Book Review: “TEACH and Retire RICH”

Review by Steve Schullo

I have known Dan Otter, the author of this terrific book, for 20 years. Daniel Otter’s seventh edition of TEACH and retire RICH should be in the home library of every public-school teacher. In his short, 150-page, easy-to-read book, readers have everything you need to start or adjust your school district’s tax-deferred retirement plan. If you have a question about anything in one of the most perplexing and intimidating world of personal finance, Dan’s book explains it all with jargon-free English.

My review is different and lengthy. I take the liberty of inputting my personal experiences with some of the book’s material. While he writes about the types of choices available, I will help you understand what Dan is saying in the real world. My story is identical to his, not knowing anything until a salesperson sold me a terrible tax-shelter annuity (TSA) plan. Thus, hang on for a lengthy review.

The Updated Definition of the Image-Loaded word RICH!

Let’s begin with the title, TEACH and retire RICH. I had seen groups of teachers laugh out loud when they heard the word “RICH.” Of course, “Rich” carries the images of mansions, servants, limos while living in lavish residential areas of New York or Los Angeles. With all the financial information available today just about anybody who works full-time who controls their expenses and manages their money can achieve financial independence earlier than 65.

YES, Colleagues! You don’t have to teach for 35 years so your pension supports you. You can retire early, much earlier than you think.

My late husband Dan and I have already experienced the author’s pearls of wisdom that the author teaches as we did TEACH and retire RICH! In our definition, “Rich” is the ability to retire early with financial peace of mind, no debts, owning a nice home located at a retirement resort community, traveling, donating to worthy causes, with a financially comfortable nest egg. My husband Dan retired at 59 and I at 61, and never worked for money again.

While the author dedicates his book to the classroom teacher, substitutes, administrators, custodians, teacher assistants, and office staff would benefit too. Any district employee that works full-time (and some qualified part-time employees also) have access to the most common tax-deferred retirement plans offered to public sector employees, technically called by the IRS as the 403(b) and 457(b) plans.

Why would public employees need to save additional money when they have pensions?” Pension plans are lovely, but the benefit is not enough financial support. Even though almost all public educators have pension plans, most educators don’t work long enough to qualify for 100% of their salaries. I only worked for 24 years as a teacher, so I qualified for 49% of my teacher’s salary (recall that teachers make about one-third to one-half as much as district executives—the administrators). If my hubby and I were to retire early, we had to save extra.

TEACH and retire RICH! fills the huge information gap of providing educators the objective information they need to start saving in these supplemental plans. Reading Dan’s book would have helped me avoid my first financial mistake of buying an annuity.

Objective Information is “Objective” because the teacher benefits by getting information on all options, returns, and costs. Sales Pitches are Biased because the salesperson’s motivation is to benefit himself or herself more, A LOT MORE, than the teacher. Costs, returns, and other options are not disclosed. 

But don’t educators get the information they need under the current system, such as their employers or unions? Hell NO! There is a long and sordid history of the complicated insurance industry’s relationship with school districts, teachers’ unions, teachers themselves, and the legislative process. Because of confounded factions within the education profession each with their own agendas, objective financial information about volunteer retirement plans is secret, scant, and difficult to find.

What the typical educator hears are useless sales pitches. Sales Pitches are NOT objective! They are masked by extremely biased financial information which has been monopolized by the insurance industry and its agents for decades. Since the early 1960s, the sole information available to teachers was from an insurance agent. Buyer beware: if agents approach you and start talking about retirement planning, that product is biased and loaded with conflicts of interest.

TEACH and retire RICH provides the exact opposite of what the annuity sales force has been peddling for a half-century. Employer-sponsored 403(b) and 457(b) plans are full of regulatory loopholes that provide the salesperson they need to exploit educators’ naiveté with hidden costs, phony bonuses, and money frozen for years. By the way, it’s legal, but the ethics of the current system are nonexistent.

This is where TEACH and retire RICH helps. Dan guides you through the otherwise complex web of arcane acronyms and financial gibberish, to understand what to do with confidence. These plans and their products are confusing and overwhelming for a reason—to make educators feel that they need this sweet man or woman who walks into their classroom or basks like lounge lizards in the teachers’ cafeteria. Many district employees want to save–they don’t know whom to turn to for trustworthy, objective information. That’s right. Across the country, no other profession needs federal regulatory protections as much as public school district employees. Let me be clear, the private sector equivalent plan 401(k) has the department of labor ERISA protections. No such protections from the feds are afforded to public K-12 teachers (The explanation is too long for this review and Dan doesn’t cover this loophole. ERISA is a wonderful federal law passed in 1974 called Employee Retirement Income Security Act).

Many Former Teachers Who are sooooo NICE, Impeccably Dressed and Approach You to Sell a Plan: Buyer BEWARE because you are on your own dealing with these people with no objective help from unions or district’s benefit departments

Never underestimate the skill which the sales force has worked at for years. These salespeople are confident and persuasive. The sales force knows the unions and districts’ benefits departments have never stepped in to offer objective information. They are good at wrapping up a terrible product with a nice sales pitch which has the persuasiveness of convincing Attila the Hun that it’s in his best interest to be compassionate to their enemies. Even if readers of Dan’s book take the list of “Questions to ask a planner” on pages 120-121, in my opinion, you might be more confused with the answers.

The sales force can handle those questions and requests for details with ease and skill and are evasive, especially any question aimed towards their fees! For example, the author writes, “Please detail all fees and commissions involved, including all costs of mutual funds or variable annuity sub-accounts.” An agent will simply say that “the company pays my fees and commissions.” Another question on the author’s list, “What is your investment philosophy?” (page 120). Do you know what a planner told me when I asked him that question? Shockingly, he did not know what I was talking about, and he was the professional! Nevertheless, you need to know the answers before you ask a planner, so you will be confident that this potential planner is looking out for you.

If annuities are to be avoided, the most important parts of the book are Chapter 5, page 31, and his explanations on mutual funds, page 88. Dan explains low-cost mutual funds and index investing. This strategy is superior to annuities for growing your wealth. If you want a planner to help you Dan shows you how to locate a fee-only fiduciary financial adviser that you pay out-of-pocket by the hour.  Fee-only fiduciary financial advisers are not insurance agents (A fiduciary is a professional that looks after your interests over her own). The author has already vetted several fiduciary-minded advisers on his website 403bwise.com. You also have the option of managing your money without an adviser or planner and becoming a Do-It-Yourselfer (DIY). There are millions of DIY investors and many online communities which provide free, unbiased, and objective support. We are of the mindset that nobody can manage our money better than the investor himself or herself.

For Tons of Objective Financial Information and Discussion Forum for you to Ask Your Questions: 403bwise.com

Speaking of online support, the author’s website contains more than enough information to educate yourself to be a DIYer and discover how to petition your employer to offer better plans. While Dan does not mention this, the 403(b) advocates and the author also seek to reform the conflicted 403(b) through talking with financial reporters about our stories and supporting legislation to change current laws. Since 1998 when a Los Angeles Times financial reporter, Kathy Kristof, featured my annuity story, our advocacy group has grown, and we have been able to get the attention of over 30 major newspaper and financial magazine articles over 20 years. While some of our teacher colleagues have been reached, there is a lot of work still to be done.

Dan covers all the major points of how to protect yourself with spot-on and objective information, so you can make good decisions that benefit you, not the insurance agent or financial broker. He shows you how to find your volunteer tax-deferred retirement plan offered by your school district to construct a diversified low-cost portfolio and everything between.

While the author patiently explained the differences between fixed, variable, and indexed annuities so that you can be convinced to avoid these dogs, I will be more direct in my review. Focus on the author’s explanation about mutual funds in Chapter seven. I think you will be better informed than trying to understand Dan’s description of annuities. It’s not just this reviewer’s opinion, millions of investors have already said to keep annuities a million miles away from your retirement investments.

Dan Discussion Investing your 403(b) or your 457(b) with the SAME strategy as our Pension Plan: The Stock and Bond Markets. 

My opinion about annuities is nothing original. My pension plan (California State Teachers Retirement System) avoids annuities too. Also, endowments, foundations, and many banks do not use annuities because they cost too much, and their returns are sub-par. You have enough on your plate to understand how the power of compound interest, stocks, and how the stock and bond market work for you. Low-cost stock and bond portfolios used by pension plans, foundations, and endowments’ portfolios are also nothing original.

If enough educators read Dan’s book and take action by informing every colleague they know, the annuity sales force will continue to roam district real estate with impunity harming another generation of educators. For example, in the second-largest district in the country, Los Angeles Unified, district policy forbids 403(b) presentations anywhere on district property. Yet, the agents blatantly barge into school sites and into teachers’ classrooms during recess time to pitch their self-conflicted products again and again. Nobody can stop them because of current law.

Call to Action!

Please, PLEASE write a review and post it on Amazon. Since 2005, the book’s publication date, Dan, has only 12 reviews. Whereas J.L. Collins, author of The Simple Path to Wealth generated over 8000 reviews. The culture between the millennials who are interested in investing and the public K12 culture who are not interested is evident by the number of reviews. If you read Dan’s Teach and Retire Book, please write a review so that our colleagues will see the interest in the book and read it.

In the meantime, you don’t have to wait for somebody else or regulation to protect you, you can get 100% protection by reading Dan’s book and coming to a community he started:

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About the Book’s Author: Daniel Otter

Daniel Otter, Ph.D. is passionate about educating educators and others about their retirement plan options.

In 2012, Money magazine named him a “money hero” for his “extraordinary efforts to improve others’ financial well-being.” Dan co-hosts the Teach and Retire Rich podcast with friends and CFP® Scott Dauenhauer. The podcast is available through iTunes and Libsyn. Dan has appeared on National Public Radio and the Bob Brinker Show. He also speaks to schools and other organizations about the Teach and Retire Rich concepts outlined in this book.

Dan Otter is a father, husband, teacher, author, and operator of this community designed to educate and empower 403(b) participants, employers, and advisors.

Steve Schullo’s BIO

Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) union newspaper for 13 years. Thrice featured retirement plan advocates in the Los Angeles Times and U.S. News and World Report. He co-founded an investor self-help group 403bAware for teacher colleagues and wrote 7,500 posts in three investment forums since 1997. Frequently quoted by the media, testified at California State legislative hearings, and was honored with the “Unsung Hero” award by UTLA for his retirement planning advocacy.

For the last twelve years, he serves as a volunteer on LAUSD’s Investment Advisory Committee as a “Member-at-Large” and former co-chair. The committee contains collective bargaining reps from the unions and monitors the district’s tax-deferred retirement plans, 457b/403b, of 55,000 former and current LAUSD employees, worth $2.5 billion in total assets.

He started this blog in 2012 to help all PreK-12 public school educators nationwide, especially his Los Angeles Unified School District colleagues. He belongs to a small national group of 403(b) advocates (mostly teachers) who want to bring closer attention to the 403(b). During the last 20 years, over 30 newspaper articles have been published and each one says the same thing, TSAs (Tax Sheltered Annuities) are terrible plans and the salesperson gets the benefit from lucrative commissions and high costs. Nobody in the educational establishment reads these articles NOR talk about the proper place for annuity products publically. We come together at 403bwise.com. Come on over if you want to join us so we can help our colleagues avoid these self-conflicted retirement plans, TSAs.