What Happens to My Social Security Benefits If I Work Abroad?

Q: I'm an American who permanently lives and works in Spain. For several years I worked in the United States and paid Social Security taxes, and now I contribute to the Spanish equivalent of Social Security. When I retire, how will this work history affect my benefits? Will I still be able to get American Social Security?

A: Probably, yes. This is possible because the United States has signed treaties with 25 countries that have agreed to coordinate their social security programs with the U.S. program. Spain is one of those countries.

These international arrangements, often called "totalization" agreements, allow workers to combine (or "totalize") work credits earned in one country with work credits earned in another country. This is useful for workers who don't have enough credits in either country alone to qualify for benefits.

You'd need to check the details of your specific case, but chances are good that when you retire you'll get two checks: one from U.S. Social Security based on your work record here and one from Spanish social security based on your long-term residence and work in Spain.

Q: What about people who are working abroad only temporarily?

A: For them, the effect is different: They can be exempted from paying into the system of the country they're working in and pay only to their home countries. This has curbed what used to be a widespread problem for Americans working abroad — having to pay both U.S. and foreign social security taxes on the same income.

But now, for instance, an American worker sent to the United Kingdom on a short-term assignment can get a certificate from the Social Security Administration to prove he or she is covered by U.S. Social Security and, therefore, exempt from U.K. social security taxes.

Similarly, a person who is living and working abroad for a long-term assignment pays to only one government — the foreign one.

The Social Security Administration (SSA) estimates that by curbing double taxation, U.S. employers and workers save $1.5 billion annually in taxes that they otherwise would have to pay to foreign countries.

Q: Which countries have signed totalization agreements with the U.S.?

A: Italy was the first in 1978. In the years that followed, other nations that joined the list include Germany, Switzerland, Belgium, Norway, Canada, United Kingdom, Sweden, Spain, France, Portugal, Netherlands, Austria, Finland, Ireland, Luxembourg, Greece, South Korea, Chile, Australia, Japan, Denmark, Czech Republic and Poland. The last country to join was Slovakia, which signed up May 1.