Pensions in the US: an essential guide for expats in [2026]

The US offers a high standard of living, a diverse culture, and many beautiful natural landscapes, making it an attractive place to retire. It also has a well-established pension system that helps residents plan financially for later life.

Expats who want to stay in the country long term should understand the retirement options available to them and how to qualify for them.

For many expats, retirement isn’t just about local savings – it’s about managing a “global pension”. This guide will cover all of the essentials on US pensions, with sections on:

Understanding the US pension system: An overview 🇺🇲

Like many countries, the US has what is known as a “three-pillar” pension system made up of public benefits, employer-sponsored plans, and individual savings.

Public benefits – mainly Social Security – provide a foundation of income for retirees. However, workplace and private retirement plans play a larger role in overall retirement provision in the US than they do in many other developed countries.

The US ranks 21st out of 44 countries on the 2025 Natixis Global Retirement Index, which measures retirement security across four areas: health, finances, material wellbeing, and quality of life.

The country ranks particularly strongly on the finances sub-index, where it places 10th.

In the 2025 Mercer CFA Institute Global Pension Index, the US ranks 30th out of 52 countries and receives a C+ grade for its pension system.

What is the Three-pillar framework?

💡 The three-pillar pension framework in the US consists of:

• 👥 Public Social Security: This is the basic US government pension, called the Old Age Survivors and Disability Pension (OASDI) paid to eligible workers upon retirement age. OASDI is managed by the Social Security Administration (SSA) and funded through compulsory payroll taxes paid by both workers and employers. 94% of the US workforce was covered by OASDI in 2024.
• 🏢 Employer-sponsored Retirement Plans: These are workplace pension plans offered by many US employers. Most are defined contribution plans, such as the 401(k) pension, with others being more traditional defined benefit schemes. Employers typically contribute towards these plans. In 2023, 73% of workers had access to workplace retirement benefits, although not all eligible workers participated.
• 🔒 Individual retirement savings: These are private voluntary savings that individuals manage themselves. One common example in the US is the Individual Retirement Account (IRA), but they can include a range of tax-advantaged private investment plans. 44% of households in the US reported owning an IRA in 2024.

Pillar	💡 Category	🎯 Primary objective	💰 Funding source
⭐ Pillar 1	Public Social Security (state pension)	Anti-poverty / Basic livelihood	Mandatory social security (PAYG)
⭐⭐ Pillar 2	Employer sponsored retirement plan (occupational pension)	Standard of living maintenance	Employer & employee contributions
⭐⭐⭐ Pillar 3	Individual retirement savings (private pension)	Individual enhancement	Voluntary personal contributions

How the Three-pillar framework works in the US

The US pension system differs from many European systems because the government provides a smaller share of retirement income. Social Security was never designed to fully replace a worker’s salary.

💡 For an average earner, it typically replaces about 30–40% of pre-retirement income, compared to around 60–80% in many European countries.

Workplace retirement plans play a particularly important role in the US. In recent decades, employers have shifted from defined benefit workplace pensions (with a guaranteed lifetime payment) toward defined contribution plans (income depends on how much is contributed and how investments perform).

➡️ This shift has tied American retirement savings much more closely to financial markets than in many other countries.

⚠️ The US pension system is not run by a single government department. Instead, several agencies share responsibility, including:

• Social Security Administration (SSA) – runs the public Social Security program
• US Department of Labor – oversees private workplace retirement plans
• US Securities and Exchange Commission – regulates the investment funds that workplace and private individual retirement accounts invest in

2026 pension reforms and updates 🗓️

🗓️ Key pensions updates for 2026 include:

• Social Security benefits increased by 2.8% to adjust for inflation
• IRS annual increases including the elective deferral limit for 401(k) and 403(b) workplace plans raising to $24,500, and IRA contribution limits rising to $7,500
• Under SECURE 2.0, high-earning employees (above $150,000) aged 50 and older now pay tax upfront on 401(k) catch up contributions, which means losing the upfront tax deduction but allowing qualified withdrawals to be tax-free

Pensions advice and support in the US

It’s sensible to seek professional advice on your US pension, especially if you’re looking to make further investments or combine/transfer pensions from your home country.

You can get advice from a variety of sources, including:

• Pension Rights Center
• Cross Border Financial Planning

Before choosing an advisor, make sure they are registered with a suitable US authority (e.g., US Securities and Exchange Commission) and have a license to provide advice in the US.

If you receive pensions in more than one country or need to transfer pension payments abroad, the multi-currency Wise Account can make things easier. With the Wise Account, you can:

• Hold money in 40 currencies
• Send payments to 140 countries
• Convert and send money at low cost, with fees starting at 0.57
• Get extra discounts on large transfers (above GBP 20,000 or equivalent)

*Product and feature availability varies by country. Eligibility and fees apply, and exchange rates can change. You can learn more here on wise.com

👥 Eligibility: Who can claim a pension in the US?

Pension age in the US 🧓

You can start claiming OASDI from the age of 62, although your payments will be permanently reduced if you claim before your full retirement age. For people born in 1960 or later, the full retirement age is 67. Eligible claimants can increase their monthly benefit by delaying their claim, with payments rising each year until age 70.

Workplace pensions in the US operate differently. Many retirement plans, such as the 401(k), allow withdrawal from the age of 59.5, with the option to delay minimum withdrawals until the age of 73.

Early retirement options

The earliest age to claim Social Security retirement benefits is 62, but your monthly payment will be permanently reduced – by up to about 30% compared with claiming at full retirement age.

Many workplace retirement plans allow early withdrawals, but taking money out before age 59.5 usually triggers a 10% tax penalty in addition to income tax.

💡 An exception known as the “Rule of 55” allows workers who leave their job in or after the year they turn 55 to withdraw from that employer’s 401(k) without the 10% penalty, although regular income tax still applies.

Private retirement accounts, such as IRAs, may also allow early withdrawals under certain conditions, but the rules and penalties vary depending on the type of account.

Qualifying years and contribution minimums

To qualify for OASDI retirement benefits, you generally need 40 work credits (about 10 years of covered employment), with up to four credits earned per year. In 2026, one credit is earned for approximately $1,890 of covered earnings.

⚠️ If you do not accumulate 40 credits, you cannot receive Social Security retirement benefits.

➡️ You can check your eligibility for OASDI on the SSA website.

For employer-sponsored retirement plans such as 401(k)s, there is no federally required minimum contribution amount.

Employers may require up to one year of service before employees can participate and earn employer contributions.

What happens if you are not eligible for a full pension? 🤔

⚠️ If you do not qualify for OASDI in the US, either on your own record or through spousal benefits, you may still qualify for support. This could include:

• Supplementary Security Income (SSI) – a needs-based, means-tested program for elderly or disabled individuals with limited income and assets
• Social Security Disability Insurance (SSDI) – if you are disabled and have accumulated sufficient work credits under Social Security, with the number required depending on your age at disability

International pension agreements for expats 🌍

Expats living in the US may qualify for Social Security retirement benefits if they have worked in the US for at least 10 years and earned 40 credits through payroll taxes.

If you don’t have 40 work credits, you may still qualify for a pension if your home country has a Totalization Agreement with the US.

Around 30 countries have agreements in place with the US, including Canada, the UK, France, Australia, and Japan. In addition to preventing “dual taxation” (having to pay social security to both countries on the same earnings), these agreements help workers qualify for benefits by allowing them to combine periods of coverage in both countries.

For example, if you move to the US from the UK and worked there for six years before relocating, those six years of UK contributions can be combined with your US work record to help you qualify for benefits. However, foreign work does not convert directly into US Social Security credits. Instead, each country calculates and pays a partial benefit based on the time you contributed to its system.

Transferring your foreign pension to the US ⬅️

Although the US has totalization agreements with many countries, these agreements do not allow pension funds to transfer between systems. Each country pays benefits separately under its own rules. As a result, expats typically receive two separate pensions at retirement – one from their home country and one from the US (if they qualify for both).

For example, someone who worked for 35 years in France and then for seven years in the U.S. may receive:

• A French pension based on 35 years of contribution, and
• A partial US Social Security benefit based on their seven years of US work

🇫🇷 The French years help them meet US eligibility requirements, but the US payment is based only on US earnings.

US workplace retirement plans such as 401(k)s generally do not accept direct transfers from foreign pension schemes. The same is true for most IRAs. Expats who move to the US usually leave their workplace or private pension in their home country and receive payments from that plan at retirement.

Some foreign private pensions allow lump-sum withdrawals instead of ongoing payments. In those cases, you may be able to transfer the funds to a US bank account. However, this may trigger early withdrawal penalties and taxes in your home country (as well as US income tax if you are a tax resident), so it’s important to check implications first.

🇬🇧 The US does not operate a Qualifying Recognised Overseas Pension Scheme (QROPS) system, meaning that UK residents cannot transfer their UK pensions into a US retirement account using a QROPS arrangement.

🌎 Managing foreign pension income with Wise ⭐

If you are transferring a foreign pension to the US, it’s a good idea to compare providers and find the most cost-effective option.

Receiving a pension into a local US bank account from somewhere like the UK, EU, Canada, or Japan might incur high receiver fees and unfavourable exchange rates.

A Wise Account can provide a solution to these problems. This multi-currency account allows you to hold money in 40 currencies and has account details for SWIFT payments in 20 currencies.

You can also send payments to 140 countries. Conversions are at the mid-market exchange rate with transparent fees, starting at 0.57 per transaction.

US pension rates, contributions and calculations 🔢

How the US pension is calculated 💡

OASDI is primarily based on your highest 35 years of earnings (adjusted for wage growth) and the age at which you start claiming benefits. If you worked fewer than 35 years, missing years count as zero, which lowers your average.

According to the SSA, the average monthly Social Security benefit amount is $2,071 in 2026.

💡 Maximum monthly payouts depend on your age when you start claiming. In 2026, these are:

• $4,152 if you claim at full retirement age (either 66 or 67 in 2026)
• $2,969 if you make an early claim at the age of 62
• $5,181 if you delay your claim and retire at the age of 70

You can calculate your Social Security entitlement using the SSA calculator, if you register an account. If you don’t want to do this, you can make a quick assessment based on your current earnings using the quick calculator.

US pension contribution rates

Workers in the US make Social Security contributions through payroll taxes. The 2026 rates are 12.4% of salary (on earnings up to $184,500), which is split equally between employee and employer contributions. Self-employed workers have to make the full 12.4% contribution themselves, but can claim the employer 50% back as a tax deduction.

📌 Category	👥 Employee contribution %	🏢 Employer contribution %	🔢 Total contribution %
Standard employee	6.2%	6.2%	12.4%
Self-employed	12.4%	N/A	12.4%

Taxation and tax relief on US Social Security benefits

Self-employed workers in the US can deduct the 50% employer portion towards Social Security tax paid when calculating their federal income tax.

If you receive Social Security retirement benefits, you may have to pay federal income tax on part of the benefit, depending on your combined income. This includes:

• Your adjusted gross income (AGI)
• 50% of your Social Security benefits
• Any nontaxable interest

The current threshold (2026) is $25,000 for individuals ($32,000 for joint filers), above which you may have to pay tax on up to 85% of your benefits payments at your standard federal income tax rate.

Standard federal income tax deductions still apply. Because tax treatment can vary depending on total income and filing status, it may be helpful to speak with a qualified financial or tax professional.

Supplementary and voluntary support ➕

As previously mentioned, employer-sponsored retirement plans and voluntary individual retirement accounts (IRAs) play a big role in supplementing Social Security benefits in the US.

Occupational pensions

💡 Around three-quarters of US workers have access to employment-sponsored retirement plans. The most common type today is a defined contribution plan.

In a defined contribution plan, employees choose a percentage of their pay to contribute to an individual retirement account, typically invested in mutual funds or similar options. Employers often contribute as well, either by matching a portion of employee contributions or by making a fixed contribution.

Contributions are usually on a pre-tax basis, meaning that you pay income tax on withdrawals in retirement. Many plans also offer a Roth option, where contributions are taxed upfront but withdrawals in retirement are generally tax-free.

📌 The account grows tax-deferred over time. Withdrawals before age 59.5 typically trigger income taxes plus a 10% early-withdrawal penalty (with some exceptions).

Common defined contribution plans include:

• 401(k) – the most common private-sector plan (including SIMPLE 401(k) plans for small employers)
• 403(b) – for public schools and certain nonprofit organizations
• 457 – for state and local government employees (and some nonprofits)
• Employer IRAs – including the SIMPLE IRA, SEP IRA, and the Payroll Deduction IRA
• Profit-sharing plans and money purchase plans
• Employee Stock Ownership Plans (ESOP) where workers receive company shares as part of their retirement benefit

By contrast defined benefit plans (traditional pensions) promise a specific monthly payment in retirement, typically based on years of service and salary. The employer funds the plan and bears the investment risk. Benefits often replace roughly 30–60% of final salary for long-tenured employees.

These plans are now more common in the public sector. Examples include traditional pension plans, cash balance pension plans, and the military retirement pension.

Private pensions

Many Americans supplement Social Security and employer-sponsored retirement plans with voluntary retirement savings. The most popular in the US is the individual retirement account (IRA). This is a tax-advantaged personal savings account that individuals can contribute to during their working years and withdraw from in retirement.

There are two main types of IRAs. With a traditional IRA, contributions may be tax-deductible depending on your income and whether you are covered by a workplace retirement plan. Investments grow tax-deferred, and withdrawals in retirement are taxed as ordinary income.

With a Roth IRA, contributions are made with after-tax income. Investments grow tax-free, and qualified withdrawals in retirement are generally tax-free. Income limits apply to Roth IRA eligibility.

In addition to IRAs, there are a number of investment options in the US that can help you plan for retirement, including investment funds, high-interest savings accounts, and property investments. While these options do not offer the same tax advantages as retirement accounts, they can provide additional flexibility and income in retirement.

📌 If people opt for an early retirement or a lump-sum payout from a private pension provider, they may need to transfer a significant amount of capital into the US.

💡Tip: Wise money transfers are made using the mid-market rate which avoids excessive hidden fees, and there are discounts for large-amount transfers (above GBP 20,000 or equivalent).

Support for low earners and disability pensions

The US has several federal programs that provide a financial safety net for older adults, people with disabilities, and families with limited income. Some programs are based on financial need (means-tested), while others depend on a person’s work history. Key programs include:

• Supplementary Security Income (SSI) – for elderly or disabled individuals with limited income and assets
• Social Security Disability Insurance (SSDI) – for workers who become disabled and can no-longer work, provided they have earned enough credits through prior employment
• Survivor Benefits – for surviving family members of someone who worked and paid Social Security taxes before they died
• Family Benefits – for spouses and dependent relatives of US workers who don’t qualify for Social Security benefits through their own contributions
• Medicaid and Medicare – public health insurance in the US for seniors, disabled persons, and those on low incomes
• Veterans Pension – means-tested support for wartime veterans with limited income and assets who also meet service eligibility requirements

📌 How to apply for a US pension 📂

You can choose when to apply for Social Security benefits in the US. You can apply as early as age 62. However, starting early reduces your monthly benefit permanently. Your benefit increases each year you delay claiming, up to age 70. After age 70, your benefit no longer increases, but there is no deadline that forces you to apply.

The application timeline for a US pension

You can apply for OASDI up to four months before you want benefits to start. This means the earliest you can apply is when you are aged 61 years and nine months. There are three ways to make your application:

• Online through the SSA website
• By phone, calling +1-800-772-1213
• Making an appointment at your local Social Security Office

The application usually takes around 30–60 minutes to complete. Once submitted, the SSA reviews your application. This typically takes two to six weeks. Social Security pays benefits one month behind. For example, if your benefits begin in April, your first payment will arrive in May.

Payments are made based on your birth date and are typically deposited on a Wednesday each month.

📁 Required documentation checklist for a US pension 📌

You will need to provide the following information when applying for OASDI:

• Your Social Security number
• Proof of birthplace (e.g., birth certificate or passport)
• Record of your earnings (e.g., W-2 forms or self-employment tax returns)
• Work history for the past five years (employers, dates, hours worked, salary)
• Marriage/divorce certificates (if relevant)
• Bank account details
• Names of any dependent children

FAQs: Quick answers for US pensions 🇺🇲

Can I claim my US pension if I move abroad?

In most cases, you can claim your US pension if you move overseas, although there are certain countries where restrictions apply (for example, North Korea and Cuba). You should notify the SSA or your pension provider of your new address. Payments are typically deposited in dollars into US bank accounts, although it may be possible to arrange for deposits to local accounts.

Is my foreign pension taxable in the US?

This depends on your tax residency status, the type of pension, and whether a tax treaty is in place. If you are a US citizen or tax resident, you pay tax on your worldwide income, including foreign pensions. However, you can prevent double taxation if there is a tax treaty between the US and your home country, or if you are eligible for Foreign Tax Credit.

What is the minimum state pension in 2026?

There isn’t a standard minimum amount that applies to everyone in the US, as amounts depend on lifetime earnings and years of contribution. The needs-based Supplementary Security Income (SSI) program has maximum amounts. In 2026, these are $994/month for an individual ($1,491/month for a couple).

Useful resources

Information last checked 18th of February, 2026

• Social Security Administration (SSA) – federal government organization that deals with Social Security benefits
• US Department of Labor – federal government department that deals with workplace retirement plans
• Internal Revenue Service (IRS) – federal tax agency with information on tax regarding retirement, pensions, and Social Security
• US government – federal government website with information on Social Security
• Pension Rights Center – nonprofit organization that protects and promotes the retirement security of workers and their families,