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Can Your Live Abroad and Still Collect Monthly Social Security Payments?

Summer often brings dreams of living in far-away places.  According to the Social Security Administration (SSA) if you are a  United States citizen, you may receive your Social Security benefits outside the United States as long as you are eligible.

If you are a citizen of North, Central, or South America (except for Paraguay and Suriname) who claims benefits on his or her own work record, you can be paid monthly Social Security benefits without having to make visits to the United States.

If you are a citizen of North, Central, or South America (except for Canada, Chile, Paraguay, and Suriname), who is entitled to benefits as a dependent or survivor of a retired or deceased worker, you can be paid monthly Social Security benefits without having to make visits to the United States if either one of the following applies to you:

1. You (or a child’s parent) lived in the United States for at least five years while in a family relationship with the worker. (This does not have to be one continuous period of time.)                                                    OR
2. You were (or could have been) paid benefits for any month before January 1, 1985.

If you do not meet these requirements to receive benefits as a dependent or survivor, you must visit the United States in order to be paid monthly Social Security benefits. If you haven’t been to the United States at any time during the six calendar months before your first month of entitlement, then to get your benefits started you must come to the United States and stay every hour of a full calendar month.

After your dependent or survivor benefits have started, there are two ways to continue to receive benefits:

1. You must spend any part of one-day in the United States at least once every 30 days or less.                                                       OR
2. If you do not do one-day visits (or if you fail to make a visit in a 30-day time period), then you must come to the United States and stay every hour of 30 consecutive days.

The SSA cannot send payments to certain countries. For more information, please refer the SSA publication titled, “Your Payments While You are Outside the United States” located at www.socialsecurity.gov/pubs/10137.pdf. If you plan to live outside the United States, find out if you can receive Social Security payments by using the Payments Abroad Screening Tool. (Your privacy is safe with this tool; it does not interface with any personal Social Security records.)

Benefits for dependent children stop the month before the child turns 19 or the first month in which the child is not a full-time student, whichever is earlier. (There are different rules for dependent children with disabilities.)  Social Security benefits also stop if the child does any of the following:

• Enters into marriage
• Stops attending school
• Reduces school attendance to less than full-time
• Changes schools
• An employer pays for the child to attend school
• The child is convicted of a crime

For more information about how high school graduation could affect benefits and what forms you may need to complete to continue benefits see the Social Security Administration Web site at http://socialsecurity.gov/schoolofficials/faqs_school.htm#a0=6

Getting Official Documents for When You Apply for Benefits

When you apply for Social Security benefits you’ll need your birth certificate for retirement benefits, and marriage, divorce and death records for spousal, ex-spousal, survivor or dependent benefits.  The Centers for Disease Control and Prevention (CDC) provide a helpful Web page located at www.cdc.gov/nchs/w2w.htm that offers links to where to write for vital records.

Select the correct state and area and follow the guidelines at  www.cdc.gov/nchs/w2w/guidelines.htm. The Federal government does not provide certificates for benefits. For your information, many states will allow you to order via telephone, online or by mail. Charges for each certificate vary but average around $20 each. Allow two to three weeks for delivery. However, for an extra change many states have overnight express mail.

Maximizing Social Security Benefits with guest Kathleen Sindell, Ph.D.

Kathleen Sindell, Ph.D. was recently interviewed by Jim Lange for the Lange Money Hour. Jim is a nationally-recognized tax, retirement and estate planning attorney with a thriving registered investment advisory practice in Pittsburgh, Pennsylvania.  He is the President and Founder of The Roth IRA Institute™ and a bestselling author. According to Jim Lange,” Social Security: Maximize Your Benefits is blissfully short, but complete.” 

Early Retirement Calculation Assumptions

 In one example, if Paula stops work at age 58 then applies for early retirement benefits at age 62, on average Paula’s benefits will be reduced by $10 to $20 for each year of reduced or no earnings.  This could result in benefits being $40 to $80 less per month.

Let the Internet do the Math for You

“Social Security: Maximize Your Benefits” details many online benefit maximization programs. Now there is a new online resource. This week T. R. Price released an easy-to-use online tool to assist you in determining how and when to claim your Social Security retirement benefits. The FREE tool is geared to assist singles and married couples in understanding their options. The online calculator is located at http://individual.troweprice.com/public/Retail/Retirement/Social-Security-Tool?van=socialsecurity.

No registration is needed to take advantage of the free service. Your personal information is not saved on the Web site. Just enter your gender, marital status, and date of birth. Benefits are based on the amount you indicate as your current salary. (Or you can use your actual benefit amount by accessing your personal Social Security Statement at http://www.ssa.gov/myaccount or determine your estimated benefit amount by using the Social Security Estimator at http://www.ssa.gov/estimator.)

The T. Rowe Price Tool makes a few longevity assumptions based on current actuarial guidelines. (At this time the T. Rowe Price online calculator can’t accommodate couples with more than a six year age difference.) You can select from seven claiming strategies. Of course, each individual situation has hundreds of possibilities but these are good starting points. Here is a summary of the seven approaches:

1. What happens when you take benefits at a certain age?
2. What happens if you take benefits as soon as possible?
3. What should you do if you want to maximize benefits?
4. What should you do if you want to maximize income for the years you will have together?
5. What should you do to minimize the drop in income for the surviving spouse?
6. What claiming strategy should you use if you want to maximize survivor benefits?
7. What should you do if you want to retire early and maximize the surviving spouse’s benefits?

The T. Row Price online calculator provides colorful graphics and dollar amounts that highlight the benefits and pitfalls of certain decisions. You can print each report and easily run all seven scenarios to see which scenario provides the best results.

               Distribution Adjustments Based on the Family Maximum Benefit

In some situations the number of dependents claiming benefits on an earner’s record exceeds the Family Maximum Benefit (FMB) amount. For example, in the table above the earner’s full benefit amount is $300.60 and the FMB is $535.10. Therefore the earner’s dependents will have to divide $234.50 evenly between themselves. Note: The ex-spouse is not included in the FMB calculation and receives 50 percent of the earner’s benefit ($150.30).

The table above  illustrates how the earner’s benefit is not reduced due to others claiming benefits on his or her work record. The second column shows the initial entitlement of each family member. The third column shows the redistribution of benefits due to the Family Maximum Benefit Calculation. The fourth column shows the readjustment when benefits are not paid to one child. The last column illustrates the readjustment when benefits are not paid to two children.

SOURCE: Social Security Administration (www.ssa.gov), 2012.

The Amount You Can Earn While Claiming Social Security Benefits Depends on Your Age

Your earnings in (and after) the month you reach Full Retirement Age (FRA) as defined by the Social Security Administration (SSA) at www.ssa.gov/pubs/ageincrease.htm ) will not affect your Social Security benefits. However, your benefit is reduced if your earnings exceed certain limits for the months before you reach your full retirement age.

In 2013 if you are under FRA for the entire year:

• You can earn $ 15,120 gross wages or net self-employment a year and not lose any benefits in 2013.
• The SSA will deduct $1 in benefits for every $2 earned above 15,120.

If you reach full retirement age in 2013:

• You can earn $40,080 gross wages or net self-employment prior to the month you reach full retirement age and not lose any benefits in 2013.
• The SSA will deduct $1 in benefits for every $3 earned above $40,080.

The same earnings limits apply to a spouse or child who works and receives benefits on your record. You should report earnings to the SSA for any months and years prior to FRA. If you are uncertain about how this applies to your personal situation use the retirement Earnings Test Calculator located at www.ssa.gov/OACT/COLA/RTeffect.html .

Does Delaying Your Application Past Full Retirement Age (FRA) Increase the Spousal Benefit?

No, it’s based on the worker’s primary insurance amount (PIA).  Let’s say that your spouse’s FRA is 66 and his or her monthly benefit is $2,000. Your spouse decides to work until 70 and claims Delayed Retirement Credits (DRCs) to increase his or her monthly benefit to $2,640. (That’s 8 percent per year for four years). The spousal benefit is still 50 percent of the PIA.  In other words, the most you can receive as a spousal benefit is $1,000. (There are different rules for widow (ers) and survivors.)

How Working After Retirement can Affect Your Benefits

According to the Social Security Administration (SSA), working beyond your full retirement age (FRA) will allow you to increase your monthly benefit in two ways:

First, each year you work adds another year of earnings to your Social Security record.  Higher lifetime earnings may mean higher benefits when you retire. The Automatic Earnings Reappraisal Operation (AERO) is a computer operation that re-examines earnings not previously considered in the original appraisal of your work record.  If earnings for the year are higher than the earnings that were used in the original benefit computation, the SSA substitutes the new year of earnings. The higher the earnings, the more your “re-figured benefit might be”. AERO is run twice a year, usually in late October and the following March. The payments reflecting the increased benefits are issued in December and May.

Second, your benefit will automatically increase by a certain percentage from the time you reach your full retirement age until you start receiving your benefits or until you reach age 70. This is called Delayed Retirement Credits (DRCs) and the annual percentage of increase varies depending on your year of birth. For example, if you were born in 1943 or later, the SSA adds eight percent per year to your benefit for each year that you delay claiming Social Security benefits beyond your FRA.  If you delay claiming your benefit for four years, you will increase your monthly benefit by 32 percent.

For more information about this process see “How Work Affects Your Benefits” available online at the SSA Web site located at www.socialsecurity.gov/pubs/10069.html.