Money Matters

How to Maximize Your Retirement Savings While Living Abroad

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by Cyrus Kioko


Living abroad is more than a change of scenery; it’s a plunge into a world where each sunrise holds a new adventure. Yet, amid the excitement lies a unique challenge: how do you ensure your retirement savings keep pace with your nomadic lifestyle? Here’s the short answer:

To maximize your retirement savings while living abroad, you need to:

  • Choose a retirement account that aligns with your goal
  • Take full advantage of employer matches
  • Max out on your contribution limit
  • Diversify your investments
  • Start saving early
  • Invest time and effort in healthcare planning. 

Let’s take a closer look at these tips.

Choose a Retirement Account that Aligns With Your Goal

Retirement savings accounts come in many types, and your choice will significantly impact how much you can grow your nest egg. Now, I won’t go into the specifics of the different account types because these vary greatly from one country to another.

What I’ll do, instead, is provide you with a universal checklist of what to look for in a retirement savings account when all you care about is maximizing your retirement savings. 

Here it goes:

Tax Perks

Retirement accounts offer tax benefits that can be applied to contributions, investment gains, or withdrawals. The specific type of tax benefit associated with a retirement account often depends on the design and regulations of that particular account.

Some accounts give you a break on taxes at the time of contribution. This typically comes in the form of a credit or deduction for the amount contributed, which reduces your taxable income for the year. 

With such an account, your contributions aren’t taxed in the year they are made, and your investment grows untaxed until you withdraw the funds during retirement. We call these tax-deferred retirement accounts. Examples include:

  • The all-popular traditional 401(k) plans for those in the US.
  • The Registered Retirement Savings Plan (RRSP) for those in Canada.
  • The UK’s personal pension plan. 
  • Australia’s Superannuation.

On the other hand, we have retirement accounts that provide tax-free growth, such as Roth IRAs for those in the US and the Tax-Free Savings Account (TFSA) for those in Canada.

The way these work is pretty simple: you make contributions with after-tax dollars (or whatever currency you’re using), but once the money is in the account, it grows tax-free, AND you don’t pay taxes when you eventually take it out in retirement. 

Wondering what I mean by “it grows tax-free?” Well, look at you, asking all the right questions already!

Normally, Uncle Sam takes a slice from your capital gains, dividends, and other returns from investments in your retirement stash. But with tax-free growth, you don’t pay taxes on any investment returns because you’ve already been taxed on the money you contributed. That’s precisely what I meant by “it grows tax-free.” I might’ve hammered that a bit, but I had to drive it home because it’s important information. 

After reading all this, you’re probably wondering what type of retirement account is best for maximizing retirement savings. 

Well, it’s not exactly black and white:

All factors held constant, tax-deferred growth is the better option for maximizing retirement savings. While your money grows tax-free with both account types (allowing you to capitalize on the magic of compounding), a tax-deferred account has a leg up on its counterpart on one key merit: It allows you to invest with pre-tax dollars.

How does this help maximize retirement sayings?

Simple: making contributions with pre-tax dollars gives the money you’d have paid to the government as tax a chance to generate returns through compounding. Over several decades, the additional returns from that deferred tax can significantly boost the size of your nest egg.

Plus, tax-deferred retirement accounts generally have more severe penalties for early withdrawals than their counterparts, which can be an effective deterrent against one of the sneakiest hurdles to growing your retirement stash: the irresistible urge to dip into it prematurely for today’s whims. 

Now, I bolded the phrase “all factors held constant” earlier for a reason: There’s a variable we haven’t thrown into the mix yet – your tax bracket in retirement. This little game-changer can tip the scales, making one type of account strut its stuff over the other. 

Here’s what I mean by that:

  • A tax-deferred account might be more advantageous if you anticipate being in a lower tax bracket during retirement. That’s because it allows you to enjoy the tax deduction at a higher rate during your working years and potentially pay lower taxes when you withdraw the funds in retirement. 
  • But if you expect to be in a higher tax bracket in retirement, a tax-free growth account like a Roth IRA could be more beneficial. Why? Because you’ve already paid taxes on your contributions at a lower rate and can withdraw tax-free, potentially saving you money in the long run.

Contribution Limits

Retirement accounts come with varying rules on how much you can stash away. That figure can vary dramatically from one account to the next, too. To get an idea of how much variation we’re talking about, take a quick look at this Roth Comparison Chart by the IRS. 

To maximize your retirement savings, you’ll want to go for the account that lets you throw in as much cash as legally possible. Why? Because the more you toss in (within the legal bounds, of course), the more you harness the power of compounding.

Be aware of any age-related contribution changes, as some accounts may allow higher contributions as you get older. Also, remember that your age isn’t the only factor that may change your account’s contribution limit. Various economic, regulatory, and legislative factors can also drive these changes.

Investment Options

As you might already know, your retirement savings aren’t just taking a leisurely nap in your account. They work behind the scenes to grow your nest egg over time.

The “working” happens through various investments – stocks, bonds, mutual funds, and more, depending on the rules and offerings of your specific retirement account. These investments are the engine that powers your retirement savings, generating returns that can significantly boost the size of your nest egg.

But while it’s true that all retirement accounts let you invest your money, they don’t all offer the same freedom to choose where to put it. The level of flexibility in picking investment options can vary between different types of accounts. 

Generally, an account that provides a diverse range of investment choices would be a better choice when the goal is to maximize your retirement savings. Why? Because a diverse range of investment choices gives you the freedom to tailor your portfolio to your financial goal and risk tolerance. That freedom allows you to get strategic with your investment choices to accelerate the growth of your nest egg.

How come?

Consider this sample scenario: You’re a long-term investor with a retirement horizon of 20 years. You want to capitalize on the upside potential of certain growth stocks. But being the smart investor you are, you know that adding stocks to your portfolio increases your portfolio risk. 

In such a case, you’d need a retirement account that lets you access stocks and another asset class that offsets the additional risk they come with. For the sake of simplicity, let’s say the risk-offsetting asset class is bonds. 

So what do you do?

Two things:

  1. You allocate 70% of your portfolio to a diverse mix of growth stocks. These could include shares of innovative technology companies, promising startups, or companies in sectors with high growth potential.
  2. You Allocate 30% of your portfolio to high-quality government and corporate bonds because they tend to be less volatile than stocks and can act as a hedge during market downturns. 

In this somewhat oversimplified scenario, you wouldn’t be able to capitalize on the upside potential of growth stocks to grow your nest egg if your account doesn’t give you the flexibility to leverage the risk-mitigating stability of bonds. Adding the stocks alone to your portfolio would risk your savings too much.

The bottom line? Opt for a retirement account that gives you flexibility in your choice of investments. Doing this won’t just put you in a position to accelerate the growth of your nest egg; it’ll also help protect it. 


You probably know that you should choose a retirement account with low fees. Every dollar counts when it comes to retirement savings (especially given the power of compounding), and you want to ensure that you aren’t losing money that could be working for your future via fees. 

What you might not know, however, is the specific fees to look out for when picking a retirement account. These would be:

  • Expense ratio — the percentage of your total investment that goes towards fund management fees
  • Transaction fees— charges incurred when buying or selling investments within your account. 

Why these two? Because they can make the biggest difference in how much of your returns stay in your pocket rather than being siphoned off by fees.

How big of a difference, though?

Here’s a practical example to illustrate that:

Let’s say you contribute $5,000 annually to your retirement account for 30 years, with an assumed annual return of 7% before fees. Here’s how much money you’d end up with depending on how much your fund charges in fees. 

Fund A:

Expense Ratio: 0.5%

Transaction Fees: None

Final Account Balance: Approximately $365,000 [( $5,000 * ((1 + 0.07)^30 – 1) / 0.07) * (1 – 0.005) * (1 – 0.005)].

Fund B:

Expense Ratio: 1.5%

Transaction Fees: $20 per year ($10 per trade, buying and selling twice a year)

Final Account Balance: Approximately $304,000 [(Calculation: $5,000 * ((1 + 0.07)^30 – 1) / 0.07) * (1 – 0.015) * (1 – 0.015) – (30 * 20)]

Despite a seemingly small difference in expense ratios and transaction fees, Fund A’s lower costs lead to a $61,000 difference in the final account balance. See how much of a difference fees can make? Pay attention to them when picking your retirement account.

Quick tip: Index funds or ETFs often have lower fees than actively managed funds.

Take Advantage of Employer Matching Contributions

Employer matching contributions are essentially a bonus you get from your boss for saving money for your future. The way these work is simple: when you put some of your own money into a retirement savings plan, your employer adds some on top, up to a certain limit.

For illustration, let’s say your boss says they’ll match 50% of what you put into your 401(k) but only up to 6% of your salary. That means if you decide to put in 6% of your salary, your boss will add an extra 3% (i.e., half of your 6%) into your retirement fund.

Think of it as your boss saying, “Hey, great job saving for retirement! I’ll throw in a bit more to help your savings grow even faster.” It’s one of the best ways employers support their employee’s efforts to save for retirement, and you should take advantage of it because it’s essentially free money. That is, of course, if your employer offers such arrangements.

Diversify Your Investments

Maximizing your retirement savings isn’t all about growing your nest egg. You’ve got to play defense, too, because as much as you’re investing to score big, the possibility of taking Ls on your investments is a reality you shouldn’t turn a blind eye to. 

One of the best “defense strategies” you can adopt to protect your nest egg is diversification. Spreading investments across different asset classes doesn’t eliminate risk entirely (which isn’t something you’d want anyway because no risk = no reward). What it does, however, is spread risk by ensuring you’re not stashing all your eggs in one basket —get it? Eggs, nest egg…no? Okay, maybe humor isn’t my strongest suit. 

In all seriousness, though, diversification acts as a safety net for your retirement savings. It acknowledges that investing involves uncertainties, and rather than putting everything in one place, it strategically spreads your investments across different asset classes. This way, if one investment takes a dip, the impact on your overall portfolio is cushioned by the others.

Diversification can also be an “offense” tool, too. Investing in a variety of assets facilitates dynamic asset allocation, letting you shift your portfolio weightings based on the outlook for different asset classes. This flexibility allows you to strategically position your portfolio to take advantage of growth opportunities while managing risks.

Invest Time and Effort in Healthcare Planning

Healthcare planning might not steal the spotlight in your retirement savings strategy, but this unsung hero protects your nest egg from financial villains. Those seemingly small decisions, like picking the right healthcare provider and mastering the world of international health insurance, can be your secret weapons in shielding your nest egg from unexpected medical costs.

When you dodge those surprise, wallet-busting medical bills, you sidestep two major threats to your nest egg’s growth:

  • Early nest egg taps. With a well-thought-out healthcare plan, you’re less likely to dip into your retirement savings prematurely to cover hefty medical costs. That means your nest egg stays intact and has more room to grow over time.
  • Stopping or slowing down on your contributions. No surprise medical expenses? Great! That means you’re more likely to stick to your retirement savings plan without disruptions. No sudden financial hits equals steady contributions to your retirement fund, and we all know how much that can boost its growth potential.

So take the time to ensure that there are no chinks in the armor as far as our healthcare plan goes. That way, you’re not just shielding your nest egg and letting it flourish; you’re also keeping yourself in good health to enjoy those retirement savings when you’re rocking the golden years.

Start Saving as Early As Possible

Embarking on your retirement savings journey early can be a game-changer, and here’s why: the magic of compound interest. When you earn interest not just on your initial investment but also on the interest that’s already piled up, you accelerate the rate at which your money grows. 

Starting early also means you have time on your side, and time is a powerful ally in the world of investing. Your money gets to weather the storms of market fluctuations, benefiting from the long-term trends that financial markets tend to follow. It’s not about needing to contribute huge amounts—it’s about consistent contributions over the years adding up to something substantial.

Beyond the financial gains, there’s a psychological advantage to beginning your retirement savings journey early: you build a healthy financial habit. The earlier you start, the easier it becomes to prioritize saving for retirement throughout your working years. Small, regular contributions become second nature, leading to substantial savings over time.

Plus, starting early allows you to fully take advantage of your employer’s matching contributions. You get to grab every bit of that match, adding free money to your retirement savings. Missing out on these employer matches could mean leaving valuable retirement dollars (or whatever currency you’re using) on the table.

And let’s not forget the tax perks. As we saw earlier, retirement accounts often come with tax advantages, like tax-deferred growth or tax-free withdrawals. By starting early and contributing to these accounts, you give your money more time to grow tax-efficiently, potentially reducing your overall tax burden.

Max Out on Your Contribution Limit

Choosing a retirement savings account with a high contribution limit is a smart move, but the real game-changer is how much you contribute to make the most of that provision. So make sure you’re contributing to your retirement savings plan as much as you can within legal limits. Doing that will turbocharge your nest egg’s growth by maximizing compound interest and tax advantages.

Wondering what you can do to make sure you’re contributing as much as legally possible?

Here are some tips:

  • Budget strategically. Review your budget and identify areas where you can allocate more funds to your retirement savings. Adjusting your spending habits to prioritize contributions can have a significant impact on your long-term financial well-being.
  • Take advantage of employer matches. You already know the deal with this one at this point; it’s essentially free money from your employer. If your employer offers such an arrangement, ensure you contribute enough to maximize this benefit.
  •  Gradually increase contributions. If contributing the maximum feels challenging initially, consider gradually increasing your contributions over time. Small, incremental adjustments can make a big difference without causing a significant strain on your current finances.
  • Utilize windfalls or raises. Whenever you receive a windfall, such as a tax refund or a work bonus, or experience an increase in income, consider allocating a portion of it to your retirement savings. This allows you to boost contributions without affecting your day-to-day budget.
  • Automate contributions. This can be particularly helpful for those struggling to build healthy financial habits. Automating the process ensures that a portion of your income consistently goes towards your retirement savings by eliminating the temptation to skip or reduce your contributions. 
Cyrus Kioko
Cyrus is a seasoned blog post writer with over five years of experience in crafting and editing articles spanning technology, lifestyle, and finance niches. Fueled by an authentic passion to contribute valuable insights, he has invested thousands of Netflix-less hours in research for this site. Each piece he writes is aimed at empowering readers to make well-informed, real-life decisions. Holding a degree in commerce and armed with ample copywriting courses, he brings both expertise and a touch of nerdy flair to the table.
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