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
Links from the show:
Millionaire Educator
403(b) Wise
Vanguard
IRS info on 72-T
Mad Fientist article on Front Loading
Roth IRA Ladder on JL Collins
My Trillionaire Plan post on Millionaire Educator
Root of Good
Go Curry Cracker
$150,000 income, $150 income tax by Root of Good
Millionaire Educator on Twitter
Books Mentioned in the Show:
Bogle On Mutual Funds
Cashing in on the American Dream: How to Retire at 35
The Millionaire Next Door
Resources:
Personal Capital
view more