Social Security Matters: Ask Rusty – Do My Canadian Earnings Count For US Social Security?
Published 07:21 am Wednesday, August 17, 2022
AMAC Certified Social Security Advisor Russell Gloor, Association of Older American Citizens
Dear Rusty: I am a 62 year old Canadian with a green card and I have lived in the US for almost 23 years. 19 years before that, I contributed to the Canada Pension Plan (CPP), which is the equivalent of US Social Security. I am considering retiring in the US and I have been told that I can get my retirement pension from the US or Canada, but I can’t take advantage of both.
My 19 years of contributions to the Canadian Pension Plan are not included in the calculation of my US Social Security benefits. Conversations with the U.S. Social Security Bureau suggested that my contributions to the CPP would “probably” be applied to my U.S. pension when applying for benefits. However, the person I spoke to wasn’t sure how that would work. Do you know the process for transferring my Canadian earnings to my US Social Security account and how I can find out what my combined benefits will be? Signed: Retiring Canadian
Dear Retired Canadian: Allow me to clarify how things work under the US-Canada bilateral agreement. Although you have worked in Canada and contributed to CPP, your income in Canada does not count towards your U.S. Social Security benefits (nor does your U.S. earnings contribute to your entitlement to CPP benefits). While the bilateral agreement between the US and Canada allows for the combination of income credits from both countries to qualify for benefits, the calculation of benefit amounts in each country only uses dollars earned in the country. Your US entitlement is therefore based only on your US income.
Because you have contributed to the Canadian program for many years, you are also eligible for a separate CPP pension and can apply for your CPP pension through your local U.S. Social Security office by submitting SSA Form CDN-USA1. Your local Social Security office can provide the appropriate form and guidance to apply for your CPP benefits. However, you should be aware that collecting your CPP pension will affect the amount of your US benefit due to a US regulation known as the windfall elimination provision (WEP). WEP lowers U.S. Social Security benefits for anyone who has earned a separate pension without contributing to Social Security (including some U.S. state and local government employees, as well as those who have a pension from another country).
Your US benefit is calculated using a special WEP formula that considers the number of years you have contributed to the US program as “significant income.” Assuming you have 23 years of significant U.S. income from which you contributed to the U.S. Social Security program, your U.S. benefit will be reduced by approximately 35%. Your CPP pension will allow WEP to apply, reducing your U.S. pension, but it cannot reduce more than 50% of your CPP benefit amount.
FYI, WEP and international benefits are complex topics, and it’s not particularly uncommon for Social Security representatives you first encounter (eg on the phone) not quite familiar with how these benefits work. You can make an appointment to request your CPP benefits in person at your local Social Security office while also obtaining more specific information about how WEP will affect your U.S. Social Security benefits. This may require talking to a senior person who is well versed in WEP and international pensions.
Finally, keep in mind that at age 62, your U.S. benefit will be further reduced because you have not yet reached your full retirement age (66 years and 10 months). Also, keep in mind that until you reach full retirement age, you’re subject to Social Security’s income test, which limits how much you can earn before some benefits are taken away.
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