What Americans Working in Germany Should Know: Expat Financial Planning
There is a moment many Americans in Germany eventually face that has nothing to do with language or culture. It happens when the initial excitement of living abroad settles down, and you realize that your financial life is now straddling two different systems. You start to see that your paycheck, your retirement accounts back home, the German pension contributions on your payslip, and your U.S. tax obligations are all connected and complicated!
If you are like many of the Americans overseas that I speak with, you may have an uneasy feeling about your cross-border finances. You are earning in euros, saving in dollars, paying German taxes, and still filing a U.S. return every year. You may have a 401(k) in the United States, a German company pension, money in a German bank, and stock options in a multinational company. It can feel like you have built two parallel financial lives, and you are not entirely sure how they fit together.
My goal here is to walk through the key financial issues that matter most for Americans living in Germany, so you can see the bigger picture and start turning this complexity into a coherent plan. I will keep this focused on real-world decisions you face: taxes, retirement, Social Security, investing, and practical choices about where to save and how to prepare for the future.
Living Under Two Tax Systems At Once
The starting point for any American in Germany is understanding that the United States taxes you on your worldwide income, no matter where you live. Germany also taxes residents on worldwide income. Without coordination, this would be a recipe for double taxation.
The good news is that the United States and Germany have an income tax treaty that is designed to prevent the same income from being taxed twice. Exactly how this works in your situation depends on your residency status in Germany, the type of income you earn, and how you claim relief on your U.S. return. In practice, most working Americans in Germany use either the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC). Unfortunately, you cannot use both, and each one has its benefits and drawbacks.
Germany is generally a higher tax jurisdiction for middle and higher earners than the U.S. That often means the German tax you pay on your salary there is enough to wipe out most or all of your U.S. tax on that same income through the Foreign Tax Credit. The result is that the real “tax bite” usually comes from Germany, while the U.S. filing is more of a reporting and compliance exercise, but this is not automatic. The way you structure your income, benefits, and investments can change that outcome.
Where things get more complicated is outside of the regular salary system. Rental income from U.S. property, U.S. retirement withdrawals, stock compensation, and certain types of investments can be taxed differently under each system. A financial plan for an American in Germany has to consider not just how much tax you pay, but which country gets to tax each type of income and when.
Social Security, German Pensions, and the Totalization Agreement
Many Americans assume that if they leave the United States for a long stretch, they are walking away from Social Security. In reality, the situation is more nuanced and, for many expats, more favorable than they expect.
The United States and Germany have what is called a “totalization agreement.” One of the key goals of this agreement is to help workers who have split their careers between the two countries. If you have at least 6 quarters of U.S. Social Security coverage (about 1½ years of work in covered employment) but not enough to qualify on your own, U.S. Social Security can count your German coverage credits to help you qualify for a partial benefit. (ssa.gov)
The same is true in the other direction. Germany can look at your U.S. Social Security credits if you have at least 18 months of coverage in the German system and need additional time to qualify for a German old-age pension. Credits are not transferred from one system to the other. Instead, each country calculates its own benefit using your combined record to qualify you, then prorates it based on how much of your career you spent in that country. (ssa.gov)
For you, the practical takeaway is that years spent working in Germany may not be entirely lost. They can help you qualify for benefits in both systems if structured correctly and needed. When I build retirement income plans for expats, I look carefully at how many “quarters of coverage” you already have in the United States, how many German contribution years you are accumulating, and how totalization might come into play.
This is one of those areas where guessing can cost you real money. Timing matters. The decision to work a few extra years in one country or the other, or to switch from employee status to self-employment, can affect which system covers you for Social Security taxes and retirement benefits under the totalization rules. (ssa.gov)
U.S. Tax Filing, FBAR, FATCA, and Reporting German Accounts
Many Americans in Germany tell me that the tax filing itself is not what keeps them up at night. It is the fear of missing a form and facing large penalties. This is understandable because the reporting rules around foreign accounts are strict.
First, there is FBAR, the Report of Foreign Bank and Financial Accounts. If you are a U.S. person and the total of your foreign financial accounts exceeds 10,000 dollars at any point in the year, you generally must file an FBAR, even if none of that income is taxable or you owe no U.S. tax. That 10,000-dollar threshold has been in place for years, and it is not adjusted for inflation. Penalties for willful noncompliance can be severe and may reach the greater of $165,00 (as of 2025) or 50 percent of the account balance per year in serious cases. (lizotax.com)
Second, there is FATCA reporting on Form 8938. This is separate from FBAR and uses much higher thresholds for Americans who genuinely live abroad. For 2024 and 2025, if you are unmarried and live abroad, you generally must file Form 8938 if your specified foreign financial assets exceed 200,000 dollars on the last day of the year or 300,000 dollars at any time during the year. For married couples filing jointly and living abroad, those thresholds are 400,000 and 600,000 dollars. (nsktglobal.com)
In practice, if you have ordinary German bank accounts, a German brokerage account, and interests in German pensions or insurance products, you will often need to file an FBAR once your balances exceed 10,000 dollars in total, and you may also cross the FATCA thresholds if your investable assets in Germany grow large enough. Filing one form does not satisfy the other. They are two different regimes with two different penalty structures. (nsktglobal.com)
I find that this is an area where simple organization relieves a lot of anxiety. If we gather a clean list of your accounts, peak balances, and ownership structure, we can determine your filing requirements with your tax professional and build that into your annual financial calendar. It stops being an amorphous threat and becomes a routine part of expat life.
Retirement Accounts in Two Countries
A central issue for Americans in Germany is how to handle retirement savings that now live on both sides of the Atlantic. Many people leave behind 401(k)s, 403(b)s, or traditional and Roth IRAs in the United States. At the same time, they may be building German retirement rights through the statutory pension system, employer-sponsored pensions, and sometimes private German retirement products.
From a U.S. standpoint, your traditional IRA and 401(k) will be taxed when you take distributions, just as if you had never left the country. The question is how Germany will treat those withdrawals if you are a resident there or if you retire in Germany. The U.S.–Germany tax treaty allocates taxing rights over certain types of retirement income and pensions, but the practical impact depends on where you are resident at the time, the type of plan, and the specific article of the treaty that applies. A cross-border plan needs to anticipate whether a future distribution will be fully taxed in Germany, in the United States, or in both with relief through credits.
The reverse question is how the United States views your German retirement savings. Mandatory German statutory pension contributions are usually straightforward, but voluntary German retirement products can be problematic for Americans. Certain German mutual fund–like investments or insurance-based wrappers may be treated unfavorably under U.S. tax rules, sometimes as PFICs (passive foreign investment companies), which can lead to complicated reporting and high effective tax rates on gains.
This is where coordination between financial planning and U.S. tax advice becomes very important. The “default” products that work well for a German colleague might be a poor fit for you as an American who must keep one eye on the IRS.
Currency Risk and Where You Hold Your Wealth
Living in Germany but still anchored to the U.S. dollar introduces another layer of planning that does not show up for purely domestic investors. You may earn in euros, spend in euros for many years, but eventually plan to retire in the United States and spend in dollars. Or you may plan an open-ended future where you are not sure yet which country will be your long-term home.
The good news here is that long-term investments, like stocks and ETFs, carry no currency risk at all. You can buy an investment with any currency you would like, on any day. What you hold then is an investment, which can be valued going forward with/in any currency you choose. Investments in the world’s greatest companies are not worth more in any one currency than another. This is one of the more complicated ideas for expats to wrap their heads around. For more information on how this works, watch our short video about it HERE.
Cash and cash-like savings do hold currency risk, though, and need to be managed if there is a need to hold large amounts of cash in your financial plan (like for an upcoming real estate purchase overseas).
Estate Planning, Beneficiaries, and Cross-Border Heirs
Estate planning for Americans in Germany is often overlooked because it feels like a remote issue. Yet this is another area where living in two systems at once creates real consequences for your spouse, children, or other heirs.
Germany has its own inheritance and gift tax rules. It also has “forced heirship” concepts that can limit how freely you can dispose of your estate under German law. At the same time, the United States can tax U.S. citizens on worldwide estates above the U.S. exemption threshold, regardless of where they live. Coordination between U.S. and German rules is complex and well beyond the scope of a casual conversation, but the key point is that your old U.S. will, trust, and beneficiary designations may not align well with your new life in Germany, and you should seek professional help with this topic.
Beneficiary designations on U.S. retirement accounts and life insurance are especially important. If your primary residence is in Germany and your family is split between countries, you want to be sure that the way your accounts pass at death is consistent with both your intentions and the legal framework that will actually apply. That usually means reviewing your estate plan with professionals who understand cross-border issues and then making sure your financial plan reflects those decisions.
The Emotional Side: Regrets, Tradeoffs, and Flexibility
When I talk with retirees about their regrets, the themes are often similar, whether they stayed in the United States or spent decades abroad. They wish they had started planning earlier. They wish they had been more proactive in understanding taxes. They wish they had documented what they wanted for their family instead of assuming everyone would just know.
For Americans in Germany, there is an added layer. Many people feel pulled between two homes. They want the freedom to return to the United States in their sixties and be closer to grandchildren, but they also like the idea of staying in Germany with its healthcare system and familiar community. That uncertainty can lead to paralysis. It can feel easier to put off decisions and simply “see what happens.”
A good expat financial plan does not force you to choose now. Instead, it builds flexibility. We look at what your retirement would look like in Germany, in the United States, or with a split life. We consider what your income streams would be under each scenario, how your tax picture would shift, and what happens to your dependents. The goal is not to predict the future perfectly. The goal is to create a structure that works reasonably well across several realistic futures and can be adjusted as your life unfolds.
Bringing It All Together Into a Coherent Plan
If you feel like you are trying to manage a German tax adviser, a U.S. CPA, a couple of bank relationships, and a handful of retirement accounts that live in different countries, you are not alone. On their own, each of these pieces is just one part of your financial life. The real value comes when someone helps you see the whole picture.
For Americans in Germany, a coherent financial plan typically has several core elements working together:
You have clarity on your cross-border tax obligations, including which country taxes which type of income, how you avoid double taxation, and what your annual filing routine looks like with FBAR and FATCA in mind.
You understand how your years in each country contribute to Social Security and the German pension system under the totalization agreement, and you have realistic expectations for what those benefits may provide in retirement. (ssa.gov)
You have a strategy for where to save and invest that respects both U.S. and German rules, avoids common pitfalls for Americans abroad, and aligns your currency exposure with your likely life plans.
You have reviewed your estate planning and beneficiary designations with cross-border realities in mind, so that your spouse, partner, and children are protected, regardless of which side of the Atlantic you are on when life events occur.
Finally, you have a sense of what retirement means to you personally, where you might want to live, and how your finances support that picture, rather than limit your choices.
None of this requires perfection. It does require attention, some good information, and a willingness to ask for help when something is outside your comfort zone.
Next Steps
If you are an American living in Germany and you recognize pieces of your own situation in what I have described, I would encourage you not to wait until retirement is just around the corner. The most effective planning often happens while you still have years to adjust course.
I work with Americans abroad on exactly these kinds of questions, bringing together expat financial planning and wealth management for expats in a way that respects both sides of your life. If you would like to see how this applies to your own situation, I invite you to schedule a call with me. We can walk through your current picture, identify the key decisions in front of you, and start turning this cross-border complexity into a plan you can actually feel comfortable living with.
Sources
https://www.ssa.gov/international/Agreement_Pamphlets/germany.html
https://secure.ssa.gov/poms.nsf/lnx/0201707120
https://www.ssa.gov/policy/docs/ssb/v78n4/v78n4p1.html
https://www.browntax.com/insights/2025-fbar-compliance-guide/
https://www.hrblock.com/expat-tax-preparation/resource-center/tax-law-and-policy/tax-acts/fbar-vs-fatca-filing-requirements-for-americans-abroad/
