Moving overseas is not easy. Moving overseas and becoming dependent on one spouse’s income is doubly difficult. While most of us would likely have calculated how this arrangement would impact our budget, we often fail to consider what this means to our retirement savings.

In the US, retirement savings are mostly tied to our employment. We pay a percentage of our salary toward Social Security and Medicare. We may participate in company pensions. Our employer may provide 401(k) accounts where we can contribute pre-tax income and sometimes even receive a matching contribution. When we gave up our careers to go overseas with our spouses, we stopped saving for retirement in all sorts of ways, and we rarely think about it.

The fact is that this lapse in retirement savings will have long term consequences. Like it or not, many of us have or will experience extended time of living on our spouse’s income when we follow them overseas. How can we continue to save for our long term financial security even in periods that we don’t contribute to household income? Below are my few suggestions.

#1: Review your spouse’s retirement contribution

Many of us, when living the two income lifestyle in the US, only focus on each partner’s take home pay and treat any sort of paycheck deductions, such as 401(k) and pension contributions, as something out of our control. Going to one income means that you are really now working as a team. Make sure you understand how much your spouse is contributing to his retirement accounts at work. If there is a surplus in your household budget, consider increasing that contribution to make up for the loss of contribution from your job.

(If your spouse also does not contribute to or receive retirement savings through employment, you should sit down and decide a percentage of your income for long term savings, preferably with the help of a financial planner.)

#2: Contribute to your own IRA

If you file a joint return with your spouse, each of you can contribute to your own IRA based on your spouse’s income. The contribution can either be tax-deferred in a Traditional IRA, or grow tax free in a Roth IRA. The contribution limit for 2014 is $5,500, or $6,500 if you are age 50 or older. An IRA allows you to save more in a tax-advantaged way even if your spouse cannot make additional retirement contributions in an employer sponsored plan to make up for your share.

Furthermore, being on one income means you are more likely to qualify for Roth IRA contributions. You can contribute 100% of the $5,500 if your combined Modified Adjusted Gross Income is under $181,000 in 2014, and 0% if your MAGI is above $191,000. Roth IRAs are particularly beneficial for younger people because the balance of the account grows tax free for a much longer period of time.

However, if your spouse does not have taxable compensation, such as when you are qualified for Foreign Earned Income Exclusion, then you will not be able to contribute to an IRA that year.

#3: Rollover your old 401(k)s

If you have old 401(k)s from past employers before moving overseas, consider rolling them over to a Traditional IRA account. 401(k) accounts can sometimes charge much higher administrative fees, while only offering investment options that charge high management fees. By transferring the balance to an IRA, you may reduce costs of investing substantially, which translates into bigger savings in the long term.

(Consult a tax professional about your potential rollovers to avoid some of the common mistakes.)

#4: Invest in your human capital

After all is said and done, human capital might be the most important investment you can make for your retirement. At first glance, investing in Human Capital may look more like an expense than savings. You may have to pay for your own training courses or certification programs so you can stay current in your field. You may work long Pro Bono hours while not getting paid. You may even need to pay a large amount of tuition to get your post-graduate degree in a different field. Would these investments really pay off?

My short answer is “Yes”, as long as you prepare yourself to increase your income earning potential in the future. You may need to do more research on what career fields or industries are a good match for you and worth your investments. Do not feel pressured to save a few extra thousand dollars in your IRA when you could have used that money to make yourself employable or start your own business, which will contribute much more to your retirement in the long run.

I know firsthand how an investment in career change can enable you to embrace a globally mobile lifestyle. Thanks to the partial support of a professional development program, I pursued my financial planning studies online, passed my certification exam, and attended a residency program where I met my current business partner. As a result, now I run my own business overseas and am able to share the financial planning knowledge with you! All of this would not have happened if I had skimmed on the few thousand dollars of investment in myself. Even if your finances are tight, don’t limit yourself and start searching for scholarship opportunities.

What have you done to increase your human capital and contribute to your financial security in the future when you moved with your spouse overseas without a job? Share with me.

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