Job Discussion Forums

[Zero]

Do you ever worry about Social Security? I know some people think it may not be there for them, but I anticipate it will be reformed in some way.

But what I mean is, your retirement payment will be based on your 35 highest-earning years. Years spent working abroad won't count unless you paid into American Social Security during those years. If you retire with less than 35 years paid in, the "missing" years get averaged in as zeroes, and your monthly check amount could suffer significantly. For a long-term expat, I could see this being a problem.

Do most of you still count on getting in 35 years of decent earnings in the U.S.? Or do you have pensions? Or plenty of 401k savings?

Just curious. It's something that has entered my mind in considering whether to make the move to China.

[jgmodlin]

Excellent topic! I am now back in the USA after being abroad for 8 years, and have been paying into the system for the last couple of years again. I think a lot of TEFL types are not so good at paying attention to their future finances. Many of my friends in Japan used to look at me with blank expressions whenever I mentioned anything along the lines of funding my Roth IRA or other investment vehicles with the money I sent back home.

Does anyone know if it is possible to pay into SS while working for a non-US company overseas? How does one go about doing it? I would guess there is some sort of cap on how much you can send. My bet is that the system will stay solvent in the future. Especially for those thinking of retiring abroad, it would be pretty nice to have that check coming in each month and funding the better part of a retirement in Mexico, Thailand, or the Philippines

[Mr. Kalgukshi]

Serious responses only, please, as an inappropriate posting has already been deleted and any additional ones will result in sanctions.

[johnslat]

I think you'll find most of your answers here:


http://www.irs.gov/businesses/small/international/article/0,,id=97160,00.html

and here's a list of countries with whom the US has bilateral social security treaties (called totalization agreements:)

Agreements to coordinate Social Security protection across national boundaries have been common in Western Europe for decades. Following is a list of the agreements the United States has concluded and the date of the entry into force of each. Some of these agreements were subsequently revised; the date shown is the date the original agreement entered into force.

Country Entry into Force
Italy November 1, 1978
Germany December 1, 1979
Switzerland November 1, 1980
Belgium July 1, 1984
Norway July 1, 1984
Canada August 1, 1984
United Kingdom January 1, 1985
Sweden January 1, 1987
Spain April 1, 1988
France July 1, 1988
Portugal August 1, 1989
Netherlands November 1, 1990
Austria November 1, 1991
Finland November 1, 1992
Ireland September 1, 1993
Luxembourg November 1, 1993
Greece September 1, 1994
South Korea April 1, 2001
Chile December 1, 2001
Australia October 1, 2002
Japan October 1, 2005
Denmark October 1, 2008
Czech Republic January 1, 2009
Poland March 1, 2009

http://www.ssa.gov/international/agreements_overview.html

This is a very informative link

Regards,
John

[naturegirl321]

I'm pretty sure that IF SS exists, it won't be enough to live on. We have a flat, outright and plan on saving and buying a couple more. If we could get 5 more before we retire, then we should be good to go. We could easily rent them out for 300 to 500usd. Since we're younger than 30, we think it's doable.

[denise]

Yes, it concerns me. I don't expect it to sustain me in my old age, but it'd be nice to get a little something... When eventually I make it back to the US, I will continue paying into it.

On a related note, I recently tried to open an account with an online brokerage--one with low fees, no required monthly trades, etc.--I just wanted to put some money aside and leave it there, not get into heavy trading or anything. But was rejected because they don't accept overseas applicants. I looked at probably 20 different companies before choosing the one that ultimately kicked me back out. Anyone know any firms that will allow overseas investors? (Americans)

d

[Glenski]

johnslat,
That is a nice impressive list, but totalization does not mean that your foreign-earned income plays a role in how much SS benefits you can get. Trust me. As the OP wrote, what you earn abroad counts as zero for U.S. social security earnings.

All you can do with a totalization agreement is retire earlier than usual, if your combined points meet with either country's requirements.

[sparks]

It boggles my mind why anyone would WANT to pay into the social security system. It is possible to open any number and variety of personal investment accounts and funds which often pay interest of over 10 percent per year (granted with the higher percents there is some risk involved). I constantly try to get out of paying social security in Poland.

Is there any reason that paying into a shaky U.S. social security system makes more sense than paying into an interest yielding low-no risk subfund which pays a minimum of 5 percent interest?

[veiledsentiments]

Personal investing is all very fine and everyone should do it. But... you have absolutely no security with these. Funds and stocks have dropped like a rock this last year and those who had retired in the US thinking that they would have a comfortable retirement are suddenly darn glad that at least their SS check hasn't gone bankrupt or dropped 40% or more, as their income from stocks and funds have. Many conservative investors who thought that they were being smart keeping their money safe in government insured banks have watched the CD interest rates drop from 5% to less than 1% and that is an 80+% drop in income.

So yes, an intelligent person would most definitely WANT to "invest" in Social Security. It will be there as long as there is a US government because it is a political third rail. To try to take it away is the perfect way to find yourself no longer in your plush senate office in DC. It is our security net, the one income item that is the least likely to disappear.

I was already vested in SS by the time I went overseas... I had my required 40 quarters or 10 years in. In fact, I had 20 by the time it included my little part-time jobs in college. But, as mentioned above, the amount paid is based on the average of your highest 35 years of salary. So, using my example, if I had no other US work, there would be 15 years of -0- income which definitely pulls down your "average pay." Over my years teaching abroad, I worked for one place that had US connections and paid in SS for me and I have done part-time work since I early retired, so I now have 34 years paid in. Next year I will be eligible to draw SS, and it would be a glorious $800 or so. If I wait until 66, I would get $1100.

Someone asked if they can voluntarily pay into SS and the answer is no. But, if you have significant income from private lessons, that is taxable income that is not exempt, and you are supposed to declare it as income and pay the taxes. Be aware that you will pay in 15-16% for the self-employment tax (SS - you pay both halves), plus income taxes if it totals enough.

VS
(my first career was as an accountant.. though not a tax accountant)

[norwalkesl]

[jgmodlin]

[denise]

I looked into Ameritrade a few months back. I don't remember what it was that made me not choose them, but I'll look into them again. Thanks!

d

[guest of Japan]

Here in the public school system I am exempt from social security. I pay into a pension which will pay an average of my top three years of my salary after about 20 years.

[Zero]

My wife had some money in CDs, and I kept encouraging her to invest it in a Roth IRA or the like. She didn't do it. Then the recession and stock market crash hit. Her money sat their earning a bit, and you're ell aware what happened to everybody else's who was in the stock market. Now my investment advice has even less credibility with her.

[Chancellor]

I don't expect Social Security to be there when I reach age 67 (when I'll be old enough to collect).

A precious metals IRA wouldn't be a bad idea given what the stock markets and the dollar are doing these days.