Savings?

[National]

So people have been talking about savings for retirement. I have been a bit surprised by what some posters have said is the bare minimum needed to retire comfortably. One post said the bare minimum was $15,000. I wanted to survey everyone to see what others think.

Is this $15,000 per person or for a teaching couple? At what age are people starting to save? What is the final amount people are aiming to have at retirement? Just curious what other ITs feel is safe. I know everyone has different ideas about what is comfortable, what age they want to retire at, etc. but I'm curious how other ITs are planning for retirement.

[mamava]

I don't think anyone can answer that easily--so really depends on the country you live in, personal circumstances, when you started saving, etc. As an American, looking ahead, the answer is "as much as possible." We've tried to live on 1 salary since we've been overseas. 20 years as public school teachers with 3 children meant that we didn't have much extra to put away. The best thing that we did, though, was start as soon as we got married in our early 20s. Now, even though it wasn't very much at the time and we've been hit hard twice by the crash and recession, it has made a big difference. The money that we've been saving overseas has made up for a lot and will come in handy now that we're in the college years, but we couldn't have made it up if we hadn't started small and early.

Do as much as you can when you can--backward planning helps. We found a counsellor that helped us figure out how much we would need in order to meet our future goals and then worked as hard as we could to get as close as we could to those goals.

[Helen Back]

First thing you have to do is think about how much you would like to retire on if it were today. Obviously, you need some idea where you might like to retire, but let's say you'd be happy with $50,000 a year for you and your partner and you plan on retiring in twenty years time. First thing you need to do is adjust the $50,000 for inflation. Let's say it's 2.5% year, which will mean you're going to need about $80,000 when you retire to match that $50,000 you're thinking about today. How you amass the finances to give you $80,000 a year is going to vary. Let's assume you invest in low cost diversified index funds. It's fairly well accepted that you can only draw about 4% from your investment per year and still maintain some growth (your money won't run out). So, if you want to draw $80,000 a year off your investment, you need to accumulate $2,000,000. If that is your target and you have twenty years to save it, you need to be saving about $4000 a month, every month for the full twenty years. This is assuming annual growth of 6 to 7% a year (dividends reinvested).

Possibly not the answer you were looking for, but it might scare someone into taking action now!

Pretty scary stuff, eh!?@!

[vincentchase]

Further to Helen Back's post, you need to exclude the value of your home when calculating the total value of your assets. This is a particularly important consideration for international teachers, given most of us are accustomed to living rent free during our working years. Unless of course, you budget to include rent in your estimated annual expenses during retirement.

[PsyGuy]

I agree with Helen, which is why many, many ITs take one of the following pathways:

1) Transition to WE so they can retire out with a pension.
2) Work in an IS environment (elite tier, Aramco/BAE, Switzerland) with with salary potential.
3) Save often and save a lot, essentially trading lifestyle quality now for the future.
4) Have already earned a pension/retirement domestically.
5) Plan to retire in a region with a very, very low cost of living such as parts of Asia and Latin/S.A.

[Helen Back]

It may look worse than it is for many of us. If you started overseas in your thirties, then you probably have a partial pension elsewhere. In some counties you can keep paying social security / insurance when you are overseas, so that you still fulfil the requirements for a full state pension. Both of these should keep pace with inflation, so what you need to do is work out how to fill the gap. I can tick boxes 3, 4, and 5 on PsyGuy's list.

[National]

Thanks everyone for your feedback. My husband and I are on track to hit our retirement savings goal, but most of our IT friends probably aren't! I always figured we were saving excessively, but it sounds like we are lucky to be doing enough. From my math, the $15,000/year represents a couple's saving needs in order to hit the $2 million mark for a comfortable retirement. Are others suggesting a couple should save $30,000/year? I guess this is my big question. We are lucky to be able to save about $55,000/year in our current positions, but in our first seven years of teaching we only put away between $10,000-15,000/year.

[vincentchase]

The math is pretty simple. Just keep saving until your investment assets reach a value of 25x your annual expenses. Then retire.

http://theescapeartist.me/2014/10/22/ho ... is-enough/

[Helen Back]

It really depends when you start saving.

My wife and I are early forties, but have only been teaching for four years total and basically went straight into international teaching. After the first year we've managed to save about $3000 a month and that has been across two locations, one in Asia, one in Africa. We know we can't let that drop, but so far it seems a reasonable amount to go for, and given our limited experience, our salaries are likely to rise in the coming years.

This is a very useful tool http://www.thecalculatorsite.com/financ ... ulator.php

[jbiersteker]

Read Andrew Hallam's books

[PsyGuy]

You need to assess your total retirement scheme. You dont need to save much at all if you already have a domestic pension and plan to or are in the process of building an overseas/foreign pension. Two pensions for each of you and you woudnt have to have any investments or personal planing at all.
If you are saving $55K/year you are near the top of the savings planing of most ITs. I am truly surprised how many of them have very little if anything.

[marieh]

\\I am truly surprised how many of them have very little if anything.

I was also surprised by this upon entering IT. My 20-something English teacher friends boast of 5-6 figure savings (after several years) in Korea and China, but I have met many, many ITs in their 50s with empty savings accounts. This doesn't make any sense to me, since the pay increase should allow one to save something.

To answer the OPs question, my husband and I strive to save 75% of our paychecks. A "safe" number for us is $1,000,000 if we follow the 4% rule, but more would be better.

[jstwatchin]

Put away 3000 $ a month??

Please, pray tell, how can anyone do this on an IT's salary? Including my housing and transportation allowance, I MAKE less than that - and I had to turn down the last 10 job offers I received because they were even lower than that... Salaries mentioned at all the sites I have seen are about comparable to what I make, not what I would Need to make to put away that much.

[dover2013]

There are a handful (well maybe a bit more) of schools where you can save 3000USD per month - listening to teachers at those schools for advice is a fruitless exercise unless you actually work at those places for a stretch. The reality is that teaching is not a moneybags profession anywhere in the world. Internationally, you can live the life of Riley and save as much as you could have done at home if you had had no life whatsoever outside of school. Or a bit more.

But then there are also international teachers who have been "lifers" in less financially celubrious locations who are happy 'til their dying day.

If you want to save a ton then do one of two things:

1) save regularly however much you can (could be 100 per month in some locations and 3000 in others) and put it into something that is an investment (could be property for example),

2) quit teaching and get a job that people do for money (any half decent teacher is intelligent enough to do this if they are that way inclined).

[wrldtrvlr123]

dover2013 wrote:
> There are a handful (well maybe a bit more) of schools where you can save
> 3000USD per month - listening to teachers at those schools for advice is a
> fruitless exercise unless you actually work at those places for a stretch.
> The reality is that teaching is not a moneybags profession anywhere in the
> world. Internationally, you can live the life of Riley and save as much as
> you could have done at home if you had had no life whatsoever outside of
> school. Or a bit more.
>
> But then there are also international teachers who have been
> "lifers" in less financially celubrious locations who are happy
> 'til their dying day.
>
> If you want to save a ton then do one of two things:
>
> 1) save regularly however much you can (could be 100 per month in some
> locations and 3000 in others) and put it into something that is an
> investment (could be property for example),
>
> 2) quit teaching and get a job that people do for money (any half decent
> teacher is intelligent enough to do this if they are that way inclined).
---------------------------
Saving $3K a month as a single does require that you be at a fairly high paying school and/or being living very frugally (or some place with a very low cost of living). Also, that you don't spend a huge amount on travel every summer as it is very easy to drop $10K or more on a summer vacation.

Places like ISBeijing would fit the bill. I'd be interested in hearing about others. If you are part of a teaching couple it makes it a whole lot easier to hit that mark.