Since the late 1970’s, the U.S. has established international
social security agreements that coordinate the U.S. Social Security
program with the comparable programs of other countries.
These international social security agreements are called “totalization
agreements” and have two main purposes:
Eliminate dual social security taxation that occurs when a worker
from one country works in another country and is required to pay
social security taxes to both countries on the same earnings.
As a result of existing totalization agreements, U.S. workers
and employers currently are saving about $800 million annually
in foreign taxes they do not have to pay.
Help fill gaps in benefit protection for workers who have divided
their careers between the U.S. and another country, but who have
not worked long enough in one or both countries to qualify for
social security benefits. With totalization, workers are allowed
to combine work credits from both countries to become eligible
for benefits. The benefit amount paid is proportional to the amount
of credits earned in the paying country.
An agreement with Mexico
An agreement with Mexico would save U.S. workers and their employers
about $140 million in Mexican social security and health insurance
taxes over the first 5 years of the agreement.
An agreement would also fill the gaps in benefit protection for U.S.
workers who have worked in both countries, but not long enough in
one or both countries to qualify for benefits.
Mexico is the second largest trading partner with the U.S. Agreements
are already in effect with Canada, the largest trading partner with
the U.S., and 19 other countries.
- With Mexico, the U.S. now has signed agreements with eight of its
top ten trading partners. Many of these agreements have been in effect
for nearly two decades. The two exceptions are China and Taiwan. By
law, the U.S. could not enter into agreements with these two countries
because they do not have generally applicable social security systems
that pay periodic benefits or the actuarial equivalent.
Costs of an agreement with Mexico
Social Security actuaries estimate that a totalization agreement
with Mexico would have a negligible long-range effect on the Trust
Costs to the U.S. Social Security system are estimated to average
about $105 million per year over the first five years. These costs
are for additional benefits to eligible U.S. and Mexican workers and
reduced Social Security tax contributions under the dual taxation
To put this in perspective, in 2002, costs to the U.S. system for
the existing agreement with Canada were about $197 million.
Effective date of an agreement with Mexico
In the United States, once the agreement is signed, the President
will submit the agreement to Congress where it must sit in review
for 60 session days. If Congress takes no action during this time,
the agreement can move forward.
In Mexico, once the agreement is signed, the Mexican Senate must
Countries already having totalization agreements with the U.S.
The United States currently has Social Security agreements with Canada,
Chile, South Korea, Australia and most of Western Europe.
||November 1, 1978
||August 1, 1989
||December 1, 1979
||November 1, 1990
||November 1, 1980
||November 1, 1991
||July 1, 1984
||November 1, 1992
||July 1, 1984
||September 1, 1993
||August 1, 1984
||November 1, 1993
||January 1, 1985
||September 1, 1994
||January 1, 1987
||April 1, 2001
||April 1, 1988
||December 1, 2001
||July 1, 1988
||October 1, 2002
More detailed information about these totalization agreements can
be found at http://www.socialsecurity.gov/international/.