Attention all workers going abroad and hoping to collect their full Social Security benefits: There is a little-known rule that reduces the monthly payments you would expect to receive in retirement, even if you meet other requirements.

To access Social Security retirement benefits, the Social Security Administration (SSA) requires accumulating at least 40 work credits, the equivalent of about 10 years of work in jobs subject to program contributions.

In a country where many foreigners live or American workers themselves constantly emigrate, it is very common for a person to divide their working life between the United States and another country. That's not a problem for Social Security, since the Stars and Stripes government maintains international agreements known as totalization agreements with 30 countries. Here is the list (Mexico is not included):

These agreements allow combining labor credits obtained in the United States with those generated in a country that has a current agreement with the US government. Thus, a person who did not reach 40 credits solely with their work in the United States could complete that requirement using part of their work history abroad.

To take advantage of this benefit, you must have accumulated at least six Social Security credits in the United States, which is approximately equivalent to a year and a half of work that meets the program's requirements.

Suppose you worked for at least two years in the United States in a job that paid Social Security taxes and then developed your career in Spain, in that situation you could continue accumulating credit to qualify for retirement benefits in the future.

The SSA explained that most people do not need to complete any paperwork related to these agreements while continuing to work.

“Generally, individuals do not need to take any action regarding Totalization benefits under an agreement until they are ready to file a claim for retirement, survivors, or disability benefits,” the SSA explains. “A person who wishes to file an application for benefits under a Totalization agreement may do so at any Social Security office in the United States or in the foreign country.”

So far, so good, everything seems perfect. However, there is another SSA rule that, even if you met the credit requirement, would significantly reduce the payment you would think you could receive in retirement.

The rule that can reduce the amount of your benefit

Although international agreements can help you gather the necessary credits to obtain the benefit, there is another aspect that many people are unaware of.

The SSA calculates the monthly retirement amount using only your history of earnings earned in the United States. That word “only” is what makes the difference.

To determine the amount of payments you will receive in retirement, the SSA takes into account the 35 years with the highest earnings subject to paying Social Security taxes. When there are any years in which you did not earn qualifying income in the US, you are considered to have earned $0 and are used in the calculation.

This means that, in other words, you may qualify for a benefit under the international agreement, but your monthly payment could be less if you spent several years working outside the United States.

However, in another example, imagine that you work for two years in the United States, go to Spain for another two, and return to the country to finish your degree. If you worked for 40 years with a high income, the two years you worked abroad are eliminated and you still have another 38 years to occupy the highest figures in a history of 35 years of work.

These rules apply to both US citizens and permanent residents (Green Card) and other workers who have contributed to the United States Social Security and also to the system of a country with which there is a totalization agreement.

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