Like the National Insurance Institute in Israel, the American Social Security Administration (SSA) provides a variety of benefits to citizens, including those living overseas. This article will help determine whether you are entitled to retirement, disability, or survivor benefits.

Understanding the United States Social Security Administration

Despite its capitalist economic system, the United States has a Social Security system known as the SSA, established by President Franklin D. Roosevelt in 1935. It provides various benefits to American citizens, and under certain circumstances, citizens who have lived their entire lives in Israel may also be eligible for payments.

What if I Receive an Allowance in Israel?

Israel and the United States have a tax treaty in place, but it does not cover payments made to social security institutions in either country. As a result, individuals can receive payments from Israeli authorities while also qualifying for SSA benefits.

Old-Age Pension in the U.S. – Retirement Benefits

The American old-age pension is similar to its Israeli counterpart but generally offers a higher payout. In 2024, the average monthly benefit was $1,907, with a maximum of $4,873 per month.

Factors Affecting Benefit Amount:

• Reduction of Up to 40%: If receiving a pension allowance from an Israeli workplace, American benefits may be reduced by up to 40%.
• Public Sector Employment: Individuals who worked in government or nonprofit organizations may have benefits reduced under the Windfall Elimination Provision (WEP).

At age 62, the SSA contacts eligible individuals to guide them through the claims process.

Who Is Eligible for U.S. Retirement Benefits?

In addition to U.S. citizens, U.S. residents in Israel and Israelis who worked in the U.S. may qualify, provided they meet these criteria:

1. A Minimum of 10 Years of Work Experience
2. 40 Quarterly Payments (Credits)
3. Earnings of More Than $1,730 per Quarter
4. No Option to Accumulate Extra Credits – Earnings exceeding the minimum threshold do not yield additional credits.

Additional Requirements:

• Work must have been performed in the U.S. or as an independent contractor in Israel (for U.S. citizens).
• Regular tax reporting to the IRS.
• Ongoing contributions to the SSA through Social Security taxes.

How Is the Allowance Calculated?

To qualify for benefits, an individual must have contributed to SSA for at least 40 quarters. The calculation involves:

• Reviewing the highest-earning 10 years.
• Summing total earnings from those years.
• Dividing the total by 120 to determine the average monthly income.

Monthly Benefit Amount:

• At age 62: 75% of full benefits.
• At full retirement age: 100% of benefits.
• At age 70: Increased benefits.

Disability Benefits in the United States

The U.S. government provides disability benefits to qualified individuals, including those working in Israel. To apply, eligible individuals should contact the SSA at 1-800-772-1213.

Who Is Eligible for Disability Benefits?

Unlike retirement benefits requiring 40 quarters, disability benefits vary by age:

• Under age 24: At least six quarters of work within the previous three years.
• Ages 24-31: Must have worked half of the time between age 21 and the disability onset.
• Ages 31 and above: At least 20 quarters of work in the 10 years before disability.

Survivor Benefits in the United States

Survivor benefits (“Shraim” allowances in Hebrew) provide financial support to surviving spouses and minor children.

• If the deceased earned at least six credits in the three years before passing, survivors may qualify.
• If the deceased was eligible for retirement or disability benefits, survivor benefits will be based on those entitlements.

Other Important Considerations

Returning to the U.S. – Medicare Eligibility

Eligible individuals returning to the U.S. upon retirement will qualify for Medicare, a government-funded health insurance program.

Spousal Benefits – Up to 50% of a Spouse’s Allowance

If you are not eligible for SSA benefits but your spouse is, you may still qualify for up to 50% of their benefit amount.

For further questions and professional assistance regarding U.S. tax reporting, company formation, and investment strategies, contact the U.S. tax experts in Israel at MasAmerica.