Living abroad may be right up your parents' alley. More than 330,000 Americans take advantage of the lower cost of living in other countries to stretch their retirement savings. You may not like watching them pack up their visas, but you don't have to worry about Mom and Dad not getting their Social Security benefits. They can collect Social Security as long as they're eligible, they're U.S. citizens and their foreign address doesn't put them in a restricted country.
The U.S. Department of the Treasury and the Social Security Administration, or SSA, have their own "no" lists of places where they won't send benefits. The Treasury makes North Korea and Cuba taboo, while SSA puts Vietnam, all but five members of the former Soviet Union -- Russia, Lithuania, Latvia, Estonia and Armenia -- and Cambodia on its list. Retirees living in these countries must wait until they return stateside or reside in a nonrestricted country to receive their Social Security benefits. A beneficiary living in an SSA-banned country may request an exception through his local U.S. embassy or consulate.
Starting in May 2013, citizens living abroad must choose between two forms of electronic payment: direct deposit or an SSA-issued Direct Express debit card. Retirees who've gotten checks automatically get the debit card if they don't switch to direct deposit by then. Every month, the SSA credits benefits to this card; your parents can use it just as they would a regular debit card. As of December 2012, banks in 46 countries accepted direct deposit and currency conversion of Social Security benefits at no cost. The list changes periodically, so a call to the local U.S. consulate or embassy can prevent cash-flow worries. They always have the option of using their U.S. bank account. The U.S. does not adjust benefits payments for exchange rates.
If your folks delay signing up for their benefits until after they get settled in, they can apply at an American embassy or consulate staffed with specially trained Social Security personnel. When your parents spend 30 consecutive days in their new foreign home, the United States considers them to be officially outside of the country, a status they keep until spending another 30 consecutive days stateside. As citizens living broad, they'll get questionnaires from the SSA that they must complete and send back to continue receiving benefits. Payments also may stop if they don't let the SSA know when they move or when their eligibility status changes.
Technology makes life abroad less distant: You can keep in touch through Skype and emails. It doesn't change the fact that citizens living outside of the U.S. do not have access to Medicare for medical services or prescriptions. They must return to the States for Medicare-covered hospital care. Although Social Security benefits received abroad get taxed the same as benefits received in the U.S., foreign taxes may be a concern. Some countries tax Social Security benefits of their American residents. A country's embassy in the United States can answer questions about taxable income and filing requirements.
- Social Security Office of Retirement and Disability Policy: Annual Statistical Supplement, 2011
- Social Security: Receiving Benefits If Outside the United States
- Social Security: Your Payments While You Are Outside the United States
- Social Security: International Country List 6
- ElderLawAnswers: Getting Social Security While Living Overseas
- Digital Vision./Digital Vision/Getty Images