Teaching abroad provides a number of interesting and exciting opportunities, from travelling to exotic countries to building a nest egg, and from making a difference in the lives of your students to making connections through expat communities. While you are enjoying the benefits of an expat teacher, you should also consider the financial elements of working internationally.
While there is no simple financial plan that will fit all teachers in every circumstance, there are some fundamental must-know financial facts to be aware of as an expat teacher. All the below are good reasons why you should always discuss your financial plans with a trustworthy professional.
1. Most private schools do not provide a retirement pension for their international expatriate staff.
There is always a thrill when you take up your new teaching post, but even more so when it’s at a private school in a foreign country. The last thing you’ll be thinking off as you take up your new post is your retirement plan. That’s way off in the future. That doesn’t mean you shouldn’t include a retirement pension in your thinking. If you don’t take the initiative now, before you know it, retirement age will roll round and you may find yourself without a regular income. Don’t take the risk of repatriation without ensuring that you have a secure income for your retirement.
2. 75% of international teaching staff do not have critical-illness cover.
Critical-illness cover is becoming popular globally due to the increase in cancer and other debilitating terminal illnesses, yet 75% of international teaching staff do not have critical-illness cover.
The adage states that only three things matter in life: your family, your friends, and your health. Unfortunately, we tend to take all three for granted. No provisions can be made for relationships — it’s complicated, as they say. However your health — or lack thereof — is something you can provide for. Advances in modern medical care means that more people are surviving illnesses that were previously considered fatal. For that we can all be grateful, but if you were hit with a critical illness, do you know how long your recovery time would take? Do you know whether your school would continue to employ you for one or two years, or even longer, while you recover? Ask yourself the hard questions. How long would you survive with no income? Who would pay the bills when you find you cannot work and have no income? A critical-illness policy pays out to you directly on diagnosis of a critical illness. These funds can be used to support your recovery.
3. Expat teachers frequently to confuse critical-illness cover with medical cover.
Critical-illness cover and medical aid products are often confused. Don’t make this mistake. Medical aid products are designed to cover you only for medical and hospital care (plan dependent), and they are very important. A critical illness, however, can leave you with a long recovery period and unable to work or with the need for rehabilitative equipment.. Ensure you are covered for critical illness and don’t let the lack of financial security impact on your ability to seek sound medical assistance and be able to recover and live the best life you can should you contract a critical illness.
4. Many confuse taking out a policy in the country they are working in with investing in an offshore pension.
During the course of their career, expat teachers often teach in more than one school in more than one country right up until retirement.
As schools in expat locations generally do not offer a pension plan, you may decide to invest in a pension plan in each country you teach and these plans may not be optimally structured for your retirement. This is counter-productive to building a pension pot that won’t leave you financially unprepared for your retirement.
An offshore pension, which you contribute to monthly, will provide a fixed, structured, and disciplined vehicle without spending too much time researching and planning for retirement.
5. Many expat teachers are unaware that they may have a shortfall in their pension.
Often teachers forgo a private pension when they leave their home country. It’s easy to think that you will have time to make up the shortfall in your retirement savings when you embark on an exciting career as an expat teacher — the travel opportunities are exciting and retirement is years away. Before long, 10-15 years has flown by and although you saved during this period, you will often find that it is not enough to live the life you thought you would in your retirement. Don’t let the pull of exciting travel experiences leave you unprepared. If you are leaving or have left your home country to teach internationally, and have forgone your home country private pension, you will want to secure your retirement income before it is too late.
6. Most expat teachers will save three times the amount they would have back in their home country.
The nomadic lifestyle of expat teachers often means you are paid well, are provided with accommodation, maybe a medical scheme, and an annual flight home included in the package. This enables you to enjoy a lifestyle you may not be able to afford in your home country.
You therefore often have disposable income accumulating in a savings account. Whatever your reasons for choosing the life of an expat teacher, one should be to accumulate wealth — not savings. But if you are not putting aside regular payments into a fund that will be preserved for your retirement, then your retirement and repatriation could be a painful experience. This is probably not something you anticipated when you started out on your career journey.
7. Expat teachers don’t often take the time to sort out their international finances.
The most frequent reasons are:
- No knowledge of offshore finance options.
- No time or a lack of desire to take the time to research international finance options.
- A lack of internationally qualified financial advisers in their current country.
Each country has its own financial laws and policies and it can be confusing to navigate your way through it all in a foreign country. Not only can it be confusing, but also time-consuming to research and work out the best option for your personal needs.
It’s no wonder many expat teachers think they will leave it for another day when they will have more time to filter through all the information. But there never seems to be enough time to make an informed decision, so no decision is made resulting in time lost in investing for your eventual retirement, and possibly pushing out your retirement date due to lack of sustainable income.
Carrick is a specialist advisory in the areas of global retirement, pension, and wealth management plans for expat teacher regardless of their country of origin, where they are working, or how often they change the country they work in. Many British expat teachers, for example, often do not want to return to the UK, preferring to retire to Spain or similar places. Carrick Wealth can assist you with a wealth management strategy, including an international retirement pension that would make this possible.
Take the first step to financial independence by clicking here and a Carrick Wealth Specialist will contact you.