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The American

Social Security

Survivor and Spousal benefits for UK resident Americans and NRAs. Essential advice from David Costello

O

n August 14, 2015, US Social Security turned 80. If you did not receive your invitation to the party or bought a present - don’t worry. The presents are for you! As we put together financial plans for Americans living in the UK, we often coach our clients on how to get the most up to date Social Security benefit statement. These benefits can be significant and play a major role in helping to provide for your retirement lifestyle expenses. Currently, the maximum monthly benefit at full retirement is $2,663 pm or $31,956 pa. Using a 4% withdrawal rate, you would need almost $800,000 in savings to provide an equivalent income stream. You can see why this benefit should not be forgotten. Plus, you paid into it! There is a totalization agreement between the United States and 24 other countries, of which the United Kingdom is one. The aim of

all US totalization agreements is to eliminate dual Social Security coverage and taxation while maintaining the coverage of as many workers as possible under the system of the country where they are likely to have the greatest attachment, both while working and after retirement. Each agreement seeks to achieve this goal through a set of objective rules. This agreement is a topic for another article altogether. Two questions that we are often asked have to do with Survivor and Spousal benefits. First a definition, Non-Resident Alien (NRA) is someone not living in the US and is not a US citizen. Recently one of our clients, who is a UK citizen and recently lost her US citizen husband, was pleased to learn that she would continue to receive 100% of his social security benefit for the rest of her life in the form of a survivor benefit. She gets this benefit having never lived

or worked in the US. Because the UK has an agreement with the US regarding each other’s social security programs, she did not have to fulfill the additional residency requirement of 5 years normally in place for dependents and survivors. If an NRA spouse is a citizen OR resident of the UK or the other 23 countries with totalization agreements with the US, he or she is eligible for spousal benefits. There are some restrictions on where the US will send the payments. For further information, go to ssa.gov and search for ‘Your payments while outside the US’. David Costello is a Partner at Tanager Wealth Management LLP which is is authorized and regulated by the Financial Conduct Authority in the UK and is an SEC Registered Investment Advisor. Tanager Wealth Management LLP does not provide tax advice. You should seek specialist tax advice from a suitably qualified tax professional. www.tanagerwealth.com

IMAGE ©401(K) 2014

16 September - October 2015

The American September-October 2015 Issue 746  

Bumper issue: the leading cross-media publication for Americans in the UK - and anyone interested in American culture

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