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Isn’t there a Social Security penalty for retiring overseas?
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Isn’t there a Social Security penalty for retiring overseas?



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?

27 Comments

  24. skoop queen

    Big ups to everyone working effortlessly trying to earn a living while building wealth. I’m 40 and my husband 44 we are both retired with over $1 million in net worth and no debts. Currently living smart and frugal with our money. Saving and investing lifestyle in the made it possible for us this early even till now we earn monthly through passive income. We are currently in spain enjoying our retirement.

  25. jt95124

    Just because they mentioned it, TX vs CA for retiree taxes:

    Income tax – CA does not tax SS, does tax pensions – TX taxes neither
    Sales tax – CA 9%, TX 8%

    … but … Property tax !!!!!

    TX has 2%, and in many places RE is zooming up, so your tax may go up by large amounts. In Austin, prices have doubled in 5 years !!!!
    CA 1%, and we have prop 13, your tax can only go up 2% per year

    I am 70, have SS and a $15k annuity, so my CA income tax is almost nothing, my property tax is $6k. If I moved to TX, I would pay minimum $6k more taxes on a $250k house. My sister has a house in TX worth less than mine and pays $20k property tax.

    Unless you have lots of non-SS income and no house, TX ain't no red state low tax thang. Blue lib CA wins. To win in TX, you need $100k hon-SS income and $100k house. Like most red/conservative deals like the Trump tax cut, the multi-millionaires are the beneficiaries. Regular people in TX may well pay more in taxes than CA, all you need is a valuable house.

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