Social Security and US Expats Living Abroad
One of the biggest questions most people have when they look at retirement is whether they can afford it. Retirement on Social Security alone can be a nerve-wracking possibility in many parts of the US. It is a concern shared by the one in three Americans who have no additional retirement savings. However, if you are retiring overseas, chances are good that not only can you afford to retire, you can afford a better standard of living than you might enjoy back home. There are a few concerns to look at before making a commitment and a few things that you may not know about your Social Security rights.
Can You Collect Social Security While You Are Living Abroad?
If you are a US citizen and not living in a country where there is a US sanction, the answer is yes. The same sorts of restrictions apply that may be present if you were in the US. For instance, if you have not yet reached the full retirement age, you may have some payments withheld if you work while receiving Social Security. Those who have reached full retirement age do not have limits on their earnings.
How Much Will I Have to Work With?
Social Security is based on work credits. Depending on how much either you or your spouse earned during your working years, you will receive monthly benefit checks or direct deposits. The amount of retirement income will also depend on the age at which you first begin receiving Social Security checks. You are eligible for early retirement payments when you turn 62. However, every month you work after your 62nd birthday increases the number of payments that you will be eligible for. Since expected lifespans have increased since the time the program was introduced, the decision about when you apply will have ramifications for years or decades. The age at which you reach full retirement age depends on when you were born. If you were born in 1954 or earlier, that age is 66. People younger than that have a few months added for each year of age, up to age 67 for those born in 1960 or later.
You can find out exactly how much you will have to work with by looking at your “My Social Security” account. They’ll create a personalized estimate based on your past income and your expected income between now and your expected retirement age.
The average individual who works to full retirement receives around $1,389 per month. If you are married to someone also receiving that average amount, you will have around $32,000 per year to work with.
What Can That Amount Get Me?
What you can expect will depend on where you retire. In a place like London, for instance, you’ll find that your retirement income is not sufficient for a comfortable lifestyle. However, if you look at areas with a lower cost of living, you will have more than enough. Many parts of Asia, for instance, have rent prices that are only a few hundred dollars a month for a two bedroom flat. Your income will cover this and perhaps also extras like household help.
You can compare a number of cities and countries using an online calculator like the one at Numbeo. This will show you average expenses and help you make an informed decision.
If you are interested in establishing residency in another country, you should also look at any income requirements. Luckily, the average Social Security income is adequate in most places to begin establishing permanent residency and the benefits that provide.
How Will my Social Security Checks Get Paid?
The easiest way is to maintain a US bank account and have your Social Security deposited there. However, there are also a number of countries where Social Security has international direct deposit agreements. Check their international country list to see if your destination is on the list. This way, you can get money easily each month without having to transfer from a US bank.
Are There Any Countries Where You Cannot Collect Social Security?
There are a handful of countries where retirees may wish to enjoy the low cost of living, beautiful scenery and other benefits but where they cannot collect Social Security.
At this time, US citizens living in North Korea or Cuba cannot collect Social Security. Payments are not forfeited if you are a US citizen; they are simply withheld until you’ve returned to a country where they can send payments. However, if you are not a citizen, you can’t receive payment for those months, even if you go to another country later and satisfy all of the requirements to resume collecting Social Security. Plan travel well so that you are not left with a shortfall.
Sanctions may sometimes affect people living in other countries. Check with the US Treasury if you think you may be looking at retiring to an affected area. Belarus, Moldova, Ukraine, Azerbaijan, Kazakhstan, Tajikistan, Kyrgyrzstan and Uzbekistan are currently on that list. However, there may be a few ways to qualify for exceptions in those countries. You’ll need to appear at a local US Embassy or Consulate every six months to qualify and fulfill certain conditions.
What About Medicare?
As we get older, health coverage becomes a more important concern. Unfortunately, Medicare generally does not cover any health services that you may get outside the United States. However, the upside is that medical care is often far more affordable in other countries.
In countries with a national health program, you may be able to enroll as a permanent resident. In general, you will pay small monthly or annual fees to get coverage at any participating healthcare provider. In other areas, you may have to pay cash for appointments, procedures or medications. These typically cost far less than they would in a healthcare setting in the United States as a self-paying individual.
Every country has unique requirements in this area. Check with the places you wish to live to learn whether you’ll need to seek international insurance as a condition of permanent residency or whether you will be able to get coverage another way.
- Medicare Coverage Overseas? Get the Coverage You Really Need
- Seniors and Travel Insurance
- Retiring Abroad, Some Insurance Advice
Summing Up – Social Security For Seniors Living Abroad
While there are a number of things you’ll have to do to make sure payments come smoothly, it is absolutely possible to live on Social Security in many areas outside the US. Research your specific situation to learn more and figure out the place where you can get the biggest bang for your retirement buck.