Eighth podcast episode by Kathleen Peddicord and Lief Simon––Podcast From Paris

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Here are the question addressed in today’s episode:

Mike B., from the United States asks:

We are planning a move out of the United States, possibly to Belize. Our retirement will come from pension plans in the United States. If we receive our checks in Belize, we understand that we still will have to pay federal taxes. However, there is no domicile state that can collect taxes. So doesn’t that amount to a tax break? Or am I missing something?

Jeff F. from the United States asks:

Isn’t there a Social Security penalty for retiring overseas? Many in my wife’s family believe so. They say they would get only two-thirds or three-fourths of their checks if the Social Security Administration knew they retired to Mexico.

Gary C. from the United States asks:

Kathleen, thank you for all of your information. I love reading your dispatches and also am enjoying your podcasts.

I know that some income earned overseas can be excluded from my U.S. tax return, but what about an Internet business where income is derived from many different countries?

In other words, if we move to Panama to run our business, is the income excluded regardless where it comes from, even if it comes from the United States.

Mark T. from the United States asks:

If I move overseas, could I ever return to the United States?…(read more)

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Retiring overseas is an increasingly popular choice for many people as they approach retirement age. There are numerous benefits to retiring in a foreign country, including a lower cost of living, access to new cultures and experiences, and the opportunity to travel more frequently. However, one common concern that many retirees have is whether retiring overseas will result in a Social Security penalty.

The simple answer to this question is that no, there is no Social Security penalty for retiring overseas. Social Security benefits are portable, which means that they can be paid to eligible individuals regardless of where they choose to live. As long as you are eligible to receive Social Security benefits, you can continue to receive them even if you live abroad.

However, there are some important things to keep in mind if you are planning to retire overseas and receive Social Security benefits. The first is that you will need to make sure that the Social Security Administration (SSA) has accurate information about your current address and contact information. This is important because the SSA will need to be able to send your benefit checks to your new address.

You will also need to be aware of the tax laws in both your home country and the country where you plan to retire. Depending on the country you choose, you may be subject to foreign taxes on your Social Security benefits. Additionally, some countries may have tax treaties with the United States that affect the taxes you will owe. It is important to research the tax laws in your chosen country and to consult with a tax professional to ensure that you are meeting all of your tax obligations.

Finally, it is important to note that if you receive Social Security benefits and decide to live overseas, you may be subject to different rules related to your Medicare coverage. If you are enrolled in Medicare and you move overseas permanently, your coverage may be affected. However, if you plan to return to the United States at least once every six months, you may be able to maintain your Medicare coverage abroad.

In conclusion, there is no Social Security penalty for retiring overseas, but there are important considerations to keep in mind. You will need to ensure that your contact information is up to date with the SSA, research the tax laws in your chosen country, and be aware of how your Medicare coverage may be affected. With careful planning and preparation, retiring overseas can be a great choice for many retirees who are looking for new experiences and a lower cost of living.