Retiring abroad? How that could impact your Social Security.
Moving abroad can yield huge savings for retirees on everything from housing expenses to food costs. Perhaps that's why a growing number of Americans are choosing to retire outside the U.S.
If you're considering an overseas move in retirement, you may wonder: Can I still get Social Security if I retire in another country?
Let's break down how retiring abroad affects your Social Security payments.
Can I still get Social Security if I move abroad?
If you're a U.S. citizen who's eligible for Social Security, you can move abroad and receive your benefits (with just a few exceptions that we'll discuss momentarily). This applies if you're receiving retirement benefits, as well as family and spousal benefits, survivor benefits, and disability benefits.
You can receive your check via direct deposit at a U.S. financial institution no matter where you live, though you still need to notify Social Security whenever you change addresses.
You can also receive your checks through a financial institution in the country where you're living, as long as the country has an international direct deposit agreement with the U.S. If you're one of the few beneficiaries who still receive a paper check, you could pay check cashing and currency conversion fees.
While receiving benefits should be pretty seamless if you're a U.S. citizen living abroad, you'll need to complete a questionnaire from the Social Security Administration every year or two. The answers you provide confirm that you're still eligible for benefits. If you fail to return the questionnaire, your Social Security benefits could stop.
Now, about those exceptions mentioned earlier: Social Security can't send money to anyone living in North Korea or Cuba. In most circumstances, you also won't be able to receive benefits while you're living in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, or Uzbekistan -- though some narrow exceptions are available. If you qualify for an exception, you'll be required to appear in person at a U.S. consulate or embassy every six months.
If you're living in a country where you can't receive benefits, the Social Security Administration will hold on to your benefits. You'll be able to receive that money later if you move to a country where Social Security is allowed to send payments.
Non-U.S. citizens who earned Social Security based on their work histories can still receive benefits under some circumstances if they move abroad. But the rules for noncitizens collecting Social Security outside the U.S. are long and complex. For a full breakdown of the rules, check out Social Security's publication "Your Payments While You Are Outside the United States" or contact Social Security to speak to a representative.
Will I qualify for Medicare if I move abroad?
Paying for healthcare costs in retirement is a big concern for seniors. So it's important to know that Medicare services aren't available outside the U.S. You'll still be eligible for Part A, which covers hospital and many other inpatient stays, if you return to the U.S. But you'll have to decide whether to enroll in Part B, which covers doctor visits and other outpatient care.
You may not want to enroll in Part B if you plan to reside outside the U.S. for a long period, as the premiums will be deducted from your Social Security checks. But if you don't enroll in Part B when you become eligible and you decide to enroll later on, you'll pay a 10% additional premium for each year you delayed signing up.
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What to consider before retiring abroad
If you're thinking about moving abroad in retirement, there are a number of factors to consider, both financial and non-financial. Here are a few of the most important financial considerations:
- Will you need to buy private health insurance? Even if you're retiring in a country with universal healthcare, you'll often need to buy private insurance unless you're a citizen. The U.S. State Department recommends that people retiring abroad buy private coverage that also allows for medical evacuation to the United States.
- How would currency fluctuations affect your budget? If the dollar loses strength after you've moved overseas, you'll have less purchasing power in the country where you're residing. Make sure your budget has some wiggle room for currency fluctuations.
- Are you aware of the tax implications? When you move abroad, you'll probably still need to file a tax return in the U.S. Make sure you've talked with a professional about how your move will affect your tax bill.
- Would living abroad affect your life insurance coverage? Some life insurance policies may not pay a death benefit if you've lived abroad for an extended period. Be sure you ask your insurer what, if any, effect moving to another country would have on your coverage.
Finally, consider all the non-financial factors that make for a happy retirement. Think about what social support you'd have in your new country, ease of transportation, how frequently you'd be able to return home, and whether the climate is comfortable. Before you make a big move, try renting abroad for a few months to see if the destination lives up to what you envision.
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