American Social Security & Retirement Pensions

1935: Social Security Act (Part of President Roosevelt’s New Deal measures)

It created a social insurance program

designed to pay retired workers age 65
or older a continuing income after
retirement. It's run by the Social Security
Administration (SSA), a federal agency
which is responsible for “retirement
benefits” and “Medicare”.

The future of the Social Security?

The American Social Security system is
financed by the pay-as-you-go1 principle
This means that all employed persons
pay into the system to cover the benefits
of the recipients. At the same time, employees build up their own pension entitlements for later.

 Some observers have raised concerns about the aging of the U.S. population and the viability
of a system in which fewer active workers will support a greater number of retirees and
increases in the cost of living. The Social Security Trust Fund is expected to be exhausted by the
2030s.

Retirement
Age

• Americans born before 1960 receive retirement benefits (= pensions) from the age of 65.

• For Americans born after 1960 (most workers), the retirement age is 67 years.

NB1: Retirement plans in the USA also offer the option to receive Social Security benefits as early as at
the age of 62. Those who take advantage of this "flexible age limit" must expect a reduction in pension
benefits of around 5-6% for each year of early retirement.

NB2: However, the opposite is also possible: Americans who choose to wait until age 70 to retire will
receive an additional 5-6% for each extra year of contributions

During the covid-19 pandemic, both the Great Resignation and the Great Retirement were in the news
constantly, with labour statistics indicating that unprecedented numbers of workers were leaving their
jobs and older workers were leaving the workforce entirely. But another trend also emerged: The Great
Return, with older workers re-entering the workforce to join those who never left.

1
Pay-as-you-go system : système par répartition
The Social Security system in the USA cannot completely sustain the standard of living in old age but
is more of a basic provision. Therefore, it is usually necessary for American employees to supplement
their old-age pensions themselves with extra company or private pension plans.

A company pension plan:

Medicare
The health insurance provided by the social security for Americans over 65

In the USA, about 60% of Americans under 65 get insurance through their jobs (full-time employees
are eligible for employer-paid insurance if they work for companies with 50 or more workers): you
need to be employed to have a health insurance, and most employers don’t extend health insurance
coverage to retirees.

 Americans aren’t eligible for Medicare (social security health programme) until age 65.
However, Medicare doesn’t cover all healthcare services (dental procedures, dentures, eye
exams, eyewear, hearing aids and many prescription drugs).

 More and more seniors continue working beyond the retirement age so they can receive
employer-paid health insurance. Some are working into their 80s and 90s because they don’t
have the savings to retire, or need to stay on the payroll2 to keep receiving health insurance
benefits

2
To stay on the payroll : rester partie des effectifs de l’entreprise