Moving abroad is a temptation for myriad Americans as they move toward and into retirement, and for many it's become a reality. And since Social Security monthly benefits are such a significant source of income, a natural first question to ask about such a move is whether retiring abroad will impact those payments. The answer? Generally, no.
Here's what the Social Security Administration (SSA) itself says about that: "If you are a United States citizen, you may continue to receive payments while outside the U.S. as long as you are eligible for payment and you are in a country where we can send payments."https://www.ssa.gov/pubs/EN-05-10137.pdf
That might sound restrictive, but really that list of countries where benefits can't be sent is quite short. North Korea and Cuba, for instance, are the only two that the SSA flat out won't send money to, and even then they'll send you all the withheld payments if and when you move to one of the permitted places.
The current rules also say Social Security payments generally can't be sent to Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. "However, we can make exceptions for certain eligible persons in these countries," the rules say.
Other factors include residency status and tax treaties
On the other hand, as far as your new host country is concerned -- and they obviously have a very real say in this -- Social Security benefits can be affected by various factors, including residency status, taxation treaties, and individual circumstances.
Be sure to explore these issues with a tax attorney or other expert experienced and knowledgeable about overseas retirement issues. One thing you'll quickly discover is that your benefits could be subject to double taxation if you make enough for your benefits to be taxed back home and you're now living in a country without an international agreement with the U.S. to cover that issue.
There currently are 30 countries with Social Security agreements with the United States, including such popular destinations as Australia, Japan, the United Kingdom, Canada, Mexico, Spain, and all the Scandinavian countries.
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We're talking so far about U.S. citizens and their retirement benefits based on their U.S. income only. Things can quickly get more complicated for dependents and spouses, and for non-citizens who have qualified for SSA benefits based on their work record here.
For example, Canadians who have contributed to both the Canada Pension Plan (CPP) and U.S. Social Security may qualify for partial benefits from both countries. The CPP benefits are normally reduced by the amount received from Social Security. Similar rules exist for other nations. There are lots of financial implications to keep in mind.
When planning to go, don't go it alone
In sum, retiring abroad can be appealing in ways as varied as the destinations themselves. It's a big world out there, so do your research.
There are eligibility criteria, tax implications, and international agreements to consider, and consulting with qualified financial advisors and tax professionals -- along with leveraging official resources both here and there -- will help you make informed decisions that can optimize your benefits and ensure a smooth transition into those golden years ahead.
