International Schools retirement plans thoughts?

[newboygirl]

Hi All,
I am wondering if anyone knows a bit more about schools that offer these awful teacher retirement plans through Alexander Beard Group or Raymond James. Why do they offer these plans when in reality all they really do is take unsuspecting teachers hard earned money. The fees for these ridiculous so called retirement investments are upwards of 6-7% annually. Why do the Council of International Schools and those kinds of organizations back these terrible companies? I know schools worldwide use them to try to "help" teachers save for retirement. The so called help really only creates quite the gravy train for these companies. They charge each teacher $500 to put the initial investment in imagine when a school gets 10-20 new hires a year that is a lot of free money for these companies yearly. Do the schools get a kick back from them? Why do they offer them and even put into their teaching contracts forcing a teacher to lose an immense amount of money over time? I feel like international teachers are prey to these companies because it is also ridiculously hard to get out of the investment without paying a very high surrender fee. Does anyone know why so many intl schools have signed up for this plan? Is it purely financially driven because it certainly does not have the teachers best interest in mind?

I think as a whole international teaching community we need to get this practiced stopped asap. Do administrators not know that their teachers are being ripped off by these so called retirement plans they are offering? Do they care? I think first and foremost it needs to stop being written into teachers contracts. It is our money we should be able to invest it when and where we chose.

Just wondering what others think and have found at their schools that do offer these "retirement plans" aka Annuities. Does your school let you get out of investing with these kinds of companies if you have a retirement account in somewhere else that does not charge these insane fees? In the end the individual teacher makes absolutely no money on their investment and really over time loses money on their investment while these companies and CEO's rake in millions upon millions of dollars yearly off the backs of unsuspecting teachers.

Any thoughts? Does your school force you to do this? Have you been able to get out of it using another retirement investment you have elsewhere?

We must be financially literate as international teachers or we will keep being prey to these schools and companies that insist on us investing in them.

Thanks for your thoughts and ideas.

[Cheery Littlebottom]

I once complained to my director as some well meaning person in the school sent round misleading ads about the British pension system devised by a similar company, and trying to scare people into opting into this sort of rubbish.
However, my school doesn't force us into anything and the person who sent the info around was just trying to be helpful.
Yup, you are right. Those companies are shite and prey on people they think are ignorant of investment practises.
They are legal, and they do resemble many UK style investments, but they are still shite.
Totally with you on this one.

[nathan61]

It is really too bad if they are pushing these plans. My school had a company they worked with, but thankfully the former director sort of recommended we not use it. Probably much better off investing in index funds or anything with a lower expense ratio!

[gengrant]

School I am moving to gives you "retirement" of 6.5% of annual salary at end of contract year (paid once in last pay of the year) and you can do what you want with it...invest on your own, spend it, roll around in it, or burn it.

It's not a lot of money, but it's better than no money towards retirement at all.

[jstwatchin]

So what do you guys use to prepare for retirement if your school does not offer a pension plan? As an international teacher I can no longer contribute towards my public teacher retirement plan (and the pension I can expect at this time is crap, even with over a decade worth of contributions), so I'm looking at my options too.

[marieh]

My school gives us an additional 15% of our salary at the end of the year to invest/spend as we please. In order to prepare for retirement, my husband and I will be putting the entire amount, plus an additional 50-60% of our take-home pay, into diversified mutual/index funds. Although we will have to pay 15% capital gain taxes when we divest, we feel that having complete control over our accounts - and not having to worry about early withdrawal penalties - is completely worth it.

[gengrant]

I concur with Marieh - you can either invest yourself (takes a little research, but can be done) or find a reputable investor in your local area (back home). Depending on your age - if you're at the start of your career, it's worthwhile to look at high yield/higher risk investments; lower yields/lower risk as you get closer to retirement age. The key is to diversify - don't put all your money into one fund or account. Look at your overall needs and decide if you want liquidity or if you're satisfied with putting the money away for a time and only taking it out at retirement - if you take it out sooner, you will incur penalties. All of this type of investment advice is easily found via Google. I'm not a money guru by any stretch of the imagination. Do what's best for you.

[Briz]

Buy land, build cheap condos, become a slum lord.... Or something a little more classy. But really, retirement is all about residual income. Do you have a place to live? Can you buy food? Can you pay all the bills that come your way? You can? Well then you can retire!!! How you get there, well safe investments with brokers etc., is one way, but land is my way!!!

[IAMBOG]

Search this forum for 'Andrew Hallam' and read the posts.

[xtralight]

Avoid all financial advisors and put 30-40K a year in broad-based index funds for 20 years (mixture of stocks and bonds) and you will be able to retire with a nest egg of 1.3-1.8 million. If you can get the school to contribute a portion of this, even better.

[Rob]

In the early 1970's I was with an international school that offered TIAA-CREF. It's the same retirement group that many of the university professors around the US use in their retirement plans. Over the course of 40 years, I was in some international schools that contributed to that plan. Other schools did not, so I contributed to TIAA-CREF myself during those years. I spread the money in three areas- CREF stocks, Real Estate, and the very conservative TIAA annuity.

Many retirement investors do not like the annuity, but I do not like the stress and uncertainty of what stocks or real estate will do over the course of my lifetime. I've always stuck with the old retirement model- the three legged stool (a pension, social security, and savings in the bank). I'm a little old fashioned that way. The annuity is now paying me a salary for the rest of my life, and it has a COLA, so every year I get a raise. I look at this "pension" from the annuity as my salary, and my job is to stay healthy. With that "pension" and social security, I have a salary at least equivalent to some of the best schools I taught in. I still have a significant amount in stocks and real estate (and in the bank), but I'm not stressed out when the market falls. I figure if Albert Einstein and Ben Bernanke have the TIAA "pension", then I should be fine.

Overseas I deposited money into the retirement plan monthly. It gave me peace of mind. As overseas teachers, we just don't have the pension that states offer their teachers, so we need to create our own pension. Because I have a low tolerance of uncertainty, I chose the annuity as my pension, while still contributing (even now) to the stock and Real Estate funds.

My two cents.

Rob

[jstwatchin]

The different investment options are really interesting.

Another thing to consider (if one can get the legalities in place and does not consider such factors as family ties): Where is the best place to retire? US? Europe? Costa Rica or another tropical paradise? Which factors would you consider in deciding on a place?