Ask Liz Weston

Get smart with your money

Social Security

Q&A: Should I delay my pension payments as long as possible?

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Dear Liz: I work for a local government and my job offers a pension as well as a 457 deferred compensation plan. If I delay starting my pension, will it have the same 8% growth that Social Security offers? Is my 457(b) plan much better than 401(k)?

Answer: Government pensions and Social Security both offer guaranteed income for life, but use different formulas for determining benefits.

Social Security is generally based on the worker’s 35 highest-earning years. Recipients can earn an 8% annual boost in their retirement benefit for each year they delay starting after their full retirement age, until benefits max out at age 70.

Pensions, meanwhile, are typically based on a combination of age, final salary and years of service. Delaying retirement typically does increase your benefit, but how much depends on the details of your plan. Many plans offer tools for estimating your future benefits, or you can contact your human resources department.

Your 457(b) plan has much in common with a 401(k). Both allow workers to contribute pretax money through payroll deductions up to certain limits ($24,500 in 2026, with an additional $8,000 catch-up contribution for those 50 and older, plus an additional $11,250 for those 60 to 63). The amount you ultimately get in retirement isn’t guaranteed but depends on how much you contribute and how the investments you choose perform over time.

A major difference between the two types of plans: 401(k)s typically offer some kind of matching funds, while 457(b)s often do not. On the other hand, early withdrawals from a 401(k) are usually penalized, while you can generally withdraw money from a 457(b) penalty-free after you leave your job.

Q&A: How disability income affects survivor benefits

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Dear Liz: My wife and I are essentially the same age (62), high school sweethearts married 44 years. She had a severe stroke at 57 and I became her full-time caregiver. She began receiving Social Security disability benefits about nine months later, at 58. I began taking my Social Security retirement benefits this year. I had a heart attack at 51 and am doubtful I’ll live much past 75 or so. My wife was always the higher-earning spouse so her benefits (equivalent to retiring at 70) are double mine.

First, if my wife passes before I do (which is a toss-up), am I entitled to survivor benefits? Secondly, will my Social Security benefits simply be replaced with the amount my wife currently receives?

Answer: When your wife reaches her full retirement age of 67, her disability benefit will become her retirement benefit. You referenced age 70, when benefits typically max out, but that’s only if they haven’t been started yet.

When one of you dies, the larger of your two benefits will become the survivor’s benefit. The smaller benefit will end.

Q&A: How working abroad affects Social Security

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Dear Liz: In your answer to the person who wants to move abroad, you forgot to mention that they would have to have 40 work credits to receive Social Security benefits.

Answer: Actually, the United States has made “totalization agreements” with more than 30 other countries regarding Social Security coverage. Essentially, a worker who doesn’t have enough credits in one country’s Social Security system can use credits from the other country to qualify for benefits. These agreements also ensure that workers don’t face dual taxation; typically, workers abroad who are covered by these agreements pay into the host country’s Social Security system.

Q&A: Should I draw down my 401(k) before accepting Social Security?

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Dear Liz: I am a 66-year-old single male working part-time (not by choice, but it’s the best I can get). I earn about $24,000 per year plus another $4,000 in unemployment during the summer. Work provides healthcare, so I don’t have Medicare premiums yet. With fixed expenses at roughly $50,000 per year, I am withdrawing from my 401(k) to cover the gap until I reach full retirement at the age of 70. If they will let me, I hope to continue to work until 75 because I love my job. At this rate, I will have exhausted the 401(k) by age 70, leaving me with a $100,000 CD earning 4%. Am I right to use the 401(k) as a bridge to full Social Security?

Answer: The advantages of delaying Social Security are typically so great that financial planners often recommend tapping other resources, including retirement funds, if that allows you to put off your application. Social Security’s delayed retirement credits boost your payment by 8% each year between your full retirement age and age 70, when benefits max out. A maxed-out payment is a powerful hedge against longevity risk, which is the danger of living so long that you deplete your savings.

However, a financial planner probably would suggest you also look for ways to decrease your living expenses to avoid completely exhausting your retirement accounts. As you’ve discovered, older people can have a harder time staying employed, even when their health cooperates. You may not be able to work as long as you’d like, and the average Social Security check is closer to $2,000 than the $4,000 or more you would need to meet your fixed expenses.

Consider seeking out a fiduciary financial advisor who can review your situation and offer personalized advice. Your employer or 401(k) provider may offer access to such advisors, or you can look for a financial coach or accredited financial counselor affiliated with the Assn. for Financial Counseling & Planning Education at www.afcpe.org.

Q&A: Could spouse’s early start stunt Social Security survivor benefit?

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Dear Liz: My husband and I plan to delay taking Social Security retirement benefits until the higher-earning spouse is 70. This is to ensure the highest possible survivor benefit. However, the lower-earning spouse will be turning 62 at the same time that the higher earning spouse turns 70. We are concerned that the lower-earning spouse’s future survivor benefit will be reduced if the lower earner starts benefits early. When would be the best time for the lower-earning spouse to take retirement benefits and ensure that the survivor’s benefit remains the same?

Answer: The lower earner won’t reduce the survivor benefit by starting early, but they will permanently reduce their own benefit or any spousal benefit they’re owed. Most people are better off waiting at least until their full retirement age to start Social Security benefits so they can avoid this reduction.

Q&A: How are you taxed if you work abroad?

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Dear Liz: It has become difficult to find good employment in my field. I’ve been able to find several openings that sound exactly like what I want outside the U.S. If I successfully apply for a position in a foreign country, it could mean paying income taxes into both the U.S. system and the foreign country. Not being a citizen of that country may also limit possible future employment opportunities. Once employed and resident in that county for the required time, I could apply for citizenship and pay the fee to renounce U.S. citizenship.

Obviously, this step would come with significant financial implications, including no longer being able to receive Social Security (into which I have paid during my U.S. employment). My banking and investment accounts would have to be completely rearranged as well. Obviously, a large number of people emigrate and change their citizenship every year, but how does one navigate all this financially?

Answer: You’ve come to some interesting but likely erroneous conclusions about working abroad.

Let’s start with taxes. The U.S. tax code has a few provisions designed to help people working abroad avoid double taxation, including the foreign earned income exclusion (which is up to $132,900 in 2026) and the foreign tax credit. You will still be required to file annual tax returns with the IRS reporting your worldwide income, but much if not all of your earnings abroad could avoid U.S. taxes.

Next, let’s discuss citizenship. About half the countries in the world, including the U.S., allow dual citizenship. If the country where you want to work does not, and you decide to renounce your U.S. citizenship, you still have a right to the Social Security benefits you’ve earned in America.

Keep in mind, though, that renunciation is considered permanent. If you changed your mind later, you would have to try to get a U.S. visa and go through all the steps to be naturalized, which can be a long process.

As far as your financial accounts, they can stay as they are as long as you maintain U.S. citizenship. You’ll likely need to set up bank and perhaps other financial accounts in the new country as well. Consider reading “Borderless Living: How to Create Freedom and Financial Security for Americans Abroad” by financial planner Brian Dunhill.