Qualifying for Social Security with totalization agreement

[aodonnel]

Hi, I am trying to plan for retirement and need a way to figure out how much my Social Security benefits would be but can't find a tool to help. I only have 24 work credits in the US but I also worked in Canada for 33 years . I can't find anything online that would help me figure this out, utilizing the totalization agreement, can you help? I would be eligible to claim SS in 3 months myself or I could wait a year and claim spousal benefits on my husband's SS,(he is still working and fully qualifies in US and Canada). I am trying to figure out the best plan before I claim any benefits. We are both dual citizens living in the US now.

[nelsona]

When you go to apply, you will inform the SSA of your CPP history, and they will contact service Canada. You will then be eligible for some benefits.
Generally it works to 24/40th times 24/40ths (~36%) of what someone who worked 40 quarters at your wage level. It will not be impacted by WEP.

The SSA will help you decide which you should take and when.

In the end however, taking the 50% spousal amount based on your spouse's SSA will no doubt be what you end up with.

Given you are nearly sixty-two, you should already have scheduled a meeting with SSA.

[aodonnel]

Thanks ...I appreciate the quick response. I believe you are likely right about the spousal benefit being the right choice, however since my husband is younger than I am...he is 61 and I am 66, and still working.. it appears he will need to consider WEP, so I am guessing I would only get 50% of his SS after the WEP? Also, it's my understanding that since I don't qualify for Medicare on my own merit (24 vs 40 credits), I would need to stay covered through his current employment for health benefits or his SS benefits once he retires. But if he retires at 62, then he will have to take the lower payments (rather than waiting till max payments at 70) and we will also need to buy independent insurance until he turns 65, is that your understanding also?, Thanks

[nelsona]

Couple of misconceptions to clear up:

WEP will only reduce his SS by an amount less that 50% of his CPP, not 50% of his SS. Think of it rather has a reduction of CPP.

Also, if he has already qualified for Medicare with his work history (he has), you will too, when YOU reach 65, not only when HE turns 65 .

You would likely want to stay on his work plan anyways, the company has adjustments to coordinate coverage when the spouse is eligible for Medicare. Check with his HR. He may also have retiree medical which would cover both of you before and after you go on Medicare. You probably want to avoid being only on Medicare if you have the option of company or retiree medical.

This is just a tip> Since WEP essentially lowers the value of his CPP, it might be best to take CPP as early as possible, and perhaps delaying SS. This way one will enjoy the "full" CPP (not yet yet affecting WEP) for a few years. This outweighs the extra credits one gets by delaying CPP>

[aodonnel]

Thank You Nelson, your insight and Tip has been very helpful.

[cammy7]

My assumption is the Canada - US totalization agreement is such that a person who has worked in both countries can not double dip. Is that correct?

Thus is say you are getting a fully insured pension from Canada Pension Plan but only had say 20 insured quarters in the USA, there is no advantage to applying to top up US Social Security to 40 quarters is because the difference would be offset by a reduction on your full Canadian Pension.

Thus there is no advantage. It's only if you are short in both countries then use one country's credit to top up another country's credits so one gets at least one fully insured pension. The country which ultimately pays out the pension is the one where the insured gets the maximum.

Or do the 2 countries get together and take the fully insured maxium and figure out how much each country contributes but never to an amount that exceeds what one would have gotten from 1 country alone.

Does this assumption sound reasonable - totalization does not prvide any value if you are fully insured by 1 of the two countries?

[nelsona]

Your assumption is incorrect.

The agreement helps you to qualify for a particular pension if you would not otherwise qualify, but has no impact on the other pension. But it does not top up any contributions, nor add up what you get on either side,

For CPP, you get whatever you worked for, even if it was only for a year, so there is no need for any help.

For SSA, in your example, since you need 40 quarters, and you have 20, they will accept that you worked for 5 years or more in Canada, and grant you a SS benefit equivalent to someone who has 20 quarters. This has no impact on your CPP. Your SS will be much less than someone working 40 or more quarters in US, but you will get some SS, which you otherwise would have got none.