Many retirees who split their careers between the United States and Canada assume that years worked across the border do not count towardretirement benefits. According to Yahoo Finance, that misunderstanding can leave eligible workers without income they have earned.
For some retirees, the impact can be significant. The report highlights a case in which eight years of work in Canada could translate into roughly $449 per month in additional retirement income, thanks to a little-known agreement between the two countries.
People who have contributed to both systems often believe they do not meet the requirements to qualify for benefits. Yet a treaty that has been in place for decades allows certain workers to combine their employment histories when establishing eligibility, even though benefit amounts are still calculated separately.
A Treaty Designed to Bridge Gaps in Retirement Eligibility
According to the report, the U.S.-Canada Social Security Totalization Agreement, signed in 1984, allows workers to combine credits earned in both countries when determining eligibility for retirement benefits. The arrangement is intended to help people who spent part of their careers on each side of the border and might otherwise fall short of minimum qualification requirements.
The article illustrates the issue through the example of a 65-year-old worker who spent eight years employed in Toronto before building a 32-year career in the United States. Although he believed his Canadian employment years would not count because of perceived eligibility barriers, the agreement allows those years to be recognized when assessing retirement claims.
Totalization helps establish eligibility but does not increase the size of the pension itself. Canada Pension Plan benefits are based only on actual Canadian contributions, while U.S. Social Security payments are calculated solely from U.S. earnings records.
In the example cited, eight years of Canadian contributions would generate about CAD 620 per month, equivalent to roughly USD 449 at current exchange rates. The worker’s U.S. Social Security benefit at full retirement age would remain approximately $2,650 per month. Combined, those payments would produce a monthly retirement income of about $3,100. Many cross-border workers, former expatriates, and seasonal residents remain unaware that these provisions exist and may never file claims for benefits they are entitled to receive.
Taxation, Currency, and Claiming Decisions Can Affect Retirement Income
The report also outlines several practical considerations for retirees receiving payments from both countries. Canada Pension Plan income is taxable in the United States, while treaty provisions generally prevent double taxation. At the same time, CPP payments count toward income thresholds used to determine how much of a retiree’s U.S. Social Security benefit is taxable. As a result, some individuals may find themselves subject to higher taxation levels than expected.
Currency fluctuations represent another factor. Since CPP benefits are paid in Canadian dollars, the value of those payments in U.S. dollars can rise or fall depending on exchange rates. Some retirees maintain Canadian bank accounts and convert funds when rates are favorable, while others simply accept the variations.
Retirement benefits from the two countries do not have to be claimed simultaneously. CPP can begin as early as age 60 with a reduction or as late as age 70 with an increase. U.S. Social Security follows its own timing rules and delayed-retirement credit structure.
According to the report, workers with employment histories in both countries should apply through the Social Security Administration and specifically request a totalization claim. The agency coordinates with Service Canada, allowing applicants to navigate the process through a single point of contact while providing documentation of their Canadian employment history.
