How Social Security Can Get You a Visa

How Social Security Can Get You a Visa
Social Security income can be your ticket to residency abroad.|©iStock/Reptile8488

When people sign up for my consultation service here at International Living, one item in the questionnaire asks how much of their retirement income will come from Social Security.

I ask that for two reasons.

Before I explain them, let’s be clear about one thing.

No matter where you live or what your status in relation to the United States—whether citizen, green card holder, or even ex-citizen or ex-green card holder—you are entitled to your Social Security benefits even if you move abroad. If you’ve paid into the system, you will get something out of it. (Leaving aside, of course, the politics of Social Security and other benefits in the US!)

That’s part of my first reason for asking about Social Security. Since Social Security income is guaranteed by US law and backed by the full faith of the US Government, it’s often the key qualifying factor for passive income visas in foreign countries.

Let’s say you have two sources of retirement income: Social Security and income from non-retirement investments like rents, capital gains, and so on. Which one counts for more when it comes to getting a foreign retirement visa?

The answer, of course, is Social Security. Even if you earn substantially more from private investments, foreign countries are more interested in the guaranteed flow of income that comes from a government pension when they consider your application.

For example, I’ve helped many people seek a Spanish non-lucrative visa. As with most countries, the qualifying amount is based on a government benchmark used to calculate eligibility for social benefits—in Spain’s case, 400% of the benchmark. For a married couple, this works out to €3,000 a month, or €36,000 a year.

If your combined Social Security income exceeds that amount every month (and you have no disqualifying factors like a criminal record), you will almost certainly get your visa. But if the same two people apply showing income from private investments, rent, interest, and the like, there’s no guarantee they will succeed (unless of course that income is so substantial that there’s doubt about their ability to support themselves).

Governments do this because non-guaranteed income can change. If there’s a major financial crisis, there’s no telling whether people living in the country on passive income visas will be able to support themselves. And since governments only check on that income when you renew your visa—which can be anywhere from one to three years or even more—they don’t want to end up with destitute foreigners hanging around.

The second factor relates to taxation. The United States has many tax treaties with countries around the world, which often specify which country has the right to tax Social Security income.

For example, under the US/France tax treaty, Social Security benefits are exempt from French income tax, even if you are a French tax resident. The same is true of Portugal and Mexico.

Other countries have territorial tax systems where most foreign source income, including Social Security, is exempt from local taxation. They include Ecuador, Uruguay, Costa Rica, and Panama. But even in such countries, private passive income like dividends and interest may be taxed. So, if you want to lower your tax bill whilst living on a foreign passive income visa, you want to focus on Social Security as your qualifying source.

Another benefit of using Social Security to qualify for foreign residency is the paperwork. Social Security benefits statements are easy to come by and unambiguous. You simply download one from the Social Security Administration and present it to the foreign consulate. On the other hand, non-Social Security income requires extensive bank statements, often 12 months or more, as well as other documentation to prove the amount and regularity of that income.

So, if you’re thinking about looking for a place to live abroad based on passive income, don’t neglect your Social Security contributions. They could be the key to getting you to where you want to be.

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