I don’t join the leagues of journalists suggesting there’s an upcoming retirement crisis. That sort of headline makes great copy, grabs eyeballs, and those eyeballs draw advertising dollars to the highest bidders.
But I do know this: most international educators retire with less disposable income than the teachers they left behind in their home countries. Social Security, for Americans, is a powerful (often belittled) force. A couple of American teachers spending a career overseas would need about $1.5 million in investments (in 2024) just to provide what equal stateside earners would receive from Social Security. Yeah, just Social Security.
Defined benefit pensions are another matter. While they vary in their compensations, the typical Canadian teaching couple, for example, who worked in Canadian public schools for their entire careers would have more retirement cash flow than the vast majority of international educator couples. Most Canadian public school teachers also have investments (RRSPs and TFSAs). Some even have second homes, putting the comparable bar (almost) out of reach for most international educators.
But this doesn’t mean international educators can’t enjoy a fruitful retirement. We can. And we do. But we need to plan. We need to save. We need to invest effectively. Americans (especially) should also maximize their taxable efficiencies.
Some international schools (countries) offer pensionable benefits. A few even offer Americans the privilege of contributing to Social Security. These opportunities shouldn’t be overlooked.
My good friend, Jeff Devens, created the first financial survey for international educators. I helped a bit.
We know the survey isn’t perfect. For starters, teachers often move around, spending time in Europe, sometimes in Asia then bouncing to the Middle East. In future surveys, we’ll try to specify those locational variables, instead of just asking people about their nationalities. As it stands, our survey says, “North American passport holders have median retirement savings of X, while European passport holders have median savings of Y.” But that says little about where they are working.
Before digging into some of the numbers, let me offer a caveat. Plenty of people have seen these results and said, “Yay! I’m doing better than the average international teacher my age!” But that might not be a cause for celebration. If you drown while swimming across a lake, would you celebrate the fact that you made it further than your friends?”
So let’s dig into the data. Our survey included 1,143 international educators around the world.
How much money are international educators saving each year?
The median amount international teachers are saving is $22,500 per year. All figures are in USD. That differs, of course, with age and marital/partner status.
Married couples are saving a median of $27,500 per year.
Married couples with children in the home are saving a median of $22,500 a year. Married couples with children out of the home are saving a median of USD 32,500. The difference accounts for the fact that kids cost money, and by the time children are out of the home, teachers are typically older and better compensated, financially.
I’ve long suspected that married couples without children “adult later,” when it comes to saving for their financial futures. Children, perhaps, bring a sense of urgency and responsibility to the mix.
Consider married couples without children who have worked overseas for at least 16 years. They save a median of $32,500 a year.
In contrast, their married counterparts who have worked for at least 16 years overseas (who have children) save a median of $42,500 per year.
Single educators (more of whom are younger) are saving a median of $12,500. Singles with children in the home are saving a median of $22,500.
Single educators without children, who have been overseas for at least 16 years, are saving a median of $17,500. Their single counterparts with children in the home (and at least 16 years experience overseas) are saving a median of $20,000 per year.
Singles with at least 16 years of experience overseas, and with children out of the home, are saving a median of $36,250 per year.
Based on the data we have, educators with children appear to save more. That might be a result of the added responsibility placed on themselves and their children’s futures.
When looking at “outliers” however, the highest saving couples are those without children (as you might expect). But based on medians in every comparable category, the responsibility of having children appears to juice the urgency of saving money for the future. Typically, people with children save more for retirement than people without children, when adjusting for age, marital status, and equal experience teaching overseas.
How much money do international teachers have saved for retirement?
The median amount international teachers have in retirement savings is $250,000. That differs, of course, with age and marital/partner status.
Married couples have a median of $350,000. Singles have a median of $125,000.
Married couples with children in the home have a median of $250,000. Married couples with children out of the home have a median of $750,000. The differences are accounted for by the relative ages of these couples. Those with children out of the home tend to be older. As such, their investments have also had more time to grow.
Married couples without children have a median of $250,000. But married couples above the age of 51, who don’t have children, and have at least 16 years of overseas experience, have median retirement savings of $600,000. Their equal counterparts with children (16+ years experience overseas, aged 51 and older) have median retirement savings of $1.13 million.
Once again, children appear to enhance savings rates and overall net worth.
The wealthiest outliers are still married couples without children. But they are rare.
Having children, overall, appears to help boost savings rates and wealth.
You can access the visual results of this survey at this link. It’s interactive, so you can select different variables (ages, marital status, experience overseas, etc.). But be sure to continually “refresh” the page after making your selections.
This article was submitted by Andrew Hallam, the author of Millionaire Expat: How To Build Wealth Living Overseas, and Millionaire Teacher.
