So you’ve decided to work or retire out of the good old USA. How does this affect your Social Security and Medicare benefits? The answer varies by country, and it can work out better for you in some countries versus others.
- About 20 countries have agreements to prevent double taxation. In the rest, you will pay taxes to your host country as well as Uncle Sam.
- About 25 countries maintain bilateral agreements that allow you to transfer Social Security credits to and from the U.S. For example, if you work in the U.S. for 20 years and then move to Canada and work there for another 10 years, when you retire you can transfer your U.S. credits to Canada to vest into their system (or vice versa).
- There are a few countries, such as North Korea and Cuba, where you will not be allowed to receive Social Security benefits while living there.
- Your non-U.S. spouse may or may not be entitled to your benefits if you were to pass. The laws vary by country and are quite complex.
- If you think you will ever move back to the U.S., then it is very important to sign up for Medicare part A, which is free, at age 65. There are ways to opt out of part B if you qualify, but if you do not sign up for part A there are permanent penalties that will persist throughout your retirement.
- If you worked overseas and did not pay into Social Security for certain years, your pension from that country will most likely trigger a Windfall Earnings Provision (WEP) that partially offsets your Social Security benefit.
Determining retirement benefits for expats can be a confusing and complex, with many country-specific rules that change over the years. If you need help navigating Social Security options for expats and their families, reach out to us and let’s get you a plan in place!
Are you a business owner with an at-home spouse who helps out with bookkeeping or other tasks that need to be done? Once you get to retirement age it’s too late, but for those of you in your 20’s, 30’s, 40’s or even 50’s there’s still time to let these efforts build future benefits. Paying your spouse at least $4,880 a year will ensure that they continue to vest into the Social Security system, which will help you at retirement time.
To fully vest you need to earn at least 40 credit hours, with a maximum of 4 credits per year at $1220 per credit. Spouses who are not vested can still pull a half benefit off of their working spouse’s retirement benefit (or ex-spouse’s, if married over 10 years). If widowed after being married a year or more you can draw benefits up to your deceased spouse’s full amount, depending on the age when you decide to file.
If both spouses have work history, the Social Security retirement benefits picture can drastically change for the better. With two vested partners you’ll also have more options, such as the potential for the lower-earning spouse to pull earlier while delaying the higher earning spouse’s filing until age 70 to get the highest benefit. And don’t forget that Social Security disability benefits are hinged on a person working at least five out of the last 10 years, which can help should the worst happen.
As you can see, it’s in your best interest to ensure that the work both partners contribute to your business is recognized as paid employment by the Social Security Administration. We offer a pre-check Social Security planning option that will help you review where you are today and give insight about the impact on future income you can make by ensuring that both spouses are being paid for the work that they do.
Please contact our office to learn more or sign up today to start planning for your retirement.
Parents take care of us for so many years, and in some cases we are able to help our own parents in their retirement. But what will happen if your dependent parent outlives you?
Very few people know about an important Social Security benefit that can help your financially dependent parent should you pass away before they do. If your parent relies on you for more than half of their living expenses, they may be able to receive benefits in the event of your death. In order to take advantage of this benefit you must have earned enough credits to qualify for Social Security – that’s 40 credit hours – and your parent must:
- Receive at least half of their support from you
- Be at least 62 years old
- Not have remarried since the adult child’s death
- Not have an individual Social Security benefit that’s more than the potential benefit based on your earnings
This benefit can be an important source of support for your aged parent in the unfortunate event of your death.
If you’d like to learn more about this or other Social Security benefits that can help your family, please contact our office at firstname.lastname@example.org, or sign up for your Social Security benefit plan today.
There are 4.3 million families that currently receive Social Security benefits to help support their children, but many more are eligible and don’t even know they could be getting additional income each month. Qualifying for this benefit has little to do with the children – it’s based on the parents’ status. (Disabled children may be able to collect Supplemental Security Income benefits based on their condition. They may also qualify for the benefits described in this article but the rules are slightly different.)
In a nutshell, Social Security benefits for children are designed to replace the income that is no longer provided by a parent who has retired, died or become disabled and therefore cannot work. The retired, deceased or disabled parent must have worked long enough to qualify for Social Security and the child must be unmarried and under 18 or a full-time student. Benefits end on the child’s 18th birthday, unless he or she is a full time high school student. In that case, benefits continue until graduation or two months after the child’s 19th birthday, whichever comes first.
Social Security benefits for children can be paid to a parent, step-parent, grandparent or another person who cares for the child (but the benefits may stop earlier in this case). The amount received each month depends on the specifics of the situation and the retired, deceased or disabled parent’s work history. In general, benefits are up to 50% of the full amount of a parent’s disability or retirement benefit or as much as 75% of the amount a deceased parent would have received. If other family members also receive Social Security benefits, a family cap on the amount received applies.
If you think you might qualify for Social Security income for a child in your care, contact our firm today. We’ll help you find out about any financial benefits you may be entitled to and complete the filing process so you can start receiving that income each month.
Business owners typically prioritize the success of their company over other financial goals. That’s a good thing in general, but it’s important to keep a balance or you could be creating a host of long-term financial problems for yourself while you’re trying to do the right thing.
A common pattern I see with my clients is that they pay themselves as little as possible and put the vast majority of the available money back into the business. That may be good for the business but it’s not necessarily a smart move for your overall financial picture. When it’s time for retirement, problems arise:
- Little Social Security income. By keeping the amount you pay yourself low over the years, you deprive yourself of Social Security benefits you might have been able to collect later. The amount of monthly benefit you receive is calculated based on your average earnings over a 35-year period. If you didn’t take pay yourself much, the government won’t either.
- Minimal retirement savings. When you plough all the profits back into the company you reduce the amount available to fund your personal retirement account. That means you don’t have a substantial nest egg that’s growing to take care of you once you’re ready to hand the business over to new owners.
- Expecting too much. Selling your business when retirement beckons may deliver a nice bundle to provide for your financial needs in the coming years. Then again, it might not. Economic conditions shift, and the type of business you own can make a huge difference in the amount you can actually sell it for.
Take care of your business, but be sure to look out for your own best interests as well. Paying yourself a fair wage and investing in assets like equities and real estate are just as important as that new equipment or extra staff member your company could use. The money you pay into Social Security and invest privately will work together to give you a higher income in retirement than you’d have otherwise.
If you’re not sure how much you should be paying yourself or investing, please contact us today and we’ll help you find the right balance. You deserve a comfortable retirement!
Filing for Social Security involves a dizzying array of choices and decisions. When should you claim benefits? What’s the best way to maximize your income? Selecting the right options isn’t easy for anyone, and for those who are divorced it can be even harder. If you’re confused by the myriad of rules and regulations around filing for Social Security as a divorced individual, keep these guidelines in mind:
If you were married over 10 years, you can claim spousal benefits. This is true as long as you meet the following conditions:
- You’ve been divorced for at least two years at the time you file.
- You have not remarried.
- You have reached the age of 62 (or older).
- Your spouse is qualified by work history and citizenship to claim Social Security retirement/disability benefits.
Your spousal benefit will be equal to one half of the full retirement amount your ex-spouse is qualified to receive, assuming you file at your full retirement age. In many cases, this could be more than the amount you would receive based on your own work history – if you were out of the work force caring for children, for example. If your own work record is higher than you will receive your own benefit. In either case if you file at age 62 this could reduce your benefit as much as 30% for the rest of your retirement which can cost you thousands of retirement dollars.
You can receive the full amount of your ex-spouse’s Social Security benefit if he or she passes away. If your ex-spouse is deceased you can receive benefits as a widow or widower instead of spousal benefits. You qualify for the full amount of your ex-spouse’s retirement benefit, just as you would if you had still been married at the time of death. The rules are similar to those for spousal benefits:
- The marriage must have lasted at least 10 years.
- You must have attained your full retirement age (your benefit will be less if you file early).
- You must not have remarried before age 60. A marriage at or after the age of 60 will not affect your ability to qualify for this type of benefit.
In both types of Social Security benefits, it makes no difference whether your spouse has remarried one or more times. These benefits are yours if you qualify based on your age and marital status, even if there is a current spouse or widow who also collects benefits.
Still confused? Please contact our office for a consultation. We’ll help you clarify your options and find your best path forward.