How to Collect Social Security and Retire Overseas

If you are thinking about retiring to another country, one of your concerns may be how to get Social Security overseas.  First, I want to assure you that it is possible to receive your benefits and that many Americans around the world are living comfortable lives on their American Social Security benefits.  However, you will want to check everything out carefully to avoid any unnecessary complications before you make the commitment to move to another country.

Key Points to Know About Collecting Social Security Abroad

The Social Security Administration will provide you with their Publication No. 05-10137 entitled "Your Payments While You Are Outside the United States."  You can get it on the Social Security Administration website at www.ssa.gov.  I suggest you read it carefully and I am not going to attempt to rewrite the entire brochure in this post.  However, here are some of the key points you will need to know:

You can get your benefits in nearly any other country, although there may be special procedures you will have to follow.  For example, if you are in certain countries you will have to go to the U.S. Embassy or consulate to pick up your checks.

Currently, you cannot receive payments if you move to Cuba, North Korea, Cambodia, Vietnam or some of the countries that make up the former Soviet Union.

Retirees who move to Armenia, Estonia, Latvia, Lithuania and Russia can receive their checks, but they fall into the category of places where you will need to pick up your checks at an embassy or consulate office.

The list of countries that have these restrictions changes from time to time.  You can always get the most curent information on the Social Security website.  If you are moving to a location that has had a checkered relationship with the U.S. government, you will want to contact your local Social Security office and investigate how you will receive your benefits before you make the move.

If you move to another country and get dual citizenship in that country, while retaining your U.S. citizenship, you can continue to collect your benefits.  There is also a long list of countries on the site where you can become a citizen of that country alone and still receive your U.S. benefits; examples that fall into this category are Austria, Canada, France, Israel, Japan, South Korea and the United Kingdom.  If you are considering becoming a citizen of another country and dropping your U.S. citizenship, you will want to check the Social Security website first to make sure the country where you will be living is on the approved list.

Survivor and Dependent Benefits

If you are receiving your Social Security benefits as a dependent or you are getting widow's survivor benefits, it is possible that you will not be able to continue to collect those benefits if you continue to live overseas after the primary beneficiary dies.  There are special requirements that you will need to meet and you should check with the Social Security office to make sure you meet these requirements.

Direct Deposits vs. Checks

While you are living in another country, you can arrange to have your payments deposited in a bank in the United States or in the country where you are now living.  There are advantages to having direct deposits that go into a U.S. dollar account, since you can avoid currency conversion and other fees.

Income Taxes on Your Benefits

Your benefits are subject to the same taxes you would have to pay if you lived in the United States.  The amount of taxes you will pay depends on the amount of other income you have.  If you are living on Social Security alone, you will probably not owe any taxes on your income.  If you have tax free income, such as distributions from a Roth IRA, you will probably not have to pay.  However, if you are receiving distributions from a traditional IRA or income from other taxable sources, your benefits could be subject to Federal income tax laws.

In general, Social Security benefits from the United States are tax free in many other countries as long as we have a tax treaty with that country.  If you live in a country without a tax treaty, your benefits might be taxed by that government.  In addition, if you have become a citizen of another country, you may be expected to pay taxes to the government of that country.  You will want to investigate the tax consequences of any move to another country.

Reporting Requirements

When you live in another country and collect your U.S. benefits, you need to keep the Social Security Administration informed of changes in your family status such as a marriage, adoption of a child, a child who becomes 18,  a child who is or becomes disabled, an annulment or divorce, a change of address, and similar events that could affect your eligibility or the eligibility of your dependents.  The SSA will send you a questionnaire periodically.  However, if there are changes, you should not wait until the next questionnaire to report them.

Medicare

You will not be covered by Medicare in another country.  If you do choose to sign up for Medicare, it will only provide you with coverage when you are in the U.S.  However, you may still want to sign up while you are living abroad because your premiums will go up by 10% a year for each year you remained out of the U.S. and were not enrolled.  If you come back to the U.S. in your later years, your Medicare premiums will be substantially higher if you have not been paying them all along.  The decision is up to you, but it is something you should consider when you turn 65.

It is not unusual for people to decide to go ahead and have their Medicare premiums deducted from their Social Security checks and, in addition, buy an insurance policy in the new country where they are living.  In many cases, medical insurance is quite inexpensive in other countries.  In this way, the retirees are covered in their new country and they have basic Medicare coverage when they are visiting family in the U.S.  They also will be able to keep the lowest Medicare premiums if they choose to return to the U.S. permanently.

If you are currently making retirement plans, you may also want to read other posts from this blog.  They are listed and linked in the index articles below:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

Resources:

http://voices.yahoo.com/what-social-security-benefits-if-retire-1567559.html

http://www.ssa.gov

Social Security Administration Publication No. 05-10137 "Your Payments While You Are Outside the United States"

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Photo of sample Social Security card is courtesy of wikimedia.org/commons.