New book based on Millionaire Next Door

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
JBTX
Posts: 4039
Joined: Wed Jul 26, 2017 12:46 pm

Re: New book based on Millionaire Next Door

Post by JBTX » Thu Jul 19, 2018 5:34 pm

SelfEmployed123 wrote:
Wed Jul 18, 2018 11:28 am
KlangFool wrote:
Wed Jul 18, 2018 10:51 am
tfb wrote:
Wed Jul 18, 2018 10:39 am
KlangFool wrote:
Wed Jul 18, 2018 10:26 am
deltaneutral83 wrote:
Tue Jul 17, 2018 10:25 am
I still think lawyers and Dr's represent higher than their proportion of millionaires in America. They may do less with more, but they still are at that level in absolute terms relative to their proportions in the workforce I believe. Obviously small business owners that don't have to flaunt it make up the bigger portion. I believe that was 1996 so things may have changed, but I kind of doubt it with what I still see.
deltaneutral83,

https://www.aol.com/2012/03/26/surprisi ... naire-clu/

http://www.futurescopes.com/dating/weal ... llionaires

You are wrong. There are 6 times more teachers that are millionaires than either the lawyers or doctors.

KlangFool
Because there are 20 times more teachers to begin with (just an example, I'm not sure how many times more)? Just 6 times more in numbers doesn't cut it. deltaneutral83 was talking about the percentage of millionaires relative to their proportion in population. What % of lawyers or doctors are millionaires? What % of teachers are millionaires? Which is higher?
tfb,

Good question. I do not know the answer.

KlangFool
I have edited below to spell out the math.

This back and forth made me curious, so I did some research. Please bear with me :D The National Center for Education Statistics estimates there are 3.6 million teachers in the US. A 2016 census of licensed physicians (https://www.fsmb.org/globalassets/advoc ... census.pdf) estimates there are about 953,000 physicians in the US. As of 2016 there were about 1.3 million attorneys in the US (https://www.denniswpottslaw.com/united- ... rneys-map/). The research from Spectrum Group estimates there are 8.6 million households in the US worth $1 million or more. The survey says 12% are teachers, 2% are physicians, and 2% are attorneys. Using those numbers:

Teachers: 12% times 8.6 million = 984000 teacher millionaires / 3.6 million total teachers in USA = 27 percent

Doctors: 2% times 8.6 million = 164000 doctor millionaires / 953k total doctors in USA = 17 percent

Attorneys: 2% times 8.6 million = 164000 attorney millionaires / 1.3 million total attorneys in USA = 12.4 percent

Thus, about 27% of all teachers are in millionaire households. Meanwhile, 17 percent of physicians are in millionaire households while only 12 percent of attorneys are in millionaire households.

If my numbers are right, I think it's really interesting how much more likely teachers are to accumulate over $1 million than doctors and especially attorneys. Living within your means and saving is clearly very important. I suspect teachers are also more likely to have a dual income household.
The data is by house hold. How many of those teacher millionaires are second income spouses? It historically has been a very good second income job. The hours are more conducive to raising kids than most jobs.

User avatar
ChowYunPhat
Posts: 82
Joined: Mon Jun 02, 2014 7:49 pm
Location: Houston, TX

Re: New book based on Millionaire Next Door

Post by ChowYunPhat » Thu Jul 19, 2018 5:51 pm

Millionaire Next Door, Millionaire Mind, Stop Acting Rich and Millionaire Women Next Door were all excellent. I will definitely be picking up the next book up. These books reinforced concepts I learned, but also helped me feel part of a community that wanted to generate wealth and live life differently. Next to Bogleheads, these books were among the most influential set of texts in my financial life.

Thanks for posting this.
A wise man and his money are friends forever...

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Thu Jul 19, 2018 6:23 pm

willthrill81 wrote:
Thu Jul 19, 2018 3:28 pm
I'd add that many universities now give faculty the irrevocable option when hired to either participate in the state's pension system or the university's 401a/403b defined contribution plan. It seems that few offer both a defined benefit and a defined contribution plan. It seems typical now as well for universities to mandate that if faculty choose the defined contribution plan that they are required to make contributions to it. At my current university, this is 7.5% of gross pay, which is matched by the university. Once I reach age 50, this will go up to 10% gross pay for both me and them. At a prior public university, I only had to put in 2.5% and they put in 13.5%!

These contributions are not elective, so we're still eligible to contribute $18.5k annually in our voluntary 401k. We also have a 457 plan, so that's another $18.5k of space. I elected to have a medical plan that offers an HSA, so we have a lot of tax-advantaged space there, in addition to IRAs.

So if these teachers are being required to save 15% or more of their gross income, they will surely become wealthy given enough time. Combine this with teachers not typically retiring very early, and you at least have the potential for a fairly well off group.
Good points! The "irrevocable" is the one that new hires have to be careful of as most probably won't get too much guidance from HR during the orientation days when all the paperwork is signed. Due diligence - or "buyer beware" - is certainly suggested.

I worried about our graduating seniors from the college where I have been teaching who were going out into new teaching jobs - some jobs of which allowed the new hire to choose the percentage of income deducted from their paychecks to be chosen, but were also irrevocable. So if they chose too low, or too high - they were stuck.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Thu Jul 19, 2018 6:41 pm

JBTX wrote:
Thu Jul 19, 2018 5:34 pm
The data is by house hold. How many of those teacher millionaires are second income spouses? It historically has been a very good second income job. The hours are more conducive to raising kids than most jobs.
I think we need to be careful not to stereotype.

Coming from a dual income educator household and having many colleagues/friends with households where both couples are in the "industry" of university and public education - salaries for well established, long career educators range in our state between those I know and associate with from $63K+ to $175K+. This allows full pension, full catch up contributions of $24.5K for each spouse into 403b, and additional full contribution to 457b, plus getting MAGI to the point where full catch up of $6500 each to Roth IRA is possible. Example: we have $24.5K x 2 going into 403b's, plus $24.5K going into a 457b, plus full $13K into Roth IRA's, plus 15.x% into a pension. It all adds up. :beer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

JBTX
Posts: 4039
Joined: Wed Jul 26, 2017 12:46 pm

Re: New book based on Millionaire Next Door

Post by JBTX » Thu Jul 19, 2018 6:53 pm

CyclingDuo wrote:
Thu Jul 19, 2018 6:41 pm
JBTX wrote:
Thu Jul 19, 2018 5:34 pm
The data is by house hold. How many of those teacher millionaires are second income spouses? It historically has been a very good second income job. The hours are more conducive to raising kids than most jobs.
I think we need to be careful not to stereotype.

Coming from a dual income educator household and having many colleagues/friends with households where both couples are in the "industry" of university and public education - salaries for well established, long career educators range in our state between those I know and associate with from $63K+ to $175K+. This allows full pension, full catch up contributions of $24.5K for each spouse into 403b, and additional full contribution to 457b, plus getting MAGI to the point where full catch up of $6500 each to Roth IRA is possible. Example: we have $24.5K x 2 going into 403b's, plus $24.5K going into a 457b, plus full $13K into Roth IRA's, plus 15.x% into a pension. It all adds up. :beer
I figured somebody would misinterpret my intent. I'm just saying that teachers have historically often been a second income. So in many cases they may not be the primary source of the millions of savings that have been accumulated in the family.

I have a family member who is a professor and yes between pay and benefits he is pretty well situated.

Having said all that, if you counted the present value pension benefits as part of that wealth, it isn't necessarily shocking that many teachers could be millionaires. An inflation adjusted annual annuity of $25000 would be worth in the ballpark of $625k (assuming 4% payout). That plus some modest 401k savings and you are at a million.

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Thu Jul 19, 2018 7:20 pm

JBTX wrote:
Thu Jul 19, 2018 6:53 pm
I figured somebody would misinterpret my intent. I'm just saying that teachers have historically often been a second income. So in many cases they may not be the primary source of the millions of savings that have been accumulated in the family.

I have a family member who is a professor and yes between pay and benefits he is pretty well situated.

Having said all that, if you counted the present value pension benefits as part of that wealth, it isn't necessarily shocking that many teachers could be millionaires. An inflation adjusted annual annuity of $25000 would be worth in the ballpark of $625k (assuming 4% payout). That plus some modest 401k savings and you are at a million.
Sorry about that, I didn't intend to misinterpret.

We just happen to socialize with well over a dozen couples who are both in education. And there are many, many more in our community in the same situation that we know, but don't socialize with - so I don't think it is that uncommon within the circles of education. I just didn't want to let the "pat on the head, that's nice you are a teacher" thought process go unchecked whether it is or is not the norm throughout America with a stereotype that the "real bread winner" wears the pants in the household of a teacher. That's the part I took as a dangerous stereotype based on knowledge of our own personal social circle, colleague circle, and reality of salaries and portfolios that we all have.

Yes, the pensions are high quality where we live (in a LCOL area). Pensions and SS alone will equate to 141.x% of our current expenses (needs/wants/variables) before we even get to the portfolio. Maybe it would be different if we had married a non-educator.... :P
"Everywhere is within walking distance if you have the time." ~ Steven Wright

golfCaddy
Posts: 704
Joined: Wed Jan 10, 2018 10:02 pm

Re: New book based on Millionaire Next Door

Post by golfCaddy » Thu Jul 19, 2018 7:39 pm

JBTX wrote:
Thu Jul 19, 2018 5:34 pm
The data is by house hold. How many of those teacher millionaires are second income spouses? It historically has been a very good second income job. The hours are more conducive to raising kids than most jobs.
Unless anyone's seen the original study, everyone's reading way too much into it by substituting teacher for educator. Law professors are educators. Med school professors are educators. B-school professors are educators. Deans in engineering are educators. There are a lot of well paid educators, but not many of them are teaching middle school English.

JBTX
Posts: 4039
Joined: Wed Jul 26, 2017 12:46 pm

Re: New book based on Millionaire Next Door

Post by JBTX » Thu Jul 19, 2018 8:04 pm

CyclingDuo wrote:
Thu Jul 19, 2018 7:20 pm
JBTX wrote:
Thu Jul 19, 2018 6:53 pm
I figured somebody would misinterpret my intent. I'm just saying that teachers have historically often been a second income. So in many cases they may not be the primary source of the millions of savings that have been accumulated in the family.

I have a family member who is a professor and yes between pay and benefits he is pretty well situated.

Having said all that, if you counted the present value pension benefits as part of that wealth, it isn't necessarily shocking that many teachers could be millionaires. An inflation adjusted annual annuity of $25000 would be worth in the ballpark of $625k (assuming 4% payout). That plus some modest 401k savings and you are at a million.
Sorry about that, I didn't intend to misinterpret.

We just happen to socialize with well over a dozen couples who are both in education. And there are many, many more in our community in the same situation that we know, but don't socialize with - so I don't think it is that uncommon within the circles of education. I just didn't want to let the "pat on the head, that's nice you are a teacher"thought process go unchecked whether it is or is not the norm throughout America with a stereotype that the "real bread winner" wears the pants in the household of a teacher. That's the part I took as a dangerous stereotype based on knowledge of our own personal social circle, colleague circle, and reality of salaries and portfolios that we all have.

Yes, the pensions are high quality where we live (in a LCOL area). Pensions and SS alone will equate to 141.x% of our current expenses (needs/wants/variables) before we even get to the portfolio. Maybe it would be different if we had married a non-educator.... :P
The bolded was what I was referring to. I was in no way making a value judgement on teachers (I think know they are often underpaid), just that historically teaching was often a second income, and associating family wealth with teachers may not necessarily be terribly meaningful.

College professors are a different animal completely, although I suspect their numbers are small compared to the millions of teachers.

Of course I could be totally wrong:

https://www.bloomberg.com/graphics/2016 ... ries-whom/

It could be that often teachers tend to marry each other leading to a higher percentage of two income households (I think someone else advanced this theory elsewhere in the thread). Take that and add 2 pensions then a million is well within reach.

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Fri Jul 20, 2018 6:37 am

JBTX wrote:
Thu Jul 19, 2018 8:04 pm
College professors are a different animal completely, although I suspect their numbers are small compared to the millions of teachers.
US Data

30%: 1.54 Million College Professors (1.7 Million if you include TA's)
70%: 3.6 Million Elementary and Secondary Teachers in the US
JBTX wrote:
Thu Jul 19, 2018 8:04 pm

Of course I could be totally wrong:

https://www.bloomberg.com/graphics/2016 ... ries-whom/

It could be that often teachers tend to marry each other leading to a higher percentage of two income households (I think someone else advanced this theory elsewhere in the thread). Take that and add 2 pensions then a million is well within reach.
Yes, it is not uncommon for marriages/unions/partners in education. It usually ranks in the top 4 in various studies revolving around marrying and professions. If there were a higher percentage of male teachers in the profession, then it would most likely be even more common than it is.

http://www.businessinsider.com/who-your ... job-2016-2

http://www.bbc.com/capital/story/201602 ... y-teachers

https://www.cnbc.com/2017/02/17/how-you ... marry.html
"Everywhere is within walking distance if you have the time." ~ Steven Wright

getthatmarshmallow
Posts: 223
Joined: Mon Dec 04, 2017 9:43 am

Re: New book based on Millionaire Next Door

Post by getthatmarshmallow » Fri Jul 20, 2018 10:34 am

I suspect, in the case of university professors, that those that are likely to become millionaires benefit from the time spent in grad school making comparatively little money, and thus avoiding early lifestyle inflation, and from professional norms that tend not to value certain kinds of consumerism. This isn't to say that professors don't care about money or don't find their own ways to waste it, but that there's a little more autonomy and that makes it easier to avoid many consumer traps. No one cares how much I spent on my car, what I wear to work, or that I pack a lunch. If everyone on my street decides they need to get a boat to compete with the Joneses, it's relatively easy for me to ignore.

Plus, at least in my case, the non-monetary perks of the job make up for somewhat lower salaries. My kids go to the excellent lab preschool for about a third of what the Montessori school charges. Their college tuition, were they to attend where I work, would be at a significant discount. The gym is free, and exercise classes run $50 for the semester. I can take two classes a semester for free. Conference travel is mostly paid for by work, and usually means going to cool cities. So I can live an upper middle class lifestyle for a significant discount, while taking advantage of lots of tax advantaged space.

User avatar
DanMahowny
Posts: 509
Joined: Sun Aug 06, 2017 8:25 pm

Re: New book based on Millionaire Next Door

Post by DanMahowny » Fri Jul 20, 2018 7:10 pm

ChowYunPhat wrote:
Thu Jul 19, 2018 5:51 pm
Millionaire Next Door, Millionaire Mind, Stop Acting Rich and Millionaire Women Next Door were all excellent. I will definitely be picking up the next book up. These books reinforced concepts I learned, but also helped me feel part of a community that wanted to generate wealth and live life differently. Next to Bogleheads, these books were among the most influential set of texts in my financial life.
Great post man.
Funding secured

User avatar
ClevrChico
Posts: 1279
Joined: Tue Apr 03, 2012 8:24 pm

Re: New book based on Millionaire Next Door

Post by ClevrChico » Sat Jul 21, 2018 7:27 am

I loved the original, and I'm excited about the new book. Thanks for the heads up!

My library has this on pre-order, and I'm first in the hold queue. :-)

timmy
Posts: 720
Joined: Thu Jun 14, 2012 2:57 pm

Re: New book based on Millionaire Next Door

Post by timmy » Sat Jul 21, 2018 11:10 am

http://www.thomasjstanley.com/

That's Dr. Stanley's website. As noted, his daughter (soon to be coauthor) has been posting since 2015. Her posts echo his themes. She seem like a good writer. That's positive for the book.
Last edited by timmy on Sat Jul 21, 2018 6:04 pm, edited 3 times in total.

davidkw
Posts: 800
Joined: Sun Feb 25, 2007 6:39 pm
Location: Northern VA

Re: New book based on Millionaire Next Door

Post by davidkw » Sat Jul 21, 2018 12:49 pm

The Millionaire Mind by Thomas Stanley was an outstanding book - I read it and did a book report in my Toastmasters public speaking club:

The major themes I found in the book:

Team work and mentoring
a. Encourage them to participate in extracurricular and team-oriented activities. If we do this, we can expect to have a greater number of leaders. P. 46

Not gifted
a. Our undergraduate GPA was 2.92 P. 13


Discipline & Tenacity

One has to be tenacious to overcome stuttering, epilepsy, and being held back repeatedly. P.95, 106

Opportunities
It’s hard for a person to recognize opportunities if he stays in one place and remains in one job-most self-made millionaires have had a rather wide experience with various part-time and temporary jobs. P. 128

Business
a. It is less about investing in the stock market and much more about investing in ourselves, our careers, our professional practices, our private businesses and so forth. P. 12
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

staythecourse
Posts: 5983
Joined: Mon Jan 03, 2011 9:40 am

Re: New book based on Millionaire Next Door

Post by staythecourse » Sat Jul 21, 2018 1:20 pm

Rick Ferri wrote:
Wed Jul 18, 2018 7:29 pm
Stanley’s original work from 20 years ago confirmed what I saw every day in my business. I advised thousands of investors over the years and learned early on that wealth accumulation is mostly a result of determination to save than a determination to reach a high income level.

I also learned that prudent personal money management is a mindset that some people have and others don’t. The ones that have it often do not have high incomes, and many are influenced by their parents or others who ran into big financial problems. These people are determined to live below thier means and never take money for granted. The ones who don’t have it spend all their money on possessions and things that appeared to increase their status. They also believed the money is just going to keep rolling in.
Great insight.

I remember reading a book sometime ago which REALLY changed the way I viewed decision making and likely has a lot to do with this topic. The book talked about all decision are based on 3 choices (utilitarian, expressive, and emotional). Needing to fund retirement is a utilitarian view on money. Wanting a big house or designer clothes are an expressive decision (how folks around you view you). Myself holding onto the same car I had as an intern, resident, attending, and partner in my old practice is an emotional decision. If one is cognizant they really can analyze why they make the decisions they do. I really think those that save a lot view money very utilitarian as opposed to expressive. High end occupations are very susceptible to expressive decisions (conscience or not) that is what dooms them.

Then again a specialist can make 300k+ as long as they want so maybe not worrying about job has something to do with it.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

SelfEmployed123
Posts: 180
Joined: Sun Apr 15, 2018 8:57 pm

Re: New book based on Millionaire Next Door

Post by SelfEmployed123 » Sun Jul 22, 2018 8:29 am

golfCaddy wrote:
Wed Jul 18, 2018 8:13 pm
The study appears to lump K-12 teachers and college professors under the same category as educators.
I've revised the below numbers to include postsecondary educators. According to the Bureau of Labor Statistics, there are about 1.54 million postsecondary educators. I am not including teaching assistants because those jobs are temporary, so we are keeping our numbers to post-degree professionals only.

All Educators: 12% times 8.6 million = 984000 educator millionaires / 5.14 million total educators in USA = 19 percent

Doctors: 2% times 8.6 million = 164000 doctor millionaires / 953k total doctors in USA = 17 percent

Attorneys: 2% times 8.6 million = 164000 attorney millionaires / 1.3 million total attorneys in USA = 12.4 percent

That substantially reduces the percentage of millionaire educators, but it is still higher than doctors or attorneys. Still interesting IMO. Of course, this all depends upon how representative the sample is in the original survey.

staythecourse
Posts: 5983
Joined: Mon Jan 03, 2011 9:40 am

Re: New book based on Millionaire Next Door

Post by staythecourse » Sun Jul 22, 2018 8:56 am

SelfEmployed123 wrote:
Sun Jul 22, 2018 8:29 am
golfCaddy wrote:
Wed Jul 18, 2018 8:13 pm
The study appears to lump K-12 teachers and college professors under the same category as educators.
I've revised the below numbers to include postsecondary educators. According to the Bureau of Labor Statistics, there are about 1.54 million postsecondary educators. I am not including teaching assistants because those jobs are temporary, so we are keeping our numbers to post-degree professionals only.

All Educators: 12% times 8.6 million = 984000 educator millionaires / 5.14 million total educators in USA = 19 percent

Doctors: 2% times 8.6 million = 164000 doctor millionaires / 953k total doctors in USA = 17 percent

Attorneys: 2% times 8.6 million = 164000 attorney millionaires / 1.3 million total attorneys in USA = 12.4 percent

That substantially reduces the percentage of millionaire educators, but it is still higher than doctors or attorneys. Still interesting IMO. Of course, this all depends upon how representative the sample is in the original survey.
Are the "All educators" data numbers Postsecondary educators or all educators. Your paragraph before makes it seem it is only postsecondary, but then you mention it as: "All educators".

Also, I am assuming if this is pulled from BLS then you are talking about ACTIVE workers. So are you assuming the pension due to the educators into their numbers even though they have not received the pension? If you are shouldn't you adjust the numbers to the total income that a physician will earn through their working life when estimating their wealth as their equivalent of a pension? Also, shouldn't we be removing all the physician residents and fellows to get a better apples to apples comparison?

Apologize if the methodology of this back of the envelope calculation was discussed earlier as I did not read the other replies to this thread.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

xrayvsn
Posts: 61
Joined: Tue Jul 21, 2015 11:27 am
Location: Murfreesboro, TN
Contact:

Re: New book based on Millionaire Next Door

Post by xrayvsn » Sun Jul 22, 2018 9:26 am

Millionaire Next Door was one of the sentinel books I came across that shaped my financial future. I came across it much later than I should (early 40s) and some of the financial damage had already been done by that point.

As a physician there were some parts that definitely did not apply to me especially determining if you were a PAW or UAW because it made assumptions of salary that don't apply as a physician (white coat investor later modified this to better match the unusual income curve a physician typically gets (very low beginning for multiple years then a stratospheric rise in salary).

Most people have correctly pointed out above that physicians are often perceived to be wealthy but are really not being highly leveraged. I know several colleagues that live paycheck to paycheck to support their lifestyle and any income decline has them scrambling (one even considered a 401k loan despite a mid 6 figure practice for years).

There has been a better financial awakening in physicians recently thanks to sites like white coat and physician on fire as is evidenced by a surge in physician financial blogs (last count there were now 52 such blogs which I actually have started one this year as well).

This of course may be due to selection bias saying physicians are getting more financially savvy as the audience that visits these sites is likely a very small percentage of total physicians. But it is still a good sign that more and more blogs are popping up to tell their story and showcase warnings of bad financial practices.

As far as teachers have a better chance of being millionaires than physicians I totally buy it.

There are so many things going against a physician. First there is such a delay in gratification (medical school and then low salary residency) that when the first big money hits your checkbook in your early 30s you want to spend it to make up for lost time (I did buy buying a new car (Mercedes) a couple of months before that first big check (while I was in a fellowship).

Then there is social pressure to be the joneses because if you are a physician and don't have the doc house and doc car there is a perceived notion that you must not be doing very well or are not very good (same for a lawyer). Would you got to a lawyer to handle a big case that is driving a 30 year old beater or one that shows up with a new Maserati?

Some of us get it and live well below our means. With our high salary and high savings rate you can really make progress in the path to wealth and there is a small group that have a legitimate chance to retire early and have a wonderful life free of burnout (despite a devastating divorce right before I turned 40 that gutted me financially and emotionally I turned it around from a negative net worth to a positive net worth thanks to bogleheads (my first post in this site was in 2015 when I had just paid off my mortgage and needed advice to get me where I am today) and white coat as well as the millionaire next door. And now at age 47 I can see myself retiring at the latest at 55 and likely much earlier.

Leemiller
Posts: 1049
Joined: Sat Jun 01, 2013 12:42 pm

Re: New book based on Millionaire Next Door

Post by Leemiller » Sun Jul 22, 2018 9:33 am

Dave Ramsey is also coming out with a book based on a survey he conducted of his listeners who are millionaires. I think that may be an interesting read as well.

The bias on this forum for higher earners having nothing to show for it is a bit over the top. Based on knowing a lot of attorneys, I don’t know any who aren’t saving for retirement, kids college, etc. They may not be saving as high as percentage of income as a comparably earning small business owner, but they will still end up with seven figure wealth.
Last edited by Leemiller on Sun Jul 22, 2018 9:42 am, edited 1 time in total.

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Sun Jul 22, 2018 9:38 am

SelfEmployed123 wrote:
Sun Jul 22, 2018 8:29 am
golfCaddy wrote:
Wed Jul 18, 2018 8:13 pm
The study appears to lump K-12 teachers and college professors under the same category as educators.
I've revised the below numbers to include postsecondary educators. According to the Bureau of Labor Statistics, there are about 1.54 million postsecondary educators. I am not including teaching assistants because those jobs are temporary, so we are keeping our numbers to post-degree professionals only.

All Educators: 12% times 8.6 million = 984000 educator millionaires / 5.14 million total educators in USA = 19 percent

Doctors: 2% times 8.6 million = 164000 doctor millionaires / 953k total doctors in USA = 17 percent

Attorneys: 2% times 8.6 million = 164000 attorney millionaires / 1.3 million total attorneys in USA = 12.4 percent

That substantially reduces the percentage of millionaire educators, but it is still higher than doctors or attorneys. Still interesting IMO. Of course, this all depends upon how representative the sample is in the original survey.
I would also add that the data from BLS shows that teachers are 30% more likely to hold a 2nd job compared to non-teachers. Although the link below shows that even though one would think that summer is the most opportune time for a 2nd job, it shows that the 2nd job for teachers is not confined to summer.

https://www.brookings.edu/blog/brown-ce ... cond-jobs/

The linked article doesn't answer the "why", but it hints...

It’s particularly secondary school teachers and male teachers who have second jobs. Why are teachers more likely to take a second job? I suspect part of the difference is due to the fact that teachers are paid less, so they have greater incentive to increase their income. But I did a quick statistical analysis which suggests that earnings differentials only explain something over a third of the difference between the two groups. That means there is something more than pay differentials that matter. (For the record, according to the sample data teachers and non-teachers work the same number of weekly hours at their main job.) This leads to intriguing questions: Why do more teachers choose second jobs? Is it the pay differentials? Or might it be that teachers have easier access to second jobs because teachers and tutors are in demand?

If we include the summer months, teachers have time available. Throw in utilizing one's human capital while they can being another. If a teacher was working 40 hours a week, 50 weeks out of the year I'm sure it would be different. However, with Summer vacation, Spring Break, Fall Break, Christmas/Holiday Break, etc... - it all adds up to the dimension of time being created allowing both human capital energy to be made available, and the quest to increase earnings through side gigs/2nd jobs.

In my own line of work (music), colleagues take jobs as church musicians, directing a church choir, playing or singing professional gigs, teaching at non-school related summer music camps both domestic and international, working at summer music festivals, composing/editing music, etc... . Outside of music, I've got three colleagues/friends who have their own house painting business and each are able to clear an extra $15-$20K each summer painting as a 2nd job or side business while not teaching during the summer.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Sun Jul 22, 2018 10:15 am

Leemiller wrote:
Sun Jul 22, 2018 9:33 am
texasdiver wrote:
Wed Jul 18, 2018 12:32 pm
texasdiver wrote: ↑Thu Jul 19, 2018 12:03 pm
I have taught for 12 years in 2 states as a second career which I started at age 42. There are a few like me but I don’t think we affect the statistics.

My guess is that teaching is a majority female profession (especially at the lower grades) and that many many teachers are part of married households in which the male spouse is the primary earner. I knew many many teachers who were married to all kinds of higher paid professionals....executives, bank managers, regional managers of various businesses, doctors, lawyers, professors, administrators, etc, etc. I’m guessing that all the female teachers with higher paid spouses tend to distort the household income and wealth statistics for teachers. I think that would be a much more common scenario than wealthy individuals going into teaching as a second career.

This is obviously going to depend on the region. I think this holds true in upscale suburban areas where I taught. Not so much in rural areas where teachers are often the primary source of income in the family.
This. Many teachers are females married to higher earning males.

The bias on this forum for higher earners having nothing to show for it is a bit over the top. Based on knowing a lot of attorneys, I don’t know any who aren’t saving for retirement, kids college, etc. They may not be saving as high as percentage of income as a comparably earning small business owner, but they will still end up with seven figure wealth.
I think we can all agree on the variety of careers that are saving for retirement, college education funding, etc... .

I think we would need to see data to confirm some of the assumptions about teachers. 76% are female, 44% of teachers are under the age of 40, and 56% of teachers hold a Master's Degree or higher. The average salary for public school teachers in 2015–16 was $58,064.
https://nces.ed.gov/fastfacts/display.asp?id=28

https://www.bloomberg.com/graphics/2016 ... ries-whom/

For all marriages involving jobs in the U.S.:

1. The most common type of marriage was between grade-school teachers.
https://www.urbo.com/content/this-is-wh ... -your-job/

The work schedule being the same, meeting "on the job" as young professional teachers right out of college certainly leads to the obvious connection between two teachers (summer vacations together, spring break, holiday breaks, etc....). If we go with the data that 76% of teachers are female, well it makes sense that the percentage who do not marry another teacher due to supply/demand issues (before we even get into same-sex unions), then marrying somebody with another career is obvious. The first interactive link at Bloomberg is interesting to see the common connections between teachers and who they are marrying.

Lacking data that compares households where the income is derived solely from one industry/career path only (be it two teachers, two doctors, two welders, two lawyers, two restaurant managers, two professors, two small business owners, etc...) certainly leads the discussion into a lot of assumptions.

The blog post link below attempts to go deeper into the numbers....of this article: https://www.barrons.com/articles/SB5000 ... hare_tweet

https://iterativepath.wordpress.com/201 ... lionaires/
"Everywhere is within walking distance if you have the time." ~ Steven Wright

SelfEmployed123
Posts: 180
Joined: Sun Apr 15, 2018 8:57 pm

Re: New book based on Millionaire Next Door

Post by SelfEmployed123 » Sun Jul 22, 2018 10:54 am

staythecourse wrote:
Sun Jul 22, 2018 8:56 am
Are the "All educators" data numbers Postsecondary educators or all educators. Your paragraph before makes it seem it is only postsecondary, but then you mention it as: "All educators".

Also, I am assuming if this is pulled from BLS then you are talking about ACTIVE workers. So are you assuming the pension due to the educators into their numbers even though they have not received the pension? If you are shouldn't you adjust the numbers to the total income that a physician will earn through their working life when estimating their wealth as their equivalent of a pension? Also, shouldn't we be removing all the physician residents and fellows to get a better apples to apples comparison?
1. This back of the envelope calculation includes ALL educators (elementary school through college)
2. The numbers for all occupations include ACTIVE workers only, not retirees. I checked but could not find good data on retirees.
3. I'm not sure how pensions are taken into account in the original survey. I tried to check it but it is behind a paywall. Certainly the forced savings of pensions helps more teachers have financial independence.
4. I'm not inclined to adjust the numbers as I have very little basis to do so. I'd rather accept there is some bias/error in the estimate I made rather than potentially introducing new bias/error. I acknowledge the numbers aren't perfect.
5. No residents are included in the estimate of numbers of physicians. The data on physicians was for LICENSED physicians in medical practice. Yes that may include fellows. I consider fellows to be equivalent to new lawyers and new teachers, just with a different occupational label, so I believe it is apples to apples.
CyclingDuo wrote:
Sun Jul 22, 2018 10:15 am
https://www.bloomberg.com/graphics/2016 ... ries-whom/

For all marriages involving jobs in the U.S.:

1. The most common type of marriage was between grade-school teachers.
https://www.urbo.com/content/this-is-wh ... -your-job/

The work schedule being the same, meeting "on the job" as young professional teachers right out of college certainly leads to the obvious connection between two teachers (summer vacations together, spring break, holiday breaks, etc....). If we go with the data that 76% of teachers are female, well it makes sense that the percentage who do not marry another teacher due to supply/demand issues (before we even get into same-sex unions), then marrying somebody with another career is obvious. The first interactive link at Bloomberg is interesting to see the common connections between teachers and who they are marrying.

Lacking data that compares households where the income is derived solely from one industry/career path only (be it two teachers, two doctors, two welders, two lawyers, two restaurant managers, two professors, two small business owners, etc...) certainly leads the discussion into a lot of assumptions.

The blog post link below attempts to go deeper into the numbers....of this article: https://www.barrons.com/articles/SB5000 ... hare_tweet

https://iterativepath.wordpress.com/201 ... lionaires/
It's definitely true that who you marry has a huge influence and that is something my back of the envelope calculation cannot account for. Given it's not possible to account for that or the issue of pensions, I'd suggest just taking the larger picture view for a moment. I don't believe either marriage or the existence of pensions factors would overwhelmingly change the data, but for the sake of the argument what if they did? That would mean there is roughly an equal prevalence of millionaire households among teachers, attorneys, and physicians. Isn't that interesting? Doesn't that fly in the face of conventional wisdom? It really goes to show that steady employment, living within your means, avoiding debt, and saving/investing for the future (whether forced savings or voluntary) are huge determinants of net worth over time. All points very much at the heart of Millionaire Next Door.

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Sun Jul 22, 2018 11:08 am

SelfEmployed123 wrote:
Sun Jul 22, 2018 10:54 am
It really goes to show that steady employment, living within your means, avoiding debt, and saving/investing for the future (whether forced savings or voluntary) are huge determinants of net worth over time. All points very much at the heart of Millionaire Next Door.
Bingo! This confirms what we see here at BH all the time from a wide variety of career paths/industries. The formula works if computed correctly. 8-)

I can speak to the reality of real world teaching experience the past 15 years when asking administration what my budget is for the year and being told "$0" which certainly helps instruct one on how to get the most out of nothing over the years. This may help educators extrapolate similar budgeting tactics in their own personal households to live within their means.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

golfCaddy
Posts: 704
Joined: Wed Jan 10, 2018 10:02 pm

Re: New book based on Millionaire Next Door

Post by golfCaddy » Sun Jul 22, 2018 11:17 am

SelfEmployed123 wrote:
Sun Jul 22, 2018 10:54 am
It's definitely true that who you marry has a huge influence and that is something my back of the envelope calculation cannot account for. Given it's not possible to account for that or the issue of pensions, I'd suggest just taking the larger picture view for a moment. I don't believe either marriage or the existence of pensions factors would overwhelmingly change the data, but for the sake of the argument what if they did? That would mean there is roughly an equal prevalence of millionaire households among teachers, attorneys, and physicians. Isn't that interesting? Doesn't that fly in the face of conventional wisdom? It really goes to show that steady employment, living within your means, avoiding debt, and saving/investing for the future (whether forced savings or voluntary) are huge determinants of net worth over time. All points very much at the heart of Millionaire Next Door.
What's really interesting is 8% of the UHNW($5M+ excluding the primary residence) are educators. Repeating part of prior post: The average salary for public school teachers in 2015–16 was $58,064.
https://nces.ed.gov/fastfacts/display.asp?id=28
. I think we can all agree it's almost mathematically impossible to reach UHNW status earning $58k/year. Even on two full-time salaries, it's still almost impossible to reach UHNW, so what's going on there? I see three likely reasons.
1) married to a higher earning spouse
2) inheritance
3) teaching in college, which is a completely different animal than being a public school teacher

fortunefavored
Posts: 28
Joined: Tue Jun 02, 2015 8:18 pm

Re: New book based on Millionaire Next Door

Post by fortunefavored » Sun Jul 22, 2018 11:34 am

..I know a bunch of educators too, and many are multi-millionaires after 20 or 30 years, usually married to another educator.

The piece your missing is: Ability to take on risk. One tenured, your job is pretty much locked in and predictable. You can then invest in rentals or other speculative ventures on the side, with little concern about either paying your immediate bills or worrying about retirement. This is almost unique as far as modern careers go (you could argue medical is currently there.. but that is a house of cards which at least has to weigh on those mega-doctor salaries.)

seligsoj
Posts: 34
Joined: Mon Apr 25, 2016 11:44 am

Re: New book based on Millionaire Next Door

Post by seligsoj » Sun Jul 22, 2018 12:46 pm

Here's a blog post I created for a blog I have never developed yet on teachers becoming millionaires...I haven't had time to edit so there may be errors :)

Can a teacher become a millionaire?

In short, yes…teacher can become millionaires, particularly if they start investing when they are young, automate their contributions, and become veteran teachers working 30+ years. The easiest way to become a millionaire as a teacher is through the magic of compound interest in a 403B with low fees, over the span of many years worked. Of course, there are other paths to becoming a millionaire such as marrying into money or inheriting a windfall…….these have certainly eluded me and so I can’t share much wisdom on these avenues :)

For this example, I took the average national public teacher salary based on years of experience and utilized: an average salary of $45,000 for years 1-10, an average salary of $55,000 for years 11-20, and an average salary of $62,500 for years 20 through 35. If the average teacher invests 15% of their income for every year worked, during a 35 year career span, at an average of 7% interest compounded, they would have $1,117,609.78 by the time they completed their career. Pretty sweet, huh?

What would be the implications if you started working at a higher paying school district such as in the District of Columbia with a Master’s Degree? You would make an average salary of 60,500 for years 1-10; an average salary of 73,800 for years 11-20, and an average salary of $100, 839 for years 21-30. If you invested 15% of your income for every year worked at an average of 7% interest compounded, you would have $1,586,358.17 at the completion of your 35 year career. Not too shabby for a teacher! Now imagine if you were married to another fiscally impressive teacher…..that would be over $3,000,000!!! Shazamm!!

What happens if the teacher with the average salary didn’t start saving until you’re 40? If you saved 15% of your $62,500 salary at 7% interest for a retirement in your mid fifties, you would only have $252,000. If you saved half of your salary...no small feat…..under the same conditions, you would reach $1,031,219.77 by the time you were 57.

In short, the best gift you could give to your future self is to begin investing at least 15% of your salary as soon as you get your first teaching job and have it automatically deducted from your paycheck (with a big caution to check out my article on 403Bs versus IRAs first to know where to direct your money). If you are always forced to live on less, you’ll never know what you’ll be “missing.” If you missed the boat when you were younger…….you can still reach a million, but you will need to put aside a much more significant portion of your salary in order to do so or be willing to work for a longer period of time.

Now, let’s also include a brief discussions of the worth of your pension here, because this can be a significant contributor to your bottom line. A veteran teacher working in my district for 30 years would get 2% X years worked X the average of the last year salaries. In my district this would work out: 2% X 30 X $108,000 = $64,8000 a year. The average life expectancy for men/women is 76/81--let’s average it out and round up to 79. A career teacher who fulfills 30 years in many states at the age of 55 can expect to collect the pension for approximately 24 years. That works out to 1,555,200 over a lifetime. Now we haven’t even factored in extra perks such as the worth of retiree health care or retiree cost of living adjustments which could easily up this figure to much more. So in the example of the two teacher couple, who invested early and wisely, would have $3,000,000 in investable assets and an additional combined pension value with a life-span of around 25 years following retirement of $3,000,0000 for a total of $6,000,0000.

fourwheelcycle
Posts: 458
Joined: Sun May 25, 2014 5:55 pm

Re: New book based on Millionaire Next Door

Post by fourwheelcycle » Sun Jul 22, 2018 1:23 pm

Post deleted.
Last edited by fourwheelcycle on Sun Jul 22, 2018 1:29 pm, edited 1 time in total.

StarsandStripes
Posts: 31
Joined: Sun Mar 24, 2013 9:16 pm

Re: New book based on Millionaire Next Door

Post by StarsandStripes » Sun Jul 22, 2018 1:27 pm

My mother was a teacher until 65 when she retired. She died at 90 a couple of years ago. She did not inherit anything. She had two years in a nursing home which was expensive. She had a modest house. Her estate was seven figures. She could stretch a penny further than anyone. Stretching those pennies is how she did it. Thank you to all of the hard working teachers that influenced our lives.

golfCaddy
Posts: 704
Joined: Wed Jan 10, 2018 10:02 pm

Re: New book based on Millionaire Next Door

Post by golfCaddy » Sun Jul 22, 2018 1:31 pm

seligsoj wrote:
Sun Jul 22, 2018 12:46 pm
Here's a blog post I created for a blog I have never developed yet on teachers becoming millionaires...I haven't had time to edit so there may be errors :)

Can a teacher become a millionaire?

For this example, I took the average national public teacher salary based on years of experience and utilized: an average salary of $45,000 for years 1-10, an average salary of $55,000 for years 11-20, and an average salary of $62,500 for years 20 through 35. If the average teacher invests 15% of their income for every year worked, during a 35 year career span, at an average of 7% interest compounded, they would have $1,117,609.78 by the time they completed their career. Pretty sweet, huh?
That might be possible, if you are invested aggressively and at the right time. The long run, real return on stocks is about 5.3%. 30-year TIPS yield less than 1%. For a balanced portfolio, I would consider 4% after inflation but before taxes to be on the optimistic end of expected returns. Using the same salary assumptions and a 4% rate of return, you would accumulate $582k. With a 3% rate of return, you would accumulate $483k. With two teachers in an average district, not counting your home value and pension, you might make into millionaire status, but barely.
Last edited by golfCaddy on Sun Jul 22, 2018 1:51 pm, edited 2 times in total.

staythecourse
Posts: 5983
Joined: Mon Jan 03, 2011 9:40 am

Re: New book based on Millionaire Next Door

Post by staythecourse » Sun Jul 22, 2018 1:43 pm

SelfEmployed123 wrote:
Sun Jul 22, 2018 10:54 am
5. No residents are included in the estimate of numbers of physicians. The data on physicians was for LICENSED physicians in medical practice. Yes that may include fellows. I consider fellows to be equivalent to new lawyers and new teachers, just with a different occupational label, so I believe it is apples to apples.
Thanks for the clarifications. Just to let you know the point above likely DOES include residents then. Residents legally have to have a license to practice medicine. It is just a temporary license though since they will eventually have to graduate and reapply for a permanent license. I am pretty sure the BLS does not differentiate between temporary vs. permanent license. So yes the data likely does include resident physicians.

Also, the results of this whole discussion is likely WAY OFF from the truth if any pension is figured into the data for teachers. It should be obvious if one did include their current and FUTURE income (via pension) then the only way to make an apples to apples complarison is to extrapolate a doctors FULL working career as well. Does that make sense? Comparing a teachers wealth based on current and pension commitments to a doctor who is only 10 years into practice is not a fair comparison. You would have to project forward all their wealth at full retirement for each occupation. Or you have to subtract out ALL the pension obligations for teachers and compare only wealth at current levels while they are working for the two subgroups. Either way is a much better comparison.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

ks289
Posts: 626
Joined: Sun Mar 11, 2012 12:42 pm

Re: New book based on Millionaire Next Door

Post by ks289 » Mon Jul 23, 2018 6:56 am

willthrill81 wrote:
Wed Jul 18, 2018 10:34 am
Carefreeap wrote:
Wed Jul 18, 2018 10:09 am
My parents were convinced that if you were a doctor you wouldn't have any money problems and that's just not true.
:thumbsup

Absolutely. It comes from the mindset that income equals wealth, but that's just plain wrong on several levels.

We have a friend who's a gastroenterologist in his mid-30s. With all of his debt, he will probably be in his mid 40s before his net worth reaches zero. Granted, if he can hang in there and not burn out, he stands a good chance of having significant wealth by the time he's in his 60s, but I certainly wouldn't trade financial places with him.
There is a lot of interesting information on this thread regarding poor wealth accumulation among physicians. Granted, for many physicians spending habits likely exceed the average among other professions.
For gastroenterology, the median salary according to MGMA exceeds $500K annually. It would be surprising to me if a (non-academic) GI doc who is a reasonably prudent saver could not overcome education debt earlier.

SQRT
Posts: 863
Joined: Sat Feb 05, 2011 9:44 am

Re: New book based on Millionaire Next Door

Post by SQRT » Mon Jul 23, 2018 7:19 am

Leemiller wrote:
Sun Jul 22, 2018 9:33 am

The bias on this forum for higher earners having nothing to show for it is a bit over the top. Based on knowing a lot of attorneys, I don’t know any who aren’t saving for retirement, kids college, etc. They may not be saving as high as percentage of income as a comparably earning small business owner, but they will still end up with seven figure wealth.
I think you may be referring to the common discussion here about people who make a lot but don’t save. Common problem for sure but around here it seems to dominate. We really love to talk about “financial losers” ie those that don’t LBYM. Makes us feel better, I guess.

There is tremendous wealth in the US. Not everybody who drives a nice car or lives in a nice house is living beyond their means. I believe most people who spend a lot can afford to do so. You would never know it by hanging around here.

Quite often someone with a “big hat” also has “a lot of cattle”.

KlangFool
Posts: 10159
Joined: Sat Oct 11, 2008 12:35 pm

Re: New book based on Millionaire Next Door

Post by KlangFool » Mon Jul 23, 2018 8:54 am

SQRT wrote:
Mon Jul 23, 2018 7:19 am
Leemiller wrote:
Sun Jul 22, 2018 9:33 am

The bias on this forum for higher earners having nothing to show for it is a bit over the top. Based on knowing a lot of attorneys, I don’t know any who aren’t saving for retirement, kids college, etc. They may not be saving as high as percentage of income as a comparably earning small business owner, but they will still end up with seven figure wealth.
I think you may be referring to the common discussion here about people who make a lot but don’t save. Common problem for sure but around here it seems to dominate. We really love to talk about “financial losers” ie those that don’t LBYM. Makes us feel better, I guess.

There is tremendous wealth in the US. Not everybody who drives a nice car or lives in a nice house is living beyond their means. I believe most people who spend a lot can afford to do so. You would never know it by hanging around here.

Quite often someone with a “big hat” also has “a lot of cattle”.
SQRT,

<< I believe most people who spend a lot can afford to do so. >>

I disagreed. As per my first-hand observation in my annual median income 150K neighborhood with median house price of 500K to 600K, that is not true.

KlangFool

KlangFool
Posts: 10159
Joined: Sat Oct 11, 2008 12:35 pm

Re: New book based on Millionaire Next Door

Post by KlangFool » Mon Jul 23, 2018 9:00 am

Folks,

Between the discussion of educator/teacher versus doctors/lawyers, it should be clear that engineers have a good combination for wealth accumulation.

A) Low startup cost -> 4 years bachelor degree. Less time and less student loan.

B) Higher average median income -> Higher median income than educators/teachers

C) Higher starting pay

D) Less keep up with the Jones pressure.

KlangFool

staythecourse
Posts: 5983
Joined: Mon Jan 03, 2011 9:40 am

Re: New book based on Millionaire Next Door

Post by staythecourse » Mon Jul 23, 2018 9:33 am

ks289 wrote:
Mon Jul 23, 2018 6:56 am
willthrill81 wrote:
Wed Jul 18, 2018 10:34 am
Carefreeap wrote:
Wed Jul 18, 2018 10:09 am
My parents were convinced that if you were a doctor you wouldn't have any money problems and that's just not true.
:thumbsup

Absolutely. It comes from the mindset that income equals wealth, but that's just plain wrong on several levels.

We have a friend who's a gastroenterologist in his mid-30s. With all of his debt, he will probably be in his mid 40s before his net worth reaches zero. Granted, if he can hang in there and not burn out, he stands a good chance of having significant wealth by the time he's in his 60s, but I certainly wouldn't trade financial places with him.
There is a lot of interesting information on this thread regarding poor wealth accumulation among physicians. Granted, for many physicians spending habits likely exceed the average among other professions.
For gastroenterology, the median salary according to MGMA exceeds $500K annually. It would be surprising to me if a (non-academic) GI doc who is a reasonably prudent saver could not overcome education debt earlier.
To each their own, but I will take 500k+ nearly guaranteed for the rest of my working life with nearly 100% job security in this comparison. In the example given IF the GI doc wanted the loans to be done he could do it before he is 40 and would be at 5+ million liquid net worth at 50-55 AT WORST. Mind you ALL of that money can be transferred in an estate on his death. The BIGGEST issue with SS and pensions is they can not be inherited. They die when your spouse and you die. Not the deal I would choose over a shot at that high of trans generational wealth as a bonus.

Now on the subtopic of teachers being millionaires? Of course they can. How many stories do you have to read about the librarian who was worth 10+ million of figure out being a millionaire has NOTHING to do with income and EVERYTHING to do with saving. Income is about one's profession and saving is all about mindset and discipline. Two totally different things. One doesn't always influence the other. If it did every specialist physician would be worth 5+ million (heck likely 10+ million) and that simply is not true. Growing your money is much more important then earning the money. Liken it to gardening. It is easy to dig a hold and throw a plant in there, but requires a greater thought process to GROW that plant. Same as growing wealth.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

User avatar
meowcat
Posts: 387
Joined: Wed May 09, 2012 5:46 am

Re: New book based on Millionaire Next Door

Post by meowcat » Mon Jul 23, 2018 11:44 am

I can sum up The Millionaire Next Door in just 4 words:
It changed my life.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

texasdiver
Posts: 2647
Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: New book based on Millionaire Next Door

Post by texasdiver » Mon Jul 23, 2018 11:50 am

golfCaddy wrote:
Sun Jul 22, 2018 1:31 pm
seligsoj wrote:
Sun Jul 22, 2018 12:46 pm
Here's a blog post I created for a blog I have never developed yet on teachers becoming millionaires...I haven't had time to edit so there may be errors :)

Can a teacher become a millionaire?

For this example, I took the average national public teacher salary based on years of experience and utilized: an average salary of $45,000 for years 1-10, an average salary of $55,000 for years 11-20, and an average salary of $62,500 for years 20 through 35. If the average teacher invests 15% of their income for every year worked, during a 35 year career span, at an average of 7% interest compounded, they would have $1,117,609.78 by the time they completed their career. Pretty sweet, huh?
That might be possible, if you are invested aggressively and at the right time. The long run, real return on stocks is about 5.3%. 30-year TIPS yield less than 1%. For a balanced portfolio, I would consider 4% after inflation but before taxes to be on the optimistic end of expected returns. Using the same salary assumptions and a 4% rate of return, you would accumulate $582k. With a 3% rate of return, you would accumulate $483k. With two teachers in an average district, not counting your home value and pension, you might make into millionaire status, but barely.
I’ve taught in two states: TX and WA

In Texas your hypothetical teacher retiring after 35 years with a final salary of $62,500 would earn an annual non-COLAd pension of $50,313 with NO social security ($62,500 x 35 x 0.023) Once in a blue moon the state pays a 13th month bonus pension payment to retirees but it never goes up.

In WA your same hypothetical teacher would earn a COLAd pension of $43,750 PLUS social security ($62,500 x 35 x .02). So the WA teacher clearly comes out ahead.

In both of these examples you have the teacher retiring at about age 60 if they started teaching at about age 25. They could goose the pension an additional 15% or so by working an additional 5 years to age 65.

In my experience, most teachers do not have much in the way of additional retirement savings. Maybe some IRAs or a small 403(b) variable annuity they were sold by the sharks. What teachers typically do is either keep working until the pension math works out for them to retire, or else find a side gig like real estate after they retire. I’m guessing that the great majority of “millionaire” teachers either have inherited wealth or higher earning spouses or both. It would be a small minority that saved 15% of income into additional retirement accounts for the duration of their careers.

seligsoj
Posts: 34
Joined: Mon Apr 25, 2016 11:44 am

Re: New book based on Millionaire Next Door

Post by seligsoj » Mon Jul 23, 2018 6:35 pm

texasdiver wrote:
Mon Jul 23, 2018 11:50 am
golfCaddy wrote:
Sun Jul 22, 2018 1:31 pm
seligsoj wrote:
Sun Jul 22, 2018 12:46 pm
Here's a blog post I created for a blog I have never developed yet on teachers becoming millionaires...I haven't had time to edit so there may be errors :)

Can a teacher become a millionaire?

For this example, I took the average national public teacher salary based on years of experience and utilized: an average salary of $45,000 for years 1-10, an average salary of $55,000 for years 11-20, and an average salary of $62,500 for years 20 through 35. If the average teacher invests 15% of their income for every year worked, during a 35 year career span, at an average of 7% interest compounded, they would have $1,117,609.78 by the time they completed their career. Pretty sweet, huh?
That might be possible, if you are invested aggressively and at the right time. The long run, real return on stocks is about 5.3%. 30-year TIPS yield less than 1%. For a balanced portfolio, I would consider 4% after inflation but before taxes to be on the optimistic end of expected returns. Using the same salary assumptions and a 4% rate of return, you would accumulate $582k. With a 3% rate of return, you would accumulate $483k. With two teachers in an average district, not counting your home value and pension, you might make into millionaire status, but barely.
I’ve taught in two states: TX and WA

In Texas your hypothetical teacher retiring after 35 years with a final salary of $62,500 would earn an annual non-COLAd pension of $50,313 with NO social security ($62,500 x 35 x 0.023) Once in a blue moon the state pays a 13th month bonus pension payment to retirees but it never goes up.

In WA your same hypothetical teacher would earn a COLAd pension of $43,750 PLUS social security ($62,500 x 35 x .02). So the WA teacher clearly comes out ahead.

In both of these examples you have the teacher retiring at about age 60 if they started teaching at about age 25. They could goose the pension an additional 15% or so by working an additional 5 years to age 65.

In my experience, most teachers do not have much in the way of additional retirement savings. Maybe some IRAs or a small 403(b) variable annuity they were sold by the sharks. What teachers typically do is either keep working until the pension math works out for them to retire, or else find a side gig like real estate after they retire. I’m guessing that the great majority of “millionaire” teachers either have inherited wealth or higher earning spouses or both. It would be a small minority that saved 15% of income into additional retirement accounts for the duration of their careers.
Hey PP,
I agree with you that many of the teachers I work with don't save for retirement...and certainly not 15% of their salary beginning in their 20s. In many states, teachers just don't make enough to be able to put that kind of money aside...unless they are ultra frugal. In the district where I work in Maryland, teachers are actually well compensated, albeit the cost of living is higher. We have an ideal situation in my district where we have access to very low cost 403bs. As a result, I think it would be easier to put aside 15 percent where I work, however the vast majority of teachers I have talked too don't. Many of them have never been taught that it's important to do this. Teachers are predominantly women and many of us were never taught financial literacy unfortunately.
In talking about increasing pension output, if I worked in Maryland for 30 years and then went to neighboring Virginia, and taught for another 10 years the math actually works out quite nicely...I would collect a Maryland pension while I was working in Virginia (and I'd be making mid six figures) and then 2 pensions when I finally retired. If teachers want to be millionaires, its much easier if they work in high paying areas and do some "geographic arbotrage."

User avatar
Toons
Posts: 12963
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: New book based on Millionaire Next Door

Post by Toons » Mon Jul 23, 2018 6:37 pm

Brilliant,,,
Packaging Common Sense,,,and
Selling It.



:happy :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

smectym
Posts: 221
Joined: Thu May 26, 2011 5:07 pm

Re: New book based on Millionaire Next Door

Post by smectym » Mon Jul 23, 2018 6:48 pm

I don't know a lot about the medical profession, but speaking as a (now basically retired) attorney: merely learning that someone is "an attorney," without more, doesn't tell us much about that individual's earning power and wealth accumulation prospects.

Only a very small (and decreasing) fraction of those who acquire law degrees and pass the bar wind up at the big law firms where the stereotypical "healthy six-figure salary to start and from there it just keeps getting better" compensation is the norm, and of those who do make the cut and get a big firm job, still fewer make it up the pyramid to the type of secure partner position that can generate really serious income over a span of years. And those jobs tend to cluster in very HCOL metro areas.

Within the well-compensated attorney cohort, re traits like bogleheadism, willingness to save and invest, zeal to pay down law school debt, and caution/lack of caution toward excessive expenditure: I'd say it's all over the map. A lot of very smart attorneys when it comes to the law are also very smart about their personal finances; others can exhibit startling naivete. Some tend to rely too much on supposed "insider" deals like private equity funds that look to biglaw attorneys as a natural pool of capital and "allow" them to invest, as opposed to just opening a Vanguard Total Stock Market Fund account. On the other hand, some do score big on those private equity deals.

Smectym

User avatar
willthrill81
Posts: 5748
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: New book based on Millionaire Next Door

Post by willthrill81 » Mon Jul 23, 2018 6:50 pm

Toons wrote:
Mon Jul 23, 2018 6:37 pm
Brilliant,,,
Packaging Common Sense,,,and
Selling It.



:happy :happy
Image
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
Toons
Posts: 12963
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: New book based on Millionaire Next Door

Post by Toons » Mon Jul 23, 2018 7:04 pm

willthrill81 wrote:
Mon Jul 23, 2018 6:50 pm
Toons wrote:
Mon Jul 23, 2018 6:37 pm
Brilliant,,,
Packaging Common Sense,,,and
Selling It.



:happy :happy
Image

Excellent :sharebeer :sharebeer :sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

A440
Posts: 224
Joined: Mon Sep 02, 2013 7:46 am
Location: NJ

Re: New book based on Millionaire Next Door

Post by A440 » Tue Jul 24, 2018 6:46 am

One of the financial literacy books in my library is "Millionaire Teacher" by Andrew Hallum. Along w/ TMND, and Bogle's "Little Book of Common Sense Investing", it should be added to required summer reading for new teachers. However, "You can lead a horse to water..."

In my experience as a teacher for the last 25 years, most of my colleagues do not have the interest or time to learn about investing. We live in a "bubble" of 504's, IEP's / IEP meetings, meeting standardized tests requirements, SGO's/SGP's, lesson plans, grading, learning new curriculum and technology platforms almost every year, calling/emailing parents and administrators during our prep and lunch, and classroom management to name a few. Then most coach, advise a club, or have a second job after school is finished. Or like most people, they go home to be a Mom or Dad. A job that has great benefits, but lousy pay. :happy

Some young teachers will sign up for a 403(b) because they were advised to do so by a veteran teacher. AXA Equitable is very aggressive in our district and will get most to sign up for a variable annuity. Those that have a little more inclination to do some research might sign up for a 403(b)7 with Lincoln and avoid an annuity. Best case scenario, the teacher has access to a self-directed plan and can invest with Vanguard or Fidelity to take advantage of low-cost index funds or Target-date funds. If I can, I try to be at the new teacher orientation meeting each year to let the new recruits know of their 403(b) options, but most are so overwhelmed with all their new responsibilities that the 403(b) information does not get stored in their heads.

User avatar
obafgkm
Posts: 292
Joined: Fri Mar 11, 2016 9:12 am
Location: Pennsylvania

Re: New book based on Millionaire Next Door

Post by obafgkm » Tue Jul 24, 2018 7:54 am

getthatmarshmallow wrote:
Fri Jul 20, 2018 10:34 am
I suspect, in the case of university professors, that those that are likely to become millionaires benefit from the time spent in grad school making comparatively little money, and thus avoiding early lifestyle inflation, and from professional norms that tend not to value certain kinds of consumerism. (...)

Plus, at least in my case, the non-monetary perks of the job make up for somewhat lower salaries. (...) So I can live an upper middle class lifestyle for a significant discount, while taking advantage of lots of tax advantaged space.
In my and my (late) wife's situation, this is certainly true. We are/were college professors (different institutions) and we lived very much like grad students for several years even after we got our tenure-track jobs. That allowed us to save a fair amount of money by maxing our retirement contributions.

I hadn't thought of the other perks from my job, besides the help with my middle-school-aged child's college tuition (free where I work, discounted elsewhere) when that time comes. But the free gym (which I should make better use of :happy), my time being generally my own during the school year and during the summers (so I can spend it with family if needed), and being in a relatively low-cost-of-living area helps.

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Tue Jul 24, 2018 8:00 am

A nice study to couple with The Millionaire Next Door series would be the academic study called "The College Payoff" which is available here: https://www2.ed.gov/policy/highered/reg ... payoff.pdf

It takes a look at career earnings in various fields of study, various degrees, and gender. If we take a look at some of the data for lifetime earnings based on field, degree obtained - you can start to see how a career - be it in education, health, STEM, managerial, etc... - provides a base of income over one's career to be able to save money and build up a nest egg. The formula is the same - as we all know - regardless of the occupation for accumulating wealth. So Education has just as clear of a path to becoming a millionaire as some other occupations. Saving, investing, and living within one's means being required for all occupations to reach that monetary status of having accumulated $1M or more.

Since I have been involved in the education discussion within this thread and having taught the past 15 years at the post secondary level, and married to somebody who also works in the field (both hold advanced degrees), I know well our cash flow, what we have saved, and how we have done it on our incomes. We also socialize with many in our field ranging from dual income couples in education, to mixed occupation couples, and certainly the discussion of pensions, 403b's/457b's, taxable savings, retirement, Social Security, permeate enough of a part of our social discussions to have a grasp of where we have all ended up in our 50's and early 60's.

This chart from "The College Payoff" link above, points out where education ranks in lifetime earnings...

Image

Top 10 Occupations with Master's Degrees and lifetime earnings (remember, 56% of teachers have a Master's Degree or higher)...

Image

Top 10 Occupations with Doctoral Degrees and lifetime earnings (most college/university professors - called post secondary - fall into this category)...

Image

Top 10 Occupations with Professional Degrees and lifetime earnings...

Image

Finally, this data compares the gender gap in pay...

Image

When factoring in a lifetime of earnings, and using the formula of living within one's means while saving each and every year throughout one's career, it shouldn't surprise any BH that occupation is not the most important part of the equation. Education being just one of those fields, but it ranks high enough in career earnings to provide the opportunity for accumulating wealth.

By the way, I have used the document (with permission) in my teaching a general education course each year for freshmen to help guide them and their fears of student loan debt, choice of career, expected earnings, and coupled it with talking about savings, 401k/403b/457b/pension/SS, etc... to start their college careers off. I have received amazing feedback from the students the past few years after the unit covering this information.
Last edited by CyclingDuo on Tue Jul 24, 2018 8:45 am, edited 1 time in total.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Tue Jul 24, 2018 8:35 am

obafgkm wrote:
Tue Jul 24, 2018 7:54 am
I hadn't thought of the other perks from my job, besides the help with my middle-school-aged child's college tuition (free where I work, discounted elsewhere) when that time comes.
Yes, this is a HUGE benefit for professors/administration/staff who work at colleges or universities that provide the free tuition remission for children of employees. In many cases, it is a partial tuition remission rather than full tuition remission. My institution provided free full tuition not only at our school, but within a network of hundreds of schools provided the student could get accepted into one of those schools and the tuition remission exchange could meet the quota and be worked out between the two institutions.

In our case, the value of full tuition remission for one child was worth $137K at the time for the 4 years of study!! We still had to foot all of the bills for housing/food, special school related trips, transportation, plus the usual fees - but the free $137K was an amazing perk! Of course, the other child - in spite of our powers of suggestion - chose to go to a school that was not within the network. :shock: Fortunately, and according to our goals/plans, we had been saving for their college educations since they were born and had saved enough to cover both their undergraduate and graduate degrees. We gave both of them the remaining balance in those accounts to begin their lifetime savings which was an unexpected perk for both of them.

The benefit is not only HUGE for the parents, but sending your children out into their working careers with no debt in today's society with the student loan crisis is - in our opinion - an even larger benefit. We would take the tuition remission perk and zero debt for our children over the free gym membership any day of the week.
:sharebeer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

LiterallyIronic
Posts: 795
Joined: Sat Dec 05, 2015 10:36 am

Re: New book based on Millionaire Next Door

Post by LiterallyIronic » Tue Jul 24, 2018 9:53 am

timmy wrote:
Mon Jul 16, 2018 7:03 am
the authors decided to take another look at millionaires in the United States to examine what changes could be seen 20 years after the original publication of The Millionaire Next Door. In this book the authors highlight how specific decisions, behaviors, and characteristics align with the discipline of wealth building, covering areas such as consumption
Am I the only one who did not like The Millionaire Next Door? It was completely unrelatable to us common folk. It was filled with stuff like, "Millionaires don't buy $5,000 suits, they buy $1,000 suits." Seriously? I buy $100 suits off the rack during sales. The book might as well have said, "Millionaires are so rich they can afford to buy $1,000 suits." Gee, thanks for the insight.

texasdiver
Posts: 2647
Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: New book based on Millionaire Next Door

Post by texasdiver » Tue Jul 24, 2018 10:28 am

A440 wrote:
Tue Jul 24, 2018 6:46 am
One of the financial literacy books in my library is "Millionaire Teacher" by Andrew Hallum. Along w/ TMND, and Bogle's "Little Book of Common Sense Investing", it should be added to required summer reading for new teachers. However, "You can lead a horse to water..."

In my experience as a teacher for the last 25 years, most of my colleagues do not have the interest or time to learn about investing. We live in a "bubble" of 504's, IEP's / IEP meetings, meeting standardized tests requirements, SGO's/SGP's, lesson plans, grading, learning new curriculum and technology platforms almost every year, calling/emailing parents and administrators during our prep and lunch, and classroom management to name a few. Then most coach, advise a club, or have a second job after school is finished. Or like most people, they go home to be a Mom or Dad. A job that has great benefits, but lousy pay. :happy

Some young teachers will sign up for a 403(b) because they were advised to do so by a veteran teacher. AXA Equitable is very aggressive in our district and will get most to sign up for a variable annuity. Those that have a little more inclination to do some research might sign up for a 403(b)7 with Lincoln and avoid an annuity. Best case scenario, the teacher has access to a self-directed plan and can invest with Vanguard or Fidelity to take advantage of low-cost index funds or Target-date funds. If I can, I try to be at the new teacher orientation meeting each year to let the new recruits know of their 403(b) options, but most are so overwhelmed with all their new responsibilities that the 403(b) information does not get stored in their heads.
So true. In all the schools I have taught at there is basically a benefits fair in August during the back to school inservice week. It happens when teachers are hurried and stressed about wanting to get back into their classroom to prep for th upcoming school year and annoyed by all the endless red tape. Teachers make the rounds of all the booths to wait in line and deal with all the benefits sign ups: Health insurance, life insurance, group life insurance, FSA/HSA accounts, union or association dues, child care options, ancillary benefits like healthy living activities and clubs, and retirement planning. The only retirement planning people who show up are the usual high priced variable annuity sales people from insurance companies who are masquerading as financial advisors. They usually have their table booths with lots of slick literature and the fact that they are there provides the perception that they are endorsed by the school district. Teachers are trusting and get sucked in.

In my last two states teachers have had access to zero-fee 403b or 457 options but they were among the best kept secrets anywhere. I never met another teacher ever who knew they existed. In TX one can do a zero fee self administered 403b plan through Vanguard but no teacher or administrator seems to know that option exists or is possible. In WA there is a state run deferred compensation 457 plan available with extremely low fee index funds available that no one seems to know about either. But the only options that teachers ever hear about are from the sharks like AXA who show up to the benefits fair to sell variable annuities.

acegolfer
Posts: 1092
Joined: Tue Aug 25, 2009 9:40 am

Re: New book based on Millionaire Next Door

Post by acegolfer » Tue Jul 24, 2018 10:40 am

I never read the 1st 2 books. If a college student needs to read 1 of the 3 books, which would you recommend?

User avatar
CyclingDuo
Posts: 1727
Joined: Fri Jan 06, 2017 9:07 am

Re: New book based on Millionaire Next Door

Post by CyclingDuo » Tue Jul 24, 2018 10:42 am

texasdiver wrote:
Tue Jul 24, 2018 10:28 am
So true. In all the schools I have taught at there is basically a benefits fair in August during the back to school inservice week. It happens when teachers are hurried and stressed about wanting to get back into their classroom to prep for th upcoming school year and annoyed by all the endless red tape. Teachers make the rounds of all the booths to wait in line and deal with all the benefits sign ups: Health insurance, life insurance, group life insurance, FSA/HSA accounts, union or association dues, child care options, ancillary benefits like healthy living activities and clubs, and retirement planning. The only retirement planning people who show up are the usual high priced variable annuity sales people from insurance companies who are masquerading as financial advisors. They usually have their table booths with lots of slick literature and the fact that they are there provides the perception that they are endorsed by the school district. Teachers are trusting and get sucked in.

In my last two states teachers have had access to zero-fee 403b or 457 options but they were among the best kept secrets anywhere. I never met another teacher ever who knew they existed. In TX one can do a zero fee self administered 403b plan through Vanguard but no teacher or administrator seems to know that option exists or is possible. In WA there is a state run deferred compensation 457 plan available with extremely low fee index funds available that no one seems to know about either. But the only options that teachers ever hear about are from the sharks like AXA who show up to the benefits fair to sell variable annuities.
Although I would like to say that HR departments in education owe their employees some education when it comes to what is available, it's not the case - both in public school education and in the college/university side of teaching. They don't owe the employees this education and are not in the business of having to teach it. Unfortunate, but true.

Luckily, there is plenty of material available if one (an employee) wants to educate themselves about the plans and options available. This is true for any occupation when studying the benefits and plans available.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Locked