I’m 28, so I’m not going to retire anytime soon, but these are prime investing years, and when you work internationally like I do, it can get pretty confusing. From what I have seen and heard, many young international teachers like myself haven’t attempted to save for retirement. Even though I love my job, and want to continue teaching internationally for the rest of my life, getting visas after the age of 60 is more difficult (Malaysia, Indonesia, Pakistan, Thailand to name a few according to this website). This is why I need to be saving and investing now!
International teachers have:
No PERS
No 401K
No Roth IRAs
No Social Security
No work-based retirement plans
This is the reality of international teaching.
Ok, there are a FEW schools that will pay into social security because they have such close ties to an embassy. Good schools also might have retirement plans. However, I have never worked at any of those schools. So what have I been doing to save for retirement?!
I studied personal finance and accounting a bit as part of my minor in Business Administration, but most of what I do I learned from personal finance books and blogs that I have read on my own time over the years.
Some blogs that come to mind that I read regularly are:
Andrew Hallam’s Millionaire Teacher
So what do I do to save for retirement?
- Try to stay debt free. If I use my credit card I pay it off in full at the end of the month.
- Pay down my student loans as quickly as possible (highest interest rate first)
- Invest in a Vanguard 2050 Retirement Fund
- Have six months worth of emergency savings in a high yield online savings account.
- Plan big purchases by creating savings goals with SmartyPig
Next step: Make more money! This means either sign on at a school where I will get paid more and/or make money on the side either tutoring or with TeachersPayTeachers. This is the part I’m not so good at and it is not part of my current plan. While teaching in Mexico I tutored because the salary was so low, but I haven’t tutored since then because the pay wasn’t worth my time. Making passive income is my next goal for myself!
Disclosure: I’m working on my “next step” so this blog includes a few affiliate links, which means that if you click them I might earn a few cents to help support my travels and help me pay off my student loans.
Teaching Wanderlust 
Good luck with your long-term plan! I’m in the same boat. Not having a pension plan puts the full onus of retirement on your own shoulders. Exhilarating, isn’t it!?
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Hahaha, exhilarating isn’t the word that comes to mind Beer Vestor! As someone who likes to have money and takes care of herself, personal finance is an interest of mine, but many international teachers I’ve met don’t seem to give their retirement a second thought. ::shudder::
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Indeed. Also: “Talking about it is both super-depressing and taboo… so let’s get drunk instead” is the attitude I usually encounter.
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Sad, but true. The only thing we can do is try to get the info out there in case they change their minds one day….
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Thank you for reminding me that I should think of this for later! These are great tips!
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Hi Courtney,
Thanks for visiting. I’m glad you found this article useful.
I feel like if you were to ask most people about retiring they would say that they wished they had started saving earlier. Compound interest can work wonders, but only with enough time and money to make it work. I wish I had started saving when I had first started working at 16.
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Excellent article… I was just thinking about that too. How teaching aboard will affect my teaching pension, state pension and student loan repayments. Need to look into it more.
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What you are doing is great! My husband and I have done a 180 with our finances and are on a mission to, not necessarily retire early, but to become financially independent within 8 – 10 years. We are both ESL instructors. It’s a great feeling to have financial goals!
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I agree that it feels great to have financial goals! Originally I had planned to pay off my student loan debt in 5 years, but now I think I can do it in 3.5 years if everything goes as planned.
Where are you teaching ESL? I have had many friends who have taught in South Korea and managed to save tons of money while teaching ESL!
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I’m currently in the States, but taught in Korea for 4 years. Korea is a great place to save money. I’ve met so many people who have paid off student loans and other loans and even saved for house!
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I have a friend who taught EFL in Korea who said he paid off his student loans, saved 80K AND met his wife. It sounds like a pretty good deal!
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So great to hear stories like that!
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I just found your blog and with all your tips I just feel I have been in the right path to become an international teacher, the only thing i have found difficult is the fact I am not a native English Speaker,
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If you have excellent spoken and written English you can still make it work. Something that some of the local Venezuelan teachers do is to get a job at an international school in their home country, teach as an assistant or as an ESL teacher, and then go work at an international school in China or the Middle East. Those areas need English speaking teachers so they are willing to take the risk of hiring a non native speaker.
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This is such a great post. I’m also 28 and haven’t got a single bit of pension saved. At the end of this year, I’ll be completely debt free. From that point on, it’s all about the pension. No matter where I am or what I plan to do, I’ve got to put something to the side for my old lady days.
In Korea, you automatically pay into a pension fund when you work here. Everyone can collect it when they leave. Everyone, that is, except for us Brits.
No pension for me yet.
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How frustrating that must be! Maybe the next time you go home you could sign up for your own retirement account!
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Hi, I too am an international teacher, but am based in Jakarta, Indonesia. The question of retirement plans looms large, even though I am only 27. I’m curious, though, about your Vanguard Target-Date Retirement account. How does this work with the Foreign Earned Income Tax Exclusion? Can you make annual contributions? If so, are these taxed?
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Hi, Aaron!
I opened the Vanguard account before I left the US (if you haven’t opened one yet and you are interested, I suggest doing it the next time you are in the US). I’m not a tax specialist of any kind (I leave that to my mother who is a certified tax preparer), but I believe that it is an after-tax style account meaning that it doesn’t lower my taxable income any. At the end of the tax-year Vanguard sends tax forms to my house with interest earnings listed which are then included in my tax documents. I do believe that the interest from this would be added to my annual yearly income. If I were lucky enough to earn more than the IRS allows (which I highly doubt many teachers would) then I might have to pay something. According to the IRS, “For tax year 2015, the maximum foreign earned income exclusion is up to $100,800 per qualifying person.”
I make monthly contributions to both my Vanguard Target Retirement Account as well as my work sponsored account through Raymond James and both of these accounts are reported on my taxes.
I hope this helped!
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Excellent, thank you very much for the info! The ins and outs of taxes for expats can be mind boggling at times. I will certainly look into it the next time I am back in the States. Thanks again!
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Hi, I commented a while back regarding your Vanguard account. I have been looking into this and it seems they don’t open accounts for expats and if they find out you are living abroad they will freeze and/or liquidate your holdings. How do you get around this?
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I’m sorry to hear this! I opened my target retirement account with Vanguard while I was still living and working in the US. Money is automatically deducted from a US account. The only time I had trouble with them is when I tried to get a Roth IRA and I told them that I didn’t have US earned income and that is when they told me I had to have a normal after tax investment account. Maybe open it the next time you are in the US? Andrew Hallam with Millionaire Teacher could probably give you more information.
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Yes, it is certainly not an ideal situation haha.
What about paying your taxes? I assume you fall within the Foreign Earned Income Tax Exclusion and that you claim it as such. However, my question is this: When you file your taxes (claiming this exemption), you will provide your address for whichever country you are currently residing, yes? But you must fill out a separate form for your Vanguard account and I assume you still use your U.S. address for this. Is this address discrepancy not a problem? Or am I misunderstanding the situation?
Sorry for the barrage of questions, by the way…
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Good questions. My mother is a certified tax preparer so I tend to leave it to her. Yes, I qualify and use the foreign earned income exclusion, but I opened my Vanguard account many years ago. I’ve never updated the address. I have not had any problems. I still have mail and packages sent to my home address in the States. I think Vanguard just cares that you have an address in the US. Here is a conversation about this very thing said by international teachers who have been in the business much longer than I have: https://www.internationalschoolsreview.com/v-web/bulletin/bb/viewtopic.php?t=5969&p=42425.
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