HOW MUCH SHOULD I BE SAVING RIGHT NOW? PLUS – SPECIAL PROMO! SAVE EVEN MORE ON YOUR NEXT REAL ESTATE TRANSACTION

Tim:[00:00:15]Bam right off the top, day one, the company tucks 17%, soon to be 18% of your compensation in your 401k, and it’s immediately vested, meaning that company money is now your money. It’s 100% yours. And with such a high company contribution. You know, I think it’s normal to wonder, well, how much of my own money should I be saving? So for the first time ever, we are putting out a promo for all of the pilot portfolio listeners as the listeners should already know, we give 20% of the real estate commission back to the borrower to help with their closing costs. We are going to up that to 25%. Uh, any pilot portfolio listener that get connected with us in the fourth quarter, we will honor that all the way through 2026.
Show:[00:01:06]You are listening to the Pilot’s portfolio, the show dedicated to guiding professional pilots towards a future of financial success and stability. Fly along with your host Timothy P. Pope, as he provides financial planning insights and answers to your burning questions and dives into real life stories. From fellow pilots who share their successes and cautionary tales, the pilot’s portfolio takes off now.
Tim:[00:01:36]Another Monday and another episode of Pilots Portfolio. Welcome guys. Glad you’re joining me here. My name is Timothy P. Pope, certified Financial Planner and principal at 360 Aviation Advisors, where we focus on the planning needs of the professional pilot. In today’s episode, we are joined by Jade Barnett, who is a US Air Force veteran real estate investor and chief operating officer of Beacon Relocation, A sponsor of the show to provide a market update and forecast of what could happen in the residential real estate market over the next six to 12 months, and where buyers could expect to find some relief. And also where sellers maybe you guys consider a strategy if you see your value of your property slipping away and you still need to move. So as you guys know, as I’ve just mentioned, Beacon is a supporter of the show and they routinely give pilots, portfolio listeners, 20% of the agents commissions back to the buyer or seller towards their closing cost.
[00:02:37]And if you’re thinking about moving between now and the end of 2026. Definitely listen to this segment of the episode so you can learn how you
could save even more money on your next move. For the second part of the episode, I answer this question, how much should I be saving? That’s a question I hear a lot, and I wanted to walk through a few factors for you guys to consider so you can gain some insight on how you can answer this question for yourself. So with that, let’s jump into today’s episode. Well, as you guys know, in our last episode, we talked about what you should be thinking about as we start to close. The 2025 year. Right? And joining me today is Jade Barnett with Beacon Relocation. Welcome to Pilot’s Portfolio, Jade.
Jade Barnett:[00:03:30]Good morning Tim. Thanks for having me on. It’s a pleasure. Tim:[00:03:32]Absolutely. So you guys, Beacon Relocation, you guys support the show. We’ve had Kevin on in the past. You are one of the co-founders to Beacon Relocation. Tell the listeners about your background and how you’re working with folks in real estate transactions.
Jade Barnett:[00:03:46]Yeah, absolutely. Yeah, my partner, Kevin and his wife Jamie, are outstanding partners, and I met them while still serving in active duty in the Air Force, and he was my real estate agent as I was looking for a home in the Charlotte area. And we hit it off just walking through houses, him and his wife and my wife, and we became good friends and I still had about anywhere from four to 10 years left on my active duty commitment, and we kind of, you know, had lunch one day and said, hey, whenever you retire, let me know if you’re interested. He still had a few years of a controlling airplane still until he retired and we were gonna team up and, and see what we can do in this market and taking care of the veterans and taking care of the controllers, and then a few short years later, we joined partners and a company and started Beacon Relocation, and we are doing better than we deserve at this point.
Tim:[00:04:37]Well, that’s really interesting. You often hear it’s like just you go through life, the folks you meet and just the opportunities that present themselves.You, you really never know like what that can lead to. So I, I try to tell my kids, hey, be nice everybody.
Jade Barnett:[00:04:50]Exactly. Yeah. You, you never know what person you’re gonna meet. That, that may change the, at the outcome of your life. Good or bad for sure.
Tim:[00:04:57]So you mentioned you retired from the Air Force. What would you do when you were in the Air Force?
Jade Barnett:[00:05:02]Yeah, so I was a, my A FSC. My job in the Air Force was an air traffic controller, so I was a air traffic controller for 24, 21 years in the United States Air Force and in the Air Force side of things, we often gettasked out to do additional jobs, and one of my jobs was a combat airspace manager, and through that I got to do several deployments down range and really be at the tip of the spear and, you know, work with some of the greatest Americans to ever live and accomplish some of the greatest things that we’ve ever done on our time.So I would do it all again if I had the opportunity in the same timeframe. It was an absolute honor.
Tim:[00:05:39]So fast forward. So now you’ve co-founded Beacon Relocation. And by the way, for those of our listeners who are not familiar, Beacon Relocation’s, a national real estate firm helping pilots and controllers save money on their real estate transactions as they move across the country. So what have you guys been up to at Beacon Relocation here lately?
Jade Barnett:[00:05:57]One of the best things we do is give back to the people, primarily our veterans, our controllers, all over the US. Whether you’re moving across the state or across the country, we are happy to jump in there and help those guys. As a military person, and my wife is still active duty, we have multiple moves still ahead of us, so we understand the headache that comes with the constant moving. A lot of controllers and pilots have a very similar career and where they have to move to where the work is, and often that has us moving from place to place and, and leaving our quote on quote forever homes and having to buy a new one and start over and find a new network. So at Beacon, we really, really enjoy helping people with that process.
[00:06:34]Most recently, we just came from CFS, which is communicating from safety. It’s an every other year convention that happens in Las Vegas. Where all the participants of the National Airspace System come together with a focus on safety in the national airspace. So all the major players were there. We had a great time, a lot of young pilots entering, as you’ve already alluded to, that the hiring and the uptick of hiring in the, in the airline industry is on the rise. And we echo that. We had a lot of people come by the booth and talk about, hey, I just got picked up here. Just got picked up here. Need to start looking, and so we were so happy to see all the young people come by and, and how invested they were in changing the future of aviation.
Tim:[00:07:13]Well, thank you for supporting the safety initiative. I mean, 2025 has been a big year, I think with safety on a lot of people’s mind, a lot of incidents and notable accidents here. So, certainly I think the industry appreciates all the participants that with a focus on safety. So, just this past
month in September the Federal Reserve decided to cut interest rates by 25 basis points. So that’s one quarter of 1% and for those that are interested in buying a new property, they may or may not have been surprised to say like, hey, well mortgage rates didn’t fall right. Well, just as a reminder that mortgage rates are really tied towards that, to the 10 year treasury and not the very short term federal funds rate. So if buyers have not been able to find some relief in the cost of the mortgages, are they gonna be able to find relief in terms of the price of the property? I’d love to hear your forecast in terms of, you know, what’s happening in terms of the real estate prices.
Jade Barnett:[00:08:16]Yeah, that’s a great question, Tim. As we all sit over our crystal ball and we have a professional opinion, I don’t mind sharing mine. Although you are not seeing the relief necessarily in the mortgage rates just yet, and we all are hopeful. Everybody’s hopeful. You are seeing the relief in the prices of real estate, and that’s simply because there are now becoming more sellers than there are buyers. It is shifting to a buyer’s market. There’s room for negotiation. The asking prices on houses are starting to come down. Now, every market’s not the same. Somebody may listen to this and say, well, in my market, their houses are still going over asking in multiple offers. That may be true and other markets. We’re seeing price cuts and houses still sitting on inventory over 180 days.
[00:08:59]So based on your market, if you’re in the market to buy a home, I would highly, highly suggest you and your spouse, significant other, develop a spreadsheet and start putting all your wishlist houses down and break them all down by square footage, county, school district, and really put the stuff side by side and figure out whether you’re getting a good deal. Most houses, you can find the actual quality in the house by breaking down the square footage you’re gonna get upcharge for, for school districts, finishings, neighborhoods, all the stuff, all the, all the pretty shiny stuff expect to pay for, but you shouldn’t be overpaying in this market.
Tim:[00:09:37]So you think that buyers are gonna be able to find relief on the purchase price of properties because there’s just the sheer imbalance. There’s way more sellers than buyers at the moment, and so we think that buyers are gonna be able to benefit.
Jade Barnett:[00:09:56]Yes, I think if you’re a seller in today’s market, you need to be ready to negotiate and potentially come off that price that you’ve already put in your head that you’re gonna sell your house for because your neighbor six months ago, 12 months ago, did get that number. That’s probably not going to happen anymore, but if you’re a buyer, on the flip side of that, you
have plenty of negotiating room. You have plenty of inventory to choose from, and if you’re patient, there is a great deal. I believe it is coming on the forefront.
Tim:[00:10:21]Now, I believe in mostly efficient markets, so I would not expect any kind of imbalance to remain long-term.So what do you guys expect to happen? To kinda shake things up and bring things back to equilibrium?
Jade Barnett:[00:10:37]Yeah, as you mentioned, just the most minor changes from the fed’s spark interest within, within the market, even that little decrease that you just mentioned. Even though it didn’t translate to mortgages, it freed up people in other places and we saw an uptick in the activity within the mortgage industry and a lot of people going under contract just in the slight movement. So every little bit of movement that continues to come down and brings the interest rate and where it’s going to eventually match the price point as the price point’s coming down in interest, there’s gonna be a happy median that is going to, we’re all hopeful. That is the new norm in a very balanced market, and I think we are headed to that.
[00:11:18]If my crystal ball was to give us all an answer, six to 12 months. This is about as fast as it could happen. It took about four or five years to get to this point. COVID kinda injected an unnatural wave and I think we have second, third, and fourth order effects that may be coming out of that, that everybody’s chasing an answer for. But we just can’t quite put our finger on it ’cause people were moving for unnatural reasons than what had been typical prior to 2020. As the second, third and fourth order effects start to calm down, I believe we’ll see a balanced market with balanced interest rate, what those numbers are. Anybody’s guessed, but I would believe it’s somewhere between 10 to 20% of what we’re seeing right now. A little bit more of a decrease matched with some decent interest rates, and it should be a very healthy market for both sellers and buyers in the future.
Tim:[00:12:03]Those percentages were on the purchase prices?
Jade Barnett:[00:12:07]Correct, I do believe the house and market. Could withstand another 10 to 20% decrease in some areas. Again, my crystal ball, I look more from an investor standpoint as I have investment properties, I expect my own numbers to also fall 10 to 20%. So depending on what type of market you’re in and what you’re looking for, I do see some decrease in the market just based off things slowing down, houses sitting on the market longer. People needing to sell, pressure sell versus needing to buy, that’s going to change the asking price. And people are coming off the asking price just to move. The good news is a lot of our buyers have equity. If you bought prior to five years ago,
there still is a lot of equity in the market. You just have to give up some of that equity that you thought you were gonna cash out on,but it’s still gonna be very easy for you to move around. If you bought within the last five years, expect some difficulties because the, since you bought the market, has started its turmoil. So expect a little bit of a decline. If you’re half to sell right now and you’re having trouble selling, maybe talk to your local real estate agent, whoever you’re working with.
[00:13:09]Hopefully you’re working with a Beacon agent. Have them do a CMA for your local area, a market assessment to find out what you could get for rents if you can’t get what you’re asking. For the, on the sales side, and if you don’t have that type of leeway, you could tempt the rental market and buy yourself another 2, 3, 4 years with a long-term lease, and then potentially go back to sell a little later.
Tim:[00:13:31]You bring up some really great points, both on the tips for buyers, which I think the tips there might be more readily apparent, right? With with possible slide and home prices and then some tips for sellers. You know, we were talking in the pre-show, now you’ve had 21 years as a veteran. Your wife is a veteran. You guys are very familiar with the VA loan. We were talking about some, some possible strategies for sellers who are also veterans. Maybe. Maybe you wanna share about those.
Jade Barnett:[00:14:02]Yes, absolutely. I’m a very big fan of the VA loan. Me and my wife were able to acquire multiple properties using the VA loan. So, as you guys know, in the military, there’s, we’re not compensated comparable to our civilian counterparts, but there are a lot of other perks to being in the military.So this is not a poor mouth in the pay scale. We all know what we’re getting into when we sign up. A lot of my buddies who served the first six years with me were able to get out and go to the civilian side and work. Civilian side, and it’s about 50-50. Now, when I see ’em at these conferences, man, Jade, I wish I’d have stayed in with you.
[00:14:36]I’d be retired right now. But again, life worked out for me well, and life worked out for them well as well. But during that time, if it wasn’t for the VA loan, I would not have been able to afford a house. You can Google the paychecks of an E three, E four, E five, and you’re not affording a house in those pay scales. So our housing allowance that the military gives us, often does not cover the beginning of a mortgage. Nevertheless, utilities that are gonna come in on the house and us as Americans, let’s be honest, we often try to live outside of our means. So, the first goal and the first priority, obviously, especially from a financial advisor or financial savvy person, is live within your means.
Tim:[00:15:14]Mm-hmm.
Jade Barnett:[00:15:16]You’re living outside your means, right? We’re too far apart to begin with, but living within your means definitely is the first start. And if you’re living within your means, the VA loan process has given veterans the ability to still be homeowners in America, and if you’re really savvy with your finances and, you’re future minded. Like my wife and I, we were able to acquire six homes. We’ve acquired 10 now, but we’ve had to buy some of those commercially because the VA benefits do run out. But we were able to acquire six homes with our VA loans by combining our benefits and individuals can find out how much benefit they have left by visiting their military websites, or the loan officer, if given the permission, can also pull your certificate of eligibility to see how much eligibility you have left.
[00:16:00]The VA loan has just changed some of its parameters, and I say just because most of it’s taken action in 2025, however, it started in 2020 and they have changed the limit of the VA loan if you are under the old VA loan. You had a cap somewhere close to 800,000. Don’t quote me on the numbers. You can Google search it. It moves just a little bit by county. But 800,000 is a good, easy number for easy public math. And what the VA loan does essentially eliminates the need for A PMI on the conventional loan where the PMI, you’re gonna pay on 20% of the loan until you get 20% of that value back. The bank only wants to be leveraged for 80.
[00:16:40]The VA will cover 25% of that loan for the bank, and the bank is leveraged in 75. That’s how they’re able to give the veterans these, these opportunities. So with that being said, it’s not dollar for dollar of your 800,000 eligibility. It’s a portion of that eligibility that the VA has used to secure that. So don’t think just because you bought the one house that you’re out of eligibility, you could very much have more eligibility and you can combine it with your spouse’s eligibility to go purchase another. They can still provide you some relief on the VA side because you can still go purchase and rent out your other house. If it’s not selling in the market. Like now, you’re not prepared to take today’s market value, you needed market value of two years ago or five years from now. Don’t be afraid to go rent it. Have your real estate agent pull the CMA, see if the numbers work for you. If you haven’t been a landlord before, I would encourage working with a property manager. Let the professionals do what they do best. Try to work it in the cost and see if there’s relief for you there.
Tim:[00:17:38]So the point here, just to kinda wrap that with a nice bow, is if you’re selling the property, if you have VA eligibility, if your property is not
selling as quickly as you need it to, maybe you found the next stream home, you’re ready to move, you can check to see what your eligibility is, use that VA loan on the new property, and then rent your current place. You use the acronym CMA. What’s CMA?
Jade Barnett:[00:18:04]CMA is comparative market analysis. That’s where you’re going to find similar homes, similar square footage, similar school districts. You’re gonna wanna compare like properties with like properties in order to. A, know what you should be expect to sell your house for. And B, you should know what you should expect to buy for. Do yourself a favor and make sure you’re, you’re comparing numbers side by side. Don’t tilt the numbers in your favor because that’s what you, you’re hoping to, to sell your significant other on. Right. Give it, give, give yourself an actual assessment and that way you, you know what you’re shopping for and you know what you’re selling for.
Tim: [00:18:40]Absolutely. Let’s talk about this. So airline hiring has picked up guys that were just hired in the last year or two are just like, yes. And now their seniority can, can keep going up. Guys that are, we’re waiting to get into the door are pleased about it. But what this means is folks are going to be on the move, right? So moving to base. Finally, you’re off probation, got a base that you like, and you’d like to move there and then selling property as well. When somebody calls you guys at Beacon, like what do those conversations sound like when you’re helping somebody either move locally or cross country to settle down into that dream home?
Jade Barnett:[00:19:16]Absolutely. To your point, Tim, we saw a huge uptick in young pilots coming by the booth recently in Vegas at our Communicating for Safety Conference. So they were so excited to finally be on the move. Much like the controllers and the pilots, everybody wants to crawl, walk, run. We’re very safe. We understand checklists, we understand processes and procedures, and so we’re all very deliberate about putting one foot in front of the other.
[00:19:42]And when it comes to buying a house or renting a house, or being a landlord, it’s no different. You’re gonna put one foot in front of the other. You’re gonna be very methodical about the process, as you should be. It’s a big undertaking to take on a home. A lot of what we’ll tell people is if you’re starting to look for a home, the best thing you can do is get connected with an agent in the area you’re looking to buy. I reach out to our agents in that area to actually get the boots on ground report. Be very specific about the parameters that they would be looking for. That local agent can then, set you up on a search to send you the houses, even if you’re looking for six or 12 months. You’ll see what comes on the market.
[00:20:20]You’ll see what goes off the market. You’ll see how long it stays, you’ll see the price reductions and you’ll get start to get a feel long before you ever pull the trigger on what things are moving. And, you can also find out what you’re gonna miss out on and, and what potentially is to come to the future if you watch it for long enough so it’s never too soon to get connected with a local agent and start that search, a lot of people will start it. Just like my wife does on realtor Zillow, she has every app. She has a million safe searches, but when we link up with our agent, we narrow it down to the four or five. We’ve already done our homework and we really want to. You know, use that agent’s resources and professionalism to secure those. Our top five or our top two, whatever it may be.
[00:20:59]But realtor and Zillow are very, very good scroll apps to, as you’re driving around and just doing some of the leisure looking. They’re very good to save. They’re not the most updated apps. They’re not gonna be more updated than what your agent can find you because everything obviously is polling at different times, but there’s still very good assessment tools. To keep a pulse on the market in the area that you’re buying or selling?
Tim: [00:21:22]Yeah, I can only imagine. Like if I were going to move my family across country. Right? And being in the military is one thing, ’cause you’re told where you’re going. But on the civilian side, we decide if we’re gonna go. To this space. And so you pick up the family, pick up the kids, right? So we’re thinking about school districts. We’re thinking about convenience. We’re thinking about traffic. We’re thinking about just local activities that we might get involved in. Culture, you know, a whole new city. You mentioned previously, it’s a spreadsheet and thinking about the features that you want on the home, but then also just the culture of going to a new place. Is this gonna be the look and the feel that I want for my family? And I would imagine that’s where the value of the boots on the ground could come in. And as you guys get that conversation started.
Jade Barnett:[00:22:12]Yes, absolutely. And most of these times, as you guys have big hubs and big bases, it ends up being a value play. So, you’ll see some of the same agents who already know the neighborhoods, where a lot of the pilots or controllers are already living on a certain side of town because it’s easy to get to and from the airport. So all those things locally, yes, some of your peers in the business are probably already giving you some of that, but then that real estate agent local should be echoing that. And if they’re not, if it’s not lining up with what you’re seeing, then obviously there’s. Red flags. Majority of our agents that are in hub areas are already strongly inversed on our controllers and our pilots and their lifestyle and their needs and desires, and they’re very good at
accommodating those long before you ever get boots on the ground. It’s those things where you start to assemble the team, and again, you’re not ready to get pre-approved for a loan. You don’t need that soft hit on your credit yet because you know you’re not purchasing for six or 12 months, but you can still get the team assembled. You can still start talking hypothetical scenarios again to add those numbers to your spreadsheet.
[00:23:12]So now when you and your wife and family are talking over dinner now you can really minimize, you know, all the white noise and be like, okay, we really want this area. We really want, need this square footage, we need this school district, and it’s not as big of a task after you narrow down, these are the needs versus the wants, and then you get a local agent and, A lender and the whole team’s together, and you really know your buying power. And as the numbers change, you know what’s changing for you specifically, and you don’t necessarily need to be walking around with a pre-approval in your hand because you have somebody to talk to about the what if scenarios.
Tim:[00:23:46]Yeah, so let’s talk about this as we move through Q4, beginning of Q4 here. What are people thinking about as it comes to either buying the next home or selling the next home and the end of the year? At the end of the year is a busy time. I mean, you got holidays back to back, and then to squeeze in like a move in the middle of it. Talk to me what people are thinking about. ’cause for me, to be honest, it doesn’t sound like a great time, but fairly it happens.
Jade Barnett:[00:24:15]Yes, absolutely. Tim. It has been historically flipped upside down the last couple years. Fourth quarter and first quarter are typically the quietest for real estate, naturally, second and third, as they revolve around the summer and school moves.It’s easier to do those things and those are the typical moving times but, over the last two years, we have seen an extreme uptick of buyers entering the market in December and January for some reason. Also an uptick in closings in December. And then if they don’t get it done by the end of the year, I think it’s slide into January.
[00:24:49]But those December and January numbers have historically started increasing over the last two years. Some of it may be tax implications, some of it was politically driven. We assume as well, you know, with the change in presidencies come in and a lot of people just kind of sitting and waiting. But the last two years, it has been a great market. So as we do see a lot of inventory or more inventory coming up, there’s great opportunity for buyers if for some reason you wanna buy a house for Christmas instead of decorate the tree in your old house. But yeah, if you are moving during these holidays, there seems to be plenty of opportunity and you’re not the only one.
Tim:[00:25:26]Maybe it was the bonus depreciation for the real estate investment.
Jade Barnett:[00:25:30]That could very well be, that could be the, the depreciation and also some end of year bonuses that may put people over the edge to be able to go get the house they finally wanted.
Tim:[00:25:39]So that’s what folks are thinking about here is Q4. And who knows, maybe 2025 will be the same, and that’ll be a big spike in end of year activity. But you guys, beacon relocation has a little end of year homework for pilot portfolios listeners, let’s talk about that.
Jade Barnett: [00:25:54]Absolutely Tim. So for the first time ever, we are putting out a promo for all of the pilot portfolio listeners. As the listeners should already know, we give 20% of the real estate commission back to the borrower to help with their closing costs. We are going to up that to 25%. Uh, any pilot portfolio listener that get connected with us in the fourth quarter, we will honor that all the way through 2026, and we want them to use the promo code: Beacon Pilot 2025.
Tim:[00:26:26]So we’ve got promo code Beacon Pilot 2025. That’s good for 25% of the real estate agents’ commission back to the buyer. Now, that works on the buy side and sell side. So if you hook up with a Beacon realtor to sell your property and then hook up with one on the other side of the transaction, wherever it is in the country or in the same city, then there’s another discount on the buy side as well. So up to 25% of the agents commission back to the buyer or the seller. You’re saying that the pilot’s portfolio listeners just reaches out to you guys in the fourth quarter of 2025, starts the conversation and should they close on something? All the way throughout next year. So an entire year, then you guys would honor that 25%, is that what we’re saying?
Jade Barnett:[00:27:15]Yes, absolutely. Anytime in 2026, we will give them 25% of the real Estate’s commission to help with their closing costs.
Tim:[00:27:21]So we will certainly put that in the show notes because I mean, if you’re thinking about moving in 2026, then it’s like, hey, start the conversation, see where it goes. End up staying where you are.Awesome. No problem. You end up moving, then those are more dollars in your pockets. So folks, we’ve added this now to your end of year checklist. If you are thinking about moving either in 2025 or 2026, go check out. Go to the show notes, check out Beacon relocation. Grab the promo code Beacon pilot 2025, and be on your way. And thanks, Jade Barnett, co-founder of Beacon Relocation for joining us.
On this episode letting us know what’s happening in the real estate market across the country and what we can expect, I think for the next six to 12 months on prices. Thanks, Jade.
Jade Barnett:[00:28:10]Absolutely, Tim, and thanks for having me.
Tim:[00:28:14]That was an awesome conversation with Jade talking about the residential real estate market and how you guys can save money on your next real estate transaction between now and the end of 2026. So let’s move on to this question. How much should you be saving? That’s a question that I hear a lot and let’s talk about it. At the major airlines, one of the really neat and super powerful things that you guys have going for you when it comes to retirement savings is the NEC, okay? That non-elective contribution, bam, right off the top. Day one, the company tucks 17%, soon to be 18% of your compensation in your 401k, and it’s immediately vested, meaning that company money is now your money. It’s 100% yours. And with such a high company contribution. You know, I think it’s normal to wonder, well, how much of my own money should I be saving?
[00:29:12]And before we address that question, let’s just do two quick calculations. We’re gonna compare the results, and then what I want you to do is I want you to go do your own calculations. After we’re done. So go grab a compound interest calculator. Yeah, as a financial planner, I use them all the time. I have ones that you can change a lot of factors in, but one that’s readily available, it’s fairly simple, no frills, but it works is on investor.gov. So you go to investor.gov tools and calculators, and then choose the compound interest calculator, and here’s the calculation that we’re going to run. Let’s say you have no money, you have zero, but you’re gonna start saving today, which is great. And so you’re gonna save a hundred dollars a month for the next 20 years.
[00:29:54]And we’re going to assume an 8% annual rate of return, and we’re gonna compound that annually. So those are the inputs that we put in the calculator, and here’s what we get. At the end of 20 years, we have put in $24,000 and the account value is now $55,000. That’s actually $54,914, but let’s round it’s $55,000. Okay, so that’s great. So we put in 24, we get out 55. Now we’re gonna make one small change, all right? We’re still gonna save the a hundred dollars a month. We’re still gonna assume 8%. It’s a modest, very achievable rate of return. We’re still going to compound annually, but instead of 20 years, we’re going to save for 30 years.
[00:39:39]So we click calculate, and what we see is, we have $36,000 that we’ve put in, but now the account is worth $136,000. So it was 55,000 when
we’re doing 20 years, and now it’s $136,000. We do 30 years. So that, of course, is the wonder of compounding. It’s amazing. Right? And let’s face it, as a professional pilot, your numbers are going to be much larger than a hundred dollars a month, but the principles of what we’re about to talk about. Is going to be the same. So, how much should you be saving and investing? And I’ll tell you, when I’m working with clients and building financial plans and trying to solve this question for them, how much should they be saving right now? There’s a lot of considerations that we go through, like what other financial milestones are you working through at the moment?
[00:31:31]How much do you already have saved and where, how much longer you have until you need the money that we’re talking about saving, A lot of times it’s for retirement, but you guys have multiple goals. Uh, retirement’s a big one, but it’s not always retirement. What’s the expected rate to return for the money that we’re talking about saving? Right. Some folks are, you know, very open to market volatility and okay with it, and some folks are less okay with market volatility, which, so we’re probably gonna earn a more modest rate of return. That’s all okay? But we need to know what those assumptions are. Okay? What future changes do we expect to income and expenses? Some, not all, but these are many of the factors that we walk through when we’re building a financial plan. But since you’re listening to a podcast and you’re not building a financial plan, let’s walk through some of these things that you could think about it. So in that quick one dimensional calculation that we just did together.
[00:32:25]What we saw was the phenomenal difference that just 10 more years of saving and investing, even at a modest rate of return makes for your account values. So let’s say that you’re starting your savings journey. You’re early in your career. Let’s say you have 30 plus years left. The mass is that if you target about 25% of your gross income year by year, and you save and invest it and you assume an average annual rate of return of 8% or better, you’ll be able to retire and maintain your same after tax spending power. And that, my friends, that’s what it’s all about. It’s all about how can we turn this into income in retirement. Okay? And so 25% of gross income. Now with the company, let’s use 18% because we’re in the Q4, it’s going to 18% soon, so let’s use 18% with the company giving you 18%. That leaves only 7% of your gross salary that you need to bring to the table. So they’re 18, you are seven. That’s gonna get you up to 25%. So should your long-term savings goal be to save and invest only 7% of your gross income?
[00:33:30]I’m gonna say no way. Right? I’m gonna challenge you. I’m gonna argue that starting your savings journey early on, that you should save and invest abundantly. And here’s why because, It’s going to put you way ahead.
Okay? And as you move through your career and your life, maybe you get into the messy middle. Maybe you get married, maybe you have kids, maybe your kids are now consuming your resources and you reach a point where it’s like, hey, you know what? Early in my career, I was able to save a very high rate of income, but now I gotta throttle that back and maybe you throttle back. The 7%. So you’re hitting seven, company does 18, and now you’re hitting the 25% target and you throttle back because your cash flow is going in other areas.
[00:34:18]And if you’ve started early. Then it’s going to be okay. When you have to throttle back, it’s going to be just fine because you are letting the time do the heavy lifting for you. Okay? And here’s the other thing about starting early in your career and saving abundantly, and when I say abundantly, I mean above the 25%, right? So above that 7% that you’re doing and the company’s doing the 18. Here’s the other thing I’ll say about that is that contracts come. Go. Will you always be getting an 18% NEC? I don’t know. You know, it’s hard to tell. A 30 plus year career is a long time to not expect any changes to your retirement plan.
[00:34:59]So you’re kind of frontloading this thing and saying, hey, look, if things change later, at least I haven’t relied on it. And uh, you know, I’ve got this margin of safety built in. The last thing I’m gonna say about saving abundantly early in your career is that retirement is simply one goal. As I said before, it’s a big one, but it’s just one. And a lot of the pilots that we work with wanna do other things before retirement, like buy a vacation home or send kids to college or secure their financial futures. In the event that the industry sours to name just a few. Maybe you’re a two income household and your spouse wants to retire early, and so you say, well, you know what? We’d like to make that happen. Or maybe you’re gonna go from two to one income. You know, there’s just so many things. Everybody’s life is different when you save abundantly. Probably some of that is going to different places than your 401k. Retirement account, right? Maybe some of it’s going to a brokerage account, maybe some five 20 nines.
[00:35:56]It may be IRAs, and that’s gonna give you the flexibility, particularly the brokerage account and the five 20 nines, to not have to wait until age 60 to access your savings for some of these other non-retirement goals so you can access that much sooner and make things happen much sooner. So, let’s move on from a 30 plus year savings time horizon to a 20 year.So let’s say you’re starting your savings. You got nothing right now, but you’re changing that today, right? You’ve got 20 years left. Well, you already saw the huge difference at that 10 years between saving for 30 years. And saving for 20 years made in our quick calculation before. So this means that you’re going to have to come prepared to do a bit more of the heavy lifting on the retirement savings side. The
company NEC is a strong start, but your retirement savings target is likely 15 to 20% of your gross income in order to replace your current take home pay. Alright? Depending on a couple things, but two that are big is one, your state income tax if you have one, or you don’t, and your rate of return. Now 20 years also shortens the pre-retirement time horizon, meaning how long they have to invest, but also how long they have to recover from any severe down markets in the years leading up to your retirement.
[00:37:14]And so at 20 years, I think it increases the impact that a severe down market could have. Should one happen, say in the five years, before the seven years before. Certainly that’s three years before, right? As you lead into retirement, right? So you know, so these things, you start to lose some of your margin of error there. And, so it’s just an argument to say, hey, keep that savings rate high so you can keep as much of a margin of safety as reasonably possible. I think really the big takeaway though is starting at 20 years out. Versus 30 plus years out, the percentage is at least double of what someone who has a 30 year time horizon. Okay. And we’re still talking modest rates of return, right? You know, it’s 8%, which I think is very achievable. When you think about long-term returns of just a 100% stock portfolio going back at least the last a hundred years, we’re looking at on average 10%, close to 10% there. Let’s keep whittling this thing down.
[00:38:10]Let’s say that you are starting your savings and investing journey 10 years before retirement, we’re gonna see some interesting thing happen. First, the good news is once it’s 10 years out, we’re assuming that’s 55, we’re gonna go out to age 65. In this example, you’re over the age of 50, and so that means you’re gonna be eligible for catch up contributions in your IRAs and in your 401ks, and that just means the government says, hey, at 50.We’re gonna allow you to put more money in than folks that are under 50. Okay? So you could do that. And, then there’s this new one, this super catchup contribution that just came out, and that’s when you’re, between the ages of 61 and 63, your catchup contributions are even larger. Okay? So that’s the good news, is that you got more shelf space in your retirement accounts to put it away. The other good news is if you’re at major airlines, you probably got more money as well, because your seniority is higher. Maybe you’re flying better metal. If your seniority is better, you got better control of your schedule, right? So you can go fly a little bit more.
[00:39:10]Here’s the bad news. Mathematically, it’s probably unlikely for you to hit the required rates of return to save enough in that decade if you’re just starting from zero to save enough to replace your current take home pay when you retire. And as we know, risk and reward go hand in hand. So as you reach
for higher expected returns, typically you’re introducing more risk into your portfolio, which is usually the opposite of what we want to happen as we near retirement and begin turning our savings into income. So in this scenario, if we’re 10 years out and we’re just getting started or we, you say, hey, you know what?We just wanna start getting serious about this.
[00:39:50]The other side of the coin that we’d look at in this case is our expenses. So what can we do to make sure that our retirement expenses can fall within the range of what we’ve saved and invested? And of course, you’re probably looking at things that beyond the airline. So I think that this thought experiment, if you will, is really informative. And I think it does two things. It tells us the importance of time and then some things to think about and some possible percentages to think about when you’re thinking about replacing your after tax income, your take home pay. And so how much should you be saving? Preferably save early, save often. Right? To enjoy financial flexibility during your career and after. So that’s gonna do it for today’s episode. Earlier we had Jade on to talk about what’s happening in the real estate market and how you guys can save on your next real estate transaction between now and the end of next year. That’s 2026. And then I wanted to also use the time to address this question that we get a lot. How much should I be saving and investing? So, edfinitely wanna hear from you guys. If you have questions, send me a note info@pilotsportfolio.com. That’s gonna do it for this episode. No debrief on Jade’s segment because I think you got the message there of what you need to do.
[00:41:08]It’s all in the show notes. So with that, thanks for joining and we’ll see you on the next episode, thank you for joining this episode of Pilot’s Portfolio. If you found this information helpful, spread the word and share it with a pilot button. Or if you have questions and there’s something that you would like to hear discussed on the show, send us an email. You can find the address in the show notes for those of you who are ready to learn how we help professional pilots with their financial planning needs.Schedule an appointment. Until next time, keep the shiny side up and we’ll see you on the next episode.
Show: Pilot’s Portfolio is hosted by Timothy P. Pope. Timothy P. Pope is principal owner of 360 Aviation Advisors. 360 Aviation Advisors is a registered investment advisory firm regulated by the state of North Carolina in accordance and compliance to the securities laws and regulations. 360 Aviation Advisors does not render or offer to render personalized investment or tax advice through pilot’s portfolio.
The information provided is for informational purposes only and may not be suitable for all investors and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.