US Social Security Question Re: not retired yet/working

[rcoyote]

I was reading about Social Security reporting if I am living and working in another country and I had some questions I hope someone can answer. SS mentions that I can be penalized for not reporting the income and also says that I can get more information about reporting SS at the US embassy.  

• Can I pay into SS from Thailand? Now I am working as a teacher, but this year I plan to start a business as well.
• I have worked for the last 2 years in Thailand without sending any notifications to SS or for that matter even paid my taxes. I am in the process of paying the taxes now. 

Any advice would be helpful. Thanks.

 

US Citizen, Age 53, I have enough units worked, but my benefits are quite low, so I want to continue to pay into SS, or perhaps I should just do a Roth etc.

[rcoyote]

I just posted a question about US Social Security, but it opened up a can that I've been avoiding for quite some time. Due to many unfortunate events and decisions I am looking at nothing but low social security payments at the moment down the road to retirement. I am now 53, have survived some real close calls with injuries and surgeries, but now have to rebuild and deal with the fall out. All things said I am happy and relatively happy.  I plan on working and running a business for some time. Can anyone offer some real advice.. yes I get that can be a set up for snark, but I honestly would like some sound advice.

 

I have enough units to receive Social Security, but the payment is relatively low as of now. $475/mo if I retire at the normal age. Anyhow, Should I keep paying into to SS?, or put the same amount into a Roth account? some combination of the two, or is there a better option?

 

Luckily I can keep earning, but I have been wiped out a few times, and can't say that my strategies or lack there of have helped out. Willing to change. Thanks.

[steven100]

9 minutes ago, rcoyote said:

wiped out a few times

I hope that wasn't because of thai wives  ?

[rcoyote]

haha, no not at all. I had a series of injuries because of semi-dangerous jobs. One thing I found out is that a serious work injury in America is nearly a death sentence.. if you're lucky a path to bankruptcy. Finally, I realized I had to let go of the way I made money. 

[NanLaew]

1 hour ago, steven100 said:

I hope that wasn't because of thai wives  ?

Even if it was, what is the point of mentioning it? The OP simply wants some advice on leveraging his retirement income despite the diminishing productive years.

[steven100]

1 minute ago, NanLaew said:

Even if it was, what is the point of mentioning it? The OP simply wants some advice on leveraging his retirement income despite the diminishing productive years.

because I'm curious ...  that's why ..

[steven100]

8 minutes ago, rcoyote said:

haha, no not at all. I had a series of injuries because of semi-dangerous jobs. One thing I found out is that a serious work injury in America is nearly a death sentence.. if you're lucky a path to bankruptcy. Finally, I realized I had to let go of the way I made money. 

I'm glad you changed, making money is not everything ...happiness counts for alot also and your health.  I wish you luck.

[tonray]

You need to provide further details.

 

1) At what age do you intend to retire ?

 

2) What is your risk tolerance ? (could you sleep at night if your investments lost 25% for example in the stock market ?)

 

3) What is your investment knowledge  level ?

 

4) How much can you contribute every month until retirement age ?

 

5) What are your current living expense requirements and do you expect that to change significantly in retirement ?

 

1) USA and Thailand have no SS reciprocal agreement so only foreign earned income above exclusion amount is eligible

 

2) Roth contributions can only be made with US taxed income, so same as above or from income generated from operation of a US registered and taxed business.

Edited May 24, 2017 by tonray

[ubonjoe]

Your 2 topics are now one.

[Minnehaha]

4 hours ago, tonray said:

You need to provide further details.

 

1) At what age do you intend to retire ?

 

2) What is your risk tolerance ? (could you sleep at night if your investments lost 25% for example in the stock market ?)

 

3) What is your investment knowledge  level ?

 

4) How much can you contribute every month until retirement age ?

 

5) What are your current living expense requirements and do you expect that to change significantly in retirement ?

 

1) USA and Thailand have no SS reciprocal agreement so only foreign earned income above exclusion amount is eligible

 

2) Roth contributions can only be made with US taxed income, so same as above or from income generated from operation of a US registered and taxed business.

 

Is it possible to pay into SS while living and working abroad and lets say, age 50? To explain further, if I had my own business in Thailand and had 3 or 4 quarters remaining to be fully vested, is it possible to pay into it so that one is vested at ... say age 65 or whatever the cut off age might be? 

[tonray]

There is a foreign income exclusion of $102,100 in 2017. So anything you earn above that level is taxable in then US and that portion can then be used for SS credit purposes (means paying SS and Medicare taxes in addition to income taxes on income above 102,100 dollars.)

[Suradit69]

5 hours ago, NanLaew said:

Even if it was, what is the point of mentioning it? The OP simply wants some advice on leveraging his retirement income despite the diminishing productive years.

 

Some people feel there's never an opportunity to be lost to Thai bash.

[Suradit69]

6 hours ago, steven100 said:

because I'm curious ...  that's why ..

"Curious" is probably not the right word. 

Opportunistic and agenda-driven would probably better sum it up.

[edwardflory]

SS payments are now based on the earnings of your LAST 5 YEARS of employment be advised!!!

My mistake was working a easy job, with much lower pay, to kill time for 5 years till I was 67 for "Full" retirement benifits

Do NOT make the same mistake. Reading what you posted ( $$$ )You can "continue working" until 70 which will add around 25% more to your benefits.

Another thing, no COL adjustment the past 5 years........did get a surprise $400+ on one December payment

[Thaidream]

Social Security payments are based upon the  highest salary earned for  35 years of your credited  work income. One cannot voluntarily pay into Social Security to gain more credits . Social Security taxes are deducted automatically from covered income or paid in if one is self employed with a coverable business. If one is working for example for a Thai Company or a business operating in Thailand- these are not coverable business' and one cannot pay info the system voluntarily.

 

Unless you are employed in Thailand or operating a business that is going to pay you a similar wage that one would make in the United States- I would not stay in Thailand at your age.The only exception would be if you have a large amount of savings or passive income such as from a home your are renting out or large disability payments that will last a lifetime. You have 14 more working years until age 67 and I would be employed in the US or for the United States Government abroad so as to increase the Social Security monthly payment.  You can even take a reduced payment at Age 62  and continue to work up to a certain level until your normal retirement age (67) and after that you can continue to work with no penalty. 

 

Your current projected payment  is too low to  live adequately in Thailand 14 years from now. and too low  for either a retirement or marriage Visa The cost of living increases each year.   You might examine the Social Security rules and regs at their website Social Security.Gov. The system is somewhat complicated but there are tons of info available.

[smotherb]

2 hours ago, edwardflory said:

SS payments are now based on the earnings of your LAST 5 YEARS of employment be advised!!!

My mistake was working a easy job, with much lower pay, to kill time for 5 years till I was 67 for "Full" retirement benifits

Do NOT make the same mistake. Reading what you posted ( $$$ )You can "continue working" until 70 which will add around 25% more to your benefits.

Another thing, no COL adjustment the past 5 years........did get a surprise $400+ on one December payment

Do the math for retirement above the minimum of 62 years of age. I believe the current SSA description of retirement options is biased against the senior citizen. In my case, I would have had to live to be 79 before I would have made more money by waiting to retire at 66 than at 62. I am now 72, and if I wake up one morning at 79, I'll still have the last laugh.

[thailand49]

2 hours ago, Thaidream said:

Social Security payments are based upon the  highest salary earned for  35 years of your credited  work income. One cannot voluntarily pay into Social Security to gain more credits . Social Security taxes are deducted automatically from covered income or paid in if one is self employed with a coverable business. If one is working for example for a Thai Company or a business operating in Thailand- these are not coverable business' and one cannot pay info the system voluntarily.

 

Unless you are employed in Thailand or operating a business that is going to pay you a similar wage that one would make in the United States- I would not stay in Thailand at your age.The only exception would be if you have a large amount of savings or passive income such as from a home your are renting out or large disability payments that will last a lifetime. You have 14 more working years until age 67 and I would be employed in the US or for the United States Government abroad so as to increase the Social Security monthly payment.  You can even take a reduced payment at Age 62  and continue to work up to a certain level until your normal retirement age (67) and after that you can continue to work with no penalty. 

 

Your current projected payment  is too low to  live adequately in Thailand 14 years from now. and too low  for either a retirement or marriage Visa The cost of living increases each year.   You might examine the Social Security rules and regs at their website Social Security.Gov. The system is somewhat complicated but there are tons of info available.

There is a lot of good answer this is by far the best one, a second to going online to get the real facts. You can also create a account.

Based on the payment which is very low, mean you have enough credit to get that but not enough if you plan down the road to sign up for Medicare?  Right now you at your age I don't think based on the plans you noted can ever put in enough working overseas unless it is equal to U.S. Money you would make.

You mentioned also you were hurt years ago, sound like you were working on jobs that might not have covered you for Workmenscomp?  or the injury you sustain wasn't bad enough for you to qualify for disable benefits under S.S.?

Whatever your plans for business it needs to make you a ton of money because your situation as noted you will certain be needing it.

Good luck

[Pib]

4 hours ago, edwardflory said:

SS payments are now based on the earnings of your LAST 5 YEARS of employment be advised!!!

My mistake was working a easy job, with much lower pay, to kill time for 5 years till I was 67 for "Full" retirement benifits

Do NOT make the same mistake. Reading what you posted ( $$$ )You can "continue working" until 70 which will add around 25% more to your benefits.

Another thing, no COL adjustment the past 5 years........did get a surprise $400+ on one December payment

 

Couple of inaccuracies in the post above.

 

From the Social Security Agency website regarding how your SS benefits are calculated.

Quote

Many people wonder how we figure their Social Security retirement benefit. We base Social Security benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.” This is how much you would receive at your full retirement age — 65 or older, depending on your date of birth.

 

Delay starting your social security pension from full retirement age 66 till age 70 will increase your pension by 32%.  If full retirement age more than 66 then the percentage is lower.

https://www.ssa.gov/planners/retire/1943-delay.html

 

From the Social Security Agency website regarding COLA adjustment over last 5 years....4 of last 5 years have had COLA adjustments.  Now, if you are signed up for Medicare Part B and it.'s premium increases which it normally does that would most likely eat-up all your COLA adjustment if you don't get that much of a . Social Security pension. 

Quote

January 2013 -- 1.7% 
January 2014 -- 1.5% 
January 2015 -- 1.7% 
January 2016 -- 0.0% 
January 2017 -- 0.3%

 

Edited May 24, 2017 by Pib

[Tony125]

Are you not aware of the Foreign Earned Income Exclusion? You can work overseas and earn up to  $101,300 for 2016 and pay NO TAX if you reside overseas permanately or out of USA at least 11 of the 12 months in a year. You still have to file every year but if under the limit wich changes every few years you pay no tax.. If you have income from USA say a pension or job/company pays you a salary that is taxable.

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Foreign Earned Income Exclusion - Requirements

To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:

• A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
• A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
• A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

Changes in the Foreign Earned Income Exclusion

The maximum amount of the Foreign Earned Income Exclusion under Internal Revenue Code (IRC) section 911 is indexed to inflation ($91,500 for 2010, $92,900 for 2011, $95,100 for 2012, $97,600 for 2013). $101,300 for 2016

The amount of foreign earned income (and foreign housing costs) excluded from an individual's gross income will be used for purposes of determining the rate of income tax and alternative minimum tax (AMT) that applies to his or her nonexcluded income. An individual’s tax on any foreign earned income above the exclusion amount and on any unearned income is computed as if the foreign earned income exclusion was not claimed. The individual's tax will be the excess of the tax that would be imposed if his or her taxable income were increased by the amount(s) excluded, and the tax that would be imposed if his or her taxable income were equal to the excluded amount(s). For this purpose, the excluded amount(s) will be reduced by the aggregate amount of any deductions or other exclusions otherwise disallowed. In many cases this will have the effect of increasing an individual’s U.S. federal income tax to an amount greater than it would have been under prior law.

[Pib]

Best to keep in mind that personal income taxes (and possible exemptions) are different from Social Security and Medicare taxes.

 

Retirement Planner: Work Outside The United States

https://www.ssa.gov/planners/retire/international.html

 

Social Security Tax Consequences of Working Abroad (note the Who Must Pay Self Employment paragraph regarding Social Security and Medicare taxes)

https://www.irs.gov/individuals/international-taxpayers/social-security-tax-consequences-of-working-abroad

 

 

 

[rcoyote]

Great feedback and information. Thank you all - really. this gives me a great idea on how to plan my next steps and what risks are worthwhile. btw. I did have workers comp, but just got injured at the wrong time in that system. I also had private insurance.. long story, but I accept my part in it. I don't see any point in thinking about the past.. move on and make the best of it. working in the US is a big possibility, but I also want to look into as many possibilities as I can figure out. I enjoy my life here much more so than the US. Yet, I still must think beyond today. Thanks again.

 

 

[Pib]

Regarding how many years your SS pension payment is based on (i.e., 35 years) take a look at below webpage for a layman's explanation.

https://www.fool.com/retirement/general/2014/08/02/how-are-social-security-benefits-calculated.aspx

 

 

And just partial quote from above webpage regarding how some incorrectly think it's only based on your final few years of earnings.

Quote

 

What factors do not affect Social Security benefits?
Working longer doesn't necessarily mean you get more Social Security benefits. Only your 35 highest-earning years (adjusting for inflation) count, so continuing to work won't boost your benefits unless it increases your average income for the highest-earnings years.

And working fewer hours or for less pay as you near retirement won't hurt your Social Security benefits. Some people mistakenly assume that Social Security benefits are based on the last years worked. Fortunately, you can work as long as you want, and your Social Security benefits are still based on your 35 highest-earning years.

 

 

[Foozool]

Adding to you SS retirement benefits wold work better in the US since your income will be bigger, therefore you pay tax more. 

But in Thailand your income could be smaller and the tax will be smaller as well. 

It takes longer time to build a better SS benefit here in Thailand. 

Unless you make a real good money to compare average Thai income.

[Pinot]

If I were you, I'd start putting away a chunk of money every month in an  investment account. Charles Schwab is a particularly good place to do that. I would invest it one of Schwab's low cost ETFs. I've been averaging earning 12% on my investment. I'll give you specific recommendations if you want to PM me.

 

Putting $500/mo for 10 years will at say 10% growth will get you $105,000

$1000/mo for 10 years will get you $210,000

 

Now if you can earn 10% a month on that, that gets you  $1,750/mo. Combined with $500/mo SS, that's enough to live on in LOS. 

 

Obviously there are a number of assumptions here, but your best bet is to start stocking it away now to be able to retire in 10 years.

[Grumpy Duck]

I do not believe I am qualified to give advice about Social Security and working abroad however I can share my experiences. 

1. Self employed or individuals paid on form 1099 are required to pay self employment taxes to include both parts of FICA. The exact numbers & percentages I am not sure. My ex wife in the US got nailed for this on income of less than $60,000 yr. 

2. Medicare does not cover recipients outside the USA. 

3. Individuals receiving SSDI/SSD are not supposed to live outside the US for over something like 30 days consecutively. 

4. The Social Security website is a good source of information. You can also get binding answers to questions via e-mail through the website once registered as a user. 

https://www.ssa.gov/myaccount

[ThaiWai]

$475 a month?? You've got work to do.  SS is going to give me 5X that amount when I hit 67.  Forget about SS, you will never catch up now.  Start reading and earning fast and then start compounding interest.  To avoid US income tax on income earned abroad, keep foreign earnings under $101,300 and don't be in the US for more than 30 days total in a 12 month time frame or you loose your exemption.  Use the attached form (next years version) to avoid income tax on earnings.  You asked about Roth IRA's but you should compare that to a traditional before committing.  You should be saving like crazy and reading non-stop.  Open a mint.com account and find out where you money is and where it's going and generate a number that you can dedicate to investing monthly and make it your most important bill.  Use an app like Spending Tracker and enter every baht that comes or goes, convert the totals from THB to USD and enter them as a single transaction in Mint.com  IE; Jan 31 Monthly Groceries $XXX.  Get a VPN on your computer because without it all the US financial investment institutions, more often than not, will block and flag you.  Fidelity is good and cheap for stock purchases, I also use Vanguard for mutual funds and have no complaints.

 

 

https://www.irs.gov/pub/irs-pdf/f2555ez.pdf

 

 

 

 

 

[ThaiWai]

2 hours ago, Pinot said:

If I were you, I'd start putting away a chunk of money every month in an  investment account. Charles Schwab is a particularly good place to do that. I would invest it one of Schwab's low cost ETFs. I've been averaging earning 12% on my investment. I'll give you specific recommendations if you want to PM me.

 

Putting $500/mo for 10 years will at say 10% growth will get you $105,000

$1000/mo for 10 years will get you $210,000

 

Now if you can earn 10% a month on that, that gets you  $1,750/mo. Combined with $500/mo SS, that's enough to live on in LOS. 

 

Obviously there are a number of assumptions here, but your best bet is to start stocking it away now to be able to retire in 10 years.

Great advise to start saving and earning but expecting 10% returns over time is presumptive.  6% is a safer estimate. Your figures don't account for taxes, fees or inflation??  That $1750 you speak of is not a realistic in pocket figure.   Hope for the best, expect/plan for the worst.

 

http://business.financialpost.com/personal-finance/retirement/calculating-investment-returns-actuarially-speaking-6-is-a-good-rule-of-thumb

[Pinot]

5 hours ago, ThaiWai said:

Great advise to start saving and earning but expecting 10% returns over time is presumptive.  6% is a safer estimate. Your figures don't account for taxes, fees or inflation??  That $1750 you speak of is not a realistic in pocket figure.   Hope for the best, expect/plan for the worst.

 

http://business.financialpost.com/personal-finance/retirement/calculating-investment-returns-actuarially-speaking-6-is-a-good-rule-of-thumb

 

Yeah, it does seem high. I consistently do it. That's an average over the 8 years I've been here. I'm not bragging, I'm just saying what I've done.

 

I've never paid taxes on the income from dividends. It's never reached the threshold for paying. I check every year and I use to file a zero tax return, but don't bother any more. 

 

I'll stand by these figures, in fact,I do better than this. 

 

I'll give you a few ETFs/CEFs I invest in: FOF, ETY, ETJ 

[dman]

You will not be able to open and or maintain a US discount brokerage account here in Thailand unless you have a valid US address. I was booted from TD Ameritrade several years ago because of my Thai address. Have been doing business with them for over 25 years but this made no difference. I looked at every US discount broker and the only one who would do business with me for my 401K and personal account was Interactive brokers. The only problem with them is a rather difficult GUI and you cannot invest in ETA's. This is all related to the Patriot act and the US governments rules and regs on banking and investing. It just was not worth the hassle for US brokers or banks to do business with US citizens living abroad. They wonder why we are fed up with the US govt when an illegal alien living in the US can get bank account, drivers license, and brokerage account and a US born citizen living abroad cannot get any of these things.

 

Back on topic. I left the USA 18 years ago and worked in Asia until retiring last year when I turned 62. I had not paid a dime into SS for 18 years and my monthly pension is a bit over $1700/month and my 12 y/o son gets about $1100/month until he turns 18 or 19 if still in school. If I were you I would not look to try and pay anything into SS and instead save the money and invest it on your own. You will likely do much better than they would in growing your money over the years. Best of luck

[Pinot]

You can set up an International account with Charles Schwab, The only restriction is you can't trade mutual funds but you don't need them. The account comes with a Visa debit card that will reimburse you for all ATM fees, perfect for Thailand. They're easy to do business with. Highly recommended.