Social Security Question for Green Card Alien

[haha]

My dance partner is a Swede who worked in Sweden 20 years or so, then moved to the US and married and worked another 20+ years. She is almost 66 and wants to apply for US social security to start at her FRA of 66.. She went in some time ago to apply for Medicare, and the worker told her than she might not get SS payments as she is getting a pension from Sweden. She worked for an industrial firm, but apparently in Sweden there is a government pension scheme, perhaps similar to SS here in the US. She is very unsophisticated financially, and needs some help. Her husband is not around, as he joined the Peace Corps after 6 months of being bored after retirement, so she asked me for advice.

She gets about $1100/ month from the Swedish Government at current exchange rates.

Will this affect her US social security benefits?

Any help is very welcome.

Ha

 

[nun]

Her Swedish Govt pension will reduce her SS check, but it won't eliminate it. Google "Windfall Elimination Provision". If you have less than 30 years of SS payments and are receiving a pension due to non-SS income (eg income earned in Sweden) then the SSA applies the WEP. There is a WEP calculator on the SSA website.

WEP is an issue for some state workers in states that opt out of the SS part of FICA. Many people who paid into SS before becoming state workers get WEPed. The reduction or total lack of SS is also a reason why the reduction of state pensions is such a hot button issue to state workers.

 

[Tadpole]

Description of the U.S.-Swedish Social Security Agreement

Totalization Agreement with Sweden

 

[nun]

Description of the U.S.-Swedish Social Security Agreement

Totalization Agreement with Sweden

As the OP's friend has enough credits in both Sweden and the USA to qualify for pensions from both countries the totalization agreement isn't really applicable. However, this paragraph in the link is interesting.

If you qualify for Social Security benefits from the United States based only on U.S. credits and an “ATP” pension from Sweden based only on Swedish ATP credits, the amount of your U.S. benefit may be reduced. This is a result of a provision in U.S. law that can affect the way your benefit is figured if you also receive a pension based on work that was not covered by U.S. Social Security. Receipt of a Swedish “basic” pension, which is based on residence in Sweden, won’t affect the way your U.S. benefit is figured. For more information, call our toll-free number, 1-800-772-1213, and get the publication, Windfall Elimination Provision (Publication No. 05-10045). If you are outside the United States, you may write to us at the address in "For more information" section.

The OP's friend needs to find out about the source of her Swedish pensions. If she receives a pension from a Swedish company or the Government that was paid for with non-SS income her US SS will be reduced by WEP. But it also says that there's another "basic" Swedish pension that is based on Swedish residency and recepit of that won't reduce US SS, but if you don't live in Sweden I assume that doesn't come into play.

Another thing to consider is taxation of the pensions. That will depend on the OP's friend's citizenship and residency status and the US/Sweden tax treaty. In many cases SS payments are only taxable in the recipients country of residence so she may need to get Sweden not to take tax out.

 

[haha]

Thanks for these very helpful answers and links. I forwarded them to her, and will try to help her make sense of it. I believe the key is exactly what type of pension she has, and also how many creditable years she worked under SS in the US. I believe she will not lose much if any, from the somewhat sketchy information that I have so far.

Ha