MonthApril 2017

Airlines Treat Customers Like Cattle (retired people fly too)

It’s been a long time since air travel was fun and exciting. For those of you under 40 it really was a treat at one time. Passengers were really appreciated and treated with respect. Yes all of them, not just the frequent fliers.

I remember my first commercial flight. A friend and I went from Boston to Portland Maine on a Yellow Bird. Even though it was a short flight, we were served a beverage and snack for free. The seats were large and comfortable, the flight attendants were friendly and the round trip was around $100. It was a lot for a couple of high school kids, but worth it.

Today there are only two airlines that I will fly, Jet Blue and Air Lingus. These companies still give you room to sit and a modicum of service. My last flight on another airline was a trip to the UK. I flew Delta from Boston the Heathrow and it was one of the worst flights ever. The trip cost over $2,000 and there was not enough leg room to get my knees in behind the seat in front of me. With one knee in the aisle the flight attendants ran into me with the food cart twice. Instead of any apology, all I got was a grunt that was more of a “get the F out of the way” than any sympathy for my pain. I have subjected myself to the cattle treatment on American and United as well, but nothing this bad.

The recent articles about the United passenger that was dragged from the plain refreshed my ire at the airlines. One article on CNN.com stated that 46,000 passengers annually are removed from flights. What other industry will sell you a product and then take it away just as your about to use it?

It’s time to end the shameless abuse of customers that these businesses practice as standard operating procedures. I stopped flying all but two airlines, but my few flights a year will not be noticed. However, if a large number of people stop flying the majors, then perhaps they will get the message and change their procedures. Or perhaps we will make the airlines that treat us with a little dignity more successful. Either way the passenger abuse will stop. We have the power to fix this if we work together.

Discretionary Income (The spice of life)

Those of us living on a salary, know how much we make on a weekly/bi-weekly basis because it shows up in our pay check.  The mystery is how much of that can we really spend and how much has already been spent. The difference between what we make and what is already spent is what’s called discretionary income. This is the money that we have total control over how it’s spent.

Today, my income is about one third of what I was making prior to retirement, but my discretionary income is about the same. The table below shows a comparison of our monthly spending before and after retirement:

Discretionary Income Comparison
(% of Working Monthly Income)
Working Retired
Monthly Income 100.0% 35.5%
Monthly Committed Spending:
Taxes 20.6% 2.5%
Food 2.8% 2.8%
Gas 3.2% 1.1%
Retirement Savings 5.0% 0.0%
Health Insurance 2.3% 4.5%
Mortgage Incl’d Taxes and Ins. 17.0% 3.5%
Child Support 13.5% 0.0%
Utilities & Phones 7.1% 2.5%
College 7.1% 0.0%
Car Loan 3.2% 0.0%
Total Committed Spending 81.7% 17.0%
Discretionary Income 18.3% 18.5%

 

Most retirement calculators will use your current monthly income as a gauge for your required retirement income when the real focus should be on discretionary income.

Let’s look at why our spending has declined so much in retirement. The taxes came down because the income has dropped and I no longer draw a salary for the government to take Social Security and Medicare from. I’m retired, so I don’t need to contribute to my retirement savings. We are fortunate enough that we were able to cash out of the house up north and use the proceeds to buy a home for cash in Florida. We still have taxes, insurance and some other fees to cover in Florida, but nothing like the cost in MA. We downsized the house by a third and have much lower utility bills. The kids are gone and college is paid for. The cars are paid off and still running well so that expense is gone. The cost of healthcare is up to some extent, but we planned for that.

While I was working, there tended to be a lot more variation in the monthly spending and the expectations were higher because of our income level. Now, even though the real income at our disposal is about the same, the expectations are lower and so are the surprises.

We planned some significant life changes and made some compromises to get to this point financially. The biggest change is that we’ve gone to a 2,000 sq. ft. villa from a 3,000 sq. ft. house and share the pool with several of our neighbors. I also gave up the yard work, pool cleaning and maintenance on the house. So the compromise has its benefits.

The important part is that we are happier now than we were when I was working. We’d like to see more of the kids and grandkids, but living in our ideal vacation setting 52 weeks a year is wonderful. Before you listen to what the “experts” tell you about your retirement requirements, look at your discretionary income and plan your retirement around that number.