“Kathleen, I just read your recent e-letter with the letter to the editor from a reader about gaining residency in Panama. The reader had questions about the HIRE Act of 2010 and how it might affect their income if they do move to Panama.
“What is this person talking about? I just finished searching on the Internet for information about the HIRE Act of 2010 and can find nowhere anything about 30% of income being withheld from Social Security benefits, pensions, etc., as a result of this act. It is the so-called ‘Jobs Bill’ and pertains to the hiring of Americans. What does this have to do with me, someone who is already retired and not on the ‘jobs’ market?
“Can you clarify for me? This concerns me because I receive Social Security retirement income (US$1,577 per month) and am planning on going down to Panama to check it out as a place for me to retire before I make any permanent decisions. I hope this isn’t true. I sure don’t won’t to give up a cent of my retirement benefits.”
–Tim M., United States
The tax implications (which translate, practically, into the potential 30% withholding) are buried in the HIRE Act. As you say, this is ostensibly a jobs bill. Why or how the tax consequences got tied up in all this is a political enigma.
Bottom line, though, the 30% is a withholding on the international transfer of funds–that is, wire transfers. No one (including the international bankers we’ve spoken with) knows exactly how banks will fulfill the requirements for the act. However, your Social Security income, as long as you don’t try to move it around internationally via a wire transfer, should be unaffected.
As Social Security can be direct deposited into bank accounts in many countries directly, again, you should be fine.
Also remember that you can use your U.S. ATM card to withdrawal funds overseas. In other words, if you can’t have your Social Security payment direct-deposited into a local bank account in your new country of residence, you could simply withdraw the funds locally via ATMs.
Continue Reading: How To Retire Overseas