The financial prospects of educators have always been of interest to me, especially since my wife is middle school teacher! She recently shared a podcast from Georgia TRS (Teacher Retirement System) featuring Dr. Steve Frandsen about his new book The Millionaire & Me: A Teacher’s Guide to Becoming a Millionaire.
It’s a catchy title and intriguing concept but is this realistic?
He answers that question right off the bat with the fact that the top 3 professions producing millionaires are 1) Engineering 2) Accounting 3) Teaching1. Engineering and accounting are not that unexpected but teaching is somewhat of a surprise. So,what are the “secrets” these teachers practice and can other occupations do the same?
Frandsen focuses on 5 “levers” to wealth that teachers should employ to grow their wealth.
1) Max your retirement pension. Pensions are more of a rarity these days. If you have one, know it well, and be sure you are taking advantage of all the opportunities it allows.
2) Make the profession pay you. Achieving higher degrees for educators pays in Georgia. Although other occupations may not see the direct bump in pay, becoming more educated in your field can give you leverage.
3) Tell your money what to do. Just like you can’t out-exercise a bad diet, you can’t out-earn poor spending habits. By setting a budget and sticking with it you can stay in control, allowing you to prioritize savings and minimize debt.
4) Put some of your money to work. Pay yourself first – set aside 10-20% of your income to invest. This allows you to take advantage of the “eighth wonder of the world”, compound interest.
5) Expand your options. Teaching is a solid, stable profession with good benefits. This kind of stability often enables the teacher or spouse to pursue other opportunities and entrepreneurship.
Of the 5 points Dr. Frandsen emphasizes that the pension is the most valuable. To put it in perspective, the average teacher retirement in the state of GA is $41,000 per year2. To equal this in an investment account, you would need $1 million at a 4% withdraw rate.
If you do not have a pension available with your occupation, your financial advisor can help you create a similar type of investment vehicle.
And whether a teacher or not, consider implementing these five levers to grow your wealth and retirement to it’s fullest potential.
If you would like more information on this or other financial matters, let me know.
1 Ramsey Solutions, October3,2024
2 TRS, May 24,2023
This material is forinformational and educational purposes only and should not be construed aspersonalized investment advice. Investment strategies discussed may not besuitable for all investors. All investing involves risk, including thepotential loss of principal. There is no guarantee that any investment strategywill achieve its intended results. The examples provided are hypothetical andfor illustrative purposes only. They are not intended to represent theperformance of any specific investment. Before making any financial decisions,investors should consult their financial professional regarding theirindividual circumstances. The 4% withdrawal rate is a commonly referencedplanning guideline and may not be appropriate for all investors. This commentaryreflects the opinions of the author as of the date published and is subject tochange without notice. Information presented is believed to be reliable but isnot guaranteed. This material is not intended as a recommendation to buy orsell any security.
Advisory Services are offered through IFG Advisory, LLC, a registered investment advisor. Golden Isles Financial Advisors and IFG Advisory, LLC are separate entities.
