Many international school teachers don’t think enough about retirement.  And that’s understandable.  The whole concept can seem confusing.  Andrew Hallam, however, says it isn’t.  He says that those who fail to plan are planning to fail. That could mean eating dog food instead of gourmet during your golden years.

So, what are the top 10 tips for international school teachers to build a solid retirement?

Tip #1

Work at a school that allows you to save at least $18,000 USD as a single or at least $25,000 USD a year as a couple.

If you can’t save at least this amount, and you’re not just “experiencing” international teaching for a year or two, then go home or find another school. Otherwise, you might be eating dog food when you retire.

At private international schools abroad, you often won’t be contributing to Social Security (for Americans) or its foreign equivalents. Nor are you always contributing to a defined benefit pension plan, offering guaranteed income for life. Don’t glibly suggest that Social Security or your home country equivalent won’t be around when you retire. In one form or another, it will.

No, you don’t need to work at a top-tier school to save these amounts. Meet Andreas Clesle. He saves $20,000 a year teaching in Myanmar.

Tip #2

Work at a school that doesn’t FORCE YOU to invest in an offshore pension. How can you tell?  Ask this one question: Can I pull my money out at any time, without penalty? If the answer is no, find another school. These are usually expensive, inflexible products. They cost so much in hidden fees that the only person they make rich is the joker who’s selling the product. Unfortunately, many international school administrators haven’t caught on to the racket. When their recruitment pools start drying up, perhaps they’ll start asking why.

Tip #3

Pay off your student loans, car loans, and credit card debts before investing. Then, invest at the beginning of every month. Those who invest while carrying credit card debt are categorically insane. They’re paying interest of 18 percent per year (or more) and expecting to make 9 percent per year in the stock market.  Enough said.

Tip #4

Buy low-cost index funds. Avoid buying actively managed funds. Active funds are pricey.

The Alexander Beard Group is a favorite among financially illiterate administrators. The firm sells actively managed funds. But Jeri Hurd, at the Western Academy of Beijing, is one of the smart teachers who refused to invest. Including the company’s platform costs and actively managed fees, investors pay more than 3 percent per year. So if global stocks make 6 percent, investors will be giving away 50 percent of their profits to the firm. If global stocks average 3 percent in a given year, investors will give 100 percent of their profits to the firm. If you think bonuses, paid by your school, can offset this leakage, think again.

Tip #5

Don’t let anyone convince you to trade currencies. Trading currencies is not investing. It’s speculating. The only person who makes money, long-term, will be the broker or the bank. And they’ll be making their money from you, not for you. Here, I describe a woman at my former school. Her bank decided to trade currencies on her behalf. It’s a very foolish move indeed.

Tip #6

Diversify your assets. This means buying a variety of low-cost funds (preferably indexes), allowing exposure to a multitude of different markets: your home country stock market, international stocks, and a bond market product for added stability.

Tip #7

Don’t base investment decisions on economic outlooks or predictions. Most of them prove to be wrong. The average person listens to forecasts. Often, it’s their broker’s. But consider this. U.S. stocks averaged more than 9 percent per year from 1994-2014. According to Dalbar, the average investor in U.S. stocks made about 5 percent a year during the same time period. Why? The biggest culprit is behavior. They listened to their gut and investment speculators.   Remember what Warren Buffett says: “Stock market forecasters exist to make fortune tellers look good.”

Tip #8

Share your annual savings goal with your friends. Studies show that if you want to succeed, write down your goals and track your progress. If you don’t want to save enough for retirement, keep it all to yourself and ignore your expenses.

Tip #9

Write down what you spend each month. By writing down your spending, you’ll simply spend less.

Tip #10

Remember that you aren’t on a holiday. You’re working overseas. And your future is in your hands.

This top 10 list was submitted to us by guest author Andrew Hallam.  He is the author of The Global Expatriate’s Guide To Investing. He’s a columnist for AssetBuilder and for The Globe and Mail. He’s also the author of the international bestseller, Millionaire Teacher. He taught at Singapore American School from 2003-2014.

Check out the pension plan details of 100s of international schools on the ISC website.  Currently, we have 836 comments that have been submitted on the comment topic “Pension plan details” on our school profile pages. Here are just a few of them:

“There are 2 things: 1. Mexico has a “social security” plan, and you pay into that so you pay in for your years, leave, and you can come back when you are 65 to collect. 2. The school has a 13% matching program that you can collect 1 or 2 times a year, based on your choice. This is the retirement plan, but it is up to you to move the money somewhere.” – American School Foundation of Monterrey (Monterrey, Mexico) – 195 Comments

“For certain nationalities, the required contributions for staff members and schools into the Employee Provident fund are locked in until the age of 60, so people leave without this money and have no hope for ever retrieving it.” – Kodaikanal International School (Kodaikanal, India) – 53 Comments

“The school provides no pension, but 9% is deducted from the monthly paycheck to pay into IPS, which is sort of like Social Security. If a teacher retires in Paraguay, he or she will receive money through IPS. So for the most part, saving for retirement is in the hands of the foreign hires; they must have the discipline to do it themselves.” – American School of Asuncion (Asuncion, Paraguay) – 149 Comments

“The school has to do a pension plan because of being in Korea. They take money out every month for the pension. I do not know if the school matches it, but that’s what I heard. You also get a severance, which is one month’s salary for every year you worked at the school. They also started a 401k plan with a company, but the school does not match anything you put in.” St. Johnsbury Academy Jeju (SJAJ) (Jeju-do, South Korea) – 47 Comments

“The end of service bonus will be paid at the end, but it is better to ask to have it out and put it into the Eon master funds, in Australian dollars. When taken out, after you have left, you will have to pay tax, but the rate varies a lot depending on your age (more than 55) and how long the account with Eon has been open. Advice: open your account as soon as you arrive.” – Port Moresby International School (Port Moresby, Papua New Guinea) – 96 Comments