Last Tuesday, I received the first 500 copies of my book, Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School. 

Naturally, as the author, the publisher gave me a discount, but I still had to pay for them, and I feared what probably goes through the minds of many overly ambitious authors:  Will I still have 450 of these books collecting dust in a closet, ten years from now?

I took the books up to the school I teach at, and within ten days, more than 400 of them sold – with many of the buyers coming back later for multiple copies.

My school is a pretty big place – it’s the largest international school in the world, with more than 300 teachers.  But two of my friends (I’ll call them Peter and Jane) told me flat out:  We don’t want to read your book.

Now, I’m sure there are plenty of people in the world who wouldn’t want to read my book.  But this felt pretty strange.  I wasn’t asking them whether they wanted a copy or not, and we were at a party… without a book in sight.  Then Jane explained,   “We’re so far behind, financially, that we don’t even want to read it.”

That’s when I realized that there’s a demographic that my book doesn’t address.  What if you’re 50+ years of age, without any savings, and with no pension to look forward to?

Peter and Jane (both Americans) have taught internationally for their entire careers, so they won’t be able to collect U.S. social security.  Unlike most European or North American public school teachers, they won’t be collecting a teacher’s pension either.

They’re 50 years old, but they’re comparatively broke.  First, I want to tell you how broke they are.  And it might require a perspective switch on your part, if you’re living in Canada or the United States.

Here goes:  They have $180,000 in savings, and no house.

I can hear you right now, “Andrew, that isn’t broke… anyone having $180,000 isn’t broke.”

But consider this… the average retired American was receiving $1,177 per month in Social Security payments, as of January, 2011.  This amounts to a gross income of $14,124 per year.

Let’s assume that Peter and Jane were American based retirees who would receive a combined Social Security income of $20,000 a year. 

The problem is that they aren’t based on the U.S., and they won’t qualify for social security.  If they want to continue teaching overseas, and they want to create a $20,000 annual payout (which they could derive from investments) then they could purchase, upon retirement, an annuity that will pay them $20,000 a year….to replace what they wouldn’t be earning in social security payments.

Robert Wasilewksi, a money manager in Maryland, has a fabulous post on his blogsite, titled Create Your Own Pension where you can see what kind of annuity investment Peter and Jane would need for $20,000 in annual income.  In most cases, a retired couple would need to give an insurance company (the annuity provider) $350,000 upon retirement, to replace a $20,000 annual social security payment.

That’s why my friends are comparatively broke.  After working overseas for their entire careers, they only have $180,000 in savings.  Just to match stateside American couples’ social security checks, they’ll need to double the total value of their investments.

But it’s not all doom and gloom for Peter and Jane.  They don’t need to give up.  Here are a few options that might help:

1.  Leave For The United States

They could keep their teaching jobs overseas for now, but aggressively seek employment in the U.S.  Once they land a U.S.-based job, they could move back to the U.S., earning enough credits (ten years of work) to qualify them for social security.

 Financially, what would this move be worth?

 The equivalent of $380,000.

 After all, it would take a $380,000 deposit into an insurance annuity to provide the equivalent of a $20,000 Social Security payout.

2.  Start Living Frugally And Increase Their Salaries

International school teaching couples can save significantly more money than most public school teachers, if they choose the right places to work.  It might not be number one on Peter and Jane’s list, but teaching jobs at Saudi Aramco could allow them to save a combined $110,000 a year, while providing an extraordinary health care benefits package.  Even if Peter and Jane were extremely conservative, choosing to put the money in a guaranteed instrument averaging 3% per year, they would have an account value of $1.5 million after ten years.

You can see how I made the calculation above.  I took their current savings of $180,000, added $110,000 annually, and compounded the money for 10 years, at 3% annually.

If Peter and Jane bought an insurance annuity (at age 60) with $1.5 million, they would earn an annual payout of nearly $90,000.

3.  Retire Abroad

United States health insurance is a killer.  Private insurance is available virtually anywhere in the world, and my friends could benefit from much lower premium rates if they choose to retire outside of the U.S.

An added bonus might be the $1.5 million they could bring into a foreign country.  Immigration officials look kindly upon people bringing either skills or money into their economy.  If Peter and Jane move to a country with socialized medicine, they may not have to worry about medical insurance premiums.

But what if they still don’t save much money?

Options abound… for the creative.

They could retire in a country where the cost of living is lower.  I’ve written some articles on retiring overseas that could serve as a guide.

I’ve titled them How To Retire Rich…Even If You’re Not…

Perhaps Peter and Jane will see that their options aren’t as dire as they think.

And at some point – because I think it would help them – I’m going to slip them a secret copy of my book.

Millionaire Teacher, The Nine Rules of Wealth You Should Have Learned in School,

Live long and prosper!