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013 | The Unfair (FI) Advantage Of Teachers | 457b

Millionaire Educator Shares the Secrets of the 457b

  • Our guest: Millionaire Educator shows us how to invest your money. He shows how teachers, firefighters, police officers and public employees can leverage the power of pretax savings to supercharge their retirement , and become millionaires. Take this information to learn how to invest your money and retires decades before your peers
  • Ed’s journey from a college basketball player to a Spanish teacher
  • Graduate school led to $45,000 total debt at age 33
  • Taught ESL in Saudia Arabia and paid off debt
  • Returned to the US from Saudia Arabia with a $110,000 net worth
  • Had to figure out the concept of FIRE before it even existed
  • Taught in public school in Georgia for the next 7 years
  • The two retirement plans available to public sector employees: 403(b) and 457
  • Teachers can fully fund both of these accounts ($18,000 to each in current year)
  • Putting away this money helps dramatically decrease your taxes
  • In 2007 his net worth was $400,000
  • 2009: Next phase of their retirement journey
  • 403(b) fees are significant, so it was to their benefit to move jobs to roll their 403(b) accounts to a lower fee (‘separation of service’ clause)
  • 457b is a special account as it doesn’t have the 10% penalty for pre-59.5 age withdrawals
  • Phase 3 of retirement plan: Starting in 2014 they worked for 2 years and saved $238,000
  • What they are living on: a) $90,000 from 457s b) 72-T withdrawals from IRAs
  • How to control your tax bracket for big savings (potentially down to $0)
  • Debt avoidance: debt is paid with after-tax dollars
  • Geo-arbitrage and living abroad or even just a lower cost state
  • 457b account is an emergency fund that is pre-tax dollars
  • How Brad and Ed are not “perfect” with their investing
  • Pay increases for teachers when attaining new degrees. Raises that last a lifetime
  • Earning extra money for coaching and extended day teaching to max out retirement accounts
  • How they saved over $100,000 in a year towards retirement accounts
  • Hot Seat Questions

Listen to Brad and Jonathan’s thoughts about this episode on the Roundup Episode 13R.

Links from the show:

Books Mentioned in the Show:

Resources:

The Golden Albatross

If your job offers a pension, then this book is a must-read. Easily learn how to calculate your pension’s objective value and weigh it against the subjective benefits of leaving for more fulfilling work.

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