How to Build Expat Retirement Income: are Annuities the Answer?

Rob Atherton explores the retirement income planning challenges facing expats and the role annuities can play in generating a reliable income.

An international lifestyle often creates amazing opportunities, but it also introduces unique financial challenges. One of which is expat retirement planning and more specifically, answering the question; how can I turn my accumulated wealth, often spread across multiple countries, into a reliable income stream for life?  

I recently sat down with Robert Chan, Executive Vice President of Knighthead Annuities, to explore the role annuities can play in answering precisely this question. Annuities, best understood as a fixed income portfolio guaranteed by an insurance company, can help by converting retirement savings into guaranteed lifetime income, reducing currency risk, and avoiding the cross-border probate delays that can freeze other assets for months or years.

Table of Contents

1. Key Takeaways  

2. Watch: What are Annuities, and How Do They Guarantee a Retirement Income?

3. How To Build Expat Retirement Income: A Three-Layer Approach  

4. Why Retirees are Increasingly Worried About Outliving Their Wealth?

5. Why Retirement Planning is Harder for Expats?  

6. What is an Annuity, and Why is it an Overlooked Solution for Expats?

7. How Annuities Address the Expat Problem?

8. Confidence When It Matters Most  

9. Common Questions About Annuities and Retirement Income  

Key Takeaways 

• Retirement is lasting longer, and outliving your wealth is now a real planning risk, not just a fear.

• Expats face a harder version of this problem: fragmented savings, no state pension, currency risk, and cross-border tax and estate complications.

• Annuities convert a lump sum into guaranteed lifetime income, backed by an insurer rather than market performance.

• Death benefits typically avoid probate; beneficiaries can receive funds in weeks, not months or years.

• Available in multiple currencies, with up to 10% annual withdrawals if liquidity is needed.

• Not just for retirees, clients in their 30s and 40s are using them for yield with lower risk than cash.

Watch: What are Annuities, and How Do They Guarantee a Retirement Income?

In this video, I sit down with Robert Chan, Executive Vice President of Knighthead Annuities, to break down how annuities work as a fixed income solution for international clients and why they're worth considering beyond just cash and bonds.  

How to Build Expat Retirement Income: A Three-Layer Approach

One of the most effective frameworks for structuring expat retirement income is to think in three layers, each serving a distinct purpose.

The guaranteed floor. This is income you can rely on regardless of what markets do. It typically includes any state pension entitlement, defined benefit pension income, and guaranteed income products such as annuities. The floor exists to cover non-negotiable expenses, housing, healthcare, day-to-day living, so that your lifestyle does not depend on investment performance in any given year. For expats, building this layer requires particular care: state pension entitlements may be partial or frozen depending on country of residence, and sourcing guaranteed income across currencies adds complexity that domestic retirees rarely face.

A growth and income portfolio. Above the floor sits a portfolio designed to generate returns, provide income through dividends and withdrawals, and keep pace with inflation over a retirement that could last 30 years or more. This layer carries more risk, but it does not need to cover your baseline, which is the point of the floor beneath it.

A liquid reserve. A cash or near-cash buffer covering one to three years of expenses provides protection against sequence of returns risk, the risk of being forced to sell investments at a loss in a market downturn early in retirement. For expats, this reserve also absorbs currency volatility and unexpected relocation or healthcare costs.

For more on how these layers interact in practice, read our guide on balancing your retirement income and expenses as an expat, and explore the challenges of expat retirement planning.

Why Retirees are Increasingly Worried About Outliving Their Wealth

Adequately preparing for retirement has only become more challenging in recent years. In part this is due to governments putting the onus on the individual to save for retirement as well as the growing cost of living, but perhaps the biggest challenge is increased life expectancy. Retirement has gone from being something that may last years to lasting decades, while this is of course positive news, it has created one of the defining retirement income planning challenges of our time; how to ensure a retirement income that lasts a lifetime and keeps pace with purchasing power?

It’s a challenge that’s already making itself felt. According to Schroders’ 2026 US Retirement Survey; more than half of retirees (58%) surveyed said they don’t know how long their retirement savings would last with more than two-thirds (68%) claiming one of their top concerns was running out of money in retirement.

Of course, wealth accumulation plays a vital part in preparing for retirement, but it’s only half the story. As Robert put it, the crux of the issue is: "how do I maintain a lifestyle for my clients? How do I continue the income streams?" And perhaps most pressingly, how do you continue those income streams for life?

Why Retirement Planning is Harder for Expats

Expats not only face the universal retirement challenges, but they are also subject to a unique set of additional considerations. Due to a lifetime of living and working abroad, they may have no state pension entitlement in their host country and limited access to their home country's pension system. UK expats in particular may find that their UK state pension is frozen depending on their country of residence, reducing its value as a reliable source of pension income over the years of retirement.  

Meanwhile, an international career often means a fragmented financial picture with retirement savings, investment accounts, pensions and properties spanning multiple jurisdictions. Moreover, as wealth is spread between multiple countries, expats are also subject to varying tax rules and estate planning requirements across different tax systems, as well as being more exposed to currency fluctuations and exchange rate risks,  

This is where expat retirement income planning differs fundamentally from domestic retirement planning. Cross-border planning demands a coordinated approach to pension transfers, tax efficiency, and long-term financial security that a single country plan does not need to account for.  differs fundamentally from domestic retirement planning. Cross-border planning demands a coordinated approach to pension transfers, tax efficiency, and long-term financial security that a single country plan does not need to account for.  

This complex financial situation, which is so common amongst internationally mobile professionals, exacerbates what is already a challenging retirement proposition.

What is an Annuity, and Why is it an Overlooked Solution for Expats?

An annuity, in this context, isn’t a traditional lifetime pension. It’s a fixed income portfolio guaranteed by an insurance company, structurally closer to a bond or fixed deposit than to a state pension, but with an insurer’s balance sheet standing behind it. Widely used in the US, annuities remain little understood almost everywhere else.

Annuities have quietly underpinned American retirement planning for more than a century. According to LIMRA, total annuity sales posted $432.4 billion in 2024, up 12% year over year. In our conversation, Robert cites a broader figure of $400–500 billion when including all annuity business. Yet outside the US, he claims the product is barely understood.  

That distinction matters enormously for expats. Where a bond fund or a fixed deposit leaves a client fully exposed if market conditions move against them, an annuity shifts that risk onto the insurer's reserves. According to Robert, firms like Knighthead reportedly hold reserve ratios of around 14% against every dollar of client premium specifically to guarantee the promised rate and return of principal. Robert comments, “In most cases, we’re second only to fixed deposits with banks in terms of security, in terms of safety and in terms of tenure.”

How Annuities Address the Expat Problem

Guaranteed lifetime income, without giving up the estate. 

Traditional pensions typically stop paying, or drop sharply, when the policyholder dies. However, a properly structured annuity can return unused principal to a named beneficiary as a life insurance payout. This makes annuities a relevant tool for legacy planning, sitting alongside estate planning arrangements to ensure wealth transfers efficiently. Meaning capital isn't lost simply because retirement was shorter than expected.

No cross-border probate delay.

For internationally mobile families, probate across multiple jurisdictions can freeze assets for months or even years. Because annuity death benefits are typically paid as a life insurance claim, rather than an inherited asset, beneficiaries can often receive funds without it going through probate, offering a meaningful advantage for families with assets and heirs in different countries. Robert commented, “We regularly process these death claims. All we need is a death certificate, a death claim from beneficiaries, and we’ll be able to give it out within a couple of weeks.”

Currency flexibility

Many international annuity providers now offer contracts in multiple currencies like US dollars, British pounds, euros, Swiss francs, and yen (typically over shorter three-to-five-year terms, given the practical limits of currency hedging), allowing expats to align retirement income planning with the currency of the country where they actually intend to retire and reduce exposure to exchange rate fluctuations. Robert also explained that clients can also pay into the annuity in the same range of currencies, again helping to protect from wealth attrition during transfer.

Secure

Because expats can't easily judge one unfamiliar insurer against another, independent ratings matter. Agencies such as AM Best, a benchmark that has tracked insurer financial strength for more than a century, and KBRA provide an objective measure of an insurer's claims-paying ability. Segregated custody arrangements with major global banks add a further layer of protection, ring-fencing client assets from the insurer's own balance sheet. In our conversation Robert commented on this; “insurance companies in the US have not missed an annuity payment for the last 50 years or so. And that's how good the ratings are.”

Annuities as a part of a balanced portfolio

According to Robert, annuities could be well suited to the fixed income portion of a client's portfolio, which can represent 50-60% of wealth for some high-net-worth individuals. Products are available with terms of 3, 5, 7 and 10 years and can be funded in multiple currencies including USD, GBP, EUR, CHF and JPY. Key benefits highlighted by Robert included not just the insurance backing, but possibly higher returns than bank deposits but importantly reduced exposure to market volatility.  

Given the assurances, Robert commented that for many clients' security is one of its major attractions; “Even the younger clients that we have in their 30s, 40s, are becoming more and more conservative because they see the volatility around the world.”

Annuities can also provide a useful degree of liquidity within a balanced portfolio. Robert explained: “annuities give that liquidity because we allow you 10% withdrawal a year, up to 50% of premium.” This makes annuities a good alternative to holding cash, a trap many expats can fall into, a side-effect to the often-transient nature their lifestyles.  

Depending on the terms, investors may be able to withdraw funds or surrender the policy before maturity, although charges may apply. For internationally mobile professionals, this flexibility can help meet relocation, property or other costs while keeping longer-term capital invested. An annuity could therefore complement, rather than replace, an appropriate cash reserve.

Confidence When It Matters Most

For internationally mobile professionals, annuities could help turn globally dispersed wealth into a more predictable retirement income while addressing an array of common concerns from currency exposure to efficient estate transfer. Their potential for security, flexibility and access to capital can also make them a valuable component of a diversified portfolio, rather than a standalone solution.  

Of course, and as with any product, the right structure will depend on individual objectives and circumstances. I would also always recommend professional advice be sought to help determine whether an annuity is appropriate for you.

However, what I would say is that annuities help answer one of retirement planning's most difficult questions: longevity. If retirement could last 30 years or more, certainty becomes incredibly valuable. Because the true measure of retirement planning isn't how much wealth you accumulate, it's how confidently you can live when your salary stops.

If you would like to discuss any of the information above, or to understand your options in planning towards your retirement, speak to one of our advisers.

Common Questions About Annuities and Retirement Income

Are annuities only useful once you’re close to retirement?

No. Robert noted that Knighthead is increasingly seeing clients in their 30s and 40s, often second-generation wealth holders, using annuities for a higher yield with lower risk than a standard cash deposit, since international annuities aren't subject to the early-withdrawal age restrictions that apply to US domestic annuities.

Are there hidden fees with annuities?

According to Robert, no: "If we promise you 6%, that's 6% net to the client. Everything else has been considered. There's no upfront charges, there's no back-end charges." The only cost typically encountered is a surrender charge for breaking the contract early.

How do annuities compare to a bank fixed deposit?

Robert positions annuities as sitting just behind bank fixed deposits for security, but typically offering a higher yield, particularly where local deposit rates lag those available through US-backed annuity structures.

What if I need my money before the annuity matures?

Most contracts allow withdrawals of up to 10% a year (to a maximum of 50% of premium), and Robert noted that renewal rates above 85% suggest most clients don't end up needing that liquidity in practice, though surrender charges apply if you exit early.

This content is provided for general informational and educational purposes only and does not constitute financial, tax, or legal advice, nor is it a recommendation or solicitation to buy or sell any product. Rates, terms and figures referenced reflect the interview at the time it was recorded and are subject to change; past performance is not a reliable indicator of future results.

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