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UK state pension and USA social security

UK state pension and USA social security

Old Oct 24th 2017, 6:08 pm
  #1426  
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Default Re: UK state pension and USA social security

Originally Posted by Pulaski View Post
A lot will depend on how long you expect to live. I heard the other day that if you are healthy at 60 there is a now very good chance you will reach 90. If you don't expect to reach more than 75-80 then drawing early is the optimal decision.
I have heard similar figures. I looked at the calculation, and just on a basis of cash flow, it would take several years to end up ahead by waiting for full retirement.
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Old Oct 24th 2017, 9:01 pm
  #1427  
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Default Re: UK state pension and USA social security

Originally Posted by mrken30 View Post
So it occurred to me, if I am working between 62 and 67, should I claim SSI at age 62? Would the increased deferred payment be more than the 8% if you just defer claiming until age 67. Five years of back payments should amount to a bit.
SS not SSI (SSI = Supplementary Security Income).

Not sure I really understand your question - what does "more than the 8% if you just defer claiming until age 67" mean? If you take SS early, it's reduced - for your entire life - by 5% per year you take it early. So if your full retirement age is 67 (true of anyone born post 1960 iirc), taking it at 62 will reduce your payments by 30%. If you delay taking SS past your full retirement age, your payment is increased by 8% per year of deferral.
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Old Oct 24th 2017, 9:06 pm
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Default Re: UK state pension and USA social security

Originally Posted by morpeth View Post
Thanks , that is what I read was referring too. Pretty outrageous I think- so if I wanted to take early social security, I couldn't work over 45 hours a month, or own a business.
I presume it's a discouragement to those living abroad from claiming before their full retirement age. After all, for non-resident aliens, the SSA has no way of verifying your income and reducing your SS benefits if you're over the earnings threshold. Of course, people could equally lie as to the number of hours they are working overseas...
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Old Oct 24th 2017, 9:08 pm
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Default Re: UK state pension and USA social security

Originally Posted by Pulaski View Post
Frankly I am surprised that the age for early retirement isn't being increased lock-step with the increase in the age for full retirement.
It's not being increased, but as the full retirement age increases, so does the reduction for taking it at age 62.
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Old Oct 25th 2017, 5:03 pm
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Default Re: UK state pension and USA social security

Originally Posted by Giantaxe View Post
I presume it's a discouragement to those living abroad from claiming before their full retirement age. After all, for non-resident aliens, the SSA has no way of verifying your income and reducing your SS benefits if you're over the earnings threshold. Of course, people could equally lie as to the number of hours they are working overseas...
I would not be surprised if in the future HMRC will report returns details for USCs to the IRS, under some kind of FATCA agreement.
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Old Dec 30th 2017, 1:33 pm
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Default Re: UK state pension and USA social security

Originally Posted by dunroving View Post
Doesn't the Windfall Provision only apply to people below a certain level of SS contributions? I thoght if you had something like 30 years of SS contributions, the Windfall Provision didn't apply? Maybe I dreamt that?
I am 68 and have done the calculation assuming 15 years further on this planet and using three scenarios: take US Social Security now + 50% of UK state pension (being a reduction to the US Social Security payments); as above, but deferring taking UK pension for five years; as above, but with 10 year deferral. Assumptions: UK deferral increases pension by 10% annually (note - for younger people this is less may be less generous). My conclusion: it works out more or less the same (variance in total payments over lifetime <£1,000). If anyone wants it, I can attach spreadsheet so you can enter with your own numbers. Regards
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Old Dec 30th 2017, 3:18 pm
  #1432  
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Default Re: UK state pension and USA social security

Originally Posted by Alexamck View Post
I am 68 and have done the calculation assuming 15 years further on this planet and using three scenarios: take US Social Security now + 50% of UK state pension (being a reduction to the US Social Security payments); as above, but deferring taking UK pension for five years; as above, but with 10 year deferral. Assumptions: UK deferral increases pension by 10% annually (note - for younger people this is less may be less generous). My conclusion: it works out more or less the same (variance in total payments over lifetime <£1,000). If anyone wants it, I can attach spreadsheet so you can enter with your own numbers. Regards

You don't indicate how many years of US SS contributions you have.
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Old Dec 30th 2017, 4:44 pm
  #1433  
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Default Re: UK state pension and USA social security

Originally Posted by Alexamck View Post
I am 68 and have done the calculation assuming 15 years further on this planet and using three scenarios: take US Social Security now + 50% of UK state pension (being a reduction to the US Social Security payments); as above, but deferring taking UK pension for five years; as above, but with 10 year deferral. Assumptions: UK deferral increases pension by 10% annually (note - for younger people this is less may be less generous). My conclusion: it works out more or less the same (variance in total payments over lifetime <£1,000). If anyone wants it, I can attach spreadsheet so you can enter with your own numbers. Regards
I'm 67, and I haven't starting taking my British State Pension yet. I'd planned on starting to take it next year or the year after - can one continue to defer it beyond age 70? If that's the case, I didn't realise it .... And is it the case, as you suggest, that folks in our age bracket are grandfathered in with the 10% annual increase on deferral?
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Old Dec 30th 2017, 4:49 pm
  #1434  
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Default Re: UK state pension and USA social security

Originally Posted by lansbury View Post
It isn't quite like that as the WEP only applies to the major part of how the benefit is calculated. If you are a high salary earner then it is not all reduced.

The basic benefit will be 15% less then you would have got it WEP didn't apply. 5% less for each year less then 30 years. There is an online WEP calculator on the SSA web site. https://www.ssa.gov/planners/retire/anyPiaWepjs04.html
Is WEP classified only for Class 1, 2 or 4 contributions, or doe sit count Class 3 voluntary contributions ?
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Old Dec 30th 2017, 4:52 pm
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Default Re: UK state pension and USA social security

Originally Posted by Giantaxe View Post
I presume it's a discouragement to those living abroad from claiming before their full retirement age. After all, for non-resident aliens, the SSA has no way of verifying your income and reducing your SS benefits if you're over the earnings threshold. Of course, people could equally lie as to the number of hours they are working overseas...
If one has to still have to file a tax return in USA, wonder how do they calculate the reduction ? Does one have to give details as to how many hours one worked ?
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Old Dec 30th 2017, 8:03 pm
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Default Re: UK state pension and USA social security

Originally Posted by morpeth View Post
Is WEP classified only for Class 1, 2 or 4 contributions, or doe sit count Class 3 voluntary contributions ?
All UK State pension, except that derived from voluntary contributions, counts towards WEP, if WEP is applied.

My comment related to SS. When it is calculated your average earnings are split into three amounts and then a formula is used on each amount to calculate your SS. The first amount is multiplied by 90% except when WEP applies when the 90% is reduced by 5% per year for each year between 20 and 30 years SS contributions.

The other two amounts are subject to the normal formula and not reduced by WEP.

I take it that has cleared up any confusion.
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Old Dec 30th 2017, 8:09 pm
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Default Re: UK state pension and USA social security

Originally Posted by lansbury View Post
All UK State pension, except that derived from voluntary contributions, counts towards WEP, if WEP is applied.

My comment related to SS. When it is calculated your average earnings are split into three amounts and then a formula is used on each amount to calculate your SS. The first amount is multiplied by 90% except when WEP applies when the 90% is reduced by 5% per year for each year between 20 and 30 years SS contributions.

The other two amounts are subject to the normal formula and not reduced by WEP.

I take it that has cleared up any confusion.
Reason is I was offered some work in UK + I have a few years to catch up n Class 3 contributions- if US social security reduced by amount of UK pension, don't know if worth catching up on voluntary contributions if working n UK for a few years has effect of reducing my USA pension as well.
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Old Dec 30th 2017, 9:42 pm
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Default Re: UK state pension and USA social security

Originally Posted by morpeth View Post
Reason is I was offered some work in UK + I have a few years to catch up n Class 3 contributions- if US social security reduced by amount of UK pension, don't know if worth catching up on voluntary contributions if working n UK for a few years has effect of reducing my USA pension as well.
Well catching up with voluntary contributions will not effect WEP, so it is to your advantage to maximize your pension that way.
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Old Dec 31st 2017, 9:19 am
  #1439  
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Default Re: UK state pension and USA social security

Originally Posted by robin1234 View Post
I'm 67, and I haven't starting taking my British State Pension yet. I'd planned on starting to take it next year or the year after - can one continue to defer it beyond age 70? If that's the case, I didn't realise it .... And is it the case, as you suggest, that folks in our age bracket are grandfathered in with the 10% annual increase on deferral?
I don't think there is any grandfathering in of the 10% - the amount of uplift will depend on whether you hit state pension age before or after April 2016.

https://www.gov.uk/deferring-state-pension/what-you-get

At ages 67 & 68 it's possible you and Alexamck fall either side of that date.
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Old Dec 31st 2017, 10:19 am
  #1440  
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Default Re: UK state pension and USA social security

Originally Posted by rebs View Post
I don't think there is any grandfathering in of the 10% - the amount of uplift will depend on whether you hit state pension age before or after April 2016.

https://www.gov.uk/deferring-state-pension/what-you-get

At ages 67 & 68 it's possible you and Alexamck fall either side of that date.
Thanks for that link! I'll read it. In terms of state pension age, my pension age is 65 and I reached it on by birthday in August 2015. That's what I meant by grandfathering (maybe I used the term incorrectly.)

Edit; The link confirms that the pension amount will continue to increase by 1% every five weeks, or 10.4% a year, if deferred. I don't see a mention of whether there's a limit as to an upper age beyond which you can't defer...

Last edited by robin1234; Dec 31st 2017 at 10:26 am.
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