Job Discussion Forums

[ellamarie]

Just wondering if and how any of you are planning for retirement. Is anyone investing in an independent retirement account, stocks, property? If I plan to keep teaching overseas I probably need to start investing as it doesn't look like I will have a traditional retirement plan.

[naturegirl321]

Where are you from? I'm from the USA and started two IRAs when I was 21. One Regular and one Roth. I hven't contributed too much, I don't even have 5000, but I don't make much either. I've never had a full time job in the USA, just set up the IRAs, no fees, no problem.

My husband and I bought a flat a couple of months ago. Cash, all paid for, so I guess that's one investment.

Stock market, don't know much about it.

Our retirement plans are to try to buy some more property and rent it out in order to get a steady income and start our own businesses. But also, we're strict with finances, so saving is part of our plan as well. We know that we'll probably never retire to a first world country, but if we have property in Peru, we could easily live off about 400 USD a month.

[LarryK]

Since it appears that you are still in the U.S., stop by your bank and talk to an investment counselor.

As an overseas teacher, savings will be your primary source of retirement, so you want to put your money in something tax deferred. Open an IRA (choose traditional or Roth).

You can also open an account with online services like scottrade.com, where you can allocate your investment into stocks, bonds, etc.

If savings is your main concern and you plan to stay overseas, then you might consider initially working in Korea or Japan.

Other Considerations: wills, power of attorney, health insurance, long term care, and social security.

Wills - we don't like to think about it, but what if the worse case scenario happens. Have a plan and be prepared.

Power of Attorney: allows someone to act legally on your behalf, example, selling a car while you are abroad.

Health Insurance - most schools provide health insurance. Check your benefits. A serious illness and hospital stay can wipe out all savings if you are inadequately insured or have no insurance.

Long Term Care: too far off in the future for you to think about, but a vital part of retirement planning. Google the internet and you will see too many stories of hard-working middle class families who see a lifetime of savings disappear almost overnight when a loved one has to enter a nursing home. Insurance plans cover at home care in addition to assisted living facilities or nursing homes (www.aarp.com).

Social Security: If you don't pay into the program you won't qualify. Social security has arrangements with some countries overseas where you can continue to contribute while abroad and working as a teacher. Contact them for more information (www.ssa.gov).

Here's an MSN web site will some on-line tools and strategies for retirement planning: http://moneycentral.msn.com/retire/home.asp.

Advice: sit down one evening and write a short retirement plan with sections covering issues you can get started on now and areas to think about for the future.

[naturegirl321]

That's very good advise. If you're looking to save at high rates, try HSBC or www.bankrates.com

About POA, Power or Attorney, make sure it's SPECIFIC and not general. For example, My POA is very specific saying what the attorney is allowed to do.

[LarryK]

Tennesse Financial Planning Resources

There are organizations to help with financial planning in Tennessee. Some provide free or low-cost services if your income is low. The information below may help you find an organization to assist you and may help you learn how to tell when an organization is trying to take advantage of you.

see: http://www.hud.gov/local/tn/homeownership/localfaorg.cfm


HUD- approved housing counseling agencies

DebtAdvice.org - contact a member agency of the National Foundation for
Credit Counselors
MemphisDEBT

University of Tennesse Extension Service Publications on
- Financial management
- Family economics

Conexion Americas - financial literacy education and more
Hispanics in the Nashville area

Open up a Savings Account! Tennessee Saves serves to help Tennesseans save and build wealth using financial and savings education

Nashville Wealth Building Alliance - provides a Financial Stability Resource Guide for low to moderate income persons; coordinates free VITA tax preparation; and provides wealth building assessments and consultations working through the United Way and the 2-1-1 helpline services network. Call 211 today for information.

[Tim Trowbridge]

What you'll want to do will depend at least partially on your age and your current financial situation (i.e. current debt and savings). I'm not sure if you want to disclose that information here, but it may help you get more specific advice.

[ecocks]

will be your home country financial structure, pension system and tax law situation.

Americans have access to 401-K programs, annuities, insurance policies and various short and long-term investment plans. If your income is legal there may be some options at home for you. If your income is "black" you are probably doing like the earlier poster noted and considering local investments in real estate or (shudder) opening your own business operation (...like a language school, right? ).

Good luck.

[thelmadatter]

Unless the rules have changed in the last few years, you cannot contribute to an IRA unless you have earned income from the US.... I learned this the hard way when I did my 2004 taxes and had to withdraw the money I put into my IRA as that was the first year that all my income was earned in Mexico.

However, if that has changed PLEASE let me know!

[tedkarma]

I've been living overseas since 1989, teaching EFL overseas since 1992 and am technically retired.

My most reliable income is rental properties that I purchased and paid off courtesy of jobs in Korea, Taiwan and Saudi Arabia. In fact, I am only 57 and I can't start my Social Security payments for about five more years.

Property, yes, goes up and goes down in value, but my rental income stays pretty stable and has allowed me to take the risk of chasing other ideas - which I have been very happy to do - and quite successful in doing.

To me the stock market is a bit like Las Vegas and I tend to tell my friends that when I buy - they should sell. It has been a pretty reliable indicator so far . . . sadly.

Best advice: buy property, never sell it, keep it, rent it out. Don't spend the money - use it to buy more property, never sell it, keep it, rent it out. Don't spend the money. Use it to buy more property . . . Got the idea? It does work!

I'd like to chalk my success up to personal genius, but really - it hasn't been that difficult.

[ecocks]

[Tim Trowbridge]

Here's what Wikipedia says:

http://en.wikipedia.org/wiki/Individual_Retirement_Account

The maximum for an IRA contribution in years 2006 and 2007 is 100% of earned income or $4,000, whichever is less, for an individual under the age of 50. Individuals aged 50 and older can contribute up to 100% of earned income or $5,000 whichever is less. For 2008, the limits are $5,000 and $6,000 respectively.

In other words, if you don't have any earned income, you can't contribute to an IRA.

[ecocks]

is does the income have to be earned in the US?

Thel is saying it does, nothing I see says that.

[throwdownyourcrutches]

I think the key is earned and taxed in the US. You can earn quite a bit outside of the US and not pay any taxes on it due to the exemptions (almost 90K I think) for income earned out of the country. Since you aren't paying US income tax on the money in the first place an IRA loses a big advantage right off the bat and other types of accounts are equally appealing.

[Tim Trowbridge]

Yes, since there is an exemption for overseas income (it was 75K in my day, but maybe it's up to 90K now), unless you make more than this, all of your income is tax-free and not earned income. Or in other words, on the Social Security statement that you receive once a year, your yearly earned income will say 0 if you made all of your money overseas and didn't go over the exemption limit. Therefore, you wouldn't be able to contribute to an IRA.

[MELEE]

I was also not able to open a Roth IRA back in 1997 when I was working with a finacial adviser because all my money had been earned in Japan. So instead I had to put it into a mutual fund. I since closed that and brought Mexican property instead as I now consider Mexico my home.

I think a lot of the contractors in Iraq are being paid and taxed through US companies.