Collecting Social Security while in UK

Hello,

I am 46 years old and have lived in the UK for 5 years now.

Can I still collect Social Security when I hit the US retirement age and/or can my 6 year old daughter take advantage of my SS if I croak?

Thanks for the input!

Dave

https://americansabroad.org/issues/social-security/

If you qualify for SS you can have it paid to you in the UK......it is not taxable in the US, but is fully taxable in the UK.

Yes, you can certainly collect your US Social security if you've earned enough credits. You will also be eligible for Medicare (if you moved back to the US).  However, since you have not been paying into US SS for the past 5(?) years, you will not be eligible for SS disability payments.   The most important thing to be aware of, however, is that if you will be receiving a UK pension (either private or from your employer or National Insurance), your US social security pension will be reduced by the Windfall Elimination Provision (regardless of where you live).  The calculator is here:

http://www.ssa.gov/planners/retire/anyPiaWepjs04.html

As you will see, it is very unfair.  It will cut your US SS by a significant amount (in your case, up to $430 a month).  The WEP is one of several things that impacts expats unfairly and there has been a long, but fruitless, campaign to repeal it.  My understanding is that the WEP would not affect what your daughter or spouse would get if you passed away, however.

As you will see, it is very unfair.  It will cut your US SS by a significant amount (in your case, up to $430 a month).  The WEP is one of several things that impacts expats unfairly and there has been a long, but fruitless, campaign to repeal it.  My understanding is that the WEP would not affect what your daughter or spouse would get if you passed away, however.

WEP preserves the progressive nature of SS benefits......there is an argument about it's fairness....I believe that it is perfectly fair and I will get the maximum WEP reduction to my SS.

Nun - could you explain why you think WEP is fair?

Nun - could you explain why you think WEP is fair?

If you have a low number of years of FICA contributions when your average lifetime salary is calculated you get a number lower than your actual average salary while making FICA payments. Because of the progressive nature of SS this increases your SS benefit. WEP corrects the benefit amount to better reflect your actual salary and number of years of contributions.

Thank you. My impression at this point is when one has paid in to both systems for about an equal amount of time it seems unfair to lose out on the SS. Also, I understand that the rule was introduced to regulate US pensions earned by government and education employees, not foreign pensioners. However, there's nothing I can do about it now. And unfortunately, because my visa type did not allow me to work when I arrived in the US, I think I am unable to make voluntary NIC contributions, at least the ones that I can afford!

Thank you. My impression at this point is when one has paid in to both systems for about an equal amount of time it seems unfair to lose out on the SS. Also, I understand that the rule was introduced to regulate US pensions earned by government and education employees, not foreign pensioners. However, there's nothing I can do about it now. And unfortunately, because my visa type did not allow me to work when I arrived in the US, I think I am unable to make voluntary NIC contributions, at least the ones that I can afford!

If US SS was a flat rate or just proportional to the amount earned I would agree with you. But it's progressive and you get a proportionally higher benefit if you have a low income so whatever the source of the non SS pension I think WEP is appropriate.

Time for a rebuttal.

(This will not surprise nun. We’ve had this discussion many times over the years. Unusually, this is one of the very few topics where we do not agree fully.)

So, to start with, I agree with nun; but only with the statement that US SS benefits, for contributions within the US SS programme, are progressive. That’s the extent of agreement.

First, for the expat, US SS is the classic Catch 22. The WEP information states:

“If you work for an employer who does not withhold Social Security taxes from your salary….”

The implication is an option exists, and you can work for an employer that will withhold Social Security taxes. As an expat, and forgetting certain unique circumstances (Totalisation Agreement, self-employment), you do not have a choice. No foreign employer participates in US SS. WEP becomes an automatic penalty when you move abroad and pursue pension planning where non-US programmes are involved. Like US taxes for the expat, US SS is US-centric. Non-SS work in the States (Federal, State, and local authority pensions for example) compensates the employee with generous terms to offset the loss of US SS. Review the Detroit bankruptcy saga if you doubt this. Foreign plans will not compensate loss of US SS. Why should they?

As an expat abroad, you do have one choice. You may elect to avoid all foreign pension planning and avoid WEP (a disadvantage for retirement). If you are employed in the UK on an average salary, this may be impossible. Your employer will withhold contributions to the UK State Pension.

Second, US SS may be progressive, but WEP is not. If you have a UK pension of £8,000/yr, for example, you will suffer maximum WEP ($413/month for 2015). If you have a UK pension of £80,000/yr, you will still only suffer maximum WEP of $413/month. WEP penalises those on lower pension incomes unfairly, and supposedly, that’s what the progressive nature of US SS attempts to avoid. Those suffering from low incomes in retirement are penalised even further by WEP, and they are the ones needing the funds the most to survive in retirement.

Third, unlike the UK State pension provisions, you cannot contribute voluntarily to US SS. If you are not working for a US employer, there is no way to protect yourself from WEP and attempt to participate in the progressive nature of US SS to bolster both the US SS reserves and a substantial US SS benefit. Not allowed.

Last, there are numerous examples where someone resident in the US can have significant retirement benefits, voiding the progressive nature of US SS; retain the higher US SS progressive advantage when having contributed minimal amounts to US SS; and not be WEPed. Again, the assumption of the progressive US SS depends solely on all participants exercising the option of working within the US-centric system for up to 30 years in contributing US employment.

And........It's unlikely to change. Within every district and State in the US, most are convinced US SS is doomed. What are the chances of Congressional reform to equally benefit the expat? Nil would be my guess.

Kudos to theOAP 

IMHO, WEP is effectively a regressive tax, which by its very nature, affects the poor disproportionately. 

IMHO if you have issues with WEP then you should also have problems with the progressive nature of SS and progressive taxation. WEP is progressive up to the maximum cap and of course there is a cap on the amount of FICA taxable income. I have issues with may aspects of the SS program, but not with the basic principle of WEP.

Personally I'd like the cap on FICA tax to be abolished and SS to be paid at a flat rate proportional to the number of years of contributions......like the new UK rules.

My main objection to WEP is it's just one more thing to take care of when you're living abroad.  And worrisome when you're getting on in years.

My main objection to WEP is it's just one more thing to take care of when you're living abroad.  And worrisome when you're getting on in years.

Far more US residents have to deal with WEP than US expats.