013 | 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