Know the ins and outs of Social Security abroad

Here is an informative article from the Mercury news about Social Security benefits, Medicare and services abroad.

Excerpt;• You can continue to collect Social Security benefits even if you retire abroad, unless you live in Cuba or North Korea. You may also not be able to receive benefits if you are in Cambodia, Vietnam or countries from the former Soviet Union (although some exceptions may apply).

I don't think many bommers are considering Cuba or North Korea, do you?

Know the ins, outs of Social Security

CHECK YOUR ANNUAL STATEMENT FOR ACCURACY; KNOW HOW A PENSION AFFECTS YOUR BENEFITS

By Sue Stevens

Morningstar.com

No matter what age you are now, you probably think about Social Security benefits as they relate to your retirement planning. If you are younger, you may choose to run retirement projections with reduced or no benefits. For those of you who are middle-age to retirement-age, Social Security will probably be a piece of your retirement picture.

Lots of questions arise about Social Security as individuals go through many of life's changes, including divorce, phasing into retirement, or dealing with the death of a spouse. Use these tips and traps to educate yourself about your options.

TIPS

• When you get your annual estimate of Social Security benefits, check to make sure your earnings history is accurate. Everyone age 25 and older should be receiving an annual statement. If you suspect something is wrong, contact your local Social Security office to correct any inaccuracies.

• If both spouses work, each is entitled to a benefit based on his or her own earnings history. However, the spouse with lower benefits is entitled to the greater of 50 percent of his or her spouse's benefit or his or her own benefit.

• If you did an analysis showing that taking lower benefits at age 62 broke even with waiting to take higher benefits at age 65, that break-even age would be approximately 78. So, if you think you'll live past age 78, you may want to wait until full retirement age to start taking benefits. Of course, no one knows just how long they'll live, so look at your family health history and your own health situation to make a realistic guess.

• You can choose direct deposits at your bank for your Social Security benefits and never have to worry about a check getting lost in the mail.

• If your spouse has a pension from his or her former employer that will pay over his or her life only, delay taking Social Security so you'll get the maximum benefit for your own lifetime.

• If you are divorced and your ex-spouse has remarried, both you and the new spouse can collect benefits based on the ex-spouse's earnings history provided you were married at least 10 years and you apply for benefits after age 62.

• If you are still working late in life, delay taking benefits until age 70. Social Security will pay a premium above the full benefit if you wait until age 70 to take benefits.

• If you are a widow or widower, you can start taking Social Security benefits as early as age 60. But you may want to consider starting them later so you'll get a larger benefit.

TRAPS

• Even though Medicare starts at age 65 (assuming you're eligible), full Social Security benefits start later for those people born after 1938.

• If you choose to wait to take benefits until after age 65, don't forget to apply for Medicare about three months before you turn age 65.

• Not everyone is eligible for Social Security benefits. You need to have 40 credits. You can earn four credits a year, so basically you have to have your own earnings history for 10 years, although it doesn't have to be consecutive years.

• If your income is more than $25,000 single (or $32,000 married filing jointly) and you're receiving Social Security benefits, you'll pay income tax on 50 percent of your Social Security benefits. However, if your income is more than $34,000 (single) or $44,000 (married filing jointly), you may have to pay income tax on 85 percent of your benefit. See IRS Publication 915 for more on how to calculate the tax on your benefits.

• If you take Social Security early at age 62, you'll not only limit your own benefit, but those of your spouse, too (assuming both of you are eligible using one spouse's earnings history).

• If you are working, are younger than full retirement age, are earning more than $12,480 (in 2006), and are taking Social Security benefits, you'll actually lose $1 for every $2 you earn above $12,480. In the year when you reach your full retirement age, you'll lose $1 for every $3 you earn above $33,240 (2006). At full retirement age, you can work and not lose any of your benefits (although if you keep working to age 70, you'll get even higher benefits).

• If you are divorced and receiving benefits based on your ex-spouse's earnings history, your benefits stop if you remarry.

• If you go to prison, your benefits stop (although your dependents can collect their benefits).

• You can continue to collect Social Security benefits even if you retire abroad, unless you live in Cuba or North Korea. You may also not be able to receive benefits if you are in Cambodia, Vietnam or countries from the former Soviet Union (although some exceptions may apply).

Comments

[billie surmick]

A divorced woman cannot necessarily receive benefits from her former husband's social security account. I personally had this experience when benefits were stopped from his social security because I made too much ss income. Absolutely ridiculous when the benefits were only $30 a month.

[Thom Jones]

It would be great if you could address the availablity of US Medicare in Panama City. What alternate methods or type of insurance would you suggest for older folks living either part or full time in Panama City?

Thanks,

Your developer

[Jack]

Thanks for the SS info. One big question: How do I apply for benefits if I'm already living in Panama and don't want to go back to the U.S.?

I can't find anything on the internet on how to do that.