Many retirees look forward to traveling in their retirement, and more and more are actually retiring overseas, in part as a way to stretch savings. But what happens to retirees' federal benefits while they are out of the country? The short answer is that although Social Security benefits are available to retirees in other countries, Medicare is not. In this installment we look at Social Security. (Click here for our article on overseas travel and Medicare.)
As is not the case with Medicare, retirees who decide to move to another country are still entitled to Social Security benefits. Once a retiree has been outside the country for 30 days in a row, he or she is considered outside the United States and the rules for collecting benefits apply.
The Social Security Administration (SSA) will send checks to anyone who is eligible for benefits and is living abroad. However, there are a few countries where the SSA is not allowed to send checks. Retirees who move to Cuba or North Korea cannot receive any checks while they are in either country, but they can get any withheld checks if they go to a country where paychecks can be sent. In addition, the SSA generally does not send Social Security checks to Cambodia, Vietnam, or areas that were in the former Soviet Union (other than Armenia, Estonia, Latvia, Lithuania, and Russia), but retirees may be able to apply for an exception. In such cases, retirees may have to agree to certain conditions, such as appearing in person at the U.S. embassy each month, to receive benefits.
Retirees who are U.S. citizens are entitled to continue receiving benefits for as long as they live outside the United States. However, citizens of other countries who receive Social Security may have some restrictions on how long they can receive benefits while outside the United States. The rules are quite complicated; the Social Security publication Your Payments While You Are Outside the United States explains in detail what restrictions citizens of individual countries are subject to. The SSA Web site also offers beneficiaries a payment screening tool that tells them whether they will be entitled to benefits if they remain outside the country for more than six months.
Retirees may have their checks directly deposited into a bank account in the United States, and direct deposit is available in some other countries as well. Using direct deposit avoids check-cashing and currency-conversion fees.
In countries with a large number of U.S. retirees, American embassies and consulates have individuals who are trained to provide Social Security services, including taking applications. The countries are: Argentina, Australia, Austria, Belgium, Chile, Costa Rica, Croatia, Denmark, the Dominican Republic, Finland, France, Germany, Greece, Hong Kong, Ireland, Iceland, Israel, Italy, Jamaica, Korea, Japan, Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Slovenia, Spain, Sweden, Switzerland, the United Kingdom, and Yemen. Individuals in other countries need to contact the SSA in writing or by phone. For a list of phone numbers, visit the SSA's Web page
The taxes on overseas Social Security benefits are the same as taxes on benefits for retirees living in the United States. Retirees who file individual tax returns and earn between $25,000 and $34,000 may have to pay taxes on up to 50 percent of benefits. Retirees with income over $34,000 may have to pay taxes on 85 percent of benefits. Retirees who file a joint tax return and have a combined income of between $32,000 and $44,000 may have to pay taxes on 50 percent of their benefits. Joint filers with a combined income of more than $44,000, may have to pay taxes on 85 percent of their benefits. Combined income is the retiree's adjusted gross income plus nontaxable interest plus one-half of the retiree's Social Security benefits.
In addition to U.S. taxes, some foreign countries may tax benefits as well. To find out whether a country imposes taxes on Social Security benefits, contact the country's embassy in the United States.
The SSA Web site provides information and resources on its International Programs home page for retirees who are moving outside of the United States.
What About SSI?
The rules for receiving Social Security overseas do not apply to Supplemental Security Income (SSI) benefits. Most recipients of SSI are not entitled to benefits outside the United States. SSI benefits will stop if a recipient is outside the United States for more than 30 days, and benefits won't start up again until the recipient is back in the country for at least 30 days. However, there are exceptions for dependent children of military personnel and students studying abroad.