US Green card Social Security retirement benefits in Thailand

[The Man Who Sold the World]

MODS - please move this thread to the appropriate forum. Thanks. 

 

To All:

 

My investigation of retirement benefits for my wife. Can somebody clarify for me from first-hand experience.

 

I am a 60yo US citizen. My wife is a 55yo Thai citizen, USA I-551 green card holder (spousal) who has lived in the USA for approximately twenty years and has worked for greater than fifteen years.

 

Her Social Security Statement reports that she has earned enough credits to qualify for benefits. FRA 67yo @ USD $1k/mo. Age 62 @ USD $700/mo.

 

So, my wife has earned her social security benefits.

 

She will NOT become a US citizen – personal choice, adamant refusal, (? She refuses to denigrate her heritage, country, parents, etc. by getting citizenship in another country?) So be it. She is a strong opinion and iron-willed individual. So be it.

 

FACT: We will retire in Thailand in 2-3 years.

So, in preparing my retirement budget, can I count on my wife’s @ USD $700/mo.? or, will we be living off of our 401k and my social security retirement?

Also, if my wife loses her social security benefits because she is a non-resident alien, what would be our best strategy in applying for social security benefits, both mine and my spouses?

 

We will be in Thailand in a couple of months for a couple of months. I will be speaking to several expat clubs and their members, along with insurance brokers and lawyers. I will listen to advice. No need to repeat mistakes made by others, I can and will listen to wisdom gained.

 

So, I am soliciting your advice based on your experiences – please advise me on the subjects mentioned above.

 

Many thanks in advance.    

     

Edited January 9, 2017 by The Man Who Sold the World

[ubonjoe]

Moved to here.

She has earned her social security and it will not be lost because she will be living here.

Even if she was to allow her permanent residency to lapse because of being outside the states for to long she would still get her social security.

[chiang mai]

But if she allows her Green Card to lapse and receives SSc payments here in Thailand, she will be taxed at source on those payments at a rate of 24.5%, this can potentially be reduced to 10% by filing a tax return.

 

Also to add: the rules governing non-resident green card holders have become burdensome since 2002, there is now a series of requirements placed on those people to report earnings and file tax returns for up to 10 years, despite not being US resident any longer - the OP may wish to explore this aspect to see what is involved/required along with understanding the FORMAL process that is required now to relinquish a green card and what is required to maintain it.

Edited January 9, 2017 by chiang mai

[The Man Who Sold the World]

ubonjoe - many thanks for the reply.

 

My wife will lose her permanent residence as we will be living in Thailand. She will become a US non-resident alien. That is the reason for my concern. Thank you for responding.   

[The Man Who Sold the World]

chiang mai - thanks for your reply.

 

Yes, she will allow her green card to lapse. Correctly, as we will no longer be residing in the US. As far as tax returns, as a US citizen I will always be filing 1040's (married filing jointly) . We have a reasonable 401k and both our social security incomes. I do expect to pay little of no actual tax. With standard deduction and our personal exemptions, the amount of taxable income we will have should be relatively small and certainly within the 10% tax bracket. The impact will be there. Also, we have a reasonable amount squirreled away in Roth IRAs and with correct balancing I expect to keep my tax liabilities low. 

 

Investigation(s) and advanced planning...  

 

[partington]

28 minutes ago, The Man Who Sold the World said:

chiang mai - thanks for your reply.

 

Yes, she will allow her green card to lapse. Correctly, as we will no longer be residing in the US. As far as tax returns, as a US citizen I will always be filing 1040's (married filing jointly) . We have a reasonable 401k and both our social security incomes. I do expect to pay little of no actual tax. With standard deduction and our personal exemptions, the amount of taxable income we will have should be relatively small and certainly within the 10% tax bracket. The impact will be there. Also, we have a reasonable amount squirreled away in Roth IRAs and with correct balancing I expect to keep my tax liabilities low. 

 

Investigation(s) and advanced planning...  

 

 

 

Another possible consideration (which may not apply here, but is worth knowing) is that ssc payments are reduced if the recipient is receiving a work-related pension from another country's scheme, or from a private pension source not resulting from US social security payments, as a result of the windfall exclusion provision.  

 

This can reduce the amount of the ssc quite considerably (although capped to a maximum reduction of 50% of the amount of other pension being received).

Edited January 9, 2017 by partington

[The Man Who Sold the World]

partington - thanks for your reply.

 

The consideration you identify does not apply here, but, is good information to know.

 

Thanks. 

Edited January 9, 2017 by The Man Who Sold the World

[Boon Mee]

2 hours ago, The Man Who Sold the World said:

ubonjoe - many thanks for the reply.

 

My wife will lose her permanent residence as we will be living in Thailand. She will become a US non-resident alien. That is the reason for my concern. Thank you for responding.   

If she resides here in LOS after your demise, she will lose your SS w/out having taken Naturalization in the States.  My wife was adamant too about "I'm Thai"  and don't need the US Passport until she found out she was out of luck after I kick off w/regard to collecting my benefit living abroad.

[partington]

2 hours ago, Boon Mee said:

If she resides here in LOS after your demise, she will lose your SS w/out having taken Naturalization in the States.  My wife was adamant too about "I'm Thai"  and don't need the US Passport until she found out she was out of luck after I kick off w/regard to collecting my benefit living abroad.

 

According to this (admittedly 2009 publication, so possibly updated since)  

 

https://www.ssa.gov/multilanguage/10146-GM.pdf

 

a non-US citizen who is a citizen of Thailand IS entitled to survivor benefit as a spouse, providing they have lived as a spouse in the US for at least five years, so this experience may not apply to the OP.

 

Relevant extract:

"If you are not a US citizen or a citizen of one of the other countries listed on pages 5, 6 and 7, your payments will stop after you have been outside the United States for six full calendar months unless you meet one of the following exceptions: 

• You are a citizen of one of the countries listed on page 9, and the worker on whose record your benefits are based lived in the United States for at least 10 years or earned at least 40 credits under the U.S. Social Security system.

[on page 9] • Thailand

If you are receiving benefits as a dependent or survivor, see page 11 for additional requirements. 

 

[Page 11] If you receive benefits as a dependent or survivor of a worker, special requirements may affect your right to receive Social Security payments while you are outside the United States. If you are not a U.S. citizen, you must have lived in the United States for at least five years. During that five years, the family relationship on which benefits are based must have existed. "

Edited January 9, 2017 by partington

[thaibook]

I wish to thank the OP for his questions and all contributors.  This thread is of interest to me as my wife's and my position are similar with the added twist that I am not a US citizen, although entitled to and receiving ss.  If anyone has more relevant information, please add it or if you think it may not be of general interest send me a pm.

[chiang mai]

I'm a non-US citizen and ex green card holder who receives SSc benefits overseas hence I have watched this subject very closely over the years. I have watched as WEP was introduced and benefits paid to people like myself reduced, I've also watched as the rules governing the abandonment of green cards were made more stringent and the reach of the IRS extended. If I had to look into the future and guess, my number one guess on this subject would be that the US government will place more and more restrictions on SSc payments made to aliens residing outside the US and will follow the Australian model more closely, benefits paid to US residents only is where things are headed (over time and in a series of steps), it's a soft target and an easy one.

[IAMHERE]

Get an appointment to talk to a social security representative in your local office to set yourself at ease. My understanding is she will be able to get her earned social security until you die and then if yours is more collect yours and give up hers.

Social Security can get tricky especially for married people. There is an upper limit of income that you will pay no US taxes on your/hers SS payments; be aware of what that amount is.

Oh, be sure to get an account at Bangkok Bank when you are in Thailand for your visit; Social Security will send her/your money direct deposit to Bangkok Bank in New York and they will place it into your accounts, there are other methods of getting the money to Thailand. Think now of moving some money from your 401K to a ROTH.

[Ace of Pop]

For what it's worth ,and I know some won't like it Thai married n lived in U S to Naval fellow ,now she can't be bothered to go stateside to claim it here,costs about break even,sad cause she ain't no scrounger


Sent from my iPhone using Thaivisa Connect

[Leung Falang]

Laurence Kotlikoff, Boston University economics professor  answers some mail on all sorts of US SS questions and also has software that he sells for $40 retail to us on when is the best time to begin drawing-there are many strategies and hundreds of different cases.  Google news is my favorite website and I keep a subject with his name active to see his latest and most interestng posts. 

 

 My Thai wife is some way off from needing to know  what is best for her but we do intend to spend this small amount to see what he thinks.  maximizemysocialsecurity is the name to search and I had to use a virtual address to get it to open.  

 

Best Wishes

[newnative]

4 hours ago, partington said:

 

According to this (admittedly 2009 publication, so possibly updated since)  

 

https://www.ssa.gov/multilanguage/10146-GM.pdf

 

a non-US citizen who is a citizen of Thailand IS entitled to survivor benefit as a spouse, providing they have lived as a spouse in the US for at least five years, so this experience may not apply to the OP.

 

Relevant extract:

"If you are not a US citizen or a citizen of one of the other countries listed on pages 5, 6 and 7, your payments will stop after you have been outside the United States for six full calendar months unless you meet one of the following exceptions: 

• You are a citizen of one of the countries listed on page 9, and the worker on whose record your benefits are based lived in the United States for at least 10 years or earned at least 40 credits under the U.S. Social Security system.

[on page 9] • Thailand

If you are receiving benefits as a dependent or survivor, see page 11 for additional requirements. 

 

[Page 11] If you receive benefits as a dependent or survivor of a worker, special requirements may affect your right to receive Social Security payments while you are outside the United States. If you are not a U.S. citizen, you must have lived in the United States for at least five years. During that five years, the family relationship on which benefits are based must have existed. "

I think this is still correct.

[ubonjoe]

2 hours ago, Ace of Pop said:

For what it's worth ,and I know some won't like it Thai married n lived in U S to Naval fellow ,now she can't be bothered to go stateside to claim it here,costs about break even,sad cause she ain't no scrounger

Why would she have to go to the states to claim any benefits due. 

It can be applied for through the SS office in Manila.

[rjwill01]

12 hours ago, The Man Who Sold the World said:

ubonjoe - many thanks for the reply.

 

My wife will lose her permanent residence as we will be living in Thailand. She will become a US non-resident alien. That is the reason for my concern. Thank you for responding.   

good article by Motley Fool        http://www.fool.com/retirement/general/2015/03/08/social-security-5-surprising-facts-about-noncitize.aspx

[newnative]

15 hours ago, ubonjoe said:

Moved to here.

She has earned her social security and it will not be lost because she will be living here.

Even if she was to allow her permanent residency to lapse because of being outside the states for to long she would still get her social security.

This is correct, I believe.  The OP's spouse meets the requirement of having lived in the US for at least 5 years.  Once you have that it is my understanding that you can live anywhere and still receive SS benefits.  Even if a spouse didn't work in the US or contribute to SS, if the spouse is married to a US citizen and lived in the US for 5 years, it is my understanding the spouse can qualify for survivor benefits, even as a non-citizen, and need not live in the US to receive the benefits.  If any of this is incorrect I will be very happy for any clarifications/corrections as I find the SS documents/regulations to be as difficult to understand as those of the IRS.

[ericthai]

7 hours ago, Ace of Pop said:

For what it's worth ,and I know some won't like it Thai married n lived in U S to Naval fellow ,now she can't be bothered to go stateside to claim it here,costs about break even,sad cause she ain't no scrounger


Sent from my iPhone using Thaivisa Connect

makes no sense about breaking even. She would get about what $700-$1000 a month for the rest of her life and she is worried about spending $2000-$3000, not even close to breaking evening specially when the SS will be for life.  Also their is a US SS office in Manila.  

 

OP are you planning on going back to the USA at all?  I used to work specializing in Medicare insurance plans. 

Keep this in mind if you dont enroll in Medicare  part B when you are eligible and you dont have any other creditable coverage through work or private insurance then you will be charged a penalty of 10% of the national average of part B premium for each year you delayed to enroll.  Also same if you dont enroll in part D when available and you dont have any other creditable coverage through work or private insurance then you will be charged a 1% penalty for each month you dont have coverage.  If you have an address in the USA or can use an address in the US you might want to enroll in a plan, I would consider looking at a medicare advantage plan as most of no monthly premium.

 

As for taxes if you are out of the country I believe it's more than 350 consecutive days then you dont pay tax on your first $102,000 of earnings. 

[The Man Who Sold the World]

ericthai - thanks for your input.

 

I do not intend on returning to the US as I have no roots or responsibilities there. A family vacation may possibly occur after a few years. However, I cannot predict the future and may well wind up in the US again. Whether by choice or necessity. 

My intention, in three years when I am eligible is to signup for Medicare and investigate my Part B/D options. 

When I am eligible, it is expected (at least by myself) that healthcare, medical insurance, and what my options will be are going to change most significantly from what exists today given the change in the US Administration. Of course, there is always the possibility that the changes will be minimal (meet the new boss same as the old boss). Anyway, a bridge I will cross when I get to it.

 

Thank you for responding.   

 

 

[ericthai]

11 minutes ago, The Man Who Sold the World said:

ericthai - thanks for your input.

 

I do not intend on returning to the US as I have no roots or responsibilities there. A family vacation may possibly occur after a few years. However, I cannot predict the future and may well wind up in the US again. Whether by choice or necessity. 

My intention, in three years when I am eligible is to signup for Medicare and investigate my Part B/D options. 

When I am eligible, it is expected (at least by myself) that healthcare, medical insurance, and what my options will be are going to change most significantly from what exists today given the change in the US Administration. Of course, there is always the possibility that the changes will be minimal (meet the new boss same as the old boss). Anyway, a bridge I will cross when I get to it.

 

Thank you for responding.   

 

 

I dont think any major changes will happen to Medicare. I heard already that Trump said he was not going to touch SS or Medicare.  I'm sure the part B premium will go up. Right now it is $121.40 per month for anyone new to medicare. 

I keep my Insurance license up to date in the USA and still work insurance when I'm in the USA. If you need help when the time comes you can PM me.   It's crazy the US government dont let you know up front about the penalties I get someone every now and again that had no idea about the penalty so never enrolled in a part D plan and then have to pay the penalty for life.

[The Man Who Sold the World]

2 minutes ago, ericthai said:

If you need help when the time comes you can PM me.  

Will do. Thanks.

[DogNo1]

Ericthai: I believe that you have a misconception about excluding the first $102,000 of your income if you reside abroad for 350 days in a year.  That exclusion is only for foreign earned income.  You must pay regular taxes on any income derived from US sources no matter how long you live abroad.  Also, if persons have any foreign-based prescription drug coverage (as in national prescription drug coverage - in my case Japanese National Health Insurance,  ) they can likely have their Part D penalty waived by by submitting evidence of their foreign prescription drug coverage.  

[USNret]

The OP & others raise some great questions.  I'm age 59, live in the States with my Thai wife, she will have no SS benefits of her own but will depend on spousal benefits.  I'm pushing her to get a U.S. passport not for SS but for travel -- the world vastly opens up when you have a U.S passport & we intend to travel a lot.  For context, I just this week calculated I can retire next year even though SS won't start for 2 more years.  The trick to doing this is renting out our house in Hawaii, live cheap in Thailand till age 62, and after that we can move back to the States or basically anywhere we want.  It's a good plan that lets me retire 3 years earlier than I had planned.

Since others talked about Roth IRAs, taxable accounts, etc. I recently learned of a strategy that you can convert money from regular IRA (which has not been taxed), into a Roth IRA without paying tax, and then you can draw it out later without tax since Roths you withdraw tax-free.  It takes patience & planning but it can be done.  In short, in retirement you have a limit of around $20,000 in interest tax-free each year and if you don't use the full $20K you can use the excess to pull money tax-free from the IRA and put into the Roth.  We have almost zero interest income since my funds are in stocks and we get paid dividends, which have a more favorable tax treatment.  So, if I can move nearly $20K from IRA to Roth IRA each year tax-free, then later draw it from the Roth tax-free I hope to go the rest of my life without paying U.S. income tax.  You can learn more about this on gocurrycracker.com which is where I learned about it (and no, I'm not affiliated with the site & make no money from the link.)

http://www.gocurrycracker.com/the-go-curry-cracker-2013-taxes/

[ericthai]

20 hours ago, DogNo1 said:

Ericthai: I believe that you have a misconception about excluding the first $102,000 of your income if you reside abroad for 350 days in a year.  That exclusion is only for foreign earned income.  You must pay regular taxes on any income derived from US sources no matter how long you live abroad.  Also, if persons have any foreign-based prescription drug coverage (as in national prescription drug coverage - in my case Japanese National Health Insurance,  ) they can likely have their Part D penalty waived by by submitting evidence of their foreign prescription drug coverage.  

Sorry about the income tax part, I'm not a tax expert.  As for the part D penalty if you look at my post again you will see I stated that if you have drug coverage that is considered creditable there is no penalty. However you need to check with Medicare as Medicare determines what is creditable coverage. More or less a private drug plan needs to have the same or better coverage than approved medicare drug plans. In the US all employer, union plans must notify a member if their medical and drug coverage is considered creditable or not. For you for coverage under Japanese National Health you would need to check with Medicare, most likely they will want a copy of the drug formulary and teirs to review.    

[CaptHaddock]

It's really too bad that the OP's wife refuses to get US citizenship, which offers the strongest claim to SS benefits even though it does have the disadvantage of ongoing tax liability.  The main reason that I urged my Thai wife to get US citizenship while we were living in the US was to ensure her SS benefits on my earnings.  Thais who get US citizenship are lucky in being able to retain their Thai citizenship, unlike Chinese or Koreans. 

 

As far as the OP's options for Medicare after expatting: he can sign up for Part B, but not Part D or any other programs such as Medicare Advantage for which you must be resident in the US to be eligible.

 

In planning to retire to Thailand, I urge the OP not to overlook the following:

1.  Look up the tax domicile rules of your state and take the appropriate steps to make sure that you do not remain liable for state income taxes after leaving.

2.  Get LOTS of US no-fee, no-foreign-exchange-fee credit cards, checking accounts, and brokerage accounts.  It will be difficult or impossible to open one after you leave.  Never let them know that you live abroad.

3.  Look up the threads on VPNs and get one.

4.  Transfer your US phone number to a VOIP service that you can take with you to Thailand.  There are some free ones like Goggle Voice or low-cost options like Ooma.

5.  Get a mail forwarding service that provides a street-type address in a no-income-tax state.  Update all your banking, brokerage, etc. accounts to use this as your only address while you are still in the States.  I recommend this one, but there are many others:  https://www.sbimailservice.com/.

6.  Make sure that your bank(s) do free ACH transfers and get an account in your name only at Bangkok Bank after you arrive so that you can do cheap transfers.

 

[USNret]

15 minutes ago, CaptHaddock said:

It's really too bad that the OP's wife refuses to get US citizenship, which offers the strongest claim to SS benefits even though it does have the disadvantage of ongoing tax liability.  The main reason that I urged my Thai wife to get US citizenship while we were living in the US was to ensure her SS benefits on my earnings.  Thais who get US citizenship are lucky in being able to retain their Thai citizenship, unlike Chinese or Koreans. 

 

As far as the OP's options for Medicare after expatting: he can sign up for Part B, but not Part D or any other programs such as Medicare Advantage for which you must be resident in the US to be eligible.

 

In planning to retire to Thailand, I urge the OP not to overlook the following:

1.  Look up the tax domicile rules of your state and take the appropriate steps to make sure that you do not remain liable for state income taxes after leaving.

2.  Get LOTS of US no-fee, no-foreign-exchange-fee credit cards, checking accounts, and brokerage accounts.  It will be difficult or impossible to open one after you leave.  Never let them know that you live abroad.

3.  Look up the threads on VPNs and get one.

4.  Transfer your US phone number to a VOIP service that you can take with you to Thailand.  There are some free ones like Goggle Voice or low-cost options like Ooma.

5.  Get a mail forwarding service that provides a street-type address in a no-income-tax state.  Update all your banking, brokerage, etc. accounts to use this as your only address while you are still in the States.  I recommend this one, but there are many others:  https://www.sbimailservice.com/.

6.  Make sure that your bank(s) do free ACH transfers and get an account in your name only at Bangkok Bank after you arrive so that you can do cheap transfers.

 

 

This is awesome advice!  Thank you for the comprehensive list.  I'm building a pre-retirement checklist to retire in about 12 months & I'll add these items to my list.

I have a Chase no-fee, no-FE-fee  MasterCard (by Army MWR).  Do you know of any others?

 

[CaptHaddock]

On 1/10/2017 at 3:24 AM, USNret said:

Since others talked about Roth IRAs, taxable accounts, etc. I recently learned of a strategy that you can convert money from regular IRA (which has not been taxed), into a Roth IRA without paying tax, and then you can draw it out later without tax since Roths you withdraw tax-free.  It takes patience & planning but it can be done.  In short, in retirement you have a limit of around $20,000 in interest tax-free each year and if you don't use the full $20K you can use the excess to pull money tax-free from the IRA and put into the Roth.  We have almost zero interest income since my funds are in stocks and we get paid dividends, which have a more favorable tax treatment.  So, if I can move nearly $20K from IRA to Roth IRA each year tax-free, then later draw it from the Roth tax-free I hope to go the rest of my life without paying U.S. income tax.  You can learn more about this on gocurrycracker.com which is where I learned about it (and no, I'm not affiliated with the site & make no money from the link.)

http://www.gocurrycracker.com/the-go-curry-cracker-2013-taxes/

 

Well, sort of.  There is certainly no special exemption of interest in any amount for retirees.  As the text of the link explains, there is the standard deduction and personal exemption which are available to all taxpayers, retired or not.  In the example cited they total about $20,000.  It's true that if you have no other income at all, then you could take an otherwise taxable distribution from your TIRA of $20,000 and convert (deposit) it into your Roth without having to pay tax on it.  But if you have substantial assets in your TIRA you have probably also accumulated some taxable assets that will generate income. 

 

The bigger picture is that even if you have to pay some income tax on Roth conversions it might well be worth doing so depending on several factors.  The full analysis is too lengthy for here, but the value of a Roth IRA depends on the expected lifetime of the Roth IRA itself, whether or not that is your own lifetime.  If you have a younger wife or children who can inherit your Roth IRA the expected lifespan might be very much longer than your own. 

 

For me and many others in the same boat (I do have a younger wife who is a US citizen), the optimal strategy is to do Roth conversion up to the top of the lowest tax bracket for each year as necessary up to age 70.  Also, delay taking Social Security until age 70 to earn Delayed Retirement Credits.  At age 70 you will then face SS benefits and Required Minimum Distributions which will reduce your "space" in the lowest income bracket or may even boost you into a higher bracket.  But in the meantime you would have been able to convert most or all of your TIRA assets into Roth assets as a minimal, but non-zero, cost.

[CaptHaddock]

1 minute ago, USNret said:

 

This is awesome advice!  Thank you for the comprehensive list.  I'm building a pre-retirement checklist to retire in about 12 months & I'll add these items to my list.

I have a Chase no-fee, no-FE-fee  MasterCard (by Army MWR).  Do you know of any others?

 

 

Pentagon Federal Credit Union, Captial One, and others.  We make sure that we have charges on every card every month so that our accounts are not closed for inactivity.

 

It's the bank and brokerage accounts that are basically impossible to open after leaving and we need them.  Since you're apparently military, USAA Federal Savings Bank, and Navy Federal Credit Union offer good banking services.  For brokerage definitely get a Schwab US account (along with the bank account and CC) and Vanguard.

 

You can't have too many such accounts, because things change.  This is probably the only time when you can easily open such accounts.  You can always close them later, if you wish, but you won't be able to open them.  So, get way more than you think you will ever need.

[CaptHaddock]

An additional point in favor of US citizenship for the OP's wife.  When he dies, any TIRA accounts that he has can be inherited by his wife as stretch IRA accounts, i.e. she would have to take RMDs and pay taxes each year only on actual distributions.  But this is true only for a US citizen spouse.  If he dies with an alien spouse then the IRS forces her to close out his IRAs immediately taking all the proceeds as a one-time distribution.  And then the IRS takes out taxes on the amount at whatever bracket that puts her in.  Very disadvantageous.