Can You Still Receive Social Security If You Live Abroad?
Find out if your benefit checks will come in when you move overseas
Many soon-to-be retirees are looking into retiring outside of the United States because the lower cost of living in certain foreign countries can stretch their retirement savings. If you plan to live abroad during your retirement years, you may be wondering whether you will have enough retirement income to live comfortably.
With Social Security payments representing 33% of the income of seniors, it's not money that the average senior can afford to lose. Fortunately, you can receive Social Security benefits while you live abroad if you meet certain criteria, but there are additional financial and tax implications to living overseas that would-be expats should evaluate.
Receiving Benefits as a U.S Citizen Living Abroad
While Social Security wasn’t designed to be the sole source of income for retirees, it does make accommodations for international living. If you are a U.S. citizen, you may continue to receive Social Security payments while you live abroad if you meet two conditions.
You are eligible for payment. This means that you qualify for Social Security benefits based on your earnings record. When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to receive 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: The Social Security Administration cannot pay any retirement benefits until you have the required number of credits.
You are in a country where the Social Security Administration can send payments. To determine whether the Social Security Administration can send payments to the country where you plan to spend your retirement, use the Social Security Administration's Payment Abroad Screening Tool. You will be notified of your eligibility based on the country you specify as your intended new residence.
The Social Security Administration doesn't make payments to Cuba or North Korea. If you plan to live in one of these countries during retirement, your payments will be withheld and distributed to you when you move to a country where you can receive payments. Similarly, you generally can't receive Social Security payments while living abroad in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, or Uzbekistan. However, exceptions are sometimes made that allow retirees in these countries to receive limited benefits. If you don't qualify for an exception, your payments will be withheld until you move to a country without payment restrictions.
The Social Security Administration defines a person who lives "outside the United States" as one who has not been in one of the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa for at least 30 days in a row.
Claiming Benefits as a Non-Citizen
If you aren’t a U.S. citizen, you must be eligible for benefits, reside in a country where you can receive payments, and meet one of the following conditions to receive Social Security payments while you live abroad.
- You qualified for monthly Social Security benefits in December 1956 or the person on whose record your payments are based died or got a disability while in the U.S. military service and was not dishonorably discharged.
- You qualify for benefits based on your earnings and are in active military service or had covered railroad employment.
- You are a citizen of a restricted set of countries including Canada, the United Kingdom, South Korea, and Israel.
- You qualify for benefits based on your earnings and are a citizen of a broader set of countries including Mexico, Turkey, Costa Rica, and Jamaica.
- You are a citizen of countries such as China, India, Haiti, and South Africa, and earned at least 40 Social Security credits or lived in the U.S for a decade.
- You are a resident of a country that has a U.S. Social Security agreement, such as Canada, Australia, Sweden, and Spain.
If you're not sure whether you meet the criteria, use the Payment Abroad Screening Tool. Once you specify that you are a non-Citizen, the tool will ask you various questions to determine whether you can receive Social Security if you live abroad.
If you aren't a U.S. citizen or don't meet one of the conditions for receiving payment abroad, the Social Security Administration will stop making payments to you after you have been abroad for six months. The payments will resume when you have stayed in the U.S. for one full month.
Depositing Social Security Benefit Checks
Provided that the Social Security Administration can send payments to the foreign country where you plan to spend retirement, you can have the checks sent to that country or deposited into either a U.S.-based bank account or a foreign account held in a country with an international direct deposit agreement.
Direct deposit is the quickest, most secure way to receive payments; it will usually take longer to receive paper Social Security checks outside the U.S.
Managing Medicare While Living Abroad
Because Medicare benefits are only available in the U.S., it may be impractical to sign up and pay premiums for the program if you will be out of the country for an extended period.
However, if you do not sign up for Medicare, and later do so, you will pay a 10% higher premium for each year you could have been enrolled but were not. If you have Medicare Part B coverage and you want to cancel it, contact the Social Security Administration and request the cancellation. Expect premiums for Part B to continue for another month after the month you notify them.
Filing a Tax Return
If you're a U.S. citizen or a permanent resident of the U.S., the IRS will still follow you around after you retire abroad. Your worldwide income, including up to 85% of your Social Security benefits, is subject to federal income tax. You’ll also need to file a U.S. tax return every year, and you may additionally be required to file a state tax return. You will also need to report any non-U.S. bank and securities accounts annually to the Treasury Department.
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 U.S.
Preparing for Foreign Taxes
Even if you don't have any earned income, you will still be subject to the tax laws as a resident of the foreign country, so you may have to file there in addition to your U.S. return if you receive distributions from your 401(k), IRA, or pension. Some foreign governments tax U.S. Social Security benefits, so it's prudent to contact the country’s embassy in Washington, D.C. or an international tax lawyer for tax information. Deductions and credits can sometimes soften or eliminate the impact of foreign tax payments.