6 Investing Considerations For Americans Retiring Abroad In Europe

1. Investment account access becomes more complicated.

Many U.S. brokerage firms restrict or close accounts of clients who aren’t U.S. residents, which can leave Americans retiring in Europe without access to portfolios they may have spent decades building and may depend on for income.

This is due to their internal compliance policies for meeting U.S. KYC (know your client) and AML (anti-money laundering) rules. While every firm has different guidelines, the majority choose either to close accounts of non-residents, freeze them for trading or block access from abroad.

Note that not telling your brokerage firm that you’ve moved abroad is a breach of their terms—and they may become aware if you log in to their online portal from abroad repeatedly (as your bank may due to your spending pattern changing).

The solution for most Americans retiring in Europe is to work with a cross-border financial advisor who has established relationships with custodians that support overseas Americans.

2. Being a U.S. citizen affects what you can invest in abroad.

The U.S. has a citizenship-based tax system, which means that all Americans are subject to U.S. taxes, wherever in the world you are resident. This leaves Americans abroad subject to two tax systems (assuming they meet residence criteria in their new country).

You can claim tax credits when filing your U.S. taxes to avoid double taxation, and there may be tax treaty provisions that you can claim depending on the country, but you are also subject to U.S. rules that affect what you can invest in abroad.

Once you are living abroad, you may become aware of local investment opportunities, or they may be recommended by a foreign bank or advisor. However, U.S. tax rules penalize ownership of non-U.S. domiciled funds such as ETFs and mutual funds, which the IRS refers to as passive foreign investment companies, with punitive reporting and taxation; these are best avoided.

If you want to own investments in Europe to provide income in euros, it’s best to explore other options with your cross-border advisor, such as all-stock portfolios, rental property or other income investments.

3. Being an EU resident affects investing in the U.S.

At the same time, EU rules for EU residents restrict your ability to buy U.S. funds. It’s fine if you already own them, but you can’t buy new ones. This leaves Americans living in Europe stuck between two systems.

There is a work-around, however, as if you work with a cross-border financial advisor who specializes in working with Americans abroad, they can purchase U.S. funds on your behalf.

4. Your retirement accounts don’t automatically translate.

IRAs, Roth IRAs and 401(k)s are common foundational tools for U.S. retirement planning. However, they don’t receive the same treatment in Europe, and the treatment varies by country.

Most U.S.-EU tax treaties don’t extend tax-deferred or tax-free status to these accounts, so some European countries may tax distributions or ongoing growth in ways that don’t apply to U.S. residents.

Local exceptions apply, however, so seek advice as early as possible regarding whether you should restructure contributions, conversions or withdrawal sequences before retiring in Europe.

5. Currency risk is amplified for retirees.

If your retirement savings are in U.S. dollars but your living expenses are in euros, exchange-rate movements directly affect your purchasing power, and a sustained period of dollar weakness relative to the euro can erode the real value of a retirement portfolio in the U.S. relative to your spending needs.

To mitigate this risk, common strategies include maintaining a buffer of local currency and restructuring your portfolio to include euro exposure alongside your U.S. holdings. The earlier you do this, the less vulnerable you will be to currency swings.

6. Estate planning requires a cross-border approach.

A U.S. will and estate plan designed for domestic assets may not work as intended if you have assets abroad. European countries have their own inheritance laws; in some cases local rules, including forced heirship provisions that require a set part of your estate to pass to certain heirs regardless of your wishes, can override the intent of your U.S. documents.

As such, if you have assets abroad, you should seek advice on both sides and create matching wills that also reflect any local rules in your new country of residence. These should cover real estate, business interests and any other assets.

​Final Thoughts

Whichever country you choose, retiring in Europe is achievable and rewarding for most Americans, but the financial preparation goes beyond what standard U.S. retirement and financial planning covers. The earlier you start planning, the more options you will have.

Most of the challenges involved in retiring abroad are manageable with the right structure in place, and most common mistakes are avoidable if you seek specialist cross-border advice before you move.​

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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