Retirement benefits, what is ideal?

[schley]

In comparing different schools, I'm ignorant when it comes to comparing retirement benefits. This will be my first international experience, thus I'm looking for guidance.

1. What would be a good retirement package? Would a % of your salary be good, if so what?

2. Is there a certain amout of years you have to put in I would imagine? If so what should I look for in terms of years.

Basically someone tell me what a good aspect of the different retirement packages should be. Also the negatives. It seems some may give you a lump sum at the end of the contract? Let me know, thanks.

[interteach]

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[schley]

Thank you and I agree with you in the lack of planning. I'm only 33 but I don't want to be working when I'm 65 that is for sure. I am leaving the Calstrs, California teachers retirement system, after just 7 years and I think I should be knowledgable about what the retirement benefits are.

A couple more questions.

1. Is the retirement accessbile right after you leave or do you have to wait until you retire at 55 or whatever?

2. Are there options to waive the retirement and get more salary? It seems some places have that in place.

3. If I plan on staying only 2 years, for example, what should be my take on retirement options at a school? Waive it and get salary if possible, lump sum after?

4. How many years do you have to teach generally to collect your retirement from a certain school? In California 5 years gets you vested. Thank you so much.

[Overhere]

I have taught in schools with three different plans: one had a retirement plan that starts after 10 years (I didn't find this useful in that I only stayed 2), another invested 7% in a fund of your choice set up with Franklin Templeton (this was ok until the fund took a dive but that could have happened anywhere), the third and present school pays out 10% at the end of every year for you to do what you want. The third option is my favorite as it provides more flexibility and I will actually see the funds in my lifetime : )

I have never run across a school that would let you waive the retirement option but I guess they could exist.

[interteach]

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[botox]

I am getting a 5% matching to invest as I want. I am putting it into a Roth IRA. So what Schley said about not being able to contribute to an IRA scares me. Where did you get that info? I figured that because I file an income tax return that I can contribute to a Roth. This is "after tax" money and I am claiming the salary-- I just get an exemption. Why wouldn't it be just like any other exemption? Anyway, I will keep contributing until they stop me.

[scribe]

The best retirement benefits we've had have been matching contributions, with the percentage that the school kicked in ranging from 7% to 12%, depending upon how much we contributed and how many years at the school. The person who does our US taxes, who is an attorney with H&R Block, says we CANNOT contribute to a Roth IRA unless we earn a certain amount in the US. Sorry, I don't remember the amount as it was immaterial to us, we don't work in the summer. We had contributed one year without being eligible prior to us discovering this (on the advice of the investment guy at our bank who wasn't up on rules expats need to be concerned about). We're hoping that one year flies - but just because Roth takes it, don't assume it's okay for you to invest there - it's your responsibility to know the tax laws.
Many international schools have investment people pass through a few times per year, TieCare and Raymond James. They offer a variety of services and would advise you on what serves your needs best. We contribute to a 'post tax' annuity, which means we only get taxed on the money it earns since the money we put in wasn't taxable anyway--we're under the minimum for having to pay tax while living overseas (well under, as I suspect most teachers are!) We don't get taxed on it at all until we take it out - if we take it out prior to retirement age, the tax is far heftier than if we take it out at retirement age.
While none of these funds have earned huge percentages, they are slow and steady and since we've never taken our pay without this deduction, it seems like our contribution costs us nothing at all. With the school also kicking in their percentage, it does add up!

[teachingoverseas]

I am going to add a wrinkle for you to think about if you are a US citizen-- The US Congress enacted a law in the 1980's that does the following: If you work and pay into Social Security for enough quarters (40) to get medicare healthcare and benefits, the US govt will take away possibly 2/3 of what you earned IF you try to take an additional pension from a municipal or public system that DID NOT pay into Social Security. Only you know whether your school district paid into both their California Pension system and Social Security at the same time. Mine did not, so I will lose a large percentage of what I had already earned under Social Security in other types of jobs.

Some international schools pay into the US social security system as a form of pension, so this could affect you down the line.

[botox]

Thanks for the reply, Scribe. I will let this year's contriution ride like you did. I think I can get into a retirement program in this country trough a
local bank.