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Can I collect social security if I work overseas?

September 22, 2011: 5:05 AM ET

I'm an American citizen who has worked outside of the United States for nine years and will continue to do so for at least the next seven or eight. I've only worked for global companies, so I do not have a 401(k). Will I be eligible for Social Security when I retire? What kind of retirement plan should I get? -- Monica G., Osaka, Japan

As long as you work in the U.S. for about a decade—or for an American company operating overseas—you should be able to collect a Social Security check in retirement.

To be eligible for Social Security, you must contribute to the system through FICA withholding taxes for 40 calendar quarters, which adds up to 10 years of work. Each quarter in which you earn at least $1,120—the current minimum—counts. You can get credit if you work overseas for an American company that withholds Social Security and Medicare taxes. But foreign companies operating outside of the United States generally do not withhold these taxes from your paycheck—and you can't contribute to the U.S. Treasury voluntarily.

Fortunately, those 40 quarters do not have to be consecutive. "A worker can earn a few quarters here in the U.S., work overseas without paying the FICA tax for a number of years, and then come back to the U.S. to earn the remainder," says John Shallman, spokesman for the Social Security Administration.

As for other retirement vehicles, you may find it hard to open an individual retirement account (IRA). To be eligible to contribute to an IRA, traditional or Roth, you must report taxable income, and the high foreign tax credit overseas workers can take (up to $91,500 in 2010) may offset all your taxable earnings. Your best move right now is to try to save as much as possible. "Our guideline for retirement savings is at least 15% of her salary, so she should set that aside every paycheck," says T. Rowe Price certified financial planner Stuart Ritter. Once you're stateside again, take full advantage of any retirement plans you qualify for.

—Allan Chernoff

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