Retirement can be a great time to travel abroad, and some retirees even take the more adventurous step of moving overseas. If you’re thinking of taking this big step in a foreign country, you’ll want to double-check that you won’t have problems receiving your Social Security benefits.
Here are three things that can happen to your Social Security when you move abroad.
What happens to your Social Security if you move abroad?
It can be valuable to work with a financial advisor before you move overseas to be sure that you’ll have no problems with your monthly Social Security checks.
1. Your Social Security remains just as it is
In general, Social Security doesn’t have a problem with paying your monthly benefit if you’re a U.S. citizen living abroad, though you must meet a few requirements, primarily relating to what country you’re living in (more below).
For Social Security purposes, a U.S. citizen is “out of the U.S.” if they were not living in 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. Social Security considers you outside the U.S. until you return and stay for 30 straight days. For non-citizens receiving benefits, you may have to prove you were in the U.S. for 30 days.
You’ll also have some choice in the financial institution that the Social Security Administration (SSA) sends your payment to.
“Your Social Security benefit payments can be deposited directly into your account at a U.S. financial institution,” says Vincent Birardi, wealth advisor at Halbert Hargrove. “Moreover, if you live outside the United States, the SSA can deposit your benefits into your account at a financial institution in any country that has an international direct deposit agreement with the U.S.”
It’s important to note that Social Security calculates benefits in U.S. dollars and will not just adjust your benefit if the exchange rate moves favorably or unfavorably.
2. Your benefits could be cut after six months
If you are not a U.S. citizen or you don’t meet a condition of eligibility to receive your Social Security abroad, the SSA will stop your benefit check after you’ve been outside the U.S. for six complete calendar months. You can restart payments, but it requires you to come back to the U.S.
The requirements to restart your benefit are strict. Once you’ve lost your benefit, you must return to the U.S. for a full calendar month. “You must be in the U.S. on the first minute of the first day of any month and stay through the last minute of the last day of that month,” according to the SSA.
3. You could potentially lose your Social Security benefit
Social Security will not pay benefits to people living in Cuba or North Korea, as part of the Treasury Department’s policy. U.S. citizens living in either country can receive withheld payments if they move to a country where the SSA can send payments. Non-U.S. citizens, however, can’t receive payments for the months they lived in Cuba or North Korea. Other Treasury Department rules may also restrict benefits of those living in other countries.
Those aren’t the only places where you may lose your benefit, though. The SSA can’t send benefits to those living in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan or Uzbekistan. If you’re otherwise eligible, however, you might be granted an exception if you agree to what the SSA calls “restricted payment conditions.” You’ll need to contact Social Security for further details on those conditions and how to qualify for an exception.
If you can’t qualify for an exception, your benefit will be withheld until you leave the restricted nation and go to a country where payments can be sent.
Rules differ for non-U.S. citizens
It’s important to note that the payment rules for U.S. citizens and non-citizens living abroad differ. For example, for non-citizens, the SSA restricts payments based on the type of Social Security payments (e.g., whether you’re paid on your own work record or someone else’s) and foreign citizenship, among other things. The rules are complex for non-U.S. citizens looking to claim Social Security benefits while being outside the country, and it’s important to carefully understand those rules.
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What to do for Social Security before moving abroad
If you’re planning to move abroad and collect Social Security, it’s important to verify that you’ll have no problems collecting your benefits. Birardi recommends using Social Security’s screening tool to help you determine whether you’re eligible for Social Security abroad. The tool asks you a series of questions, including where you’re moving, to determine eligibility.
“This site will help you determine if your retirement, disability, or survivor’s payments will continue indefinitely, stop after six consecutive calendar months or if certain country-specific restrictions apply,” he says.
As you’re planning your move abroad, it can be valuable to work with a financial advisor who’s well-versed in Social Security issues such as these. You may run into snags as you’re setting up a new home abroad, and you’ll have to handle various issues in the process. You don’t want to end up missing something important that could affect your benefit.
Birardi provides an example: “If you decide to work or own a business outside the United States, are receiving Social Security benefits and are younger than your Social Security full retirement age, be sure to notify the Social Security Administration. Failure to do so may result in a miscalculation of your benefits, and you may be charged a penalty.”
Beyond just these issues, you’ll also want to understand the tax implications of receiving Social Security and other income while living abroad. So working with an advisor who’s familiar with those issues can also help you make financially smart decisions.
Bottom line
While receiving your Social Security check won’t be a problem in most cases, retirees who are considering taking the plunge abroad want to make sure of everything before they depart. So it can be valuable to use Social Security’s screening tool and consult your financial advisor.
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