Up in the Air
There’s much that’s uncertain in these turbulent times. One group that’s facing looming financial uncertainty is the nation’s airline employees. Airlines are poised to shed tens of thousands of workers as federal aid backstopping the industry stops October 1, 2020. American Airlines and United plan to furlough 19,000 and 16,000 workers respectively. A federal prohibition of airline furloughs and a massive $25 billion cash infusion to cover payroll have delayed the inevitable until the first day of October.
While the Federal Reserve continues to print money at a feverish pace, the truth that is the fiction of ’employment recovery’ is reaching its final chapter. Captain Jetson, an online airline/aviation publication, serves up inside industry information and tips for those employed in domestic air travel. Jetson’s August 22nd column warns airline professionals of the impending deadline and what potential strategies may help ease the financial fallout of unemployment.
When it comes to ‘income matters’ Captain Jetson suggests pursuing one or all of the following plans of action:
- Pursue state unemployment benefits & programs
- Having a working spouse or partner increase their working hours
- Applying for military benefits if applicable
- Consider applying for a reverse mortgage and/or beginning to take Social Security payments
While the age distribution of airline employees is somewhat murky we can safely surmise that there may be a significant number of older workers who did not take an early retirement package earlier this spring who are facing economic uncertainty. Many are longtime homeowners anxious as to how they will afford monthly mortgage payments or find the cash to meet their daily expenses.
Unions representing airline employees are highly-motivated to present members with potential solutions, especially those facing a forced furlough in two short weeks. Despite most airline pilots not being able to fly after age 65, the vast majority of airline personnel are found in ground crews and support staff. Contacting your nearest airline labor union could be the first step in getting in front of members 62 and older who may want to leverage their home to weather a season of unemployment or simply retire altogether.
What other industries in your area are dependent upon federal aid that may expire? What business plan will you develop to help these older workers facing unemployment?
Regardless, now is the time to make your presence known and the powerful financial tool you offer older homeowners- all while home values remain at historic highs and interest rates reach their lowest benchmarks.
Up in the air? Much may be but as Captain Jetson advises industry workers in its column, ‘develop a plan of action- NOW’.
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Recommending taking Social Security retirement benefits before reaching without caveats is a questionable practice. Early retirees need to be aware of three aspects of taking Social Security retirement benefits.
1. The reduction in benefits by claiming before reaching Full Retirement Age (which for 2020 is 66 years and 2 months) and increasing those benefits by waiting to make their claim until after reaching the Full Retirement Age but no later than reaching age 70. For specific information see
https://www.ssa.gov/OACT/quickcalc/early_late.html#:~:text=If%20a%20worker%20begins%20receiving,as%20much%20as%2030%20percent.
2. Earned income can affect the amount of benefits a beneficiary can receive. The following was taken from an AARP article at the first link shown below:
“…beginning to take Social Security payments.” Full retirement age is now 66 for Social Security benefits. Any person receiving Social Security RETIREMENT benefits before reaching 66 years old and 2 months in 2020 and making earned income can see their benefits reduced based on the following rules as provided by AARP:
“…your income might reduce the amount of your benefit if you start receiving Social Security before you reach full retirement age (FRA), the age when you qualify to collect 100 percent of the maximum benefit allowed from your earnings history.
Until then, Social Security doesn’t consider you fully “retired” if you make more than a certain amount from work, and it will deduct a portion of your benefits if your earnings exceed that limit. Once you reach FRA, there is no cap on how much you can earn and still receive your full Social Security benefit.
The earnings limits are adjusted annually for national wage trends. In 2020, you lose $1 in benefits for every $2 earned over $18,240. If you have a part-time job that pays $25,000 a year — $6,760 over the limit — Social Security will deduct $3,380 in benefits.
Suppose you reach full retirement age this year. In that case, the earnings limit is $48,600, with $1 in benefits withheld for every $3 earned over the limit. That applies until you actually hit your FRA; past that, there is no earnings limit.” For more information, see
https://www.aarp.org/retirement/social-security/questions-answers/working-while-collecting-social-security/
and for the most correct information see the Social Security pamphlet “How Work Affects Your Benefits” and its Retirement Earnings Test Calculator respectively at
https://www.ssa.gov/pubs/EN-05-10069.pdf
and
https://www.ssa.gov/oact/cola/RTeffect.html
3. Income taxes can apply to Social Security benefits as well. For more information, see IRS Form 915 for 2019 income tax returns at
https://www.irs.gov/pub/irs-pdf/p915.pdf