Social Security
6 Things US Expats Need To Know About Social Security
Social Security is the government-run program that provides income for Americans in retirement. 40% of older Americans only receive income from Social Security in retirement, and the remaining 60% receives income from one or more of a defined contribution plan such as a 401(k), a pension plan, Social Security, annuity, or other source of income. It is difficult enough for Americans living in the country to understand how much they have paid into the system and what benefit they can expect to receive in retirement, and it gets even more complicated for Americans living abroad. If you move outside the US, here’s what you need to know about your Social Security benefits.
1. You don’t need to live in the US to collect benefits.
As long as you are eligible for Social Security retirement benefits, which means you are 62 or older and have worked and paid Social Security taxes for 10 years or more, or are eligible based on a current or former spouse’s work, you likely can receive Social Security benefits even if you live outside the United States. There are only two countries where you aren’t able to receive benefits, Cuba and North Korea, and eight other countries where you can only receive Social Security payments under strict conditions (like appearing in-person at a US embassy every six months). You can receive Social Security benefits in the vast majority of countries as an American living abroad.
2. Dual citizenship generally does not impact your ability to qualify for Social Security benefits.
The United States “generally considers a person with dual U.S. and foreign citizenship a U.S. citizen for Social Security purposes.” This means if you pay into Social Security and expect to receive benefits, dual citizenship will typically not impact those benefits. There are some exceptions for countries the US has Social Security agreements with, and in some countries you may have the option to pay into Social Security or the other country’s version of Social Security.
3. Living abroad doesn’t mean you are exempt from Social Security taxes.
If you work for an American company, you may still be required to contribute to Social Security even if you are living abroad. The US has international Social Security agreements, also called totalization agreements, with many countries that ensures you and your employer do not pay Social Security taxes to both the US and the foreign country you reside in. If your American employer sent you to work outside the country for five years or less, and you work in an agreement country, you will only pay US Social Security tax. If you are hired in a foreign country, or are sent to a foreign country to work for more than five years, you typically only pay foreign social security taxes and are exempt from paying US Social Security taxes.
4. You may be able to avoid double taxation.
If your country of residence has a Social Security agreement with the United States, as outlined above, you will only pay Social Security taxes to one country as long as you meet the requirements of the agreement specific to your country. If you live in a country that does not have a Social Security agreement with the US, you may have to pay Social Security taxes to both countries on the same income (or be subject to double taxation, in other words). However, paying taxes twice means you may qualify for a separate benefit payment from each country. For more information about how to avoid double taxation, check out my article “An Expat’s Guide to Double Taxation.”
5. You need to keep the Social Security Administration updated.
If you are an expat living abroad and expect to receive Social Security benefits, it’s important to keep the US government updated with any major life changes. This ensures you are able to receive any communications about your benefits and that you are receiving the correct amount of benefits owed to you. Let the Social Security Administration know if you change your name, address or phone number, got married or divorced, if your citizen status changed, a beneficiary died, and about other life changes outlined by the Social Security Administration.
6. You may receive benefits through direct deposit in your country of residence.
You can receive Social Security benefit payments directly to your international bank account in most countries. The Social Security Administration maintains a list of countries and territories where direct deposit payments are available. Foreign banks may charge fees on international transactions which you will be responsible for, and many choose to direct deposit all Social Security payments to a US bank while living abroad because they find it faster and more secure.
Moving outside the US or living abroad doesn’t mean you will no longer qualify for Social Security. However, depending on the country you move to, there may be some caveats you need to be aware of to avoid being double taxed and receiving the benefits you are eligible for. In general, if you are eligible for Social Security benefits, you can still receive them even if you live outside the United States.