The USA is famous not only for high wages but also for decent retirement payments. The payment of pensions in the United States is tied to the social security system. When people reach a certain age, the state guarantees its citizens a monthly lifetime pension payment.
The entire pension system can be divided into three types:
a. State pension
According to this, the employer and the employee pay the appropriate pension contributions from their income. These contributions serve as the basis for the formation of a future pension. The contribution rate is set at 7.65%. This amount must be paid by both the employee and the employer.
b. Defined benefit pension
The opening of special accounts is of key importance, where a citizen has the right to voluntarily transfer money towards a future pension. When a person turns 60, he/she gets access to the money in this account. If you want to withdraw money, you will have to pay a fee, but until this moment, the money in the account is not subject to any taxes.
c. Defined contribution pension
Its essence lies in the fact that an organization accepts at its own expense a part of the employee’s pension contribution. In the future, these amounts are multiplied and serve as an additional payment to the general state pension.
Retirement in the US usually occurs at the age of 65 for both men and women. At the same time, US citizens retain the opportunity to retire early at age 62. There is also another nuance. For those people who were born before 1954, the retirement age is always 65 years old. However, for those Americans who were born later, the retirement age increases every year (maximum 67 years old).
Average US pension size
The average retirement payment in the United States is $1,850 per month. But if we take into account purchasing power parity, the US bypasses all the states of the world. American retirees can afford more than European retirees. If we take into account the numerous benefits for pensioners, the United States can be called the best country where you can meet old age.
Please note that in the US, there is also a guarantee to receive a fixed minimum retirement payment. It is set at the following rates – $800 per person and $1,100 for spouses. Consequently, if the pension is assigned at a lower amount, you have the right to demand that the pension be increased to the appropriate limit.
Military retirement pay
Currently, the military pension in the United States is 50% of the salary. In addition, in the case of service for over 20 years, additional allowances (2.5% per year) will go towards the pension for each subsequent year. If your work experience is 40 years, then the amount of retirement pay will be equal to the full amount of salary. It is without taking into account the numerous benefits that are provided to the US military.