Retiring Abroad: How Social Security, Medicare, and Taxes Actually Work Overseas

Retiring abroad doesn’t mean leaving the U.S. financial system behind — Social Security, the IRS, and RMD rules all follow a U.S. retiree overseas, even though the day-to-day cost of living usually doesn’t.

Social Security Still Pays, With a Few Exceptions

The Social Security Administration will deposit retirement benefits to recipients in more than 170 countries, generally direct to a U.S. bank account accessible from anywhere. The main exceptions are Cuba and North Korea, where the SSA generally cannot send payments at all, plus a handful of countries with narrower restrictions.

The Tax Filing Obligation Doesn’t Go Away

U.S. citizens living abroad continue to owe federal income tax on worldwide income, including Social Security (up to 85% taxable once combined income exceeds $34,000), 401(k) and IRA distributions, and RMDs, which still apply starting at age 73 regardless of where the account owner lives. This is a different question than the Foreign Earned Income Exclusion, which applies to earned income from working abroad — retirement income (Social Security, pensions, account distributions) isn’t earned income and isn’t covered by the FEIE at all.

The Medicare Gap Is the Real Planning Problem

Medicare generally does not travel outside the U.S. — Part A and Part B don’t cover care abroad except in narrow border-area emergency exceptions, even though the 2026 standard Part B premium ($185/month) keeps getting billed regardless. Retirees living abroad full-time typically need a private international health policy to cover the gap, and should think carefully before dropping Part B entirely, since re-enrolling later can trigger a permanent late-enrollment penalty.

Not Just for U.S. Citizens Abroad

Non-citizens and green card holders retiring internationally face a related but distinct set of rules, covered separately in our Social Security totalization agreements guide — that piece addresses eligibility across borders, while this one assumes benefits are already established and focuses on managing them while living overseas.

Written by Samuel, Certified Public Accountant

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