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US Social Security Payments - German or American Account?

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I'm going to be starting the procedures to receive US Social Security soon as I'll turn 62 in 4 months. I plan to stay in Germany indefinitely and had assumed I would have the Social Security funds deposited directly into my German bank account. But having discovered how easy and inexpensive Transferwise is, I am now thinking it might be simpler to just arrange for direct deposit in my US bank account and transfer the money as needed. Are there any advantages or disadvantages to one way or the other? Advice and comments welcome!

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On 17/4/2017, 11:22:26, maryrrf said:

I'm going to be starting the procedures to receive US Social Security soon as I'll turn 62 in 4 months. I plan to stay in Germany indefinitely and had assumed I would have the Social Security funds deposited directly into my German bank account. But having discovered how easy and inexpensive Transferwise is, I am now thinking it might be simpler to just arrange for direct deposit in my US bank account and transfer the money as needed. Are there any advantages or disadvantages to one way or the other? Advice and comments welcome!

 

No disadvantages, only advantages.

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I had US Social Security paid into my German account. It's no problem at all. Transferwise is great, but it will still cost you more than a direct deposit into your German account.

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1 hour ago, techgirl said:

I had US Social Security paid into my German account. It's no problem at all. Transferwise is great, but it will still cost you more than a direct deposit into your German account.

 

Setting up payments into a foreign bank account is in general more  complicated and more expensive than setting up payments into a domestic bank account. That's true both for the US and for Germany/Europe.

 

Whichever method the OP uses to transfer money, she doesn't have to do it every month but on an as-needed basis. This way she avoids the wire tranfer (or whatever) fees associated with monthly transfers.

 

In addition, these days banks are closing non-resident accounts and make it hard to open new ones. Even if the OP never plans on returning to the US, it's not a bad idea to maintain her US bank account and a credit/debit card. Having her US Social Security paid into that account, and using that account to cover some expenses (e.g., via the debit/credit card) generates account activity that will keep the accounts in good standing.

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Thank you Joe-K and Techgirl - it looks like it would be six of one, half a dozen of another. I don't have any plans to go back to the States except for occasional visits  but as Joe-K said I still have an address there and want to maintain a bank account. I currently have a very small monthly pension that goes into that account, some savings, and I keep a debit card and credit card. I guess I can always contact Social Security and change the account if necessary.   I wouldn't have to do monthly transfers - I could just transfer chunks of money as needed.

 

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Did you inquire about the WEP?

If you collect a USA Social Security pension and a foreign pension, the USA pension will be reduced due to the Windfall Elimination Provision. Unlike foreign pensions, USA SS pensions compensate generously people who work less than 30 years by paying them MORE than what they should normally receive. The rationale is that workers who were employed less than 30 years will not have enough in retirement and will need supplemental income. However, if a person is working and contributing to a foreign pension system, then the USA govt. sees it differently, i.e., this person is not in need as we assumed due to the fact that they will be collecting 2 pensions. (In many ways, it's a very socialist concept - spread some of the SS wealth to those in need. Unlike the German pay-as-you-go, you only get what you give system). What this means, is that your USA SS pension will be reduced, by anywhere from 20-45%, IF you receive a foreign pension during the same time period. Having 20+ years with USA SS is a bonus. Your SS reduction should be smaller. That said, some expats retire at age 62 (or 63,64,65 ..) which results in a permanent 30% reduction in their SS - since full retirement is 67 - however they will not apply for their German pension until age 67, so they have 5 years of full (age 62) SS payments without any WEP reduction . Of course, when they reach age 67 and collect their German pension, the USA SSA will apply the WEP and reduce their USA SS and there will be considerably less. How much depends on how many years they worked in the USA. Use the SSA website: WEP calculator for an estimate. By the way, if you "run" your numbers, you may find out that the amount you receive from the USA SS if you retire at age 62 will put you ahead financially than if retire at age 67, at which time you will have to take the WEP and a reduction in your SS check. How far ahead might you be if you retire at 62? Some expats have figured out that the breakeven point if one takes SS at age 62, rather than 67, is not reached until age 88,89.

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