Monday, 4 February 2019

How do retirees live in the USA

The US pension system does not sparkle with the uniqueness of its structure. It is standard and stable, consists of numerous public and private funds. It’s different from ours: the pension system is developed at such a high level that with a good salary a person is able to save up even 2 or 3 pensions.

Retirement age

Retirement in the United States in 2017 is similar to last year - approximately 66-67 years, depending on the age group. The scale is as follows:

For those born before 1937 inclusive, the retirement age - from 65 years, for those born later, it gradually increases.

People born in 1955 and younger, can retire, reaching 66 years 2 months.

Such a gradation arose because the life expectancy in the country has increased.

The early retirement age - from 62 years old inclusive. Anyone who so desires is required to write a statement and indicate the reason for their decision. But there is a nuance: the social pension will be only 70% of the accrued, and this amount is saved for life. That is, it will not grow to 100% with the onset of retirement age.

On average, American women retire at 65, men - at 67.

Who is eligible to receive a pension in America?

By working legally and donating money to the state budget for a pension fund, every resident of the United States earns his pension for 10 years.

The principle of accrual of the state pension (social security) is similar for both immigrants and indigenous people. For 1 year of work (legal, with payment of taxes) 4 so-called points (credits) are charged. To earn a pension in the US, you need to get 40 points - that is, to work at least the already mentioned 10 years.

Americans carefully monitor the formation of their retirement. At the beginning of each year, a legally working person receives a document from which he learns:

  •  How many credits are accrued at the moment?
  •  Is there a pension and what is its size, based on the duration of work and salary.
  •  If it has not yet been accrued, then how many years must be refined, and how much allowance should be expected in potential.
  •  Additional information: how to get a pension, the rules of accrual.

In addition to social, most Americans have additional, accumulated pensions. Each large company has a separate pension fund. Here workers deduct a certain part of the salary, which is not taxed and just constantly accumulates on their account. The company simultaneously adds its share (usually 10-15%, the most successful firms - even up to 50% of the employee’s investment amount).

With the onset of retirement age, the accumulated amount often exceeds social security.

Social Security Programs in the USA

Older Americans, for the most part, live well, even if they have never held particularly high positions. This is largely due to the large pension programs (there are more than 700 thousand).

In America, there is a program for the poor (SSI), which helps out in cases where the amount accrued by the state is lower than the subsistence minimum. Under the terms of the program, each participating pensioner is additionally paid a certain amount, which is lacking to a minimum. In each state its size is different. In California, for example, it is 980 dollars.

The accrual principle is as follows: if a person’s social security amount is $ 500, and there was no private pension fund at work, then the program for the poor earns another 980-500 = 480 dollars a month. This often happens with citizens working on a small salary, when the social pension is only $ 500-600.

There is another popular one - the so-called “Eighth program” for low-income retirees. By registering in it, you can get a voucher that allows you to pay for rental housing in specially provided complexes only 25-30% of the total income of the pensioner.

To become a member of this or another pension program, you need to contact the Social Security Service.

Pensions in the USA

The minimum social pension per citizen is $ 800, for a couple of spouses - $ 1,100.

The maximum pension benefit that the state can charge is $ 1,800.

On average, in all states, the state-accrued pension amounts to $ 1,200–1,300.

Here's what's important: thanks to social security in America, the value of social workers for the country is clearly visible. Police, military, teachers, firefighters, officials receive very high benefits.

Even receiving $ 1,000, the retiree can live quite comfortably and be provided in the US, eating and dressing in low-cost stores, participating in the housing savings program. Many even successfully postpone for travel then most of our grandparents cannot boast.

USA pensioners are offered to work to death

Elderly people in the United States face the same poverty as in the Great Depression. Money for state pensions is running out, and Americans can no longer save up for their old age. What happened to the once ideal system, the example of which was repeatedly advised Russia?

More recently, the US pension system was considered one of the best in the world. A tanned and cheerful old man, who divides his time between the beaches of Florida and cruises in the Caribbean - this is how the American retiree presented himself to the world. But as time went on, a large generation of baby boomers grew old - and the seemingly debugged system failed.

The American pension has three sources, three components. This is, firstly, social security payments - $ 600–800 a month, which the employee can receive if his employer has paid insurance premiums for at least 10 years. The second part is the savings made by the employee together with the employer. Usually, they are called the “401 (k)” plan (meaning that during the period of work you need to save yourself for old age, and you can withdraw this money from the account after 59 years). Finally, these are individual savings of citizens — investments in stocks, in real estate, or cash under a pillow.

When an extremely large post-war generation began to retire, it turned out that the social security system simply did not have enough money. Last year alone, the deficit was about a trillion dollars. Optimists believe that social pensions will be radically reduced by 2034. Pessimists insist that the system will go bankrupt in eight years. The same fate awaits the Medicare health insurance system.

With the plan "401 (k)" there was also an overlay. In the 1970s, commercial companies offered their state a “defined benefit” retirement plan, that is, employers contributed money for employees, which helped them ease the tax burden. But in the early 1980s, they realized that a plan with “fixed contributions”, which the employee himself had to do, was much more profitable for them.

If in 1980, 38% of working Americans used a retirement plan with fixed benefits, then by 2008 there were only 13% of such lucky ones. According to the plans with fixed contributions, the statistics is just the opposite, but many simply could not manage it. Analysts prescribe at least seven annual salaries by the age of 60, but for most Americans, this is an impossible task. Today, the median savings of 40–45-year-olds on this plan are only 14.5 thousand dollars - this money will not be enough for a future retiree even for a year.

Many pension plans collapsed during the 2008–2010 recession. Firms went bankrupt, employees ended up on the street, and at the same time their retirement savings made by their employers disappeared. In the second half of 2008 alone, the 401 (k) system lost $ 2.4 trillion.

As for individual savings, the workers here also faced problems. Investments in stocks were often risky — at least the cost of the dot-com crash in 2000 was worth it. After the collapse of the shares of Internet companies, future retirees hurried to invest in real estate. The cost of houses soared sharply, another “bubble” formed on the market, and ultimately all this led to the Great Recession. Houses began to sell while suffering serious losses.

To date, well-fed old age does not shine and half of the American households. It is caused by the stagnation of the growth of wages, which are barely enough for life, and the departure of employers from all responsibility for their employees. Precariat earns freelancing, and these new lumps cannot even dream of a social package. As a result, 35% of adult Americans have savings of less than a thousand dollars, while 34% have no savings at all.

A separate danger was the sharply increased cost of medical services and drugs. Once in the hospital, elderly Americans are often forced to give the clinic all that they managed to save up for life. They can only hope for the help of children, but the Millennials have their own difficulties with work, sometimes they simply have nothing to do with the old ones.

Stand apart among retirees are state employees - police, teachers, firefighters, judges. Having accumulated experience, these civil servants can count on a really good state pension - from $ 2,000 per month. However, 22 million state employees make up only 14% of the working population of the United States. Most citizens work for private companies and at the age of 65–67 years (the time of retirement in the United States does not depend on gender but on the year of birth) are close to total bankruptcy.

The stories of older Americans trying to survive the crisis of the pension system have become a popular topic for reporting. So, 76-year-old Roberta Gordon from California told The Atlantic magazine that she worked almost her whole life, having tried various professions - she was a cleaner, nurse, distributor, librarian. Often her employers did not make payments to the social security system, and now she receives only 915 dollars a month. Outside the United States, this is a very good amount, but the high cost of California life makes Robert almost impoverished. Just renting an apartment costs her $ 1040 a month.

If Roberta gets sick, she will have to pay more than eight thousand for treatment from her own savings before her insurance begins to work. Therefore, she “tries not to get sick”, and on Saturdays she earns money at the local grocery store, getting $ 50 a day. In addition, in the grocery bank at the local church, she is given free food.

67-year-old Deborah Bello, who has been a waitress for 30 years, receives from Social Security even less - $ 778. She still has to work full time, but she doesn’t have enough money to even buy a TV.
America’s pension crisis has hit women especially hard. Small, not always white salaries and years spent on raising children led to the fact that in their old age they have to literally survive. Children would be happy to help, but they themselves do not have enough money.

Retirees see a way out to work after retirement. If in 2000 in the USA there were only 3% of working pensioners, now there are already 12.4%. However, this does not save from a sharp decline in the standard of living - only low paid and unstable job offers are offered to old men.

Experts predict that if the current trend continues, a third of retirees from the baby boomer generation will soon be below the poverty line. This will repeat the situation since the Great Depression.

Not all older people can even keep a roof over their heads. If in 1990 only 11% of the American homeless were over 50, by 2016 their share had increased to 50%.

The aging population is not only impoverished itself, but also pulls subsequent generations to the bottom of the economy. Instead of investing in their children, Americans are forced to spend all free money on their ancestors. This threatens not only the economy of the country, but also the entire American way of life. Work until you die - this is what the modern version of the United States pension system looks like for most.

Love for all ages: how to find your destiny at 70

Another way of socialization, which resorts to the majority of older, but active retirees – visiting day care homes called Adult Day Care. In New York, a lot of them. With a bit of humor, such centers are lovingly and ironically called "kindergartens." Older people spend their time there, exercise, play board games, listen to lectures on art and watch movies.

In such centers, older people even fall in love and marry. Zinovy Vatel and Raisa Rogova met in just one of these “kindergartens” when they were both around 70.

68-year-old Zinovy came to New York from Kiev, along with his sons and wife after the end of his career as a psychiatrist. His adaptation to the new life was quite difficult - an unfamiliar language that the man did not know, and a new culture. According to Zinovy, the first years he cooked borscht and watched his grandchildren. He was eager to go to work, but at home, he was more necessary.

After the death of his wife, Zinovy was very sad, and one of his sons advised him to go to a special center where he could communicate with people of his own age. Zinovy agreed and went to the “kindergarten”, where he met his future wife Raisa. Since then, they have not parted. The couple had a lot in common: both of them were doctors in the past, both had a healthy lifestyle and both had fled from the Soviet regime.

Raisa flew to New York at the same age as Zinovy. Together with her were two daughters. Raisa lost her husband before the move. A woman came to the center to recover from depression after the death of her spouse and make new acquaintances in order not to feel lonely in the city of the Big Apple.
After meeting Raisa and Zinovy, they moved to a new center, which was more convenient for them to visit. There they played a small wedding.
"Kindergarten" revealed in the former psychiatrist the artist's talent: Zinovy began to make three-dimensional paintings. Together with Raisa, he also lectured in Russian for other retirees about healthy lifestyles. The man didn’t have a chance to learn English, even though he tried to master it, but Raisa, on the contrary, was able to learn English and speaks quite well on it.

Kindergarten for adults for the elderly is paid by the insurance company. The number of visiting hours is determined by a specialist from the company; for this, an individual medical assessment of the human condition is carried out.

For example, Zinovy can only come to the “kindergarten” for 2 days due to his age and illness. Raisa does not attend him at all - she cannot walk on her own. Instead, a home attendant goes to her house. And this service is also covered by insurance. The company, among other things, advises on getting Medicare insurance.

Please note: Anyone over the age of 65 who meets the requirements of the program can get Medicare. Diseases in history do not interfere with getting insurance.

The physical condition is not an obstacle for obtaining health insurance. Moreover, in some cases, this can be a serious reason for receiving preferential insurance. In most cases, you can expect financial expenses. This plan is intended for elderly people with chronic diseases who want and can be at home, or in day care homes for the elderly (the so-called "kindergartens"). The question is that the level of service in different companies is different, therefore day-care homes for the elderly, in particular, do not work with all insurances. The most advantageous are people who have both Medicare and Medicaid. This is possible with a low income. But you will not have to pay for receiving such a service as a housekeeper/home attendant or for visiting a “kindergarten”.

Many other elderly people who came to America from the countries of the former CIS, is confident that old age with any level of wealth in the United States cannot be compared with the life of a pensioner in the same Russia or Ukraine. After all, America is created primarily for people and cares about the comfort of everyone.

When is retirement in the USA

However, not everyone in America manages to secure old age. In the US, by the way, there is no such thing as a normal retirement age. A person, given his financial and personal circumstances, can decide himself when to retire.

In general, today, older people can receive a pension starting at 62 years old, although it is believed that the official retirement age in America is 65 years. The later a person decides to receive a pension, the more substantial the amount will be. For example, if you start the program of pension payments from 65 years, the pensioner will receive 100% of the payments due to him, if from 62 years - only 75%. But if you go out in 70 years - you can get 125-130%. How the amount of pension depends on age can be seen on the website of the Social Security Administration.

The largest pension is received by the former military, pilots, teachers. In addition, in America, there are many social programs for the elderly - a disability pension, a partial pay-as-you-go program “8th program”, Food Stamps food stamps and, of course, the national Medicare health insurance program. You can read more about these programs in our material.

Retired USA. Work longer, get sick more

American health is declining, and middle-aged people are faced with the prospect of retirement later.
Americans later began to retire, die faster and get sick more often in old age comparing several statistical reports about retirees in the United States.

Since 2005, the death rate in America has increased for the first time - by 1.2 percent. This figure was also the largest in the last 25 years.

American health is declining, and middle-aged people are faced with the prospect of retirement later than their parents.

According to statistics, 30 percent of US residents aged 65 to 69 are still working, in the 70s of the last century, there were about 20 percent working people of retirement age.

It is noted that the US authorities are stimulating late retirement - by 2027 they will receive a retirement benefit in 67 years, while now they receive it in 65.

At the same time, the Americans, who should retire in a few years, have worse health than people at this age ten years ago.

In addition, 12.5 percent of today's American pensioners at the age of 66 are limited by the activity of everyday life - it is difficult or impossible for them to take a shower, eat, get dressed, get out of bed or walk.

25 percent of Americans at retirement age describe their health as weak or average, which is 2.6 percentage points more than those who retired at 65 years of age.

Also, US retirees have become less optimistic in their forecasts for the duration of their lives, notes Bloomberg.

The cognitive skills of American retirees have also declined. 11 percent of those who retired at age 66 had some dementia or another cognitive decline between the ages of 58 and 60.

The average pension in the United States is 20 times higher than the Ukrainian. At the same time, Americans pay only 15 percent of their salaries to the pension fund.

To get a retirement benefit you need to postpone for at least ten years.

The tax code allows Americans to pay a portion of their salary before tax with income tax on their personal savings accounts. In America, there are both joint and cumulative levels of the pension system.

The government claims that the retirement age for Americans will gradually increase to 70 years.

Now, for a full pension, you need to work until the age of 65, but US citizens have the right to retire earlier, but in this case, the number of payments will be less.

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