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Jun 15, 2021 - 4:12:19 PM

QldPicker

Australia

360 posts since 4/17/2020

When one decides to longer turn up at their place of employment in The USA, what are the options available to fund existence?

Basically here in Oz the 'nominal' retirement age is 65ish, and when one retires there are basically three options;
1. Self funded retirement.
2. Government 'pension' which is means (investment assets) tested. This pension is a federal system.
3. Combination of self funded and government funding if one meets the asset criteria.

The family home is exempt from any eligibility asset test.

Jun 15, 2021 - 4:34:58 PM
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banjo bill-e

Tuvalu

11265 posts since 2/22/2007
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We have Social Security which provides an "old age pension" based upon your lifetime contributions, which were matched by your employers over the years. If you did not work enough to qualify you receive a bare subsistence income that basically gives you a little spending money while you have to live with someone else or in public housing, as it is not very much, under $1K. So it is not based upon need but rather workplace contributions. Your assets have nothing to do with and Bill Gates can receive his if he so desires.

But most would need to have private pension or savings or investment on top of Social Security if they want to continue their pre-retirement lifestyle.

Jun 15, 2021 - 4:45:09 PM
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rcc56

USA

3622 posts since 2/20/2016

It can be a complex subject, but here are the most important basics.

Over here, we have a government program called Social Security. It is mandatory.  If you are employed by someone else, a certain percentage of your pay is automatically deducted from every paycheck, and goes into an account under your name. If your are self-employed, you pay a percentage of your profits into Social Security when you pay your income tax.

When you reach retirement age, you can claim your Social Security benefits. For me it will be about $1100 a month. If you make a lot more than I do, you will get more, but there is a cap to the maximum amount that you will receive.  I would have to look it up, but I believe the maximum is somewhere above $2000 a month.

It would probably be pretty tough for most of us here to live on $1100 a month, so we have to make additional plans for retirement, such as personal savings and investments.

People who work "off the books," which means that neither they nor their employers are reporting wages to the government, are not contributing anything to Social Security, which means they won't get any benefits from those wages when they reach retirement age. If a person were to work off the books for their entire life, they would not get any Social Security payments.

Some employers offer pensions or other types of retirement plans, but Americans often change employers several times over their lives, which knocks out pensions and can complicate other types of employer sponsored retirement plans.

Edited by - rcc56 on 06/15/2021 16:50:38

Jun 15, 2021 - 5:25:09 PM

rcc56

USA

3622 posts since 2/20/2016

I just looked up the maximum. It is $2324 if you retire at age 62, $3113 if you wait until you're 66 to retire, and $3895 if you retire at 70. You have to make a heckuva lot more money over your working career than I've made to get those amounts.

For me, I'll get about $1100 if I claim my benefits at "full retirement age," which is 66 years 4 months for me; or about $1450 if I wait until I'm 70 to claim them.

Maybe I shouldn't have taken that vow of poverty when I quit my day job and went back into the music business when I was 35.

Edited by - rcc56 on 06/15/2021 17:27:24

Jun 16, 2021 - 12:17:49 AM

QldPicker

Australia

360 posts since 4/17/2020

How are Social Security benefits calculated for women (often/mostly married) who opted out of the workforce to care for and rear families?

Jun 16, 2021 - 3:09:08 AM

1114 posts since 9/6/2019

quote:
Originally posted by QldPicker

How are Social Security benefits calculated for women (often/mostly married) who opted out of the workforce to care for and rear families?


If they haven't accumulated the required 40 work credits they get nothing. They can apply for SSI, which is Supplemental Security Income, but as Bill said it isn't much. If the husband has died the wife qualifies for survivor benefits on the husband's social security as long as they were married for at least 9 months prior to the husband's death.

I was told early in my working career that I was a fool if I counted on social security as my only retirement fund.

Most employer pension funds, at least that I know of, are now in the 401K market and can be transferred when one leaves a company. This makes it easier to change jobs and not have to start at the bottom of the pension plan. Most of the 401K plans allow you to start receiving benefits without penalty at 59 1/2 I believe. That's my plan at least. I'm going to retire at 59 1/2 and live on what I have invested and my military retirement pension.

Jun 16, 2021 - 3:21:16 AM
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banjoy

USA

9675 posts since 7/1/2006

For a spouse who never worked, at retirement age there are survivor benefits if the spouse's mate has died. So the survivor would receive the benefits instead.

In the last few decades retirement pension funds have become cash cow gold mines for Wall Street and that ilk, to dip into for risky investments and it's been well (but not widely) reported that many of the large pensions funds are completely wiped out, gone, poof. Especially hard hit have been state pension funds, you know, public servants like teachers, firemen, policemen. This is a slow moving train wreck as I type these words, and you can google it to learn more and it's happening state-by-state. Because of risky, sometimes shady investments, many large pension funds have been sucked away and there seem to be very little accountability in the system. It's really amazing how billions of $$ just disappears and no one seems to pay the price, except the workers who lost everything.

Regarding age of retirement to qualify for Social Security, for folks about to retire like me, there are two ways to consider this. One, is monthly benefits, the second is overall $$ coming back in over time. Most folks look only at the monthly amount and don't think about the total amount received over time. It's a remarkable difference.

The Social Security website (ssa.gov) provide your entire work history once you set-up an account, and you can see exact to the $ benefits calculated at what age, and at what current income, benefits will change. I took those numbers and ran a spreadsheet for myself to learn how I could benefit most from early SS retirement, or if I should wait. Without question, it is WAY BETTER to retire and collect as early as possible. When I start collecting at age 62 (in about 14 months, you have to wait one month after your birthday to begin drawing) I will pull in about $720 per month. If I delay retirement by 6 months that goes up about $5 per month, but it would take me 11 years to break even on the total $$ in my pocket. If I delay until age 65, in goes up to about $850-ish (I cannot recall the exact figures as I type this) it takes about 15 years to break even.

This general rule applies to any level of benefits. The longer you wait to collect, the more you collect monthly, but it takes years and years to break even, if you had just started collecting at 62. If you wait until 70 to retire, the likelihood you'll break even drops to near zilch.

In other words, Uncle Sam wants to you gamble and wait on getting bigger monthly payments later, because you might be dead by then. My thinking is, if I wait to get that higher payout, I will have less time, if any, to enjoy it.

My dad decided not to retire at 65, then died suddenly at age 67, so he never saw the first penny of benefits he had worked for all his life. Sad. Mom got those benefits, though, and spent her way into financial oblivion and bankruptcy (but that's another thread going on right now too).

Also, in the US you can retire and collect benefits (at whatever age) and still earn up to $18,000 per year without affecting those benefits. Anything earned over that, is deducted from your benefits. In other words, there seems to be an income ceiling unless you have accumulated wealth, or a pension or other form of investment income, you're kind of locked in.

Edited by - banjoy on 06/16/2021 03:32:34

Jun 16, 2021 - 3:53:45 AM
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phb

Germany

2824 posts since 11/8/2010

quote:
Originally posted by banjoy

Because of risky, sometimes shady investments, many large pension funds have been sucked away and there seem to be very little accountability in the system. It's really amazing how billions of $$ just disappears and no one seems to pay the price, except the workers who lost everything.


Money never disappears, it just turns into "surplus productivity" for somebody else, this time most probably some Wall Street professionals... ;)

Jun 16, 2021 - 4:09:58 AM

banjoy

USA

9675 posts since 7/1/2006

phb

Yes yes, of course, that's what I meant to say ... "Surplus Productivity" ...

I didn't even mention pension that were wiped out due to outright fraud (as opposed to greed or stupidity) ... Enron ... WorldCom ... etc etc. Billion$ ... poof. But that's old news.

This is more current:

youtube.com/watch?v=_r0htm5uHPQ

Jun 16, 2021 - 6:03:55 AM
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Banjo Lefty

Canada

2286 posts since 6/19/2014

Retirement in Canada is slightly different. We have a government pension plan all working people pay into (actually two plans: one for Quebec and one for the rest of Canada, but they're "harmonized" so they effectively act as one) which pays out according to the credits a person has accumulated during their working life. The maximum isn't great, but there are two supplements available, paid according to need, and the result is (barely) enough to get by. Remember we have universal medicare, so the amount needed to get by is way less than in the US. If you have a private pension on top, you can be quite comfortable.

Jun 16, 2021 - 6:45:23 AM

YellowSkyBlueSun

Virgin Islands (U.S.)

204 posts since 5/11/2021

In the US, it works basically the same as what is described in the original post. Instead of calling it a "federal pension" we use the term "social security", but it's basically the same thing.

Social Security is perceived as insufficient, as you can see from some posts above, but that's because a lot of people don't realize that SS is meant to be "basic" income: it will pay for food and housing so a person can live, but it doesn't provide for anything beyond those most basic needs because that's not it's purpose. Social Security is a group fund, with no dollar value for the individual, and strict age limits on when you can receive benefits.

In addition to social security, there are (generally) two types of personal retirement funds: defined contribution and defined benefit.

Defined contribution plans, such as 401k or Individual Retirement Accounts (IRA), have a defined periodic contribution during employment and a variable benefit during retirement. E.G. you put a set $/month into various investments, and upon retirement you receive a payment based on market performance of your investments. These accounts are basically savings accounts, they have a dollar value and are personally owned by each individual. There are special tax rules that make these accounts fairly profitable if managed correctly. Owners of these accounts can also receive benefits (withdrawals from the account) at any age, under certain terms/conditions.

Defined benefit plans are what we typically call "Pensions". These are similar to Social Security, but they're based on a specific employer rather than being a government fund. These plans have a variable contribution during employment (or no employee contribution at all), and a defined benefit during retirement. E.G. the employer puts in a certain amount as needed, and upon retirement you receive a payment based on a formula based on your age/years of service/salary. These pensions typically have a "vesting" clause, so you have to work for a minimum number of years at the employer before you can receive a benefit. Generally, pension vesting is around 5 years. After you're vested, you can leave an employer and still eventually receive pension benefits when you retire. As with Social Security, pensions are a group fund with no individual dollar value and strict age limits.

In general, when you dig into it and read past the doom+gloom media headlines, you'll find that the US does indeed have a decent retirement system just like all the other developed countries. We also have universal healthcare for retired people, it's called "Medicare" and it works just fine.

Jun 16, 2021 - 10:02:18 AM

Brian T

Canada

18357 posts since 6/5/2008

I was offered a financial incentive addition to the business pension that would have evaporated by the time I turned 65. So I bailed out, went over the wall, at 60. The Fed. Gov. pension "bridging" meant a little less but for those 5 years to 65.
By being a little careful and living within my means, I am quite comfortably well off.

Moving away from the high cost of living in the city was one smart move. I get about the same service level for about 70% of the city price. I bought my home here in 2000 which was about 3-4 years before house prices took a leap. I could buy this house today for maybe 5X what I paid.

The next smart move was to pay off all big debts (loans and mortgages.) That was nearly 10 years ago now. I forget exactly. Doesn't seem to be an important date to remember.

Before I retired, I was building a mental list of the things, the hobbies, that I was going to pursue with a passion when I retired. Watercolor painting and photography to name 2 that I was fully equipped for. I'm proud to say that I have done absolutely none of what I planned.

As you know, I grow grapes and I do wood carving. I still go grouse hunting. In recent years, I have begun a collection of salt, mostly sea salts, from all across the world. Interesting. They sit on boxes all over the place. The packaging is attractive but different so any sort of a display is a puzzle.

I've probably accumulated 40-50 books on Pacific Northwest First Nations Art & Carvings.
There's another big one in the mail at the moment. I have read them all.

Retire. Do different stuff. Ignore your original plans. Refresh, you earned it. Sell off the stuff you will never use. I'm down from 12 shotguns to 2 favorites. I still make the time to sit and pick a repertoire of favorite music. I discovered with BG banjo that I can mentally step back and listen to my playing.

I'm told that people visit their own country last. Travel to the other end of your place.
Even if you could, ignore everywhere else for the next 5 years.

I hope that your health lets you do these things.

Jun 16, 2021 - 3:01:02 PM

12234 posts since 1/15/2005

quote:
Originally posted by YellowSkyBlueSun

In the US, it works basically the same as what is described in the original post. Instead of calling it a "federal pension" we use the term "social security", but it's basically the same ....snip

In general, when you dig into it and read past the doom+gloom media headlines, you'll find that the US does indeed have a decent retirement system just like all the other developed countries. We also have universal healthcare for retired people, it's called "Medicare" and it works just fine.


Beautifully explained YellowSky!

Jun 16, 2021 - 3:04:54 PM

12234 posts since 1/15/2005

quote:
Originally posted by banjoy

For a spouse who never worked, at retirement age there are survivor benefits if the spouse's mate has died. So the survivor would receive the benefits instead ........snip


Also, in the US you can retire and collect benefits (at whatever age) and still earn up to $18,000 per year without affecting those benefits. Anything earned over that, is deducted from your benefits. In other words, there seems to be an income ceiling unless you have accumulated wealth, or a pension or other form of investment income, you're kind of locked in.


Good for you Frank for doing all of that research for your upcoming event ...... and you are exactly right.  I did the same exact thing and started taking SS the day I was eligible.  The only mistake we made is that my wife could have been drawing half of what I receive rather than the amount she gets from her years of working and contributing.  I think you only get one shot at that, so I don't think I can change that now.  She is OK with it, but it would amount to an additional $300 or so per month.

Jun 16, 2021 - 3:11:55 PM

QldPicker

Australia

360 posts since 4/17/2020

quote:
Originally posted by YellowSkyBlueSun

In the US, it works basically the same as what is described in the original post. Instead of calling it a "federal pension" we use the term "social security", but it's basically the same thing.
 


Not quite, because here in Oz the 'pension' derived has nothing to do with contributions made during a persons working life. 

Basically you get the pension if you qualify under 'the assets test'. The family home, motor vehicles, home contents (including banjos) and leisure products etc are not counted. Assets that are assessed include bank funds, superannuation account balances and property (real estate) other than primary residence. It does not matter whether a direct income is taken from these assets or not. The income producing capacity of the asset is 'deemed'. 

Therefore a spouse who had not 'worked' during their life, gets the benefit IF the qualify under the assets test.

Seems to me that many women in particular in The USA get a raw deal!

Jun 16, 2021 - 3:42:36 PM

rcc56

USA

3622 posts since 2/20/2016

Well, everything is relative. The number of US women who do not work outside their home is getting rather small.

Jun 16, 2021 - 3:47:22 PM

QldPicker

Australia

360 posts since 4/17/2020

quote:
Originally posted by rcc56

 The number of US women who do not work outside their home is getting rather small.


Same here. Many more women work outside the home.

Still does not justify getting absolutely nothing for doing the most important job in society!

Jun 16, 2021 - 4:00:12 PM
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rcc56

USA

3622 posts since 2/20/2016

I agree completely.

In these modern times, I hope no one finds this old saw to be offensive. I'm going to post it anyway.
"Man just works from sun to sun, but woman's work is never done."

Edited by - rcc56 on 06/16/2021 16:00:54

Jun 17, 2021 - 5:26:44 AM
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YellowSkyBlueSun

Virgin Islands (U.S.)

204 posts since 5/11/2021

The system in the US is not affected by sex/gender. Nobody is getting a bad deal. Married people that don't work presumably have a spouse that does, and in that case the non-worker gets a social security pension based on their spouses work history. Man or woman, the system works the same for everyone.

You don't get to pull out of the pot unless you put something in. Either by working, or supporting the family of someone that works. I think that's fair.

Jun 17, 2021 - 5:56:13 AM
Players Union Member

Eric A

USA

1257 posts since 10/15/2019

In the US, a non or lesser working spouse can get a social security benefit based on either their own work history, or 50% of the working spouse's benefit, whichever is greater.

In addition, when one spouse dies (for example quite often the higher earning husband) the surviving spouse benefit is equal to what the high earner was getting.  So, the widow's benefit is bumped up to her husband's higher benefit amount when he dies, for example.

There are other rules which add complexity, but that's the gist of it.

That being said, if you have no other savings or retirement plans, social security alone is going to be a fairly meager retirement.  Social Security was never meant to be a stand alone comfortable retirement.  Merely a supplement, a little something to help keep the wolf away from the door, in addition to whatever other savings or support you may have.

Edited by - Eric A on 06/17/2021 06:06:42

Jun 17, 2021 - 6:06:10 AM

banjoy

USA

9675 posts since 7/1/2006

quote:
Originally posted by Eric A

In the US, a non or lesser working spouse can get a social security benefit based on either their own work history, or 50% of the working spouse's, whichever is greater.

In addition, when one spouse dies (for example quite often the higher earning husband) the surviving spouse benefit is equal to what the high earner was getting. So, the only reduction for a couple is what the lower earning spouse was getting regardless of which one dies. So, the widow gets her husband's higher benefit amount when he dies, for example.

There are other rules which add complexity, but that's the gist of it.


That sounds right. Both my dad and mom were workers who paid into the system. When dad died, my mom began collecting survivor benefits, then when she retired later on (I think she retired at 70) she began collecting the higher benefits my dad would have been collecting, as I understand it. She received a little over $1600 per month starting in 1992, which grew over time to $1800 per month in 2020 because of COLA increases. So she got regular payments for the next 29 years. And she received dad's pension on top of that. So not a bad deal for her.

As I understand it, monthly payments are advances for the next month, not the month just past. So SSA will usually claw back the last month's payment made after death, but it depends on when the payment was made during the month. When mom died, she had not yet received next month's advance payment so there was no clawback.

Edited by - banjoy on 06/17/2021 06:07:55

Jun 17, 2021 - 6:15:17 AM

74700 posts since 5/9/2007

I was always self-employed as a commercial fisherman.
No real retirement,but SSecurity and VA benes get me around 1200/mo.
I quickly learned how to "get by" with that small amount and want for nothing.

Jun 17, 2021 - 9:07:30 AM

6804 posts since 9/5/2006

i retired at 62 and mine is about 68% of what i was bring home working 40 hours a week...

Edited by - 1935tb-11 on 06/17/2021 09:08:07

Jun 17, 2021 - 9:12:45 AM
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390 posts since 4/11/2019

Eat cat food and crackers, you'll be fine.

Jun 17, 2021 - 9:45:04 AM

YellowSkyBlueSun

Virgin Islands (U.S.)

204 posts since 5/11/2021

One thing I've always wondered, what expenses do retired people have, anyway? No mortgage, no daycare or tuition, no car payments, no need for saving a lot. You've basically got your property taxes, phone/internet bill, fuel/gas/electric, and food. Car/home maintenance is probably a couple hundred/month. So what's the typical retiree budget look like? Maybe $1000/month total expenses, at most? Seems to me that it should be fairly simple to live on Social Security when you've got such low overhead.

Jun 17, 2021 - 9:47:50 AM

chuckv97

Canada

58214 posts since 10/5/2013

Wait a sec,,, I pay rent & car payments. Musta done something wrong somewhere along the way,,, hmmm

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