How much money?

[joe30]

The problem with only drawing down 3-5% is that you WILL die eventually. You don't really want to die with $500,000 or more in the bank. The optimum solution of course is to die the day that your money runs out, but no one can plan it that accurately.

I think from age 65-75 (i.e. when you will be most fit and active) 7% is fine. If after age 75 you're still feeling fit and healthy, maybe dial it back a bit so you'll have enough to get you until 90 (this will mean taking an income cut, of course).

It's true that it's more of a gamble if you have no state income to fall back on. UK IT's have an advantage here. AFAIK anyone can move to Europe, contribute to the national scheme there, and get a pension after a decade or two. But working in Europe has its own large disadvantages, namely the high cost of living and the women are much harder to get into bed. I wouldn't go to work in Europe just for the pension alone, that's for sure.

Remember to factor in any inheritance you might get too. Some people are uncomfortable discussing this, but if you're an only child and your parents own a house, the chances are that house is going to be yours someday, and will be a big asset when it comes to retirement savings.

Kinda disagree about the merits of property investment simply because property in the big European and American cities is priced extortionately these days, plus it's more difficult to get a mortgage when you work overseas, and the interest rate on said mortgage will be higher than if you were using it as your principle residence. On top of that, you're going to need to employ a property managing agent if you rent it out, pay for buildings insurance and repairs etc. I'd rather invest in low cost tracker funds personally as they don't require all that management and are easily sold if an emergency happens and you need some quick cash.

Back to the original topic though - I don't think the $30k average IT salary really cuts it at all to make a decent retirement. You either need to go to an area that pays well (i.e. not Europe) or move into leadership for more money. Preferably both. Or else be one of those elite IT's that land a job at a first tier school, but only a few will ever manage to do that.

[sid]

Different perspectives again. I absolutely don't mind dying with money in the bank. There are people and organizations I would love to leave it too.
I'll use it while I have use for it, and give it up when the time comes.
Never count on an inheritance as part of your plan. You never really know if or what you'll get. They may have less than you think. Or there could be a falling out, remarriage to a gold digger, bingo addiction, a Nigerian prince, expensive health event. Not to mention it's their money, and they have the right to spend every penny.

[chilagringa]

Yes, I would rather save more money and risk giving it to a worthy cause, like family, Planned Parenthood in Mike Pence's name (or the 2065's equivalent of Mike Pence).

How much does having children come into money projections? I'm at that 30-something juncture between having kids or not, and I wonder about money as well as hippie-dippie stuff like the carbon footprint of my offspring.

[sid]

Children are a huge financial piece. You'll immediately need to spend more on a regular basis, lowering your ability to save. And there will be long term implications for occasionally needing lump or large sums like for braces, class trips, university, setting up a first apartment, wedding, etc. The desire to help your children runs deep and doesn't end at 18. It's still nice to have them.
To return to the question of counting on an inheritance, if your beloved benefactor used the same methods recommended by some posters to save for and spend through their retirement, it seems quite doubtful they'll have much left for you. A simple reverse mortgage would boost their lifestyle considerably, and completely scupper your inheritance.

[joe30]

Of course they have the right to spend everything, which is why it's important to consider the sort of character of your immediate family members.

To make it clear: I absolutely agree someone should spend their money as they see fit. Personally, having come from a working class family that doesn't own property, I'm not getting much anyway. I was more talking about that IF your older relatives have a lot of assets, and they're the kind of people who won't spend them (for example, someone like sid - who states he's happy to die with money in the bank), then you can reasonably assume you'll have something to put towards your retirement funds.

I did not mean that one should sit around waiting for older relatives to die, or be bitchy when they decide to spend their money on a round the world cruise etc. But it's a fact of life that we all die eventually, and there's no harm in considering the most likely outcomes (which is that you'll outlive your parents, and you'll likely get most of their estate).

[Overhere]

chilagringa wrote:

> How much does having children come into money projections?

They should have a huge impact, on both your spending and saving habits. My kids are older now and I sometimes look back and am amazed at how much they cost and where I would be financially without them, not that I would change anything.

[Yantantether]

Joe,

Brit overseas teachers only need to pay class 2 contributions which is significantly less at than 3 pounds per week.

[vincentchase]

I'll add that spending less is more effective than earning more. Largely because you'll need less investment income to cover expenses when you do retire. You also have more control over how much you spend than how much you earn.


sid wrote:
> After paying taxes and fees along the
> way, that 5% total annual return is a safe-ish assumption.

I'm assuming this is 5% real return (after inflation)? Even so, a consistently higher RoR can be achieved with a little bit of research. Long term stock market returns are 7% (10% before inflation). Fees should not exceed 1% and if they do, then expect to be in a managed fund which consistently earns 3-5% above the benchmark (or index funds after fees). If it's not, then exit immediately.

Almost every financial service that visits international schools falls into this 'avoid at all costs' category. A couple of books by Benjamin Graham would be time better spent than entrusting your hard earned money with shady financial services.

Likewise, taxes can be largely minimized and sometimes avoided, legally, depending on your nationality and residence. Again, a strong commitment to due diligence would be required.

Kids aren't that expensive. Those with kids tend to spend less on socializing (restaurants, bars etc.) and move around less. Plus if you're at a decent school - flights, insurance and most education costs will be covered. So things tend to balance out. Plus, kids are pretty damn cool. But as this is a teacher forum, I'll avoid further blasphemy.

[sid]

Yes, I intend the 5% as an all-in overall realized annual gain, after fees, taxes and inflation. And many investments can earn more, but my point is that for planning purposes we shouldn't count on earning more. One can hope, but just like we don't count on winning the lottery, we don't count on 10% returns. Stay in the market and you'll see those some years, just like some years you'll be lucky to earn 3%.
Kids are pretty darn cool.

[PsyGuy]

Will only add that a 5% return as @sid indicated is a very generous rate of return, and would have to be before fees. Stocks generally have a 4% return, Bonds 2% and instruments 1%.

Real property is not an investment, its a business anyone who says differently is trying to sell you a get rich quick scheme. There is nothing guaranteed about real property.