball. He also can be found enjoying good wine and food, spending time at the beach, or traveling to foreign countries. He also has an interest in the Atlanta Mission, which helps out homeless people, the Woodstock City church, and contributes to various young people going out on mission trips and working on college campuses. To learn more about Mike, connect with him on LinkedIn.
