[SIZE=18pt] Are you a Ragged Trousered Philanthropist? [/SIZE]
There are currently around 20,000 TWU members at American Airlines. In 2012 American Airlines froze their pensions. In order to get the workers to voluntarily accept the loss of the pension the company and those running the Union agreed to divert compensation to a Retirement savings plan otherwise known as a 401K Plan. The catch was, unlike the plan negotiated by the APFA where up to the equivalent of 9% of their earnings are directly contributed into the 401K no matter what, ours is a match, in order to get the matching funds that were negotiated we each had to contribute 5.5% of our gross pay each week. This was done knowing full well that we would already be under financial hardship and that some would not feel they were able live without an additional 5.5% of their pay, so the match was then forfeited and the company got to keep those funds .
Those matching funds are not a gift, it was paid for with other concessions, its part of your compensation. You are paying for it with your labor , so if you do not get the maximum contribution of 5.5% you are voluntarily compounding the concessions and adding more funds to the Profits of American Airlines, profits that the management of AA do not share with it’s employees.
So that’s why I ask, are you a ragged trousered philanthropist, donating your money to the company that provides the lowest compensation, the least amount of paid time off, the worst medical plan , the fewest Holidays where we are penalized on the few holidays they do recognize by being forced to work at half pay?
Currently out of the 20,000 TWU members over 6500 are not getting the full 5.5% match because they are not putting 5.5% of their before tax pay into the plan.
These 6500 TWU Philanthropists are donating millions of dollars to AA.
I realize that due to the poor compensation at American Airlines that some may feel that they can’t part with more but out of the 6500 around 1250 contribute nothing. Around half those not getting the full match are putting in 3%, giving back 2.5%. So I don’t think for many this is a conscious intentional contribution to Parker and the management teams bonuses, more likely its because these people were signed up automatically and never gave it a second thought. If you can afford 3% then you can afford 5.5%.
Even if you had to borrow today to get the match the fact is that if you don’t get the match you are losing even in the here and now and even more in the future. Lets say you put nothing because you need every dollar you see in your paycheck now. So for each dollar under the 5.5% you automatically lose the $1 match, that extra Dollar now cost you two dollars before taxes, after taxes, if you net around 65 cents on each dollar you get paid you lose an additional 35 cents in the here and now. So you lose $1.35 in savings to pay for for each 65 cents extra to spend today, not including the compounding effects those funds would earn over time. The difference is pretty substantial, remember the dollar you put in today only costs you around 65cents, for 65cents less take home pay you get $2 put into a savings account that you can invest, borrow and even withdraw from if needed. If you don’t put in that 68 cents ($1 before taxes) you just donated a dollar to the Profits of American Airlines and gave the government an extra 35 cents.
Lets say you are 25 years old, and putting in 5.5% comes out to $3300/year out of your gross earnings, it costs you around $2100/year, but you end up with $6600 in savings. By the time you are 60, with a modest gain of 5% per year you would end up with [SIZE=14pt]$665,000[/SIZE] and your out of pocket costs over that period would be around $75,075. Your taxable income is lowered while your net worth increases.
Lets say you are an older worker and only have 10 years left to work, you would end up with around $97,000 and your out of pocket would be around $21450. You see better gains even at the low investment return of 5% because right out of the gate you make 100% on what you contribute. It’s likely you can do better than 5% so your totals could be much higher.
If on the other hand you chose to put in nothing of course you will have ZERO to borrow against if needed and to live off when you retire, and AA will have saved thousands of dollars.
So the question isn’t if you can afford to put in at least 5.5%, its how can you afford not to?
So, to each and every one who is not or does not know if they are putting in at least 5.5% in their 401K, log into Jet net, click on “Pay and Benefits” , then under “Retirement & Investments” click on “Supersaver 401(K)”, Log in, Click on “$uper $saver 401(K) Plan” under “Account List”, then “Contribution Amount”, then in the “Regular contribution amount” box , under “Before-Tax” where it says “Regular Election” its shows at least 5.5% in the “Current” column.
Don’t be a Ragged Trousered Philanthropist donating your earnings to American Airlines, as stated earlier you are already giving AA your time and labor for the worst deal in the industry, its your money, make sure you take every penny that’s made available to you.
