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  • Writer's pictureChris Stein, CFP®

Will Canadian Earnings Affect My Social Security Benefit?

A reader from Washington wonders if his Social Security benefits will be affected by his earnings in Canada.

 

“I am 60 years old. I worked for 15 years in Canada before I moved to the U.S. and became a citizen. This year will be my 30th year working in the U.S. As an example, let’s say that, at age 70, my Social Security will be around $3,500. My Canada Pension and Old Age Security would be around $500. I know a cross-border agreement exists between the U.S. and Canada regarding working and recognizing income from each country. Here is my question: Will my Social Security be reduced because of my earnings in Canada? I believe I read somewhere that if I have 30 years of earnings in the U.S., then no WEP-like reduction would occur.”


There’s some good news for me in this – a form of “get out of jail free” card – because we can ignore your Canadian connection. You mentioned that you have “30 years of substantial earnings.” Regarding the WEP (Windfall Elimination Provision), if you Google “Windfall Elimination Provision” and “Substantial Earnings,” you’ll find a table on the Social Security website that gives you a year-by-year dollar amount. Earning that amount or more that year while working within the Social Security system counts as a year of “substantial earnings.”

 

You are correct: WEP completely disappears regardless of circumstances if you have accumulated 30 years or more of substantial earnings. For example, for 2024, substantial earnings were set at $31,275. Thirty years ago, in 1993, you only had to earn $10,725. The number is low enough that if you’re working full-time, you almost certainly have substantial earnings in the Social Security system for that year.

 

You moved here after working in Canada for 15 years, so you weren’t a “young’un” at the time, and you probably had a good career job. You almost certainly qualified each year for substantial earnings. After working for 30 years, WEP will likely go away for you. It starts to go away in a phaseout beginning at 25 years of substantial earnings.

 

I won’t go deeply into the basics of WEP because that’s not the essence of the question here. However, it can reduce your Social Security benefit if, in addition to your Social Security, you have what we call a “non-covered pension.” That is a pension from an entity other than Social Security that results from working for an employer that does not pay into Social Security but pays into something else. It could be a state or local agency, for example. Working in Canada also falls into that category.

 

I don’t believe you need to worry about your Canadian earnings and benefits, assuming you have the 30 years of substantial participation, as that neutralizes WEP. But if you don’t, it can be an issue. The United States has signed agreements, or treaties, with many countries worldwide so that people who work in both countries will not be penalized. These agreements will coordinate the benefits provided by different pension systems for people working in the United States and in Canada, Australia or France, for example.

 

Had you not worked 30 years in the United States and qualified to avoid WEP, I would have to say I am not an expert on the Canadian agreement in particular and would have to look it up. Anyone who has worked in multiple countries and who is interested can Google “Social Security” and “Agreement between the United States and Canada” (or whatever country is involved). It will take you to the Social Security website, where you can read the details of that particular country’s agreement with the United States and how benefits are coordinated. Dozens of such agreements exist with the United States, which blend the two systems in various ways, depending on the agreement.

 

However, I don’t think you have to worry about WEP because you’ve reported that you have the 30 years that are required.

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