International Teachers: Something To Ponder This Summer

 

 

Between January and May, I visited 39 schools in 11 different countries. 

I gave talks about saving and investing.

I met wealthy teaching couples with kids.

I also met two school superintendents in their 60s who made a dark confession.  They had earned a lot of money. They looked rich, based on the cars they drove, the houses where they lived and the vacations they enjoyed. But in each case, they had very little money.

Who has money?  It’s almost impossible to know. I’ve met wealthy kindergarten teachers.  I’ve met piss poor principals.  International teachers, in fact, have shocking wealth disparities.    

 

Looking For A High Paying School?

You might think the school’s pay package is what matters most.  But that only goes so far.  I’ve met poor people at high paying schools.  The second richest teaching couple I met work in Ethiopia. They have two children, and they have more than $2.8 million USD.

The richest couple I met worked in Singapore.  Now retired, these parents of two children have a net worth that I believe now exceeds $6 million USD.

 

Most Overseas Teachers Will Have Less When They Retire

I tell the story of a former Singapore teacher.  She says, “Andrew, please tell my story.”  So I do.  She earned a high salary, first in the Middle East, then in Singapore.  She lived well.  She traveled extensively.  She adorned her apartment with beautiful things from around the world. 

She’s 70 years old.  She rents a room in somebody else’s home.  She didn’t work for long, in the United States.  So this American teacher earns a pittance from Social Security.  Despite her fabulous life, she now languishes far below the U.S. poverty line. 

 

Are You Struggling From Expatitis?

Expatitis isn’t a common medical term.  But if you’re an international teacher, chances are either you or someone you know is infected.  It’s easily diagnosed.  Symptoms get posted on Facebook. 

Fortunately, it doesn’t hurt—at least not in its early stages.

Unlike bronchitis, arthritis, appendicitis or colitis, expatitis is rather pleasant. Afflicted individuals get addicted to five star holidays, manicures, pedicures, massages, expensive dining and entertainment. 

But expatitis creates delusions.  It’s much like drinking champagne underwater without checking your air supply.

Symptoms creep up. 

The better the teacher’s financial package, the greater the risk of contraction.  I’ve been giving financial seminars to expatriates for more than a decade.  When I ask people to estimate their retirement expenses, their needs vary.  And I expect that. But here’s the irony.  Those reporting they need the most money are usually saving the least.

 

How Much Money Will You Need?

It’s silly to say how much money you’ll need to enjoy a comfortable retirement.  That depends on when you retire.  It also depends on where.

I met a retired American couple in 2015.  They weren’t teachers.  They currently live in Mexico.  They didn’t save a penny.  But they worked in the United States their entire working careers. 

Each month, they receive their Social Security checks.  Combined, they get $33,000 a year.  It’s tax-free.  That isn’t a lot of money.  But if you’re an international teacher, how much money will you need to match their level of income?  If you don’t contribute to Social Security (or another home country government pension plan) you’ll need an awful lot.  

How many mortgage-free rental properties will you need to provide you with $33,000 a year, after taxes, management fees and upkeep?  How much will you need in the stock and bond markets to provide $33,000 a year, indexed to inflation? 

You can find answers here.

In each case, it’s more than most people think.

Some international teachers live well today, and they’ll retire well.

But most contracted Expatitis, many years ago.

In August or September, a batch of new teachers will arrive at your international school.  Many will be right off the boat.  It might be their first international job.

Take those teachers under your wing.  Help them with their futures.  Convince your school’s administrators to initiate (or support) financial teach-in sessions.

If these teachers plan for their futures, they can soar.

But those who fail to plan really do plan to fail. 

 

Andrew Hallam is the author of Millionaire Teacher and The Global Expatriate’s Guide To Investing.

The latter book’s second edition, Millionaire Expat gets released December 26, 2017. 

You can pre-order the book here.





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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12 Responses

  1. Jen says:

    I wondered about whe to put my post-which is part sharing, partly need for reassurance and actually is something I have written about before.
    I am in despair…yes it sounds dramatic and I suppose it is! I bought Global expats guide to investing the minute it came out-I read it cover to cover and within one monthly opened a platform account and started my portfolio. Then when coming back to the M.E this year I found I had left my copy in Spain. So I decided to buy the second edition of Millionair Teacher. Iota arrived yesterday-I started reading it and cannot get passed page 32-a sinking feeling fills my stomach. and I feel a bit panicky…why….I AM LUCY –the Lucy on pages 31 and 32–(well not literally of course…but I mean like the story Lucy I only started my portfolio at age 46! Except of course for the investment I had in South Africa from a younger age). So this makes me think again that perhaps I started too late? I know the saying-better a crust of bread than no bread at all… I know how Andrew has on this very site pointed out that one can and should invest at any age…I even asked AES to write articles on their site for expats starting to invest in their 40’s, 50’s and 60’s which they did….but somehow I have got spooked reading this. Has anyone got some reassuring words or an inspiring tale of an expat who has managed to build up a good enough portfolio from only starting investing later on….I want to have the courage to read further. ( And I am eagerly awaiting the release of the second edition of my most favourite all time book-Global expats guide to investing).

    • Hi Jen,

      Thank you for sharing this. I hope you’re feeling optimistic soon because there is still plenty of time and hope. As an expat, your world is bigger than the world you came from (it’s like that for all of us). Most people don’t think about international retirement options. But we do! Let’s say somebody retires with $1 million in Toronto, Canada, or Manchester, England. That money will afford them a certain lifestyle, upon retirement. But they could enjoy a similar (if not, better) lifestyle with a portfolio of $500,000 if they live in a place like Lake Chapala, Mexico, for example. If you started to save late, you’ve lived a bit of a “front end-loaded” lifestyle. But if you think carefully about where you retire, you could also afford a back-end loaded lifestyle, giving you the best of 2 worlds. I hope you find this story inspiring. It’s one of many possibilities. https://assetbuilder.com/knowledge-center/articles/is-mexico-the-worlds-best-place-to-retire

      Cheers,
      Andrew

    • toony says:

      Jen,
      It’s good to be thinking about your retirement planning but don’t let it overwhelm you 🙂
      46 is not even close to being too late – have been helping a work colleague with a DIY portfolio. He’s 58 with compulsory retirement in 2 years! Crunched some basic numbers with the modest savings and he should be ok if stick to the plan and save hard next couple of years.
      .
      The key is is to keep your portfolio/retirement planning simple and efficient (which Andrew does a fantastic job in plain language in his book as you already know).
      .
      My best advice – think about things you can control (eg savings rate, costs) and simply ignore things you have no direct influence over (eg. market returns, interest rates, next UK Prime Minister etc). All the portfolio in Andrew’s Books are very efficient, incredibly cheap to run and easy to maintain. Therefore the main thing you need to focus on is your savings rate!
      .
      Savings rate is key. If you started with $0 and able to save:
      – 50% of wages -> retirement possible in ~17 years.
      – 66% of wages -> retirement possible in ~10 years.
      – 80% of wages -> retirement possible in <6 years.
      These numbers may seem high but very possible for expats in a low/zero tax environment and low cost of living environment. I don't know your current financial situation but retirement in 5 years may be possible if you trim expenses down and started adding 50% of salary to existing portfolio every month. Does retiring in your early 50s sound good to you? 🙂
      .
      http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
      (Great post about savings rate and early retirement from Mr Money Mustache)
      .
      I'm eagerly wanting for the 2nd Global expat book too! 🙂

      • Jen says:

        Tx for the reassuring words-I am now 48. Having come back to ME after a six month break—which I feel is essential to do-life is about the journey really-I am investing as much as I can. It is true that in two years with Andrews plan I created a nice pot-just not enough-so now–I,m intrigued-instead of the 60% I invest of my salary-mayb I,ll try increase that. Still can’t read further than page 32 though–just hearing people doing from age 9,11 and 19….w ell I have to wait for my distress to disappear and objectivity to return!

        • Jen,

          Read past page 32! Most people don’t start saving until they are much older. The average American, in your age bracket, has about $70,000 in savings. https://www.fool.com/retirement/2016/06/27/heres-how-much-the-average-american-has-in-an-ira.aspx

          Cheers,
          Andrew

          • Jen says:

            I have woken with an ephiphany!!! I am a millionaire-I can call myself a The Millionair Nurse-I have been so focuses on my money as an expat and investing offshore I overlooked that in South Africa that since I invested since my twenties I have over two million South African rands—-now I know the rand is a weak currency so it is not worth much if I moved it from SA–but if I went back there..well my early investing did pay off. I have been so focused on what I did not do as an expat that I got scared off my other people.s experiences. And thanks to your book Andrew I built up a quarter of a million portfolio in GBP in 2 1/2 yr’s. Instead of feeling the way I do…actually really I could be an inspiration for others-if I in.2 1/2 yr’s could do that from age 46-48 then so can others. I cannot compare myself to what others have achieved or done-I must compare myself to what I achieved and what I started from!
            Today I am going to continue read the book!!! Also I think we worry so much about retirement because the world is so different it is so easy to be overwhelmed and panic. Thanks Andrw-thanks Toony.

          • Wow Jen, those are some champion-level savings!

            The world is different. But in so many ways, it’s different for the better. I just wrote this, for my book, Millionaire Expat:

            “Plenty of British investors worry about Brexit, their elections or whatever disruption de jour might be taking place. But as with any country, there have always been disruptions. Compared to The Great Depression and two World Wars, Brexit is nothing more than a 10 year-old child’s tiff.
            If an investment were built to replicate Vanguard’s Life Strategy 60% Equity Fund, it would have averaged a compound annual return of 7.9 percent per year between 1900 and 2016. That included The Great Depression, World War I, World War II, The Falklands War, The Gulf Wars and “The Troubles” in between. That would have turned a one-time £1000 investment into £6.76 million.
            If that same £1000 were invested in 100 percent stocks (like Vanguard’s Life Strategy 100% Equity fund) it would have turned into almost £22 million.”

  2. Oz says:

    Very good points. Not just for teachers! Expatitis is prevalent in all demographics of expat. I had a boss earning 400k a year who got let go at the age of 58 and is desparatly looking for a job because he can’t afford to retire!
    Once you realise you are suffering from expatitis it is important to avoid the quacks touting friends provident and other expat financial “cures”!!

  3. Oz says:

    Will you have a Kindle version of the new edition of expat millionaire? I’d love to get a copy but the shipping to Singapore is ridiculous.

  4. toony says:

    ‘Expatitis’ and ‘Afflueza’ are rampant in the UAE! Local newspaper has a never ending stream of expats seeking help after getting caught in the deadly debt spiral. Many cases of people earning $30-50k+ USD a month (yes, per month!) living paycheck to paycheck!!
    .
    Told the doctor to double my dose – the shots before I arrived are holding up well 😉

  5. dhaive sharma says:

    Hi Andrew, only just stumbled across your website yesterday and have decided to get started ASAP. Ordered both your books on Amazon and look forward to reading them this week.

    I’m 27, UK resident and currently teaching in the UK and am leaving to teach in China for 2 years. I am starting to put money away into a lifetime ISA for a deposit on a house and then will continue until retirement. In addition to this, I was thinking of creating a portfolio of ETFs.

    Given my current status I believe a TAD direct investing account would be my best bet? However, to avoid tax would a stocks and shares ISA be a good option for myself? I currently have about £10,000 to invest.

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