Written by Jefferson Crew, MPS, CRCM
I’ve had the good fortune to fly for years with my father-in-law, let’s call him John, in his Lancair 320. When most people hear that a family owns a plane, they may picture a Gulfstream and champagne at 35,000 feet. Most owners I know live in the $200 hamburger world, where a serious passion carries real financial considerations.
They are more like John: doctors, business owners, former military pilots, and aviation lifers flying Cessnas, Mooneys, Cirruses or Bonanzas. Their concerns are practical: hangar rent, annual inspections, and current GPS databases.
The plane may be worth $50,000 or $500,000. Some owners use it for business and family travel. Others simply love to fly. That is why it belongs in the financial plan. A paid-for airplane still has a carrying cost.
The Cash Flow Trap in Retirement
Consider a hypothetical 70-year-old retired doctor and his wife with a $5 million SEP-IRA and a paid-for $350,000 airplane. He once flew 75 to 90 hours a year but now flies closer to 35.
The numbers look comfortable. A 5% return on $5 million is $250,000. He has no required minimum distributions at 70, but spending that return still requires taxable withdrawals. Assume he delayed Social Security to 70, his wife claimed early, and they receive another $80,000 a year. After taxes and Medicare premiums, they may have $255,000 to $260,000 to spend.
Now add the airplane. Hangar rent, insurance, subscriptions, fuel, maintenance, and reserves can total $35,000 to $40,000 annually. Owners also know the panel never really leaves them alone: a WAAS-enabled GPS, ADS-B In/Out, a second NAV/COM, or the next “while we’re in there” avionics upgrade. The airplane absorbs roughly 15% of after-tax cash flow.
Before retirement, that expense may blend into earned income. Later, it can force larger IRA withdrawals, reduce travel, trigger Medicare surcharges, or shrink the cash reserved for surprises.
When the Business Stops Paying
Suppose a 68-year-old manufacturer used a $400,000 Bonanza to visit customers and facilities. For years, the company paid $45,000 of legitimate aircraft costs. After he sells the business, that support ends. If his $5 million portfolio generates $250,000 and his lifestyle requires $200,000, moving that cost to his checkbook cuts his cushion from $50,000 to $5,000. One $20,000 inspection surprise puts him in the red.
Reframing the Flight Plan
Neither case points automatically to a sale. (On a personal note: Please don’t, John. He can only sell if the proceeds go toward building the Zenith CH 650B we have been eyeing. If that needs to become part of the inheritance plan, I will gladly help.)
Affordability alone does not settle the issue. Ask, “Does the airplane still fit the way you want to live for the next five to 10 years?” How often will you really fly? What costs remain when it sits? What maintenance is ahead? Is there an aircraft reserve? What happens if you lose your medical?
For retired and soon-to-retire owners, the airplane is rarely about status. It is about being a pilot. Years of training and judgement become part of who you are. So does the satisfaction of doing something difficult well. That identity carries a cost.
Putting the Aircraft in the Plan
Including an aircraft in a comprehensive wealth plan requires balancing cash flow, tax strategy, and legacy goals. At Central Trust, we stress-test your portfolio against these unique carrying costs. Whether you are navigating a business exit, transitioning a lifestyle asset, or planning your estate’s inheritance strategy, our team helps ensure your passion remains protected.
Let’s sit down and put your airplane in the plan.
