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[Seth]

This is a question for the long timers, specifically for those from the US as we have don't have paid pension (not much, anyway) or health insurance:

How are you saving for retirement and/or health insurance while teaching abroad (specifically poorer countries)? Obviously our employers don't offer a 401k. Are things like IRA's possible while teaching overseas?

This weighs heavily on my mind and is the only reason I don't take teaching as a career more seriously.

[veiledsentiments]

Well Seth,

I have managed to retire in my early 50's, but this was my second field. I had started out in the business area, so I moved to EFL with one good asset - a house. I was able to rent it out while I was gone, so the rent paid the mortgage. And, it appreciated significantly. Plus I was fully vested for Social Security - though at the bottom of the scale. (which by the time I collect it in my mid-60's, it will probably not even cover the rent)

Personally I don't see how a teacher in the poorer countries would ever be able to retire in the US in this field. I spent my time in the Middle East, where the pay was significant and tax free. Next my business background had given me a knowledge of investment. So, I was able to do my own investing, rather than just dumping savings into Mutual Funds, which did significantly worse than my individual stock and bond choices when the market tanked. Next you have to live in one of the cheaper, more rural areas where living is cheaper.

If you are single and wanted to retire today, I would say that the minimum you would need invested in income producing investments would be about $500,000. This would be living comfortably, but frugally in mid-America. The biggest problem - and the wild card - is health care. You have to find a private insurer and once you hit 50, the premium goes up about 25% a year. This is for a policy that will cost between $250-300 a month for a single person - and it only pays for about 60% of your medical costs. So, if you have any medical problems or are on any medications, this can easily cost you another few hundred a month. The whole medical situation is out of control in this country. I have calculated that before I am eligible for Medicare, at the annual rate that the premium has risen every year for the last 5 or 6, it will be over $2000 per month - which is signifcantly more than double what SS will be paying.

In this field, the only real retirement option for those that work in the low paying countries is to retire in some cheap country or to continue to teach until you drop in the traces. Just MHO

VS

PS, you can not do IRAs and you wouldn't want to anyway. Their only actual use is to avoid paying taxes on US earned income (not investment income) - of which you would have none!! So, just invest the money yourself - and then you can get to it easily any time.

[Rice Paddy Daddy]

Interesting comments.

I remember back in Canada in the 1990s the big craze was Mutual Funds.
I wonder if they're as popular.

I opened up DRIP accounts - Dividend Reivestment Programs.

I've created my own 'mutual fund'

[Seth]

health insurance is indeed out of control in this country. the first time i had a job with health insurance in 2001 (i had two jobs prior that didn't offer any at all), the premium i had to pay was 40 a month. that last job i had with health insurance (a few months ago) i had to pay 120 a month, and i had less benefits and a $1000 deductable. the funny thing was i was working for a hospital filing medicaid claims and other forms for people who didn't have insurance. now i don't have any insurance even though i work full time...if i get sick or in an accident i'm SOL.

but i don't want to turn this thread into a healthcare debate.

i've done little research on IRAs and i know that if you consistently put in around $160 a month you'll have $800,000 to a million after 25 - 30 years (though i could be wrong). but as you say, i can only do that when earning money in the US. it seems that there should be something i could invest in freely that would have the same kind of compounding interest. or possibly investing in the chinese stock market or something like that.

[veiledsentiments]

You're right Seth, there is no help in discussing health insurance. It is just something that you have to have if you have any assets. If you have nothing, you can get free care from Medicaid, but if you have anything, the hospital can take it all. A serious illness requiring extended care with time spend in surgery, intensive care, and a long hospitalization can run through every penny you have spent your whole life saving - in just a few short months.

You are perhaps a bit confused about IRAs. They give you nothing extra that you can't get from buying your own stock and mutual funds or CDs by yourself. Most IRA are just stock funds anyway. There is no guarantee on any of them. You could put that $160 a month into an IRA for 25 years in stock funds and if they are mismanaged, at the end you have maybe not even the $50,000, you put in. It's a c r a p shoot. The safest IRAs, and naturally the lowest yields, are those done with bank CDs. But, again, just do it yourself. IRAs are nothing magical, they are merely a tax dodge - or perhaps more correctly a tax 'deferral.'

There is nothing that an IRA does that you can't do yourself. You can take that $160 and invest it in Mutual Funds, stocks, DRIPS, (I have used these extensively), corporate bonds, REITS, or very carefully - into Chinese stocks. But, I must warn you that I know a few people that have lost a bundle on the Chinese stock market.

For your retirement savings, stick to the safe and conservative investments. Only gamble with the extra funds you may have. But, the main thing is that you have to do something and not just think about it. Even if you put it into a bank back home.

VS

[PAULH]

Seth

for what its worth

I am living in japan and paying into offshore mutual funds which are located in the Channel Islands in the UK. Have been paying into the UK.
Some of these funds are not available to US investors as they attract taxation if you take them back to the US so its matter of sitting down with a financial advisor. i am not an American nor an investment advisor but there are a number of avenues, including real estate, to sink your money into as well as IRAs. Since coming to Japan I have bought investment real estate, with a tenant now paying off the mortgage.

Generally speaking working in countries like Thailand or Vietnam you will be on third world incomes and not be able to save enough to fund a US pension- you would have to consider countries like Taiwan, korea or japan, where incomes are higher.

It can be done, but you have to make sure you buy the right package, get the right advice, and look for a fund suitable for expat Americans wanting to fund an offshore pension when they retire, and/or transferable to an IRA.

[jobe3x]

Seth,

Have you considered just not going back to the U.S.? If you consider teaching english as a career, you may have to face the fact the fact that you can never come back to the U.S. and maintain the same quality of life you had overseas. The U.S. is very expensive place to live. If you return to the U.S. with whatever money you managed to save and invest, you will be faced with dealing with higher costs of living in place where people make signifcantly more money than you. Also, the money you saved overseas has less buying power in the U.S.