If you’re an international teacher at one of the world’s high paying private schools, you might initially think I’m a driveling fool for making a ludicrous claim.
But here it is:
Most teachers at the world’s highest paying schools (such as Singapore American School, the International School of Bangkok, and Saudi Aramco) will eventually have far less money than the educators they left behind in their home countries.
They don’t have to fall short. But most will.
Teachers at home live a back end loaded lifestyle, while many international teachers enjoy front-end loaded privileges. Expatriate teachers, for example, often travel prolifically, live in relative luxury, enjoy higher salaries and pay lower taxes.
Like NBA basketball players, their rewards are up front.
Teachers at home aren’t exactly cash flush icons, but they enjoy back end rewards including Social Security (for Americans), Canada Pension Plan (for Canadians) and defined benefit pensions (provided by many public school systems). Relatively speaking, expatriate teachers can suddenly become prodigal sons and daughters holding half-filled tin cups when they retire.
If you don’t pay into these programs, you won’t reap their benefits.
Sure, these national, provincial or state benefits could be shaved in the future. But the world’s economic boat is a bit like Noah’s Ark. The hare can’t gloat when the tortoise’s end of the boat starts sinking.
Regardless of what happens, most public school teachers have greater capacities to swim.
When John Wiley & Sons sent a copy of my book, Millionaire Teacher, to The National Post’s Jonathan Chevreau, he didn’t want to read it. As a veteran finance writer for decades, he views public school teachers as automatic millionaires. And he’s right.
“When a review copy of Millionaire Teacher first landed on my desk, initially I didn’t pause to look at it… From where I sit, any career teacher who makes it to age 65 is already a millionaire, since the rest of us would need $1 million of capital in order to spin out an annual $50,000 from it.
So my initial impression was that the very phrase ‘Millionaire Teacher’ was redundant.”
So…do international teachers need one million dollars in capital to float like a teacher in Pennsylvania or British Columbia?
Nope. They need a lot more.
Besides their pensions, the average retired public school teacher has a few other goodies lined up as well:
- A mortgage-free home (and sometimes a second rental property)
- Between $100,000 and $200,000, or more, in investments
- Partial Canada pension plan payments (or its U.S.equivalent, social security).
International teachers need to create backward design models to plan for similar benefits. And it can be done. We can have the front end loaded thrills and the back end loaded benefits—in a different form.
But we need to follow a few important rules:
- Ensure that your investments are separate from your insurance policies. Investment products that couple the two, should certainly be avoided.
- Don’t pay sales charges to buy actively managed mutual funds.
- Save like crazy.
You don’t want to rob Peter to pay Paul—especially when their names are synonymous with yours.
If in doubt, go back to rule #3:
Save like crazy.
If you’re living in a dream world, it could turn into something far less pleasant.