WestJet Pension Planning

[TedStriker80]

Hi everyone,

I'm new to the forum and an airline hopeful in year or so. One of the things that gets thrown around a lot between my colleagues is that Air Canada has a pension but WestJet does not. We are aware that WJ has stock options and profit sharing. I did a little digging around the internet to see just how the guys and girls at WJ plan for retirement. What I found was a bit old but seemed sensical. It looks as though there are many options w.r.t. buying and selling your stock. I believe the post compared Air Canada's 5% contribution with a 5% match by the company to WJ's 20% stock matching which offers you more options and flexibility. The gist I got was that it requires some savvy financial planning (skills I do not possess).

I was wondering if anyone from WJ could share how they are managing their retirements and if they have done any number crunching? Also do I read correctly that you are allowed to fly second in command from age 60-65?

Thanks very much

[Skyblazer]

I cant speak for everyone but generally after the shares are released (1 year after the purchase) most pilots diversify it. Ie sell the share and invest in other securities.

For me every quarter I sell all available WS shares and convert them into other investments.

Airlines stocks are a crash or a SARS or a major Terrorism event away from a decline so not many leave them as WS stock.

Other guys focus on paying off a mortgage first and then investing after that.

The key is discipline - it would be easy to spend all you save and at the end of the day be left with nothing.

SB

[CpnCrunch]

I'm not at WJ, but in general you should be maxing out your RSP contributions every year (as long as you can afford it). That is minimum you will need to have a comfortable retirement. You should start contributing to your RSP as soon as possible in your career, so you have a healthy retirement nestegg.

I'm not sure how the WestJet share purchase works, but I'm guessing that you have to pay taxes on capital gains and dividends. If you're not putting your retirement investments into an RSP you're basically giving the government extra taxes. You should max out your RSP and TFSA every year before even considering putting your money anywhere else. You can hold WestJet shares (and most Canadian and US shares) in both RSPs and TFSAs.

If you're not comfortable making these decisions yourself, get a financial advisor. All the major banks will sit you down with a financial advisor for free. My wife used RBC, and they seem particularly knowledgable. The disadvantage is that their funds have a higher annual management fee than if you do it yourself.

[skyhigh]

A lot of us do sell our vested Westjet shares fairly regularly (majority I talk to seem to do it every quarter). You can do it monthly if you need the funds so its up to you.

As for investing the funds, it doesnt have to be complicated. I use Index Investing. Its a very passive, hands off approach that I do a few times a year. In short, you just invest in a handful of Index ETFs that track the broad maket. For Example I split my portfolio 65/35...65% Equities, 35% Bonds

25% in VTI - Tracks total US stock market. It holds stocks like, Apple, Google, Exxon, GE, Johnson & Johnson, Chevron amongst hundreds of others.

25% in VEA - Tracks International Stocks like Nestle, Vodafone, HSBC, Novartis, Toyota and also hundreds of others

15% in VCN - Tracks Canadian Stocks like the 5 Big banks, CN Rail, Suncor etc

35% split evenly in Bond ETFs - XBB - Long term Govnt Bonds, VSC - Short Term Govnt Bonds, XSB - Short Term Corporate Bonds.

So with these 6 ETFs, I capture literally hundreds of stocks and not have to worry about 1 stock tanking and dragging my whole portfolio down.

You can read more about it here:

moneysense.ca

andrewhallam.com

canadiancouchpotato.com

Good Luck!!

[Go Guns]

I wish I had changed the unregistered share purchase to purchase TFSA shares.

At the very least you won't be paying capital gains on the shares you end up selling.

[TedStriker80]

Thanks to everyone for posting. It sounds like there are quite a few options available and I would need to get a lot smarter about investing if I were lucky enough to be hired. That or get a good financial planner as suggested. I'll go through those suggested websites to start. I hadn't even considered that you could hold your stock in RSP's.

Fly safe!