What are the pros and cons of having social security funds automatically deposited into the foreign bank account of the country one chooses to retire?
As far as we know it is generally not feasible or even possible to have your US social security payments deposited directly into a foreign bank account.
For one thing, it is relatively expensive to send funds from any US bank account to a foreign bank account – typically $35 – $50 per transfer. In some cases this fee is charged by both sides (sender and recipient).
Secondly, US Social Security payments simply cannot be programmed to deposit into a non-US bank account, although Mexico may be the possible exception due to the large number of US social security recipients in Mexico.
You may consider services like EverBank, which enables you to avoid excessive charges when you send money to your foreign account, however for social security payments which are relatively small and frequent, the fees would probably be too high to justify this set up.
By far the easier way to get your money overseas to where you need it is to do one of two things:
1. Keep your US account for receiving your Social Security, then withdraw your money in cash from an ATM in your new country of residence. Your home bank will charge you about $5.00 per cash withdrawal so this is not ideal but you would not need a local bank account, or
2. Set up a bank account in your new country of residence and periodically wire transfer funds from your U.S. account to your new account overseas.
For example, you could send 3-4 months worth of funds down to your overseas account, which will still probably cost you $30 – $50 per transfer. Having a local account is convenient for day to day use, and enables to make payments locally via check instead of cash. You may also be able to apply for a credit card with your new bank, which can be handy as a back up method of payment.
Obviously it would be even better (cheaper) if you can afford to send an entire year’s worth of funds in advance, let your Social Security payments accumulate in your US account and then send another batch down next year, etc. However if your funds are invested at home, you may be better off keeping a smaller balance overseas and leave the majority of your assets in your home account.