U.S. Retirement Plan Planning FAQ (1)

Q.1

What are you most worried about when you come to the U.S. for retirement?

Taxes, the United States is a country of millions of taxes, all income and assets are related to taxes, when people grow old, 2 things cannot be avoided, one is death, and the other is paying taxes. How about a more reasonable tax exemption and tax avoidance is also very important. After Biden, the estate tax exemption proposal may be changed to 3.5 million exemptions. Many people can come to the U.S., not a fierce dragon, are assets are too strong.

Q.2

Will the government take care of the elderly when they get sick at an older age?

Seniors can buy Medicare, in addition to the 40 points of tax return low-income seniors can apply for a red and blue card, and some will buy their own medical supplemental insurance, Medigap Supplemental Insurance Plan, also called Medicare Supplement Insurance.

Q.3

What are the main pensions?

SOCIALSECURITY, PENSION, 401K, IRA (also divided into IRA, RothIRA, annuity, savings with-profits life insurance), etc. We can make some planning and arrangements in advance.

1. Social Security Benefit (Social Security Benefit)

As long as you receive a salary, you must pay a certain percentage of your pre-tax income to the government, and after a certain period of contributions (40 quarters), you will be able to receive the corresponding benefits after retirement. How much is this part of the money? Naturally, it is very little... Someone once gave such a figure comparison, although the algorithm is not very accurate, but basically in line with the reality, you are in the right place! However, the news about the imminent collapse of the Social Security Fund has not stopped over the years, and when you retire there is still the promised number... No one can guarantee.

(1) base salary such as sales clerks, hotel waiters, etc., the hourly rate of 8 to 10 yuan, if the average monthly income of 1400: 10 years of work, the pension is 360; 20 years of work, the pension is 701; more than 35 years of work, the pension is 892.

(2) General income, such as clerks, monthly salary of 2000 to 3000, if the average monthly income of 2500: if you work 10 years, the pension is 643; if you work 20 years, the pension is 902; if you work more than 35 years, the pension is 1245.

(3) The median income of full-time jobs such as elementary school teachers, journalists, etc., with an annual salary of 40,000 to 50,000, if the average monthly income is 3500: if you work for 10 years, the pension is 765; if you work for 20 years, the pension is 1084; if you work for more than 35 years, the pension is 1565.

(4) Highly paid jobs such as professional white collar, annual salary of 60,000 to 100,000, if the average monthly income of 6000: if you work for 10 years, the pension is 993; if you work for 20 years, the pension is 1542; if you work for more than 35 years, the pension is 2131.

5) Top salary such as management, over 110,000 social security maximum, that is, the average monthly income of 9166: if you work for 10 years, the pension is 1283; if you work for 20 years, the pension is 2017; if you work for more than 35 years, the pension is 2605.

The current progressive retirement system in the U.S. was mandated by a related law passed by Congress in 1983, and for a period of time was effective in alleviating the lack of funding for Social Security in the 1970s. However, in 2010, the U.S. Social Security program appeared for the first time since the 1983 reform to fall short of its budget, and is expected to face the dilemma of "social security bankruptcy" by 2033, for which there is also a debate on whether to "raise the retirement age" in the United States.

U.S. Congress Senate Finance Committee Chairman Grassley has suggested that the retirement age of Americans will be raised to 69 years old. According to calculations, if the retirement age is postponed to 68, it will reduce the gap of 18% for the U.S. social security funds, and if the retirement age is postponed to 70, it will reduce the gap of 44% for social security funds. But again, this is problematic. Many people sarcastically say that if you sacrifice a secure old age, then it is likely to become a situation where "the person is gone, but the money is still there". The failure of the elderly to retire will also affect the job opportunities of young people.

2. Some companies and government pension plans (Pension Plan) do not require employee contributions

When it comes to this part is even more crying, the vast majority of companies are not providing Pension Plan, many companies are also implementing the old ways of the old man, new ways of the new man. Of course, government employees still have this plan, mainly for civil servants, in addition, some unions also provide corporate pensions.

3. Corporate Pension Plan (401K) is a corporate-led, employer-employee funded corporate supplemental pension system for those who provide this benefit in the company. Most companies offer a 401K plan, but the plan compensation varies.

4. Individual Retirement Plan (also known as IRA, Roth IRA, Annuity, Savings and Dividend Life Insurance)

A system of individual savings and retirement insurance that is the responsibility of the individual and is voluntary.

Q.4

What happens if I lose my money while I am alive? Do I need to rely on my children for retirement in the U.S.?

Most people do not need children to retire, and retirement in the United States is not a matter for children. Most people buy their own pensions and other benefits.

Q.5

When can I retire and receive a pension in the U.S.?

There are 3 types of situations, early retirement, normal retirement, and delayed retirement.

1. Early retirement

When you reach 62 years old, you can start receiving your pension, but you have to take a 30% discount, and the discount will be less for every month you delay receiving it.

2. Normal retirement (around 65-67, depending on the age of birth)

Depending on the date of birth, the U.S. Social Security Administration has set different normal retirement ages.

For those born in 1937 and before 1937, the retirement age is 65.

For those born between 1938 and 1942, the retirement age increases in one increment (e.g., retirement age is 65 years and 2 months for those born in 1938 and 65 years and 4 months for those born in 1939).

For those born between 1943 and 1954, the retirement age is 66 years.

For those born between 1955 and 1959, the retirement age is increased in one increment (e.g. retirement age is 66 years and 2 months for those born in 1955 and 66 years and 4 months for those born in 1956).

For those born in 1960 and after 1960, the retirement age is 67 years. Those who retired within the normal retirement age receive a full pension.

3. Delayed Retirement

Those who choose to delay retirement receive bonus earnings (DelayedRetirement Credits) on top of their original pension. If your normal retirement age is 66 and you choose to retire at 67, you will receive 108% of your monthly pension, and if you choose to retire at or after age 70, you will receive 132% of your monthly pension.

This voluntary, progressive retirement system is designed to allow people to make choices based on their own circumstances, and the graded pension access ratios, especially the incentive benefits for delayed retirement, have encouraged Americans to delay retirement to some extent.