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Aviation Continuation Pay (ACP - The Bonus)

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I know there have been reports of people saying it’s not about the money. But seriously? You think he applies that opinion of the few to the masses?

If I remember correctly, there was a focus group of random pilots (yeah right) that met with CSAF and told him that.

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Yeah agreed. I think that was 2 or 3 years ago. Hopefully fingers isn’t going completely off that small sample size.

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33 minutes ago, Guardian said:

Yeah agreed. I think that was 2 or 3 years ago. Hopefully fingers isn’t going completely off that small sample size.

It sounds like he is, whether he honestly believes it or not. 

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2 hours ago, Guardian said:


I know there have been reports of people saying it’s not about the money. But seriously? You think he applies that opinion of the few to the masses?

I think no one has been willing to up-channel, through any means, the idea that we're not getting paid enough.

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I think no one has been willing to up-channel, through any means, the idea that we're not getting paid enough.


Money won’t fix it but it surely won’t hurt.
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If you think of it from an opportunity cost standpoint (the cost of the opportunity forgone), you’re essentially paying $1m to stay in the AF. Then it becomes absolutely about money.


I’m interested to see your math. I don’t disagree with the sentiment (and more money would definitely affect my decision if the price were right) but how many of the pilots here talking about money know what NPV is?

When I ran the numbers, the NPV of staying AD until 20 vs jumping to the Airlines at the first opportunity was close. The assumptions you make matter a lot (upgrade times, furloughs, health care costs, equipment, in base or not, etc). The numbers were well within the error margin of those assumptions.

That check of the month club is worth a little over $1M in today’s dollars-again, dependent on what discount rate you assume.

My own opinion is QOL matters far more than the money. Everyone makes the decision for their own reasons. And everyone has a price. We’re really all just flying whores when you get down to it.

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So I was just reading the PCSM, and this jumped out at me. The guys who signed the 2-year bonus last year are allowed to renegotiate under Tiers 1, 3, or 4 for their airframe. The guys who signed the 1-year option, however, fall under Tier 6, meaning their only option is 22-24 YAS.
I thought the 1-year option was advertised as a good faith move on the part of big blue. Instead they totally fvcked those guys over by forcing them to stick around past 20 years. Doesn’t affect me directly but one of my friends had been strongly contemplating the 1-year deal so as to be able to 7-day opt a 365.
This shouldn’t be a surprise to anyone, you’re just a number to Goldfein, Grosso, and in my personal experience, anyone above my OG/CC.

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4 hours ago, Warrior said:

When I ran the numbers, the NPV of staying AD until 20 vs jumping to the Airlines at the first opportunity was close. The assumptions you make matter a lot (upgrade times, furloughs, health care costs, equipment, in base or not, etc). The numbers were well within the error margin of those assumptions.

That check of the month club is worth a little over $1M in today’s dollars-again, dependent on what discount rate you assume.

My own opinion is QOL matters far more than the money. Everyone makes the decision for their own reasons. And everyone has a price. We’re really all just flying whores when you get down to it.

 

A lot of this.

NPV is a helpful concept, but it too is only a snapshot of how money works and can work. The gov't assumes a 6.99% discount rate, presently. Personally, I think it should be much, much less (and so does the rest of the corporate world who actually has to pay their bills). The value (cost) of a military pension is enormous, especially when you consider a few long-term factors that will compete against its sustainability.

QOL is important, but so is having an income whose purchasing power is invulnerable to inflation.

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To me it always seems the majority of folks write off a military pension without really understanding how much money it takes to generate the same guaranteed income stream.  People scoff because it's only $54K a year for a 20 year-O-5, but don't realize it's also pretty much zero risk.  Using a low risk 4% rate of return for an equivalent investment, the day you retire as an O-5 it's like the government just deposited a $1.35 million check in your investment account.

 

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I’ve spent hours playing with pv, npv and different discount rates on the check of the month club. By my reasoning, it is worth at least $1.6mm in today are dollars. If you offered me $1.5mm cash right now but I had to forgo my pension I wouldn’t take it. 

Now whether that is worth the blood sweat tears and Usaf bafoornery-well that is certainly debatable!

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2 minutes ago, Termy said:

I’ve spent hours playing with pv, npv and different discount rates on the check of the month club. By my reasoning, it is worth at least $1.6mm in today are dollars. If you offered me $1.5mm cash right now but I had to forgo my pension I wouldn’t take it. 

Now whether that is worth the blood sweat tears and Usaf bafoornery-well that is certainly debatable!

Completely agree.

The "once you hit 20 years you're working for half pay" is another line of reasoning that gets thrown around a lot but is based on incorrect reasoning IMO.

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Completely agree.
The "once you hit 20 years you're working for half pay" is another line of reasoning that gets thrown around a lot but is based on incorrect reasoning IMO.


While I don’t disagree with you, could you expand on this for those of us who aren’t as financially savvy?

-9-

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While I don’t disagree with you, could you expand on this for those of us who aren’t as financially savvy?

-9-

You’re still receiving flight pay, BAH, BAS, potentially a bonus, and your eventual retirement check is going up 2.5% of your base pay for every year past 20. So it’s more like you’re working for 2/3s.
That said, the only way I’d consider staying in past 20 is if I thought there was a high likelihood of not being able to maintain an FAA medical or if there was a likely downturn in pilot hiring (God forbid they allow single pilot ops, but if it happened the airline gravy train would run out).

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On 6/13/2018 at 9:40 AM, ihtfp06 said:


You’re still receiving flight pay, BAH, BAS, potentially a bonus, and your eventual retirement check is going up 2.5% of your base pay for every year past 20. So it’s more like you’re working for 2/3s.
 

 

No, you're not working for 2/3s pay either.  That''s the same incorrect logic as the working for 50% pay argument.  It's fallacious reasoning based on retirement being only 50% of base pay and discounting what the 2.5% increase means in real dollar terms because 2.5% is a very small number.

 

In simplest financial terms, at 20 years you're working for:

(100% pay + any bonuses) + (2.5% added retirement) - $54K.  The $54K is what a Lt Col would get if they retired at 20 and you forgo by continuing to work.

The 2.5% retirement increase for a Lt Col averages about $3K per year past 20.  It's also almost zero risk. Using a conservative 4% rate of return, you's have to earn $75K net to generate the same annual income stream increase.  However, you're giving up the $54K in retirement income, so you subtract that from $75K to get $21K.  This $21K net would get added to your full Lt Col pay when making a comparison to a civilian job.  

So what you're really working for in that 21st year is Lt Col salary + any bonuses + $21K.  This would be a base income number that you would compare to a civilian job to see if you would do better or worse financially by leaving at 20 years.  You'd also have to add in extra money to account for your tax free BAH/BAS pay. 

Granted there's tons of other factors that go into the decision of when to retire:  QoL, you prefer money in the bank as opposed to a gov't pension/annuity that goes away when you die, risk tolerance, etc.  

 

 

 

 

Edited by Hunter Rose
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What do the smart folks here calculate as more valuable...years added on to AD retirement, or years/seniority lost at a major? I can't imagine a scenario where an additional year of AD retirement is worth a lost year of seniority/longevity.

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What do the smart folks here calculate as more valuable...years added on to AD retirement, or years/seniority lost at a major? I can't imagine a scenario where an additional year of AD retirement is worth a lost year of seniority/longevity.

 

Here’s one: you lose your medical at age X where X is less than or equal to 65.

 

Edit: the forum stripped out the math symbols because they thought I was doing an SQL injection hack.

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7 minutes ago, ThreeHoler said:

 


Here’s one: you lose your medical at age X where X

 

Agree. Ditto for airline X going bankrupt/out of business, or merging and the pilot group getting stapled to airline Z. Some things can't accurately be forecast/accounted for and will only be known at the age of 65. Medical status being one of them. 

But I assume in these NPV spreadsheets, opportunity cost (seniority/longevity) is accounted for. Just curious what the assumed value is. And what the assumed probability is that one loses a medical or goes to an airline that goes out of business, thereby negating and resetting seniority/longevity. Anecdotally, I would think the odds seem to favor being able to see an age 60-65 airline retirement and an airline not going bust and/or getting stapled (or some other seniority losing event), but I have zero data on that.

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40 minutes ago, FlyArmy said:

Agree. Ditto for airline X going bankrupt/out of business, or merging and the pilot group getting stapled to airline Z. Some things can't accurately be forecast/accounted for and will only be known at the age of 65. Medical status being one of them. 

But I assume in these NPV spreadsheets, opportunity cost (seniority/longevity) is accounted for. Just curious what the assumed value is. And what the assumed probability is that one loses a medical or goes to an airline that goes out of business, thereby negating and resetting seniority/longevity. Anecdotally, I would think the odds seem to favor being able to see an age 60-65 airline retirement and an airline not going bust and/or getting stapled (or some other seniority losing event), but I have zero data on that.

My calculations show that getting out at 12 YOS, joining the Guard and flying for the majors for 8 years, then “retiring” from both, murders the active duty check of the month club if you have the discipline to live on senior captain pay and save everything above that. If you suck at saving or investing and need someone to pay you twice a month then you should not think about getting out.

Second best scenario, again purely by the numbers, is staying until 20 and then flying for the majors for 7 years. If they’re still hiring...

Of course, in either case, if you continue flying for the majors until 65 you’ll just be stupid filthy rich in retirement... as long as you don’t spend $200,000+ a year.

BUT this doesn’t account for QOL or job satisfaction. If you love coming to work everyday in the worlds greatest Air Force then getting out might not be worth it to you, even for a Ferrari or two in your 70s.

Edited by Klepto
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Don’t discount the fact that most of the majors have pretty good disability insurance..... should you get a debilitating case of vertigo around age 55 or so ....

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Klepto, best option get out, go airlines, get off probation, drop mil leave with the guard or reserves, bypass crap seniority, collect AD retirement, then truley start airline career with up to 8 years of seniority. 

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What's not true? Length may differ but it's still $35k per year. To be honest I think a 3 year $35K per year bonus is better because you can still curtail your orders if you choose. Plus in 3 years if it goes up you can sign up for more. I don't think the bonus is going down or away anytime soon. Good luck getting out of the AD ADSC if you happen to be offered a dream job. 

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