Annuities for US Expats

Annuities are an option that many Americans living within the United States turn to as a way to guarantee income in retirement, but annuities are an option even if you live outside of the U.S. An annuity can help ensure you’ll always have a set stream of income without worrying about running out of money when you live abroad.

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  • Written By Jennifer Schell, CAS®
    Jennifer Schell, CAS®

    Jennifer Schell, CAS®

    Financial Writer, Certified Annuity Specialist®

    Jennifer Schell is a professional writer focused on demystifying annuities and other financial topics including banking, financial advising and insurance. She is proud to be a member of the National Association for Fixed Annuities (NAFA) as well as the National Association of Insurance and Financial Advisors (NAIFA).

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  • Edited By Savannah Pittle
    Savannah Pittle
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    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is an accomplished writer, editor and content marketer. She joined as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

    Read More
  • Reviewed By Stephen Kates, CFP®
    Stephen Kates, CFP®
    Stephen Kates, CFP®

    Stephen Kates, CFP®

    Principal Financial Analyst for

    Stephen Kates, CFP® is a personal finance expert specializing in financial planning and education. He serves as the Principal Financial Analyst for, where he delves into industry trends to support consumers and financial advisors on wealth management, annuities, retirement planning, and investing.

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  • Updated: March 13, 2024
  • 7 min read time
  • This page features 6 Cited Research Articles

Key Takeaways

  • Annuities can provide U.S. expats with an option to save money and guarantee income in retirement.
  • For those who have retired abroad, annuities offer a way to convert an existing nest egg into a set stream of payments that can last for life.
  • For younger Americans living abroad, annuities are one way to save for retirement in the place of a traditional plan like a 401(k).

Benefits of Annuities for US Expats

Annuities can provide a steady income stream for Americans who retire abroad. They can also be a tax-deferred retirement savings plan for younger Americans who live and work overseas.

Expats who work overseas may have access to different retirement plans from those who live in the United States. For working expats, an annuity can fill the role of a 401(k) or similar retirement savings vehicle.

If you’re a retiree who has moved abroad, buying an annuity can turn your savings into a reliable source of income that will last for the rest of your life. 

In both cases, the tax-deferred growth of annuities can benefit expats who have to pay taxes in both the United States and their new country of residence.

Annuities provide a flexible saving option for individuals in atypical work or income arrangements, like expats living abroad or individuals with irregular income. Investors can fund as much or as little as they can afford in a given year without worrying about contribution limits.

Annuity Options Available to Expats

The annuity options available to expats fall into two categories: deferred annuities and immediate annuities. 

A deferred annuity is usually better suited for younger expats who are working abroad and want to secure retirement income for the future. 

An immediate annuity, on the other hand, is appropriate for expats who already have substantial retirement savings and want a dependable income source for their overseas retirement.

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Deferred Annuities Build Value Over Time

A deferred annuity allows you to accumulate value gradually over time through contributions and investment or index-linked growth. The accumulated value can be converted into periodic payments for retirement or later financial support.

3 Types of Deferred Annuities

Fixed Annuities
A fixed annuity guarantees a specific — or fixed — rate of return on the money you put into the annuity.
Indexed Annuities
The growth of an indexed annuity — also called a fixed-index or equity-indexed annuity — is based on the performance of a specified stock market index, such as the S&P 500.
Variable Annuities
The growth of a variable annuity is tied to the portfolio of mutual funds. It offers upside potential, but it tends to have greater risk than other types of annuities.

Immediate Annuities Convert Savings to Retirement Income

Unlike deferred annuities, immediate annuities offer payouts within a year of purchase. With an immediate annuity, you make a lump-sum payment upfront, which is promptly converted into periodic payments, ensuring a steady income stream without the need for an accumulation phase.

You can buy a fixed or variable version of an immediate annuity. In addition, some immediate annuity providers offer an inflation-adjusted annuity that guarantees a rate of return that matches or exceeds the inflation rate. 

Which type of annuity you choose will depend on your goals and where you are at in your retirement planning timeline.

Customer Case Study: Retirement Abroad With a Fixed Annuity

Chuck Burton is an American who is living a retired life in Mexico. In an interview with, he explained how a fixed annuity allowed him to embrace retirement while enjoying financial peace of mind.

Passionate about Mexico and its culture, he splits his year between the Pacific Northwest and a home in Mexico. His retirement plan needed to accommodate this multinational lifestyle, ensuring financial security while enjoying the best of both worlds.

Chuck Burton, Retiree

Chuck Burton


  • Balancing expenses between two distinct living environments
  • The desire for financial stability in retirement while embracing his love for Mexico
  • Making the most of his Social Security income

Chuck’s Choice: A Fixed Annuity for Financial Peace of Mind

Burton’s retirement strategy revolves around a fixed annuity. He invested in this financial product to secure his fiscal future, allowing him to live in both the United States and Mexico without worrying about running out of money.

Financial Comfort in Retirement

Burton emphasizes the affordability of living in Mexico: “We have our housing covered. We just don’t need to spend any money. If anybody that has a very moderate Social Security [benefit], that doesn’t know how they’re going to live in the States, anybody with a thousand dollars a month … can live in Mexico and live comfortably.”

While he said Social Security covers living in Mexico, the annuity provides a steady stream of income to supplement it — providing peace of mind at the same time.


Chuck Burton’s retirement experience serves as a testament to the versatility and security that fixed annuities can offer. A well-chosen annuity can be a valuable tool for people like Burton who desire a financially worry-free retirement while embracing international living.

Happy, retired couple

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Hypothetical Case Study: Financing Retirement While Working Abroad

In this hypothetical case study, Sarah is a young professional who has just started a career overseas. Her job is with an international company, which means she doesn’t have access to the traditional retirement savings accounts — such as 401(k) plans — available in the United States. Sarah wants to secure a stable retirement income.


  • Limited access to conventional retirement savings accounts due to living abroad
  • Uncertain financial prospects in a foreign country

Choosing a Deferred Annuity

Recognizing the need for a financial strategy tailored to her unique circumstances, Sarah decides to purchase a deferred annuity. This decision offers three chief advantages:

  • Flexible Contributions: Similar to contributing to a retirement account over a life-long career, Sarah can make periodic payments into the annuity. This flexibility allows her to adapt to changing financial circumstances and contribute as much as she can comfortably afford.
  • No Contribution Limits: Unlike traditional retirement accounts like IRAs, annuities typically do not impose contribution limits. This feature enables Sarah to save more aggressively, ensuring a more substantial retirement fund.
  • Secure Retirement Income: Upon reaching retirement age, Sarah annuitizes her deferred annuity — producing a guaranteed lifetime annuity. 


A deferred annuity can be a valuable tool for building long-term financial security for expats like Sarah, who lack access to traditional retirement savings options. However, it is wise to explore other retirement planning options and consult a financial advisor to determine the best strategy for your situation.

Remember that there are several types of annuities, and one may be better suited for you than another.

Tax Implications of Annuities for US Expats

The tax implications of annuities for U.S. expats can be affected by the type of annuity they purchase, their tax residency status and the tax treaties between the Unites States and the country where they now live, according to Dana Ronald, CEO of the Tax Crisis Institute, a firm that provides tax relief services in California and Nevada.

You should still expect to pay taxes on your annuity. Any taxes and fees you owe do not automatically disappear because you live in a different country.

“When purchasing an annuity, American expats should be aware of the potential tax implications in both the U.S. and the country where they live abroad,” Ronald told

5 Need-To-Know Tax Facts for American Expats 

  1. You must file tax returns with both the United States and the country you move to.
  2. You are required to report your worldwide income and assets and may face costly penalties for failing to report them to the IRS.
  3. You may be eligible for an amnesty program to stay in compliance with IRS foreign filing rules.
  4. You may offset your United States and foreign tax bills with the Foreign Tax Credit.
  5. You may qualify for the Foreign Earned Income Exclusion.

Annuity taxation outside the United States can be confusing. Taxes on annuities may work similarly to the United States even if you live in a different country. 

Other standard retirement savings methods such as 401(k)s and IRAs are generally taxed the same by the United States even if you move to another country in retirement. 

“My best advice is to know before you go,” Ronald said. “American expats should consult with a qualified tax professional specializing in expat taxes to ensure they know all their potential tax obligations and can plan accordingly.”

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: March 13, 2024
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