Retiring to Germany as a U.S. citizen

101 posts in this topic

Collecting 2 Pensions: USA SS and German pension


Be sure to 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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