Receiving Social Security Benefits Abroad

Did you know that you can still collect Social Security benefits if you are living abroad?

Receiving Social Security Benefits Abroad

Did you know that you can still collect Social Security benefits if you are living abroad? It’s true, outside of a few specific countries: Cuba, Ukraine, North Korea, or Vietnam or if the country has differing Social Security policies in place (like Lithuania and Monaco). To check if the country would pay you your Social Security visit:

https://www.ssa.gov/international/payments_outsideUS.html

Who Is Eligible?

American citizens are able to collect Social Security, disability, or survivor’s benefits while living overseas. If you are a citizen of Switzerland or the United Kingdom, you should also be able to receive your benefit abroad regardless of how long you are outside the US. Other countries residents may lose benefits after residing outside the country for six consecutive months, there are exceptions to that rule based on work history, military service, or citizenship with a country the US has a Social Security agreement with. Still, other countries, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan

can collect benefits under strict conditions, one of them is having to appear at a US embassy every six months.[i] The majority of recipients collect their benefits to a US bank or a foreign bank that the US has a direct-deposit agreement. Foreign banks that do not have direct-deposit agreements with the US may charge fees for international transactions for which the beneficiary is responsible. Regardless of country, the amount will be calculated in US dollars.

 Related article by Echo Huang, CFA, CFP®, CPA- ithdrawal Strategies During Retirement

Who Isn’t Eligible?

For certain non-US citizens, or citizens of one of the countries listed by Social Security (Cuba, Ukraine, North Korea, or Vietnam) you may be ineligible to collect benefits after living abroad for 6 consecutive months. SSI (Supplemental Security Income) benefits are not eligible to collect overseas, as they are only for residents of the US or one of its protectorates (Puerto Rico, Guam, The Virgin Islands, American Samoa, and the Northern Mariana Islands). If you are residing in one of the countries mentioned above (Cuba, Ukraine, North Korea, or Vietnam) you will not be eligible to collect your Social Security benefit but you may be able to collect all withheld benefits when you return to the US or a country where you can receive benefit payments. Benefits can be reinstated in some cases, after a month of residence back in the US. Medicare benefits are not available outside the US, but if you plan to return, it may behoove you to sign up and pay the premium as signing up later will charge you a 10% higher premium for every 12- month period you could have enrolled.[i]

Social Security Questionnaire

Periodically, the Social Security Administration will send out questionnaires to beneficiaries living overseas. These questionnaires come to you every one to two years and will help ascertain your continued eligibility. Questions will include detailing any work you’ve done, live events like marriages, births or deaths, or changes in address or circumstances. Failing to fill out a questionnaire or report an event to the Social Security Office may cause a cancellation of your benefits, so make sure to fill them out and send them back in.

Taxes

Even if you retire abroad, you will still need to file a US tax return every year and you may also need to file a state tax return as well. This will be especially true if you still maintain any property in the United States or draw any sort of income. You will also need to report any non-US banking and securities accounts to the Treasury Dept. You will also be subject to the taxes of the country you are living in and may need to file an additional tax return. US taxpayers are taxed on their worldwide income, so even if you live in a country without income tax, you’ll still have to pay them in the US. The US has tax treaties with certain countries, which can provide relief in the form of lower rates or exemptions, but that is not always the case. Some countries may charge a residency-based tax that could end up being quite high. Your worldwide income and up to 85% of your Social Security benefits may be subject to federal income taxes[ii], so it’s important to do your homework before relocating.

Tips for Retiring Abroad

Like anything in life, a little planning and research go a long way. Research the tax laws and consult your financial advisors and/or accountants. Consider renting at first as it may be difficult to get a mortgage in a foreign country. Buying without a mortgage will cost more upfront capital. Keeping cash and investments stateside and accounts active to receive your Social Security benefits may be easier than setting up a foreign bank account. Get credit cards that do not charge foreign transaction fees. Research how to get a residency visa, as some countries are more complicated than others to get one in. Retiring abroad can be a wonderful opportunity and taking a little time to go over the details will save you a lot of headaches. Good luck!


[i] https://www.aarp.org/retirement/social-security/questions-answers/collecting-social-security-abroad/ 

[i] https://www.thebalance.com/can-you-receive-social-security-living-outside-united-states-4147562

[ii] https://www.cnbc.com/2018/04/21/heres-how-to-retire-abroad--without-any-tax-surprises.html

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