If you’re considering a retirement overseas as an American, one of the first things you'll want to sort out is accessing your Social Security benefits. There are two questions you should ask:
Can you receive Social Security in another country? The answer is usually yes.
First, it is important to understand the restrictions that the Social Security Administration places on providing benefits internationally. This comes down to 2 simple questions:
Where are you moving?
The U.S. will NOT send Social Security benefits to Cuba or North Korea due to sanctions.
The U.S. also places restrictions on sending money to the following countries:
However, if you are living in one of these countries, there are other solutions. You can always receive your Social Security benefits into a U.S. bank account and then transfer the money (currencies from these countries are also typically restricted, so use dollars or euros) or use an American debit/ATM card abroad. In fact, this is the process we recommend for most American expats. If you need to receive your Social Security benefits in one of these countries, you can request an exception by contacting the Social Security Administration.
Are you a U.S. citizen?
If you’re a U.S. citizen, you can receive payments to a US bank account or foreign bank account in any other country.
If you’re not, we recommend you use the Social Security Administration’s payments abroad screening tool to see if you qualify: www.ssa.gov/international/payments_outsideUS.html
If you need more information on if you qualify for Social Security benefits abroad, please see the SSA pamphlet here.
Now, let’s address question 2: what’s the best way to receive Social Security benefits abroad?
How to receive Social Security payments abroad
When you think about receiving Social Security outside of the U.S., you’ll need to consider several questions:
For direct deposit to a bank, which bank should you use? Should it be in the United States or into an account abroad?
Direct Deposit vs. Paper Checks
We highly recommend direct deposit for Social Security payments outside of the United States. It often takes longer for the SSA to deliver paper checks outside of the United States and you may not receive your check at the same time every month. With direct deposit, you’ll receive your payment faster (usually 1-3 weeks faster). You can also typically avoid currency conversion fees (link to further down in article).
Direct Deposit: bank accounts vs debit card
So now (hopefully) you’re convinced that you should receive your SS benefits abroad via direct deposit. But should you use direct deposit into a bank? What about using the Direct Express® debit card option?
We recommend using direct deposit to a bank account in almost all cases. Why? The Direct Express® debit card incurs foreign transaction fees (3% at foreign merchant locations and $3 + 3% on foreign ATM withdrawals). That means that using your card in another country will result in fees for every transaction.
Which bank to use
The Social Security Administration can deposit your benefits directly into an account at a U.S. financial institution regardless of where you live. They can also deposit benefits into a financial institution in any country that has an international direct deposit agreement with the U.S. (check out the SSA list of countries with direct deposit agreements).
In most cases, this means you have options! Let’s look at them in depth:
1. Set up a U.S. bank account that provides low or no foreign transaction fees
This is usually the best option if you want to keep most of your banking in the U.S. and withdraw small amounts regularly. It’s what we do with our personal day-to-day cash, and we recommend it.
Which U.S. banks provide checking accounts with no foreign transaction fees? We think the Charles Schwab High Yield Investor Checking Account is best, with the Fidelity Cash Management Account a close second.
Charles Schwab High Yield Investor Checking Account: no foreign transaction fees, you are reimbursed for all ATM fees, daily ATM withdrawal limit of $1000. FDIC insured. No fees or account minimums. 0.03% APY. Charges for insufficient funds.
Fidelity Cash Management Account: 1% foreign transaction fee, you are reimbursed for all ATM fees, daily ATM withdrawal limit of $500. FDIC insured. No fees or account minimums. 0.01% APY. No charges for insufficient funds.
2. Use any U.S. bank account and transfer your money abroad when needed using a service
This is usually the best option if you want to use a foreign bank account and you can transfer larger amounts of money less frequently
First, let’s address the obvious: why wouldn’t you just ask your bank to make a wire transfer directly to a foreign bank account? Because the fees will be higher, and often much higher. This is particularly true if you’re transferring a large amount at once, say to buy a home in another country. A traditional bank in the U.S. will charge ~$2.50 per ATM withdrawal in a foreign country or 3% per foreign transaction. In addition, you’re likely to be charged a margin on top of the daily currency exchange rate. This can be up to 5% at most major banks. This is all before the fees on the receiving bank’s side - many banks charge something in the range of $15-30 to receive transfers in another currency. This is where alternative money transfer services come in.
Which services can you use to transfer your money to another country? We recommend Wise for most transfers due to their low fees and transparency. If you’re looking to transfer a large amount ($10,000+) we would also recommend OFX due to their great customer service and advantageous rates for large transfer amounts.
Wise (link) charges a low fee (usually under 1%) on most transfers and uses the real-market exchange rate. You can look up Wise fees and compare them to other providers at www.wise.com/us/compare (link).
OFX (link) charges no fees, but uses their own ‘retail’ exchange rates, which are typically worse than the standard mid-market exchange rate. You can look up OFX’s current exchange rates at https://www.ofx.com/en-us/transfer-rates/ (link).
3. Receive benefits into a foreign bank account
You should use this option if you need or want to keep all your banking in your new country, outside of the U.S. It typically incurs more fees than the two options above.
Your bank may charge fees to receive an international transfer from the Social Security Administration. This varies depending on the bank and the country, but a typical charge would be 1% or up to $30. If you decide to go this route, we would recommend making a decision on your international bank based on the fees and exchange rates they use to receive transfers in U.S. dollars.
Tax and regulatory implications
Important note on opening a bank account abroad: Opening a bank account internationally comes with additional tax filing requirements for all U.S. citizens. Specifically, you will need to look into requirements related to FBAR (Report of Foreign Bank and Financial Accounts) and FATCA (Foreign Account Tax Compliance Act)(link).
Other critical information
If you are changing your permanent address, be sure to report it to the Social Security Administration. You should report a change of address even if your bank account details for receiving benefits do not change. This will be particularly important so that you can fill out and return annual or bi-annual Social Security questionnaires. If you do not return these forms your benefits could be stopped! (COVID update: The SSA has stopped mailing questionnaires due to COVID and will not halt any payments due to incomplete forms. It is unclear when questionnaires will be mailed again).
Can I get help?
Get a free consultation with international move experts at StartAbroad to discuss your situation and learn what’s right for you. StartAbroad provides a comprehensive suite of services to make your move abroad as easy and painless as possible. StartAbroad’s international moving experts have over 20+ years of experience living abroad and helping others get settled. Get a free consultation at www.startabroad.com to discuss your situation and learn what’s right for you. Ask us about our holistic concierge package, and our medical, visa, and tax solutions!
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