What happens to my Social Security benefits if I move to Canada?

What happens to my Social Security if I leave the U.S.?

When you leave the U.S. and move to a foreign country like Canada, your Social Security benefits can generally follow you. You are still eligible to receive your U.S. Social Security payments, as long as you meet certain requirements related to your work history and contributions, or through agreements like the U.S.-Canada totalization agreement. Whether you're a U.S. citizen or a foreign national who worked in the U.S., the rules allow for continued payments while living abroad. However, you should consider factors like taxation and benefit adjustments, such as the Windfall Elimination Provision (WEP), which may affect the amount you receive.

There are a few scenarios that could apply in this situation:

Scenarios for Receiving Social Security in Canada

• 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 are considering giving up your citizenship, now living in Canada.
• You are a Canadian or foreign citizen who worked in the United States on a visa and are now living in Canada.
• You are the spouse of an individual who worked in the United States and are 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.

Can you collect both Canada Pension and U.S. Social Security?

Yes, you can collect both pensions. The benefits are coordinated under the totalization agreements between the two countries. This agreement ensures that those people who work in both countries have their benefit entitlements maximized.

Eligibility for Social Security Benefits 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.

Eligibility Scenario for Social Security Benefits

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.

How long can you be out of Canada without losing CPP?

You never lose your CPP benefits and are entitled to them regardless of if you leave Canada. Entitlement to CPP is based on years worked within Canada, so any years that Canadians spend working outside of Canada would not contribute to the CPP they are entitled to.

Getting an Estimate of Social Security Benefits

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 Benefits for Spouses

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 worker’s 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.

Windfall Elimination Provision (WEP)

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.

How do I apply for U.S. Social Security from Canada?

You can visit or write to any U.S. Social Security office located along the U.S.-Canadian border. Alternatively, you can visit any in-person Service Canada Centre or call the toll-free number at 1-800-277-9914, 8:30 AM to 4:30 PM local time, Monday to Friday.

Is a Canadian pension taxable in the U.S.?

Pensions are taxed in the jurisdiction where you are a tax resident. For U.S. persons, foreign pension income is reported on U.S. tax returns, but tax may or may not be owed depending on the tax already paid in their country of residence.

Conclusion
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