4 Things You Need to Know as a Retiree Living Abroad
U.S. expats face many financial challenges when living overseas, and planning for Social Security benefits is no exception. Following are four potential Social Security challenges you should know about as you plan to retire as a U.S. citizen abroad.
#1 – Social Security tax liability
It’s important to note that, because they’re U.S.-sourced, Social Security payments can’t be excluded from taxation using the foreign earned income exclusion (FEIE), which only applies to foreign-sourced income. Once you begin receiving benefits, up to 85% of your Social Security payments may be subject to ordinary income tax rates.
#2 – Dual coverage
If you worked overseas for a portion of your career and also contributed to the U.S. Social Security system for at least 40 quarters (10 years), you may be eligible to receive both a foreign pension and U.S. Social Security benefits. Before starting Social Security benefits, it’s essential to take time to understand how bilateral totalization agreements may impact your eligibility.
As of 2025, the United States holds totalization agreements with 30 foreign countries.1 These agreements have two main purposes. First, they eliminate dual Social Security taxation, which would occur if a worker from Country A works in Country B and is required to pay social insurance taxes to both countries. Second, the agreements fill gaps in benefit protection for workers who have divided their careers between the United States and another country.
This means if you’ve worked less than 40 quarters in the United States but also contributed to an equivalent social program in a country that has a bilateral totalization agreement with the United States, you may still be eligible to receive Social Security retirement benefits.
Without a totalization agreement in place, a U.S. citizen working in another country may not have enough work quarters to qualify for the social insurance benefits of either the United States or the foreign country, in which case the worker would be denied benefits from both countries (even though they paid into both programs, as their total work history wouldn’t have met the requirements for either country’s retirement system).
#3 – Currency challenges
Social Security payments can be paid in foreign currencies but are calculated in U.S. dollars, which can lead to significant variations in your purchasing power driven by exchange rate fluctuations. It can be difficult to count on a specific payment amount each month when exchange rates are in constant flux. Your international wealth manager can help you plan for potential currency swings and take steps to minimize their impact on your overall budget.
#4 – Spousal benefits for foreign spouses
A foreign spouse may qualify for spousal or survivor benefits based on their spouse’s U.S. Social Security contributions.
Could you use help navigating the Social Security challenges you face as a U.S. expat? Creative Planning International is here for you. Our fiduciary wealth managers work with Americans living abroad and cross-border families to help them maximize their wealth and avoid costly mistakes. We understand the complex interaction of multi-jurisdiction tax and regulatory regimes and take into account currency, diversification, tax and other portfolio considerations as we help you plan and invest for the future.
