Ever since the presidential election, I've probably received 50 emails from readers asking me what would happen to their Social Security benefits if they left the country. A couple people even wondered what would happen if they move overseas and renounce their U.S. citizenship! I'm not going to comment on their reasons for wanting to leave. (I get in trouble with readers when I reveal my political leanings.) And so, as Sgt. Joe Friday used to say on the old "Dragnet" TV series, "Just the facts."
If you are a U.S. citizen, the answer is pretty simple. Your Social Security check can be sent just about any place in the world. The only places where Social Security checks can't be sent are North Korea, Cuba, and many of the former Soviet republics like Belarus, Azerbaijan, Ukraine, and all those "-stan" countries (Turkmenistan, Uzbekistan, etc.) But in all my years of dealing with Social Security issues, I never met anyone who wanted to move to those places. So again, almost no matter where a U.S. citizen moves to, his or her Social Security check will follow.
I am sure the folks who threatened to renounce their citizenship once leaving the country were just blowing off some steam. But I will say that the rules about getting Social Security benefits abroad get a lot messier for noncitizens. I'm not even going to begin to get into the nitty-gritty of those guidelines. But if you are interested, the Social Security Administration produces a booklet called, "Social Security -- Your Payments While You are Outside the United States." You can find a copy of that pamphlet at the Social Security website. At the homepage, click on "Publications." Then find the "Topics" tab and you'll find this pamphlet under the section called "Special Interest."
If you do move overseas, almost always you will arrange to have your benefits deposited into a bank, just as you would if you were living in the United States. It could be a bank in this country, or in many cases, a bank in the country to which you are moving. And those benefits are calculated in U.S. dollars. In other words, your benefit amount is not increased or decreased because of changes in international exchange rates.
There are a couple other issues you should consider if you are moving overseas. If you are under age 66 and plan to work in a foreign country, your earnings and the amount of time you work may reduce your Social Security checks. The rules are more complicated than those for Social Security beneficiaries working in the U.S. They are explained in the above-mentioned pamphlet.
Also, any Medicare coverage you have will be totally useless overseas. (Medicare only covers you while you are in the United States.) So if you are leaving the country for good, you might as well drop the Part B Medicare plan. You usually pay at least $120 a month or so for Part B. So if you can't use it, why pay for it?
If you need to conduct any Social Security business while you are living overseas, you obviously won't have any local Social Security office to visit. And you can't call SSA's telephone center. But you can visit your nearest U.S. embassy or consulate. They always have someone on staff who handles Social Security matters.
Q: Beginning next year, my employer is going to send me to their headquarters offices, which are in South Korea. I will be living and working there for about the next four years. I am 55 years old, and I am concerned about the impact these next four years will have on my future Social Security benefits. My employer says it will be no problem. But I am still worried. Have you ever dealt with this kind of situation before?
A: In our increasingly global economy, it is not uncommon for a citizen of one country to be working in another country. There are millions of foreign workers here in the U.S., just as there are millions of Americans working overseas. And you will soon be one of them.
That is why our government has been setting up Social Security treaty agreements with other countries -- 25 of them so far. And, fortunately for you, South Korea is one of them.
Normally, if you work overseas for an American company or, in some cases, a foreign company that is affiliated with an American company, you and your employer would have to pay Social Security taxes to both the United States and the foreign country on the same earnings.
But if you work in one of the treaty agreement countries, your Social Security coverage will be assigned to either the United States or the foreign country, so you and your employer do not have to pay taxes to both. And the good news for you is that the rules say if you have been sent by your employer in the United States to work in an agreement country for five years or less, you pay only U.S. Social Security tax and you are exempt from foreign tax. So you will continue to pay into our Social Security system and continue to build up your own Social Security retirement benefits just as though you were still living and working here in the U.S.
I'm sure your employer purposely limited your overseas assignment to four years because if your foreign work detail is five years or more, then you generally will pay Social Security taxes only to that country and will be exempt from paying U.S. Social Security taxes. And that could have messed up your future Social Security benefits.
The rules about working overseas are WAY more complicated than I've explained in the last few paragraphs. That's why the Social Security Administration produces a pamphlet that provides details of the treaty agreement for each of the 25 countries involved. And they have prepared on their website a fact sheet the gives general information about working overseas.
Tom Margenau's weekly column, "Social Security and You," can be found at creators.com.