Financial Advice for Worried Airline Pilots Right Now
Furloughs, job cuts and early retirement are on the minds of many pilots. Now is the time for them to get their finances in order.


The airline industry has been upended by the COVID-19 pandemic. Among those hardest-hit are pilots — a group with a unique set of skills who are now facing major career and financial choices that could affect the rest of their lives.
Over the past few months, multiple airlines have offered early retirement packages to their pilots and corporate professionals. In August, 1,806 Delta pilots accepted a voluntary early retirement package that included continued pay for 58 hours per month until the earlier of three years or reaching age 65. Other packages with varying terms have been offered by other airlines.
While airlines aren’t allowed to furlough or lay off employees before Oct. 1 as part of the federal aid package from earlier this year, plans have been announced to furlough or cut pay for thousands of pilots as the challenges of this economic environment persist and further federal aid remains to be seen.
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In my conversations with pilots navigating this transition, I have found that taking a few specific steps for their finances can be incredibly helpful. They may conclude that retiring sooner, working longer or pivoting to another role could be the best option for them, both financially and emotionally.
So, in the midst of planned job cuts and early retirement packages, what’s a pilot to do?
Plan for the Best: Explore New Options and New Possibilities
A reduced income doesn’t have to translate into financial ruin. I’ve worked with many professionals facing industry job uncertainty who moved into new jobs or decided to take a pay cut to switch careers, but they still earned solid, stable incomes for a longer time frame while still achieving greater personal and professional satisfaction. I’ve seen pilots take on different roles that still give them the ability to produce income and keep their mind and skills sharp.
For example, I’m aware that some pilots have been able to pivot to instructor roles or take on other responsibilities within the airline. A number of pilots even hold advanced degrees or certifications that qualify them for a career in another field, such as law, accounting or real estate, which could provide an alternative income source. And others may decide to pursue military service.
But Prepare for the Worst
Now is a good time to consider how a layoff or furlough could impact your personal finances as a pilot, particularly those who are eyeing retirement or approaching age 65. Here are some steps to prepare yourself financially in these uncertain times:
Take Inventory of Your Financial Assets, Including Cash
Determine if you have sufficient cash to cover expenses for an extended period, especially if furloughed. If possible, keep any extra cash flow in anticipation of lost income. While pilots will likely have some savings and other liquid assets, and an early retirement package could help cover health care premiums for a period, the amount available may not be enough.
Determine how long you can pay for everyday expenses before needing to withdraw money from your retirement assets, such as your 401(k) or IRA.
Categorize Necessary vs. Flexible Spending Items
All expenses ultimately fall into two buckets: necessary or discretionary. Necessary spending items include fixed payments, such as mortgage payments, or utilities, groceries and other types of expenses that are required to continue running your household.
It may be prudent to hold off on some home projects and other financial goals until your income becomes more stable. You may want to consider paying off debt or refinancing at a lower interest rate.
Check Your Portfolio in Preparation for Earlier-than-Expected Withdrawals
If you don’t have enough cash on hand to weather an extended furlough, you may need to start taking distributions from your 401(k) or Individual Retirement Account earlier than expected. Examine any tax implications before proceeding; for example, ordinary income taxes must be paid on withdrawals from traditional 401(k) plans.
But be careful: Your investment portfolio shouldn’t be too heavily invested in stocks as you begin to draw income. On the other hand, reactively moving to cash or having too conservative of a portfolio could be a detrimental move. Having a properly diversified allocation and continued discipline is crucial to long-term financial success.
Add Up All of Your Retirement Income Sources
Many pilots with retirement on their minds may find that retiring earlier could be financially feasible and even less stressful, after assessing their retirement assets, pensions and Social Security.
Begin this exercise by listing out your estimated Social Security benefits at the age you plan to start and include any expected monthly pension income. Then calculate how much you can withdraw from your diversified investment assets, such as a 401(k), IRA or taxable investment account. A common rule of thumb for withdrawal capacity based on a 30-year retirement is 4% of the beginning account value. For example, a person with a $1 million portfolio could expect to withdraw $40,000 annually, growing with inflation. Another income line item could be real estate or part-time work. These items, reduced by an estimate for taxes, will help you arrive at your expected annual income going into retirement, and determine whether working longer is necessary.
It may be wise to consult a financial adviser to help you assess your financial capacity in anticipation of your non-working years.
Maintain Your Savings Discipline, Especially If Receiving a Retirement Package
Continue to keep your savings discipline if your cash flow allows. If you are receiving a lump sum retirement package, you may want to consider maximizing your 401(k) contributions before your last day of work, and contributing to a Health Savings Account if eligible to save some on taxes. Maintaining this discipline will allow for your money to grow further and expand your base of income-producing assets.
As you navigate these current economic challenges as a pilot, now is a good time to consider how different scenarios could impact your financial future.
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Chase Mouchet, CFP®, CIMA® is a partner and wealth adviser at CI Brightworth, focusing on helping clients prepare for life in retirement through the firm’s Retiring Well practice area. He is passionate about helping clients simplify their financial lives and maximize the impact of their wealth, particularly through charitable giving. He received his BBA in Finance and BSFCS in Financial Planning from the University of Georgia.
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