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Earning social security credits

Posted: Wed May 22, 2019 2:07 am
by iluv2fly1
I'm a longtime lurker, but I have a question for you guys now.

I recently discovered that I don't have nearly enough social security credits. I have worked abroad quite a bit and the time I was in the US I was studying -apparently graduate school stipends don't count for social security. I am missing over 5 years!

Coming back to the US to earn them isn't really a good option because 1. I'm not sure I want to work 5 more years, 2. I am not really interested in returning to the US right now and 3. It would be very difficult for my husband to get a visa and a good job in the US.

So, I'm wondering if there are ways to earn Social Security credits from abroad. I assume that this would require a part time remote job. Are there companies that would be a good option to spend a small amount of time (I am working full time right now) just to earn enough to qualify? Are there options other than a remote job?

For context: I'm American with a European spouse. No kids. We are both close to 40 and live in Europe. Finances are separate. He is probably technically FI already, but concerned because money is locked up in real estate that isn't producing. All my money is invested in Vanguard index funds. I have about 15 times my (low) annual spending. We are quite interested in leaving the 9-5 relatively soon, but we have been kicking around a number of ideas: SEMI FIRE, taking jobs in places we would like to live despite income reductions, taking a sabbatical, buying a business... If our current jobs stay reasonable we may just stay here and get all the way to a reasonable FIRE number. But, basically we are flexible and open to suggestions. We will receive pensions here. I could technically transfer mine to the US, but I would prefer to keep them both if possible. I would really like to qualify in the US even if it is very small just in case I need to come back (especially important for Medicare which I have heard is the same).

So, do you have any ideas for me? Thanks!

Re: Earning social security credits

Posted: Wed May 22, 2019 2:27 am
by Ego
Check to see if the credits transfer from your resident country. Many countries have a social security agreement where people like you can count credits in one country toward their resident county's system. For instance, this is the US/Italy agreement. ... italy.html

Re: Earning social security credits

Posted: Wed May 22, 2019 7:29 am
by Sclass
Welcome. Since your spouse is FI and you have saved 15x expenses I’m going to assume you’re good earners and investors.

I had to ask myself some similar questions when I retired at 43. Here is my take and it isn’t really an answer to the question, how do you get into the SS program without working in the US. It’s just an alternative track that may be better for you in the long run.

So you need five more years. You’re 40. Filling in the gaps worked five years in the states after grad school. My advice is to forget about it.

Social security is an investment. Depending on how much you make the return varies. Depending on how long you live, it lives, it’s rules etc. change the return. Given the info you’ve provided I don’t think you’re going to be getting a high return on your contributions. Take your money and invest it someplace else and be happy you aren’t being forced into the system.

Don’t regret that you’ll be missing out on some great thing that you had coming to you like it was something for nothing. Take a look at your contributions during your five years of employment in the states and look at them like an investment that just went bad and move on. I assume you are currently contributing to an equivalent low return system abroad.

Good luck. I used to worry about this. I only worked about ten years and honestly I don’t know or care if I qualify. I’m glad I’m able to divert my money to something that pays out more at the moment.

Re: Earning social security credits

Posted: Wed May 22, 2019 8:16 am
by Laura Ingalls
You could earn eight credits in two months if the job/self-employment paid enough. If you made $6k in December of one year and $6k the following month you would get eight credits.

How far off are you?

Re: Earning social security credits

Posted: Wed May 22, 2019 8:42 am
by jacob
Not an expert ... but you only need to make $1360 (2019) in earnings in a quarter to get 1 point. You can get 4 points per year and you need 40 points total for SS. If you don't pay in a whole lot, the payout will be ~90% of your average inflation adjusted income over 35 years (so there will be a lot of zeroes bringing this down). See this to understand the calculation:

The easiest way to do this that I can think of is to start a business in the US (which then makes money in the US) and try to make more than $1360. One such business might be as a contractor on a 1099 basis.

Doing a rough calculation: Suppose you make $1360/quarter for ten years (absolute minimum to qualify). Then you'll get a payout of 4*$1360*10/35/12*0.9 = $116/month (2019 dollars) when you're 67. That isn't much but given how you would only have paid in $54400*12.4%=$6745 in taxes that's a REALLY REALLY good deal.

PS: You should check out what kind of treaty the US has with your country of residence for social security type payouts. There are different treaties between different countries. For example, as a Danish national who has earned enough credit to get US SS (but not enough to get Danish SS which is now out of reach for me... I can never get enough points), I can ONLY get my US SS paid out if I live in either the US or Denmark. If I move to e.g. Germany, I get nothing. Such are the rules for my situation. They would be different if I was Swedish.

Re: Earning social security credits

Posted: Wed May 22, 2019 9:34 am
by Sclass
Laura Ingalls wrote:
Wed May 22, 2019 8:16 am
You could earn eight credits in two months if the job/self-employment paid enough.

This and @jacob sound like a great engineered solution. SSA hacking.

Re: Earning social security credits

Posted: Wed May 22, 2019 11:06 am
by Sclass
Sclass wrote:
Wed May 22, 2019 9:34 am

This and @jacob sound like a great engineered solution. SSA hacking.
Edit - I just realized that this isn’t like buying a bond but more like an annuity. You don’t get your principal back. It still looks like a great deal if you play catch-up from 55-65. But doing this from 20-30 and letting the government have your money for 35 years till they convert it to an annuity does not look particularly attractive.

There are a ton of other variables I’m ignoring like earnings 35 years in the past, payout with inflation 35 years in the future, insolvency etc.

This thread reminded me to also consider Medicare eligibility. I recall my mom was getting part A for free and part B taken from her SS check. Even with hospice, she was burning through $6000 a month of Medicare’s money. I guess if you don’t qualify for Medicare you can pay A&B out of pocket. I don’t recall the costs but it may be more significant than the SS check.

So there may be further motivation to open up the consultancy at the last moment like @LauraIngalls suggested. I wonder if there is a way to hire yourself as a consultant and pay the taxes just to fast track the credits. Like creating a foundation, contributing funds and then hiring yourself as an investment advisor. :lol: :lol: :lol:

Re: Earning social security credits

Posted: Wed May 22, 2019 11:21 am
by jacob
@Sclass - Like with all things, the IRS (eventually) has to be convinced that it's a legit business and not some hobby/shenanigan project. Easiest way to pass that hurdle is making a profit (not lose money) for 3 out of the last 5 years, although a demonstrably (documented) earnest effort might also work.

Qualifying for SS means qualifying for part A (free) as it also requires 40 credits. I think one always pays for part B(??).

Re: Earning social security credits

Posted: Wed May 22, 2019 2:43 pm
by sky
If you qualify for a German pension, there is a clause in the German-American treaty that you get your German pension plus your American Social Security pension in full. Some retirees benefitting from this treaty clause are getting a much higher pension than if they had only worked in Germany. With most countries, the US applies a windfall reduction, but apparently the Germans out negotiated the Yankees. If you are not in Germany, you might get a substantial reduction from what you would normally expect from Social Security.

Re: Earning social security credits

Posted: Thu May 23, 2019 2:47 pm
by iluv2fly1
Thank you guys for all the great ideas and information!

@Ego and @sky, I am in Germany and there is a totalization agreement. I called up social security and the way they described it really didn't sound good. But then I like the sound of what you guys are saying a lot more. I suppose I need to go read the documentation a little more clearly because you never know if the person on the phone really knows what they are saying.

@sclass I agree that I shouldn't expect social security for nothing, but I think that I would rather put some money into it if possible to have that as well. I am particularly concerned about the Medicare issue. If I stay in Europe, health care won't be an issue, but if I were to outlive my spouse, I could imagine going back to the states and the medical costs there (especially in old age) terrify me. This is something I would be willing to make some sacrifices now to qualify for later.

@jacob this is really an incentive to start thinking about side hustles. If I could get one working it could solve this problem as well as adding a bit more money to the kitty! I don't have anything going right now, but I have some ideas I've been considering. I didn't even realize they would qualify for social security.

So, now I just have to figure out a way to start a small remote business. I'll get my thinking cap on for that!