Will I receive Social Security benefits if I move to Canada?

This is a very common question that is asked when people who have previously worked in the United States move to Canada, either directly from the U.S. or another country they moved to after the U.S. After years spent living and working in the United States paying Social Security taxes, what happens to those benefits when you leave the country? There are a few scenarios that could apply in this situation.

- You are a U.S. citizen who worked in the United States and are now living in Canada.

- You are a U.S. citizen who worked in the United States and is considering giving up their citizenship, now living in Canada.

- You are a Canadian or foreign citizen who worked in the United States on a visa, and is now living in Canada.

- You are the spouse of an individual who worked in the United States, and is now living in Canada.

In all of the above scenarios, as long as valid contributions were made to Social Security and you meet the eligibility requirements, the answer is YES! Citizenship and Canadian residency are not limiting factors to receiving Social Security benefits while living in Canada.

There are a few considerations that will determine eligibility for Social Security. In order to be eligible on your own record, you will need to have 40 credits, which is roughly 10 years of contributions. If you do not meet the requirement, you may qualify for benefits with the Canada-U.S. totalization agreement. As long as you have six credits, which is 1.5 years, you can apply the years worked in Canada to help qualify you for benefits. The totalization agreement will not increase the amount you receive, it will only qualify you for benefits based on how much you contributed to the plan.

For example:

You are a Canadian citizen who moved to the U.S. on a work visa. You worked in the U.S. and made contributions to Social Security for five years, before moving back to Canada. The time worked in the United States would provide you with 20 credits.

Once you move back to Canada, you work another 20 years before you retire. During this time, you contribute to the Canada Pension Plan (CPP). When you apply for Social Security, they will apply the time you worked in Canada, contributing to CPP, to give you the other 20 credits to qualify you for Social Security. As mentioned previously, your time contributing to CPP will not increase your Social Security pension, but it will qualify you to receive it.

If you have not earned enough credits prior to your move to Canada, it is not possible to request an estimate of what your Social Security will be at retirement. You will need to wait until you apply for your pension at retirement.

If you have enough credits for Social Security, you should be able to obtain an estimate of your Social Security through their online calculators if you have your earnings record or have set up a MySSA account.

Social Security also has a benefit for spouses, which is very useful if one spouse never contributed to Social Security or would have a low benefit amount on their own record. The benefit can be up to 50 per cent of the workers’ primary insurance amount, depending on their age at retirement. Anyone whose spouse, ex-spouse or deceased spouse was or is eligible for benefits is eligible for the spousal benefit, once they have reached the age of eligibility. Citizenship and residency do not affect the spousal benefit.

Something that could affect the actual amount of Social Security you receive is the Windfall Elimination Provision (WEP). The WEP is a formula that can reduce the size of your Social Security benefit if you receive a pension from a job in which you did not pay Social Security taxes. This could be an employer pension from Canada or the Canada Pension Plan (CPP). The Old Age Security (OAS) pension is not affected by the WEP. The maximum reduction for 2023 is 50 per cent of the non-covered pension(s) up to a maximum of $558 USD a month. The maximum WEP reduction is applicable to people who have less than 20 years of substantial earnings in the U.S. and phases out each year by 10 per cent between years 20-30. The WEP does not apply to spousal benefits or benefits that were received by using the Canada-U.S. totalization agreement.

It is important to consider all sources of income in retirement and what that could mean long term. Our focus for clients is long-term planning and, looking at the bigger picture, Social Security is just one of the areas we review and advise on. If you are looking for help with your investments, cross border wealth management or planning for retirement, please get in touch with our team!

Source: www.ssa.gov

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