In the minds of Russian citizens, the point of view that Americans are a well-protected socially nation has long been postponed. Many people believe that a pension in the United States is able to satisfy almost all the needs and desires of older people. Is this so and how is this social subsidy for the average American formed today?
Magnitude of the problem
In fairness, it should be emphasized that the financial crisis today negatively affects the welfare of American society, therefore, in order for a pension in the United States to provide a more or less comfortable standard of living, care must be taken in advance. But what is currently happening in practice? Most people living in the “most democratic country” rarely work in one place for a long time. At intervals of approximately 5 years, the average American changes his job.
Naturally, in this case it would be naive to expect that the pension in the USA will be high: the employer simply will not be able to pay a “decent” amount for such a short period. The situation is further complicated by the fact that company executives are now less and less interested in “classic” social orientation programs. Another negative factor is that in modern conditions, state guarantees cannot provide a decent standard of living for Americans of retirement age. Nevertheless, an elderly person older than 62 years after going on a well-deserved rest is “financed” by the state at the expense of the social state fund, which is already good, since the money received is often enough to buy food and pay utility bills.
Count on your own strength?
Almost 50% of private sector employees today hope that the US pension will be paid by the state. However, they will have to work to a very old age to ensure a decent standard of living.
One way or another, but one of the priority sources of material support for people on a well-deserved rest in America is the State Social Insurance Fund.
As an alternative, US citizens are encouraged to invest on their own so that old age is not poor.
State system
As a general rule (with some exceptions), if a person has worked for the American economy for 10 years as an employee of a national company, then he is guaranteed material support from the federal budget when he reaches a certain age. But by what criteria are pensions accrued in the USA? Its size depends on the level average wage and seniority. As you can see, nothing new has been invented. However, it will be very difficult to get a US pension from the budget, which would be able to provide most of the needs of an elderly American. This is due to demographic changes: the number of able-bodied people is steadily decreasing, and the number of older people is increasing. In addition, no matter how much the pension in the United States would increase, it is still not immune to inflation. This state of affairs leads to the fact that the American, at the beginning of his labor activity, must, from his own savings, invest in his future old age. However, as already stressed, the state pension system insurance there is an alternative.
Individual Retirement Account (IRA)
This option provides for long-term investments, through which it becomes quite realistic to get a decent pension in the USA.
In other words, a person forms his own welfare, which he will spend in old age. An individual account is opened on it, and the subject determines how the money will be used to accumulate income. For example, he can divide capital into shares and invest each of them in various projects: mutual investment funds, real estate, transactions on currency exchanges, and so on. Naturally, who does not have an adequate level financial literacy Before investing in a particular instrument, you should consult with a specialist on this topic.
Benefits of Private Investment
Owners of individual accounts enjoy tax preferences. Standard Account Options (IRAs) are exempt from fiscal payments until the moment when the money starts to be cashed after leaving. You can open another account, the so-called Roth IRA. Its owner is obliged to immediately pay tax on the income received from investing, but he will not give anything to the state after retirement. At the same time, US officials put restrictions on the IRA-system of capital increase. So, in 2008, the account holder could invest no more than 5 thousand dollars in his old age.
People who have overcome the fifty-year age threshold could invest in the IRA no more than 6 thousand dollars a year. The White House systematically increases these limits little by little.
Savings plan
This option of financing pension assets is invested at the expense of the employer. And most company executives are comfortable with such a system. A certain amount of money is periodically invested in a future pension. In some cases, a savings plan is combined with opening an individual Roth IRA account. The "classic" plan, which is commonly called "401 k", is in many ways similar to the traditional IRA system. Again, here the owner has the right to independently choose where to invest his money. It is noteworthy that in the “401 k” system there are no restrictions on the size of investment. The employer simply deposits a deposit into the account, while retaining a fixed amount from the employee’s salary. And in this case, the rule applies: the participant in the “401 k” plan does not pay income tax until he begins to cash out his savings upon reaching retirement age. Many people use this system due to its reliability and practicality, due to the fact that money is deposited into the account automatically.
Disadvantages of “401 K”
However, the above option for ensuring old age is not without drawbacks.
First, employers use savings plans similar to “401 k” only since 2006, when the “Pension Protection Act” entered into legal force. Secondly, the system does not prohibit an employee to receive part of the money from his account ahead of schedule, for example, to buy a house or a car, and many people use this opportunity. Naturally, the amount of pension savings is seriously reduced. After reaching retirement age, a participant in the 401 k system is allowed to spend the entire amount of savings on old age immediately. Of course, from the point of view of the future perspective, this is impractical. However, there are those who do so.
"Paradise for those who have earned is America"
Now we give specific figures to understand the full picture of what kind of pension in the USA is necessary for a more or less comfortable life. Most experts are confident that workers who did not want for one reason or another to participate in the 401 k project will be forced to be content with material support exclusively from the state, which, unfortunately, cannot provide a decent old age.
Naturally, the question arises from what age retirement in the United States? A 67-year-old threshold has been established for men, and a 65-year-old for women. However, the average pension in the United States, according to experts, is about 1164 dollars. For a huge number of elderly people this is a very, very decent amount. But the minimum pension in the United States is determined by officials at 300 dollars.
It, in particular, is received by those who have not worked for the good of the country and one year.
Which retirees in America live well?
Older Americans, who have, albeit not very large, but seniority, have the right to rely on cash benefits in the amount of $ 600 per month.
As for ordinary lower-level employees working for hire, for example, secretaries, their size of pensions varies between 700-900 dollars.
Employees of the IT sector, engineers, specialists of "technical" professions, whose salary is about 2.5-3 thousand dollars, in old age will count on social subsidies in the amount of 1.5 thousand dollars. The most socially protected officials, military and former airline employees. They have a pension of 2-3 thousand dollars.
Naturally, the size of social benefits directly affects the quality of life of older people. Some are forced to rent social housing with someone, others rent houses of the category “for those over 55” with an average level of comfort, and still others can afford to buy a cozy cottage and engage in homestead farming for their pleasure.
What can they count on?
There are no significant privileges for people of retirement age living overseas. However, for them there are a number of important social guarantees. In America, the state more or less takes care that an elderly person does not feel impaired. Even if he, as a labor element, invested negligibly little in the American economy, he is still entitled to a pension in the USA (the age of exit is 67 years (male) and 65 years (female). Yes, its size will not be large, but in any case, the person will not be left in trouble social services: if necessary, they will provide him with shelter, feed him and help in treatment.
Well, those who have taken care of their old age in advance are enjoying life with might and main. Many go on a journey around the world, putting on shorts, a T-shirt and arming themselves with a camera.
Conclusion
One way or another, but the traditional system pension provision in the United States has long become obsolete. If earlier a person worked at one enterprise for several decades in a row and received a decent pension as a reward for it, today the situation has radically changed. Yes, the minimum set of tools of social assistance from the state has been and remains, but in modern conditions it is clearly not enough for a quality life. That is why every American should take alternative measures that will help him feel confident and live happily in old age. As a guide to action, the “401-k” system can be recommended. Experts are confident that today is the best investment in the period of life that begins after retirement.
