Craig S. Says:
How do most expats handle converting their Social Security or pension income to euro, to deposit into their European (in our case Spanish) account?
Social Security Expert Steve Garfink Says:
Hi Craig,
The good news is that in this day and age converting your money is more efficient and less costly than ever before. Most expats use one of several methods (or a mix of them) to convert their dollars to the local currency where they reside.
My wife and I have been living in Mexico full-time for several years now, and have considerable experience with this!
Here are four ways to converting your Social Security check from dollars to your local currency:
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- Open an account at a U.S. bank or credit union that processes foreign currency transactions with no fees and offers cards for which they will reimburse foreign ATM fees. Use this U.S. debit card to get cash from an ATM at a reputable bank in your country of residence. Also, consider using this or a credit card from the same account for large payments, such as purchases at Costco. (Always decline any option, if offered, to convert the card payment to U.S. dollars: your bank will give a far better conversion ra
- Order foreign currency from your bank when you’re in the U.S. We can easily place an order online from our Bank of America account and even request the denomination of the bills! Orders placed a week or so in advance incur no fee and the money is waiting at a branch we designate for pick-up.
- Open a local bank account (local regulations vary widely on this) and transfer dollars from your U.S. bank account. You should research both banks beforehand to ensure the transfer fees and determination of the exchange rate are reasonable. (Always remember to report any foreign bank accounts as required on your U.S. tax return, since failure to do so can result in substantial fines.)
- To secure the best possible exchange rate, have the Social Security Administration (SSA) deposit your monthly benefit directly to your foreign bank account. (Check with SSA for the current list of correspondent banks in your country of residence to be sure your local bank can receive this payment.) SSA processes your payment through the Federal Reserve Bank of Kansas City which means the “Buy Rate” equals the “Sell Rate” and you get the best possible conversion rate in the world for that day, no fees included!
We’ve used the first two options so far living in Mexico. However, we plan to open a Mexican bank account this year. When we do, you can be sure we will set it up to transfer at least one of our Social Security payments directly to that new account to lock in our preferred rate without fees.
For more information about how to maximize the benefit of your Social Security while living overseas, check out my book Social Security Secrets – How To Maximize Your Income For A Worry-Free Retirement.
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