The Foreign Earned Income exclusion does not apply to capital gains, investment or any other &quot;unearned income.&quot; So a retired person would by able to claim the FEIE exclusion -- they&#x27;d be taxed as if they lived in the United States (with deductions for foreign taxes paid.) Pensions, disability payments, annuity payouts.. not under the FEIE. So for a lower-income retired person, double taxation is a huge problem.