Hi Larry... I am listening to the "Get What's Yours" book on CD. Great stuff! Anyway, my question has to do with Totalization agreements the US has with other countries (in my case Australia) and their impact on spouse benefits.

I am a 54 year old husband with many years of high-paying employment for which FICA was deducted. My understanding is that once I file for my own retirement benefit, my wife can be eligible for the spouse benefit. Although she is an Australian non-US citizen, living in Australia, it looks like the "5-year" and "living in the US" restrictions don't apply due to the Totalization agreement between the US and Australia. The curve-ball is this... while we were living in the US for a few years, my wife worked and had FICA deducted. AND because of the Totalization agreement, which requires only 6 quarters of work in the States, she would theoretically qualify for her own (small) retirement benefits from the US. So... if she were to apply for the spouse benefit, it looks like she might automatically be deemed to be applying for all possible benefits, including her own retirement benefit. (FYI, my wife is one year older than me.)

Although the SSA should pay out the higher of the two benefits (the spouse benefit), the kicker is that an “invocation” of the Totalization agreement has serious financial implications regarding my wife’s own Australia “age pension. If the US spouse benefit is considered to be somehow a result of the Totalization agreement, her Australian age pension will be reduced dollar-for-dollar by the gross amount of the US spouse benefit. If it is not considered a result of the agreement, it will be treated as common foreign income and the Australian pension will only be reduced by something less than 50% of the net spouse benefit. Over her lifespan, the difference could be huge – perhaps to the tune of $100,000 or so.

So the question is... is the SSA likely to automatically consider and invoke the Totalization agreement regarding my wife’s own contributions and retirement benefits when she applies for benefits? Or might they simply see only 8 quarters of US contributions, and only process the spouse benefit part? Thanks in advance for any insight.

Hi,

If your wife has at least 6 U.S. quarters of coverage but less than 40, it sounds like she would then likely qualify for a U.S. totalization benefit on the basis of the agreement with Australia. And, she couldn't file for either retirement or spousal benefits without being deemed to file for both.

Your wife's U.S. spousal benefit entitlement (if any) would not, however, depend on the agreement since it sounds like she meets the requirements for entitlement with or without the agreement. It's possible that without the agreement there would be an issue about her actually being paid benefits while she is living in Australia, but I'm not sure about that (https://www.ssa.gov/pubs/EN-05-10137.pdf). I also have no idea what impact your wife's U.S. Social Security benefits might have on her Australian benefits.

Best, Jerry