In 1984, the U.S. and Canada finalized an agreement that allows a person to qualify for both U.S. Social Security and Canadian retirement benefits. This made it easier for people who worked in both countries to qualify for retirement benefits when they may not have been able to without the agreement. In the process, they have also thoroughly confused anybody trying to figure out what benefits they actually qualify. This post is meant to break down the U.S. and Canada retirement benefits for people who have worked in both countries. The social security department actually does a nice job of breaking down the different benefits and eligibility here . First, a basic rundown of the different retirement accounts in both countries.
This U.S. retirement benefit is based on total wages earned and the number of years worked. The more you earn and work, the higher your benefit. A person can start social security as early as age 62, but your benefit increases each year that you delay taking it until age 70.
Medicare is the U.S. national health insurance for those over age 65. Medicare starts as early as age 65, for those who qualify. In 2022, basic Medicare costs $170.10 per month, although supplemental plans can cost extra.
The CPP is Canada’s version of U.S. social security. Like social security you can start drawing early, age 60, but receive a higher benefit if you delay. The CPP is also based on earnings and contributions made into the system by employee and employer. The more you earn and longer you work, the higher the benefit. However, the CPP does tend to be lower than social security.
Below is a chart that shows how to be eligible for the different benefits without relying on totalization agreement. This does not include eligibility based on any spousal or disability benefits, which may be an option in certain cases.
As you can see above, a U.S. worker may have worked in the U.S. for 9 years, his job moved to Canada, and receive no social security benefits. However, the agreement in 1984 allows credits earned in Canada to apply to U.S. social security. Below is the eligibility breakdown if you have worked in both the U.S. and Canada.
There is a lot to unpack here but the bottom line is this: There is a very good chance that if you worked in both the U.S. and Canada you will have a combination of benefits that consist of social security, CPP, and OAS. However, as I have written here, there is a very good chance that your CPP will actually reduce your social security benefit. If you have worked in the U.S. and Canada, you should be thankful for the Totalization Agreement. That doesn’t mean you have to necessarily understand it.
RetireMitten Financial LLC specializes in working with families that have lived and worked in the U.S. and Canada. We can help you determine which benefits you qualify and how to best maximize those benefits. Schedule a complimentary meeting at the button below.
