Can You Still Receive Social Security While Living Outside the U.S. explained by professional Forex trading experts the “ForexSQ” FX trading team.
Can You Still Receive Social Security While Living Outside the U.S.?
Learn How to Receive Social Security Payments While Living Abroad
If you are considering living abroad during your retirement years the ultimate question remains the same — Will you have enough retirement income to live comfortably? Many soon-to-be retirees are starting to look at retiring to other countries. The lower cost of living in many foreign countries can have significant appeal if you are trying to stretch your retirement savings. If you are considering living abroad as a U.S. citizen or resident alien (green card holder), you need to make sure you understand the financial and tax basics for U.S. taxpayers living overseas.
You are still eligible to receive Social Security benefits while living outside the U.S.
Social Security wasn’t designed to be the sole source of retirement income plans, but it is important to understand how the Social Security Administration views international living. If you are a U.S. citizen, you may continue to receive payments outside the United States as long as you are eligible for payment and you are in a country where the Social Security Administration can send payments. If you aren’t a U.S. citizen, you must meet a different set of conditions for payment.
In most situations, you will still be able to receive your Social Security benefits when living outside the United States as long as you are eligible for payments in the first place. When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to recieve retirement benefits depends on when you were born.
If you were born in 1929 or later, you need 40 credits (10 years of work). If you left the workforce (or the country) before you had enough credits to qualify for benefits, the credits will remain on your Social Security record. If you return to work later, you can add more credits to qualify. The bottom line is the Social Security Administration cannot pay any retirement benefits until you have the required number of credits.
You can choose to have your Social Security checks sent to the foreign country, or deposited in a U.S. based account that you have maintained. But there are some countries where you cannot receive Social Security payments and some place additional restrictions on non-citizens. Therefore, it is important to always do your homework in advance. Social Security Administration provides a helpful publication explaining the rules for receiving benefits while outside the United States (note: non-U.S. citizens will need to pay close attention to the conditions to receive benefits). Additionally, this Payments Abroad Screening Tool will help you find out if your retirement, disability, or survivor’s payments will continue indefinitely, stop after six consecutive calendar months, or if certain country specific restrictions apply.
Medicare benefits are only available in the United States
Because Medicare benefits are available only in the United States, it may not be to your advantage to sign up and pay the premium for medical insurance if you will be out of the United States for a long period of time. However, if you do not sign up, be aware that if you later do so, you will pay a 10 percent higher premium for each 12-month period you could have been enrolled, but were not.
If you have Medicare Part B coverage and you want to cancel it, notify Social Security. Premiums for Medicare Part B and associated premiums will continue for one more month after the month you notify us.
You still have to file a tax return with the IRS
The IRS still follows you around even if you’re retired abroad. You’ll file a U.S. tax return every year and you may even be required to file a state tax return. This is especially important to realize if you still maintain a property in the U.S. or have rental income. The paper trail continues as you will also need to report any non U.S. bank and securities accounts annually to the Treasury Department.
Foreign taxes may also be a requirement in your new country
Even if you do not have any earned income, you will still be subject to the tax laws as a resident of the foreign country, so may have to file there in addition to your U.S. return if you receive distributions from your 401k, IRA, pension, etc.
That’s something you’ll definitely want to research before you make your retirement decision. U.S. taxpayers are taxed on their worldwide income, so even if you’re retiring to one of the few countries without an income tax, such as Bermuda or the Bahamas, you’ll still have to pay income taxes in the United States. In general, deductions and credits can sometimes soften or eliminate the impact of foreign taxes paid.
Can You Still Receive Social Security While Living Outside the U.S.Conclusion
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