Pilots Are High-Income Professionals, Too – Podcast #186 | White Coat Investor

Intro:
This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We’ve been helping doctors and other high-income professionals stop doing dumb things with their money since 2011. Here’s your host, Dr. Jim Dahle.
Dr. Jim Dahle:
This is White Coat Investor podcast number 186 – Pilots are high-income professionals too.
Dr. Jim Dahle:

We’re recording this, let’s see, it’s the 17th of November. This is going to run on the 26th of November. So just a few days from now. And I hope you are staying safe out there in this pandemic.
Dr. Jim Dahle:
Let’s start with a word from our sponsor. This podcast is sponsored by Bob Bhayani at drdisabilityquotes.com. He is an independent provider of disability insurance planning solutions to the medical community in every state and a long-time White Coat Investor sponsor.
Dr. Jim Dahle:
He specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. If you need to review your disability insurance coverage to make sure it meets your needs or if you just haven’t gotten around to getting this critical insurance in place, contact Bob at drdisabilityquotes.com. You can email him at [email protected] or just pick up the phone and call at (973) 771-9100.
Dr. Jim Dahle:
Our quote of the day today comes from Ray Dalio, who says, “He who lives by the crystal ball, must get used to eating a lot of broken glass”. And I think that is very true. I’ve tried to set up my portfolio so that I don’t have to have a functioning crystal ball in order to reach my financial goals.
Dr. Jim Dahle:
Thanks for what you do. Things are difficult right now. I don’t know about you guys, but we’re boarding Covid patients in the ER. All the beds are full. It’s just a matter of trying to decide who’s the least sick. The least sick ICU patient goes to tele and the least sick tele patient goes to the floor. The least sick floor patient ends up in the ER, or being discharged home. And the least sick ED patient sits in the waiting room. So, if you’re backed up, like we are, I hope you’re surviving these days.
Dr. Jim Dahle:
I had a difficult experience recently. I had a four-week-old former preemie come in basically in a cardiac arrest. Interestingly the medics called and actually wanted to call it in the field. I didn’t think that was a very good idea on a four-week-old. So, we made the medics bring them in and ran what ended up being a beautiful and very well-run cold.
Dr. Jim Dahle:
We had a lot of help from our NICU. Even our neonatologist came down and assisted with it. And we did spectacular CPR for about 45 minutes on this baby. And unfortunately, did not get the baby back. And that’s hard. It’s hard to watch kids die. It’s hard to see consequences of the choice’s parents make affect their children. And all of you also have difficult jobs. And so, if nobody’s told you, thank you today, I wanted to tell you, thank you for what you do. It’s not easy work.
Dr. Jim Dahle:
This is continuing financial education week. If you don’t read the blog or get the newsletters, you may not realize that, but we do this every year. I talk about some of the books I’ve read recently, recommend some of them to you. I tell people that they need to do some continuing financial education every year. Now that might be following a blog and reading one good financial book a year, it might be going to a conference. It might be taking an online course, whatever it is for you, we’re trying to facilitate that this week.
Dr. Jim Dahle:
So, we’ve actually got our online courses on sale. They are 10% off. And if you buy either our CFE 2020 course, or if you buy our classic Fire Your Financial Advisor course, the one that helps you get a written financial plan in place, we are offering those at a 10% discount.
Dr. Jim Dahle:
But wait, there’s more. If you buy it, we’re also giving you 13 extra hours of content from WCI con Park City. So, there’s a lot of great stuff in there on burnout, Jonathan Clemens, Bill Bernstein, Mike Piper, all kinds of great people are included in that conference as well. So, it’s kind of like even better than two for one deal. It goes through Monday, November 30th, at midnight mountain time, then the sale is over. It’s still a great deal at regular price, but if you want an even better price now is the time.

Dr. Jim Dahle:
If you haven’t heard about our upcoming 2021 Physician Wellness and Financial Literacy conference, this will be a live but virtual conference. Sorry, Covid is too bad to have a thousand of you get together in the same room, but it’ll be live and virtual. That is on the early bird sale till the same time until November 30th, midnight mountain time. You get $120 off that conference. So, sign up now. It’s going to be great and we’re really looking forward to seeing as many of you there as we can.
Dr. Jim Dahle:
All right. We got an awesome guest today. As I mentioned, we’re going to be talking about pilots and their finances today. So, let’s get into it.
Dr. Jim Dahle:
We have a special guest today on the White Coat Investor podcast. We have Jason Depew. Did I pronounce that right? Is it Depew?
Jason Depew:
Correct.
Dr. Jim Dahle:
Or Emmett, which is his call sign. He is the author of “Pilot Math Treasure Bath” and a major contributor to the Pilot Network. He is a captain with Delta, a veteran as well. He flew in the air force and is here to join with us today to talk a little bit about a high-income professional category that we don’t discuss a lot at the white coat investor, which is professional pilots, especially at the majors. A lot of people don’t realize they make doctor like incomes and actually have a lot of doctor like financial challenges. Welcome the White Coat Investor podcast, Jason.
Jason Depew:
Thank you. It’s a pleasure to be here.
Dr. Jim Dahle:
So, tell us what the upbringing is like of someone who writes a book to help pilots get a fair shake on Wall Street.
Jason Depew:
Yeah, kind of pretentious, huh? I grew up kind of solid middle class. We didn’t really want for anything, but I never had the name brands. I was never the cool kid at school as far as that stuff goes. I learned hard work and caring about other people and good grades were kind of assumed. It was just expected. If you didn’t get a good grade, what’s going wrong, right?
Jason Depew:
And as part of that, I learned to write well. I learned to speak and kind of got confidence. And then as I progressed, I went to went to college, did some flight instructing and gained a lot of confidence in teaching things to other people. And then as I was applying for airlines, I realized that a lot of people were kind of lost on the process of how to do that. So, I would start putting out answers online. Here’s how to do this, here’s how to do that and got a lot of good feedback.
Jason Depew:
And eventually, when I discovered the FIRE movement, personal finance, my wife and I had kind of already been doing good stuff, but I realized that I had the expertise to formulate and communicate an argument really well and communicate that to pilots. And now I can add the personal finance piece to it and help a lot of people out. So, I just started writing about it and it ended up a lot of blog articles and then it ended up being a book too.
Dr. Jim Dahle:
Cool. Now you went to the Academy.
Jason Depew:
I did. Yeah.
Dr. Jim Dahle:
Air Force Academy. They are in Colorado Springs. So, it’s not an easy school to get into.
Jason Depew:
Yeah.
Dr. Jim Dahle:
And then what did you fly in the air force?
Jason Depew:
I flew a bunch of stuff, actually. The B-1 bomber. So, it’s the big one, with the wings that sweep back and forth and it’s supersonic. Then I flew a little single engine, triple prop called the Pilatus PC-12 for special operations as a spy plane. I got to teach pilot training, flying the T-6 which is the most fun training you could possibly imagine. Just aerobatic upside down, fast, powerful all of it. And then I got to fly a big business jet called the Global Express. It’s bombardier biggest business yet. And, I flew in Afghanistan too.

Dr. Jim Dahle:
So, 10 years in, or how many?
Jason Depew:
11 years of active duty. And I’m still in the reserves working for the Air Force Academy.
Dr. Jim Dahle:
Because you pretty much have to spend 10 once they train you as a pilot, right?
Jason Depew:
That’s right. It’s a 10-year commitment.
Dr. Jim Dahle:
Okay. So, the financial pathway of a major airline pilot is remarkably similar to that of a doctor. You make little to no income for a decade, then pretty good income for as long as you can go without burning out. And maybe even you have a similar debt if you went into the civilian world, or even if you went to the military world. You have a time commitment, just like a doctor that did the health profession scholarship program like I did to pay for medical school. What other parallels do you see between the financial lives of doctors and pilots?
Jason Depew:
Yeah, there’s a lot. And for background, my wife is also a board-certified pediatric dentist. So, I’m not a doctor, but I can really kind of understand that world pretty well. And then there really are a lot of parallels. One thing I noticed is when you have a high income, you get a lot of people offering help. And they want to sell you their services, their advisory services, invest with us, all this kind of stuff. In a lot of ways, you don’t need that. You can do it all yourself, for the most part. That said, I know a lot of your listeners like 80% have some kind of financial planner, right?
Dr. Jim Dahle:
I don’t know if that’s 80% of my listeners. I would estimate that’s probably 80% of doctors that need one just because they don’t bother learning this stuff or don’t want to do it. But of my listeners, I’m sure that number is much smaller. It’s obviously a selection bias if you’re interested in listening to financial podcasts.
Jason Depew:
There you go. Yeah. The one thing I’ve noticed is, my wife has a single member LLC, for her dental practice or her for work. And our financial planner helped her set up a pension plan, a defined benefit pension plan, which is an awesome benefit, huge tax advantages. Nobody talks about it. We had no idea it existed and we wouldn’t have found it without them. So, I think there are some values to getting some expert help sometimes. But in general, you can do it all yourself. And then it’s the same for pilots and doctors.
Jason Depew:
Something I noticed is a lot of pilots are trapped with these golden handcuffs attached to the control yoke in the flight deck. And the money is so good that it’s just really tough to pass up opportunities to make more. And sometimes it feels like you’re keeping score. How much money did I make this year? Is it more than last year? And I know doctors do the same thing. I see it with my wife, with her friends.
Dr. Jim Dahle:
One more shift, one more call. Here’s another couple of grand. Yeah.
Jason Depew:
Just one more. It’s that much money, right? But there’s burnout. You mentioned that already. Burnout is an issue for pilots and for doctors and it’s something to watch out for. And what are you all doing or going for in life? You kind of have to think about that and take some time to focus on that. That’s kind of why I wrote my book is to kind of have a positive thing through that.
Jason Depew:
And then another thing I see a lot is you’re just like musicians and pro athletes. There are a lot of high-income professionals out there, especially pilots who make these unbelievable incomes and they’re dirt poor. And they get to the end of their careers and they wonder why they have no money. And they’ve got all these fancy toys, but they’re really not happy, they’re not taking care of them and they’re worried about the rest of their life. I like the work that you’re doing and that’s kind of what I’m going for with pilots too. It’s to give some people some basic financial education and all it takes is a little bit, and it can go a long way and help people get set up for the rest of their lives.
Dr. Jim Dahle:
Yeah, for sure. With that sort of an income just basic financial literacy and a little bit of financial discipline goes a long, long way. So, this book you wrote it’s a good segue into it. “Pilot Math Treasure Bath”. What do you mean by Pilot Math? And my next question of course is going to be, what do you mean by Treasure Bath?
Jason Depew:
Yeah. So, Pilot Math is a kind of an inside joke for pilots. It’s kind of a plan where pilots have these little rules of thumb that we use all the time when we’re flying. Like if you’re 30,000 feet, you need to descend for New York, you know the airplane to descent it needs three miles per thousand feet to descent. You need to start 60 miles outside of New York to start your descent. And that’s just basic pilot math that everybody knows. So, I kind of took that and turned it on its head and said, now pilot math means the shockingly simple math for early retirement. And I wanted pilots to think through that. So, it’s a catchphrase that every single pilot recognizes and that kind of draws them in.
Dr. Jim Dahle:
Okay. So, you’ve referenced there a relatively famous post by Pete Adeney at Mr. Money Mustache, the shockingly simple math of early retirement, which basically is that the more you save the sooner you can retire.
Jason Depew:
Exactly.
Dr. Jim Dahle:
Okay. So, what is a Treasure Bath then?
Jason Depew:
All right. So, for Treasure Bath, I was at a squadron and we got a new deputy commander, a new DEO, and we had both been in spec ops. So, we were talking about deployments and sharing war stories and all that. And he mentioned that he got this good deal deployment one time where he spent a hundred days in this really swanky location. And he got $170 a day per diem. And I real quick did the math in my head – “Wow, $17,000”. And my eyes got real big because for military officers, $17,000 is a lot of money. He just smiled and said Treasure Bath. And it turns out he’s quoting a skit. I think from SNL or something years ago.
Jason Depew:
But for me, it evoked this idea of sitting in a bathtub full of treasury or Scrooge McDuck diving into his three cubic acres of gold and gems. For pilots we tend to take ourselves pretty seriously, but I think humility is important. And I think it’s important to be able to make a little bit of fun about yourself. I don’t have a degree in finance or an MBA. And so, for me as just another pilot, to be able to talk to other pilots about finance, I think it’s important for them to know that there’s some humor in there. It’s not all just me saying I’m super serious and super expert on this.
Dr. Jim Dahle:
So, some people might accuse you after they get into your book of just taking the ideas of the FIRE community and applying them to the lives of pilots. Is that a fair accusation?
Jason Depew:
Absolutely. I feel like anyone who discovers the FIRE movement goes in the exact same journey. They say, “Wow, this is cool. Well, I want to tell everybody I know about this. Hey, I know I’ll start a blog or a podcast”. And that’s what everybody wants to do. And I was in that exact same place. I discovered Mr. Money Mustache and you, and the Mad Fientist and a bunch of others. And I wanted to tell everybody I knew about it.
Jason Depew:
And then I realized that if I were to start a blog and just start writing generalists, financial independence writing, I would be covering things that have been covered over and over again. And can I really do it any better than has already been done before? I don’t know, but it’d be a lot of work to go through all of that.
Jason Depew:
And so, I ended up going kind of stepping back and thinking, “Well, who am I really trying to help out? Who am I really trying to talk to?” And my primary audience was all the pilots that I was flying with. Pilots are notoriously bad with money. We make bad decisions and buy fancy toys, and I wanted to be able to help them.
Jason Depew:
So, I decided, I realized that by really focusing down my message on an area where I kind of have expertise and a little bit of credibility, I’d already been doing a lot of writing for pilots. I can really speak to them in a way that the average pilot is not going to go listen to Mr. Money Mustache, talk about punching them in the face. They’re going to say, “Screw you dude” and walk away. But if it’s another pilot, tell it to them I think it’s a lot more approachable for them.
Dr. Jim Dahle:
Now in your book, the first few chapters of the book in particular, you claim multiple times that someone can have a very nice life on about $50,000 a year. And you base your argument primarily on the fact that the average American spends about $50,000 a year, which is what they made. Do you really think that the average American has a very nice life?
Jason Depew:
Yeah, I do. So, I’ve been on eight combat deployments. I’ve spent time in Russia, Afghanistan, Djibouti, really horrible places on this planet. You cannot imagine the poverty and the life of the people live there. And on one level I have very little sympathy for anyone who says that they cannot be happy spending $50,000 a year, living in a country as great as the United States of America. It’s just unbelievable.
Jason Depew:
Now for me having a nice life and enjoying your life is a decision. It’s about finding meaning in life and enjoying what you have versus just pursuing a bunch of other stuff. I think that’s kind of the most important message about the financial independence movement is learning to realize, to really appreciate what you have and set priorities in your life and then craft your life so that you can focus on your priorities.

Jason Depew:
One of my favorite FIRE writers is Justin from the blog Route of Good. His family lives, they can’t even break $40,000 a year when they try hard and they retired years ago and their net worth has since doubled. And they live this great life and have $40,000 a year in spending. So, you don’t have to have all the flashy toys and cars and houses and everything else to live a great life. I think it’s definitely possible.
Dr. Jim Dahle:
I have trouble talking doctors into doing it for two to five years after residency. I just tell them to keep living like they were as a resident and tell them, you only got to do it for a couple of years. And even so I can’t talk them into doing it for a couple of years, much less an entire career. I think a lot of people have a very hard time believing that. Why do you think that is?
Jason Depew:
I think there’s a lot of peer pressure out there and you get these older doctors, these more experienced ones, the airline captains and they really can afford to go buy a brand-new Tesla or a Porsche or a boat or whatever. And then they come to work and they show it off. And the young doctors say, “Oh, I should do that. I’m a doctor. I can afford that”. The pilot is like, “Oh, I need my captain’s house”. Whatever.
Jason Depew:
It’s a lot of peer pressure. And it’s just all of America in general. You’ve got to have the newest gadget hanging off your belt clip and the newest computer and the newest car and the newest clothes. And do you really need that to be happy? No, but it’s hard to overcome just all the messaging that’s raining down on us every day.
Dr. Jim Dahle:
All right. You also in the book readily admit as do I, as do I, and I’m not innocent of this by any means that we both spend well more than $50,000 in any given year. Even with the paid-off house. Do you feel hypocritical at all telling people to do something when you were actually doing something else?
Jason Depew:
A little bit, yeah. I do. I spend more than that $57,000 a year figure. And I’m an airline captain, so I allowed myself a little extra there. But I wrote an article that I call Escape Plan FIRE. My wife and I reached financial independence after our active duty military service. We were good at the end of that. And if all else failed, we both lost our jobs, if she can never practice again, I can never fly again, we could sell our current house. We could pay off a rental house that same day that we have in Rapid City, South Dakota, We could move there. It’s by a school it’s biking distance to a grocery store. And our nest egg, as it is, our treasure bath could support the rest of our lives and we’d be happy though. It’s a place we love.
Jason Depew:
I feel like a lot of high-income professionals get to that point pretty quickly. You can get to the point where you are financially independent, and if you had to, you could scale back. So, in the meantime, you’re making more money. Okay, spend a little more. Something I try to do is I try to go out and do good in the world. I mentor a lot of young people. I teach a lot of pilots. I do a lot of online writing and a lot of basically career consulting for pilots for free. And I try to make a difference in the world because I now have the opportunity and the freedom where I’m not just scraping to get by. So, I kind of put that effort to good use.
Dr. Jim Dahle:
Now I found an interesting shift in the book. I don’t know, a third of the way into it, halfway into it. You decided to run some calculations and you decided not to use that $57,000 figure you had talked about in the beginning of the book. You actually let them double it. You said, okay, this still works if you spend $116,000 a year, and you felt that was maybe more realistic for a major airline captain. Why would you decide to make that concession?
Jason Depew:
I think it was my wife, actually, that convinced me as she was helping read through drafts. We kind of talked about the peer pressure and the consumerism in our culture. There are the classic FIRE bloggers, like early retirement extreme who lived on like $7,000 or $8,000 a year and Mr. Money Mustache, and these guys.
Jason Depew:
The average pilot, or probably doctor is not going to listen to them. A pilot’s default answer to a guy like that is “F you. I’m smarter than you”. So, they’re not going to listen to that message. And I really want it to be able to reach them. So, I had to kind of set things at their level and show them that no, you’re not going to have to cut things down to the bone. You just make a few small tweaks. And I think the targets I set out are very attainable.
Jason Depew:
And then again, being a high high-income earner, when you go from first officer to captain is why did that change from $57,000 a year to $116,000. When you make that upgrade, it’s $100,000 in your pay raise. So, if you spend most of that extra and extra spending, okay, fine. You’re still going to get there. The math still works. It’s let me keep saying shockingly simple to set your family up forever and really kind of even set up generational wealth that way.
Dr. Jim Dahle:
Now in the book you talk a little bit about healthcare and you throw a figure out there something like $5,000 a year for health care and talk about how that’s plenty. And I’m sitting there looking at my $1,200 a month, health insurance premium on a high deductible insurance policy thinking maybe you’re a little out of touch on this subject. Without Obamacare subsidies, Medicaid Tricare, or an employer paying for healthcare, how in the world can any family expect to only pay $5,000 per year for healthcare all in?
Jason Depew:
That’s a great question. I used data from the Bureau of Labor statistics for the book. They actually publish it on the website every year. So, I took their data and that’s straight from them.
Dr. Jim Dahle:
Do you think maybe they’re not counting they employer paid health care or the Medicaid paid health care?
Jason Depew:
Yeah, that must be. In my healthcare I’ve always thought it’s not particularly great healthcare at Delta. My premiums out of pocket are $200 a month and it’s a high deductible health plan. So, we spend a couple grand above that every year, but we’ve gotten nowhere near $5,000 every year.
Dr. Jim Dahle:
But your employer’s paying three quarters of that premium.
Jason Depew:
Yeah. They probably are. Yeah. And that’s probably the big difference. So yeah, maybe I need to adjust that up and I did in the book. I talk about if you have somebody with a chronic health condition, that’s going to change your math, right? You may need to plan as part of your personal finances a different level of spending to cover that. And it’s going to adjust the timeline of where you reach financial independence.
Jason Depew:
But again, even if what you say is $1,200 bucks a month, so it’s a lot more, but on a doctor’s income, is that really going to push you back more than six months or a year on reaching financial independence? Probably not. So just be smart about it and run the numbers for yourself.
Dr. Jim Dahle:
Yeah. I think that’s a fair point. I agree that doctors can afford it and still reach financial independence. I find it interesting. I talk to people that own businesses or their physicians or whatever, these people that make too much money to get any sort of subsidy on their healthcare. And they’re like, yeah, I’m out $25,000 a year before the insurance company starts paying anything. Because they got to buy their premiums and then they got to in meet the deductible.
Jason Depew:
That’s a nationwide problem. That’s not limited to us. That’s the big debate with the new government and everything. What are we going to do about healthcare? Is there a way to make it better? And that’s something really your listeners are uniquely suited to influence. They can probably put out ideas on how to reform or fix or improve health care and then health insurance and make it affordable, good access, high quality. How do you get all those things? I would love to see more work on that. And there’s definitely a lot long way to go, I think.
Dr. Jim Dahle:
Yeah. Great segue for my next question. Doctors in many countries, I had somebody on from Australia a few weeks ago. They’re unionized a bit like major airline pilots. And perhaps if the U.S. goes to a single payer healthcare system, there could be a scenario where doctors here are unionized. Can you tell us what you see as the benefits and drawbacks of being part of a relatively powerful union?
Jason Depew:
Yeah, it’s strange for me. I’m still getting used to it. In the military, there is no union. The closest thing we have is the lieutenant’s protection association, the LPA. That’s more like a militant kind of guerilla underground group to keep the big bass off our back. But the airlines do have powerful unions. We have ALPA the Air Line Pilots Association and it’s international. It covers dozens, if not hundreds of airlines. Although each individual airline is somewhat autonomous. We have our own council and it kind of decides stuff for our airline.
Jason Depew:
So, I can’t speak to a full nationwide union, but I will say that it’s effective. It’s impressive. If you look at an industry like the cruise ship industry, which is similar to aviation, the people that work on cruise ships get treated terribly. The pay is horrible. The work rules are horrible. The conditions are just not good. And it could very easily be like that for airline pilots, if not for our union. And we have this rock-solid contract and it protects us in a lot of situations.
Jason Depew:
We have these great rules. Like I commute to New York from Tampa. That’s how I get to work. Every time I go to work. And so, I have to ride standby on our jets to get there. And as long as I have a seat reserved on one flight and then a backup, at least a couple hours later, if my flights don’t work out, I’m not in trouble. And in most jobs, you don’t show up for work you could get fired. But my contract protects me. That’s huge. So, it is nice to have.
Jason Depew:
At the same time, unions are slow. They’re extremely expensive. I paid 1.85% of my income to the unions forever. There’s a lot of politics and infighting, and it’s frustrating to watch, but they can do a lot of good things. So, I think unionizing it can be really good. And sometimes you can get above market value for salary and for work rules, but you also have to watch. There are some trade consequences, I guess.
Dr. Jim Dahle:
What kind of consequences have you seen in the pilot world?
Jason Depew:
One thing that ALPA likes to do is they don’t want a 737 pilot at Delta to get paid a whole lot different than a 737 pilot at Alaska Airlines. They want to keep those pay rates somewhat similar. Can that be potentially negotiated for much better pay rates? Sure. But they’re not going to want to really do that if it makes Alaska look that much worse, if they’re also an ALPA carrier.
Jason Depew:
As a doctor maybe you make a great high income and you’ve got this great practice in a great spot. But if the union starts setting rules on how much you can charge for this or that procedure, kind of like insurance has anyway, but they could potentially limit your income potential there, which would definitely be a drawback.
Dr. Jim Dahle:
So maybe good for the people in a bad payer mix kind of area and bad for the people in a good one.
Jason Depew:
Yeah.
Dr. Jim Dahle:
Fair enough. All right. So, you’re obviously a little biased. You fly for Delta, but what are the best airlines to work for and which are the worst?
Jason Depew:
Yeah. The way I see it, there is kind of three tiers to airlines. There are the majors. They fly big airplanes. They usually have international service. So, you got Delta United American, and then I will add Southwest in there. There’s a big enough player. And then on the cargo side, FedEx and UPS are also great, great company. So, all those companies are great to work for. Some are better than others, but I have friends at every single one and every one of them is happy. They love their company wherever they’re working.
Jason Depew:
The next tier down from that is the smaller carriers. They still fly big 737s or Airbus A320s. It’s like Frontier, Spirit, jetBlue, Alaska, Sun Country. And then there’s some, some cargo carriers who even fly big airplanes like Atlas or Southern Air. They worked for basically DHL or Amazon. They’re the Amazon Prime contractor. And they’re good companies but the scope of what they do is a little bit smaller and the work rules aren’t quite as good.
Jason Depew:
And then you have the regional airlines. The small regional jets, the puddle jumpers as some people call them. And there’s actually like two dozen of those in the country. And the pay isn’t as good. The work rules aren’t as good. For most people it’s not a forever job. Everybody’s always trying to work up to those majors and you are kind of paying your dues in the lower places. Working in a regional might be like a doctor being a resident and an intern for a few years. And after you’ve done that for a while, then you can move up and be an attending. That’s like going to the major airlines.
Dr. Jim Dahle:
All right. Can you talk about the financial advantages of picking the right place to live as a pilot? You mentioned these several times in your book, although it doesn’t seem that you’ve maybe necessarily chosen to do that in at least some of the recommendations you make to maximize income.
Jason Depew:
Again, the book is about money, but mostly I’m trying to get people in a mindset of figuring out what’s important in life and prioritizing that. My wife doesn’t love winter. So, we live in Florida and it’s wonderful. We love Tampa. It’s a great place. It does cost me time to commute up to New York before and after every trip.
Jason Depew:
I’ve got a buddy who lives in LA, another Air Force buddy who flies for Delta. He doesn’t commute. He can drive to work every day. And so, he can pick-up last-minute trips and in our company that can pay double pay sometimes, which is just amazing. It’s really great pay. We compared numbers one year and he made an extra $50,000 per year just living in base, as we say, not having to ride a jet to commute to work. So, it’s a big difference. And I think it can get even bigger over time as you start making more money.

Jason Depew:
So, I always recommend to people, if you can find a place that you will love to live where you don’t have to commute, that’s good. Do it. And for me, that’s within like two hours driving distance of an airport because you’re only driving to the airport a couple of times a month.
Dr. Jim Dahle:
Airline pilots have the longest commutes of anybody I’ve ever heard of. You’re flying to New York. Your commute goes over what? Six or seven states. That seems to give you a lot of opportunities to do geographic arbitrage.
Jason Depew:
It does.
Dr. Jim Dahle:
To live someplace that that’s relatively cheap. I don’t know. Do you pay Florida income taxes or New York? You are in Florida, so you’re not paying state income tax.
Jason Depew:
Yeah, I’m a Florida resident.
Dr. Jim Dahle:
So, there’s one huge advantage of commuting up to New York for your work.
Jason Depew:
Why would you live in a state that charges income tax, when you can save 6% on airline pilot pay? Or maybe there’s somewhere else in the world that you just really want to live. I have some friends. They’re both Air Force pilots, Delta pilots, who live in Salt Lake City. They lived downtown Salt Lake. It’s a great place. They are a half hour from the ski slopes and there they live in base. And so, they can make all that extra Delta work if they want.
Jason Depew:
When I started at my company, my wife was still in the Air Force. She was assigned to RAF Lakenheath in England. So, I commuted from England to New York for work. And it was awesome. It’s super easy to do. So, anywhere in the world really that you want to live, you can. It’s wonderful. It’s a really nice benefit.
Dr. Jim Dahle:
You bring back a lot of memories when you bring up Lakenheath. I spent a summer in Lakenheath. It was one of the best things that happened to me while I was in the Air Force was being able to go over there. My wife flew over a few days after I did with two young children. And what we discovered is at the main airport there in London is you can’t get a skycap. You can’t get anybody to help you with your luggage or your little kids.
Dr. Jim Dahle:
So, she has a whole summer worth of luggage, two small kids. The oldest one would have been four and the younger one was two. Because I’m on shift when she lands, I can’t leave. She’s supposed to get a bus in a foreign country, two hours to Lakenheath. And she doesn’t make it to the bus. And now she’s got to go to the other side of Heathrow. I mean, it was this disaster after she’s been up all night with these two kids on the plane. It was quite a disaster going to Lakenheath, but we had a great six weeks there and then spent a week on the continent. So, I can certainly get the attraction of being able to do something like that. So that’s pretty fun.

Dr. Jim Dahle:
All right. You talk in your book about a really interesting period of time for airline pilots. You call it the “Dead Zone” and maybe everybody in aviation calls it the dead zone. I don’t know. But I think a lot of my audience may not be familiar with the history of the “Dead Zone” and its lessons, both for pilots and doctors really. Can you talk about the “Dead Zone”, the lessons that can be learned from it and maybe even connect it to some of the parallels we’re seeing in 2020?
Jason Depew:
Yeah, absolutely. So early 2000s, you had the dot-com bubble burst. You had 9/11. In the 2008 downturn, you had more bankruptcies and everything. And the airlines went through a really rough period where there were mergers, there were bankruptcies, there were photos where an airline pilot gets sold, “Hey, you’re not coming to work here and you’re not getting paid. And we’ll call you back in a few years”.
Jason Depew:
These are all pilots who used to have a really great pension. They got 60% of final average earnings for the rest of their life, which is just an insane amount of money. And so, all these pilots who spend these careers with that promise, and hadn’t really been saving anything, expecting to have this huge pension. And now all of a sudden, just overnight wrap of a judge’s gavel, that’s gone forever. And so, what do you do now?
Jason Depew:
Some of these pilots took charge of their life and they cut their spending. They sold some of their fancy toys. They started investing heavily. And those pilots are in a great situation right now. They’re the top of their career. They’re loving life. They’re super happy. But others just kind of ignored reality. They refused to cut their spending. They kept all the toys because they were entitled to this lifestyle. The peer pressure, I said, airline pilots have this lifestyle. Big house, fancy cars, a boat, everything.
Jason Depew:
And by refusing to accept reality, they didn’t even start investing seriously because they were going to use the powerful union or some lawsuits to get their pension back because they’re entitled to that. And they’re still whining and complaining about that. And they’re not happy people. They hate their job. They’re out of shape. They’re terrified of retirement because they are worried, they’re going to run out of money and end up starving living in a van, down by the river in a few years. And I feel bad for them.
Jason Depew:
A lot of the reasons I wrote this book was because I started encountering these guys. And I didn’t want my buddies, the younger generation to end up like that because the industry is cyclical. There is going to be another downturn. Covid is a great example right now. Things have been tough and it’s going to happen again in the future. There will be something else.
Jason Depew:
I always say, I teach people, I tell people – “You need to take charge of your life. You need to invest. Don’t rely on somebody else”. And it’s not just investing in money. It’s investing in skills and career progression. I think having a side hustle is a valuable thing to do in case the worst happens and you need something else to do. But just realize that nobody is responsible for you or your wellbeing. It’s all on you.
Jason Depew:
There’s always going to be sick people. People are always getting their teeth drilled. So, doctors and dentists are probably a little safer than airline pilots, which is a business and travel kind of leisure market. But what if there is a really big economic downturn, or maybe you just have a really bad malpractice lawsuit that really hits you really hard?
Jason Depew:
For this year my wife’s dental clinic where she works, it’s shut down for like two months and she did not go to work and did not get paid a dime. If she’d been the only income earner for our family, we would have been in big trouble. So, it’s important to have that emergency fund sitting so it’s usable and accessible. And it’s important to have some backups, whether it’s a side hustle or something that you can do just in case something happens like this.
Dr. Jim Dahle:
Yeah, that is really interesting. That is not an uncommon scenario among the audience. I would say most of my listeners took a 10% to 40% pay cut this year, just because they weren’t able to do elective procedures. Even those of us who you would have thought would have been on the front lines, I mean in the ER. And our volumes dropped up to 40%.
Dr. Jim Dahle:
We’re sitting there at the end of March, sitting in the ER, looking at each other, twiddling our thumbs, wondering if we were going to go broke because people were afraid to come in with their strokes and heart attacks because they thought they’d get Covid. Even though we weren’t seeing any Covid at the time at all. We only had 100 cases in the state a day at the time. So, the likelihood of them actually coming into the ER were pretty low.
Dr. Jim Dahle:
What are airline pilots doing this year? A bunch of them been furloughed or you’re just not getting the usual number of flights or what has happened to their incomes?
Jason Depew:
Yeah. It’s been really rough. Thousands of pilots and flight attendants and bag loaders and other people in the industry have been furloughed this year. And they’re just sitting around and trying to make ends meet finding other deals. Most of the airlines offered early retirement packages for people. A lot of people took that and it’s a great deal for them. You get like 50% pay for a few years and you move on with your life and go on to the next thing, which is kind of cool.
Jason Depew:
A lot of people are just not flying as much. I’m on reserve with the airlines, which again, the contract rules. I get paid 72 hours a month, whether I fly or not. It’s a great rate. It’s a lot of money. And so, they’re welcome to have me not fly and I’ll just keep breaking in the money, but it’s kind of frustrating not flying. We’d rather be out there taking people places.
Dr. Jim Dahle:
How much are you actually flying? They’re paying you for 72, but how much you are actually flying?
Jason Depew:
Last month I flew four flights for a total of maybe 15 hours.
Dr. Jim Dahle:
15 hours and paid for 72. I guess that’s the power of a union right there. Huh?

Jason Depew:
Yeah, that’s the power of a union. So, there are some big benefits for sure.
Dr. Jim Dahle:
All right. Well, let’s turn to some questions I collected from my friend, the pilot. I was mentioning before we started recording that I’ve a friend ин my neighborhood. He’s a pilot. He has a few questions for you. He says, it seems all of my highest earning years will be between the ages of 40 and 65. How should that, and how does that affect my planning for retirement?
Jason Depew:
Okay, good question. Airline pilot pay does get a lot better as time goes on. For me as a pilot, the most important thing and for any high-income earner, there’s a great book by Simon Sinek called “Start with Why”. And I tell people, you need to ask yourself that question – “What is the driving ‘Why’ in your life?” What are you trying to get out of life? And then do you need five days a week worth of income to reach that goal all the way till age 65 or whatever?
Jason Depew:
And then I think in my book I’ve shown with math that you don’t. You can set yourself up for financial freedom forever and probably generational wealth in a very short amount of time. So personally, I love my job. I love flying. And when I discovered the FIRE movement, and the Mad Fientist wrote an article about what does your ideal life look like? So, I kind of thought through that. What would it look like? Well, I’d get up in the morning. I’d go out of my hanger and fly an airplane and come back and eat lunch and go on, fly another airplane. So, flying is part of my life, no matter what.
Jason Depew:
Now if I’m going to be retired, I could pay a couple hundred dollars an hour to fly my own airplane, or I could get paid hundreds of dollars an hour to fly these really fancy jets for Delta. And by the way, when I get where I’m going, they’re going to put me up in a sneaky hotel and I get to go eat some good food somewhere cool in the world. So, for me, I don’t see myself necessarily retiring before age 65, but I’m not going to be like the guys who were desperate. There are pilots that are working 20 to 25 days a month. And just running themselves ragged, trying to bring in enough money to survive retirement.
Jason Depew:
And I don’t have to be like that because just a little bit of planning, a little bit of intentionality early in your career. And instead I’ll go fly a trip a month. I’ll go fly in four days bounce around the world, go to Paris and London and New York and back and go enjoy that and some good food and hang out. And that will still give me a huge income more than enough to live on, but I’m not going to be working myself ragged.
Jason Depew:
Really think about what you’re going for in life. What do you want to put all your time toward? And set yourself up so you can put the time for that and you don’t need to be working full time to age 65. You don’t need to do it.
Dr. Jim Dahle:
Now, let’s say you get to this 40 – 45-year-old, you really don’t have much put away. You basically just have to save more. You’re making more now and you can save more to get to the same place.
Jason Depew:
Yeah. Like I said, when you upgrade to captain, it’s a hundred thousand dollars a year pay raise. If you’re behind the power curve, if you haven’t saved up enough yet. Okay, upgrade to captain. There’s a hundred thousand dollars a year to dump into investments. If you’re 45, you’ve got 20 years, that’s $2 million over the next 20 years of domino investments. Worst case, 10 years into that, you’re going to realize you have enough money.
Dr. Jim Dahle:
All right. His next question was a little bit about a subject that we’ve talked about, and not only on this podcast, but already we talked about it just a few minutes ago, about a side hustle or a passive or second income. And he asked how important is it to have a passive or second income with a career that forces you to retire at 65 or medicals you out even earlier. And I’ve noticed that lots of doctors have this question as well, especially this year when they saw their pay go down. Do you really need a side hustle when your main hustle is making $200,000 plus?
Jason Depew:
Personally, I think as long as you’re intentional with your saving investing early on, you don’t. You don’t need a side hustle. And as long as you get that nest egg, that treasure bath to the right level, you’re good. And you can just keep working. And worst case, you just fall back on what you have already and you’re fine.
Jason Depew:
That said, I know a lot of pilots and doctors who really get tied up their identity, their existence is this job. Someday, that’s going to go away. You’ve got to have something to live for after that point. And there’s lots of articles that once in a while pop up that say, “If you retire early, your life expectancy is long. But if you retire at age 65, your life expectancy is like three years”. And I think it’s because these people have these “It’s nothing but the job”. And they’re there 12 hours a day, five days a week for 40 years. And when that’s gone, what do they have left?

Jason Depew:
So, for me, I talk a lot about side hustles with pilots, but for me, the term “side hustle” is interchangeable with the term hobby. For me, a side hustle is a lot of work to get going. So, it really needs to be something you enjoy. And it’s really nothing more than a hobby that pays some money. So, what are your hobbies? Anybody, any person, doctor, pilot, whatever, no matter what your income. You need some hobbies in life that are not work.
Jason Depew:
If I go to a dentist party with my wife and try to talk to her friends, if I just show up and talk nothing but airline pilot, they don’t care that. They are not interested in that. We might have some conversations for a second, but there needs to be something else in my life to talk about, to enjoy. And so, I’ve got other things that I like to do, and I encourage people to pursue that. Find other things in life that you love.
Dr. Jim Dahle:
All right. His last question is a little more complex. He wants to know if you can talk about strategies for VEBA 501(c)(9) accounts. I don’t even know what these are, but apparently some pilots front-load their 401(k) contributions because once they hit the limit, the company match starts going into these VEBA accounts tax-free. It sounds like some kind of a health savings account or something. Can you talk a little bit about these accounts and strategies and do you use them?
Jason Depew:
It’s very similar to an HSA. And yeah, airline pilots make enough and I’m sure most doctors do too. Where as long as your company match and whatever you put into your 401(k), you’re going to max out that $57,000 – $58,000 a year. And now is the company going to continue matching that money for you? In a lot of jobs, no, but in the airlines they do. The company has to keep paying. We get a 16% company contribution to the 401(k), no matter what. And in some airlines like mine it just comes to us as cash and in some it goes into that VEBA. And it’s like just a big, giant HSA.
Jason Depew:
Now, potentially that could be $50,000 or $100,000 a year going into this VEBA. That’s a lot of money for an HSA. Do you really need that? I don’t know. Maybe our earlier conversation about the cost of healthcare, maybe you do need that kind of money lying around.
Dr. Jim Dahle:
Probably not a hundred thousand a year anyway.

Jason Depew:
Not a hundred thousand a year, for sure.
Dr. Jim Dahle:
Even Fidelity that thinks you’re going to spend hundreds of thousands of dollars on healthcare and retirement wouldn’t tell you to put a hundred thousand dollars in there. What happens to it when you leave the airline? Do you roll it over into an HSA? Does it just sit in that account?
Jason Depew:
It depends on each one. Each one has different rules, but as far as I know, it’s your money at those airlines. And so, you either get to just keep the money and it stays in this VEBA and you just spend out of there. And I suspect the IRS has provisions where you can roll it into, I don’t know if an HSA, but you might’ve been able to roll it into some kind of an IRA later.
Dr. Jim Dahle:
Definitely worth looking into though. That’s a pretty interesting account.
Jason Depew:
It is, yeah. It’s an interesting strategy. We had one, they offered us one a couple of years ago at my company and we voted it down, thankfully, because it was not optional. All that extra money had to go in there. And I felt like I had my finances figured out. I can take care of myself. I’ve already got an HSA. I don’t necessarily need that.
Jason Depew:
Another strategy that I have though, is there’s a lot of doctors who can justify a lot of things. Medical marijuana was a thing long before it was recreational illegal in a lot of places. Or maybe you are a pilot. You’ve been sitting in these bad airline seats for a long time. You have back issues. Maybe some swimming would be therapeutic. And so maybe putting a pool at your house for therapy is a valid way to spend this healthcare, this VEBA money. So, there are some things that the pilots have been able to do like that to kind of spend that money.
Dr. Jim Dahle:
Interesting. So, does it have less strict requirements than an HSA would? Because I’m not sure you could swing that for an HSA money. Even with a doctor’s prescription I’m not sure you could put it in a pool.
Jason Depew:
I’ve heard stories of pilots making that work. I would definitely look into it, get some professional advice on that, but I’ve heard of some people make it happen.
Dr. Jim Dahle:
Yeah, that’s interesting. Now we need to wrap up here soon, but you’ve got the ear of 30,000 or 40,000 high-income professionals. Now granted, most of them are doctors, not pilots, but what else should they know that we haven’t talked about in today’s interview?
Jason Depew:
I would say really focus on that question of what’s your “why” in life. And if you’re intentional, you can really achieve that a lot earlier in life than you think. A lot of people think you have to wait till you’re 60 or 65, and then you retire and then you get started on the things you really want to do in life. It doesn’t have to be that way.
Jason Depew:
I average 12 days of work per month total and I make amazing money. My wife works two or three days per week, and she makes even better money. You don’t have to work continuously getting all this money if it’s just the work and you’re just turning through it.
Jason Depew:
If you can find other things in life that you enjoy, consider pairing back your schedule a little bit. Consider going to a two or three days of work per week schedule. You’ll still be making in the top 1% of income for all Americans. But spend time with your family. Go on trips, find a hobby, mentor young people, go teach at a college. Wherever you want to do, find some other things in life that you really love, that you’re really passionate about. And you can still have that gratification of using your skills, all your study, your profession, your practice. You can keep doing that. It doesn’t have to be the super full-time thing that you do every day.
Dr. Jim Dahle:
Awesome. Jason Depew, author, a “Pilot Math Treasure Bath”, editor and chief at the Pilot Network and Delta captain. Thank you so much for coming on the White Coat Investor podcast and talking to us about pilot finances.
Jason Depew:
Thanks. It was great to talk to you.
Dr. Jim Dahle:
All right. I hope you enjoyed that interview. I’ve been talking to pilots for some time and they always are saying “You should reach out to pilots more. You should reach out to the pilots more”. So today I thought I would and introduce you to that resource as well, which is obviously going to be a little more pilot specific than I can ever be given that I don’t work in the industry like I do in medicine. But I hope you enjoyed that.

Dr. Jim Dahle:
This podcast was sponsored by Bob Bhayani at drdisabilityquotes.com. He is an independent provider of disability insurance planning solutions to the medical community in every state and a long-time White Coat Investor sponsor.
Dr. Jim Dahle:
He specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. If you need to review your disability insurance coverage to make sure it meets your needs or if you just haven’t gotten around to getting this critical insurance in place, contact Bob at drdisabilityquotes.com today or by email at [email protected] or by calling (973) 771-9100.
Dr. Jim Dahle:
In case you missed it when I talked about it at the beginning, there is a sale right now on our online courses. It’s continuing financial education week. If you buy our online courses right now, you get 10% off. And we throw in 13 hours of additional content from WCI con Park City. So, check that out. It lasts until Monday the 30th at midnight, and then that special offer goes away. But get your continuing financial education in this week.
Dr. Jim Dahle:
Obviously, if you haven’t heard about the conference we’re having in March, that is also on early bird special until Monday at midnight again. So, if you want to come to this virtual, but live WCI con conference, The Physician Wellness and Financial Literacy conference that offers continuing education and dental continuing education credit that is on early bird special. It’s $120 off from now until Monday night at midnight Mountain time.
Dr. Jim Dahle:
All right. Thanks for those of you who’ve left us a five-star review and told your friends all about the podcast. Our latest review, or actually this one has been on there awhile. This one comes from Trade Myron who said, “Stoked. Just what we needed. My fiancé will be finished with residency in June. We have asked all about these questions. Love your insight. It helps out a lot. I already can’t wait to hear more. Thank you”. Five stars. So, thank you for that review.
Dr. Jim Dahle:
Keep your head up, your shoulders back. You’ve got this and we can help. We’ll see you next time on the White Coat Investor podcast.

Disclaimer:
My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author, and podcaster. He’s not a licensed accountant, attorney or financial advisor. So, this podcast is for your entertainment and information only and should not be considered official personalized financial advice.