I've worked in both the US & the Netherlands - Where am I eligible for social security?

Social security is a pretty confusing issue.  We don't know if we will get anything at all, and working in multiple countries compounds the confusion.  The general principle is that you get paid by the countries where you have paid in social security taxes.  However, there is usually a minimum amount of time that you need to work in order to be eligible.  For example, in the US you need "40 quarters" (effectively 10 years) in order to qualify at all.

Luckily, the US and the Netherlands (and many other countries) have what is called a "Totalization Agreement", which allows you to use the time working in the Netherlands to qualify for the 10 year minimum.  For example, if you worked 6 years in the US and 4 in the Netherlands, you would qualify for US social security even though you did not work 10 years in the US.  Or what I see more commonly (with US expats), if you only live in the Netherlands for a few years, you can still qualify for Dutch social security when you retire.  However, if you don't meet the minimum guidelines, you need to inform the appropriate agencies (normally by writing a letter) and get proof from the other country of the "qualifying" years in that country.  You also need to make sure they have your current address when you retire.

Before you go planning your dream vacations in your retirement, keep in mind that the actual benefit you get is still based on the time you worked in each specific country.  In the example above, the person would have 6 years of credit in the US.  The benefit payment is based on your highest 35 years of income in the US, so the benefit would be based on 6/35 of the "full" benefit (or about $375/mo based on the current maximum of approx. $2,185/mo).  See also the Social Security web site (www.ssa.gov).

In the Netherlands they have a similar system, but it is based on 50 years of living in The Netherlands (not necessarily working), so in the example above the person would get 6/50 of the maximum benefit.  That would be enough to buy yourself a koffie verkeerd and a warme appeltaart (with slagroom)!

Please note that the actual calculation of benefits is a bit more complex than this, but this gives you the general idea. 

David Colvin is a CPA and CFP® based in Amsterdam, Netherlands since 1998. His niche focus is serving high-net-wealth individuals with cross-border tax and financial issues. He is also an advisor to Maxim Global Wealth Advisors, based in Amsterdam and Portland, Oregon.