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Old 01-30-2015, 09:42 AM
 
7 posts, read 5,338 times
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Hi,
I just want to ask what you have to do in order to be eligible for retirement (pension) in USA. I'm 35 years old and have been living here over 10 years, but still do not know what to exactly to do in order to plan for retirement.
My questions are How long do you need to work in order to be eligible? As a self employee I understand you need to pay social security tax every year which is 12.4%, what I do not understand is how long do you need to contribute this.
what is the minimum retirement in USA?
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Old 01-30-2015, 09:56 AM
 
Location: Florida -
8,764 posts, read 10,848,423 times
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There really is no 'minimum or eligible retirement age', unless you are speaking of when one is eligible for Social Security. With SS, the minimum eligible age (unless one is disabled) is 62, at which time one (who has paid into SS for 40? quarters) can receive a reduced SS "pension."

You would be wise to start planning for your own retirement by regularly investing funds in a self-directed Individual Retirement Account. You can do that with either a ROTH IRA (post-tax dollars) or a regular IRA (pre-tax dollars). The main difference is that later, when you start withdrawing retirement dollars, you will pay taxes at that time on the gains in your regular IRA, but, not with your ROTH IRA.
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Old 01-30-2015, 10:17 AM
 
Location: Central Massachusetts
4,800 posts, read 4,850,322 times
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Quote:
Originally Posted by florida2001 View Post
Hi,
I just want to ask what you have to do in order to be eligible for retirement (pension) in USA. I'm 35 years old and have been living here over 10 years, but still do not know what to exactly to do in order to plan for retirement.
My questions are How long do you need to work in order to be eligible? As a self employee I understand you need to pay social security tax every year which is 12.4%, what I do not understand is how long do you need to contribute this.
what is the minimum retirement in USA?

I agree with jghorton. You are young enough not to be thinking about SS but you do need to be putting away money. Use what you have to your advantage and compound interest. Save as much as you can afford in a Roth Ira or 401k. If your employer is providing you a 401k (roth or traditional) take advantage of that for the matching if any. If there is no matching read through the material provided and contact other companies like Fidelity, Merril Lynch, Charles Schwab or others and hear what they have to say. Advice here is do not buy into anything on the day they arrive. Tell them you will look it over and talk to others as well. Don't be over agressive but don't be too timid either. Look at funds with a track record. That information will be an indicator of future performance, and as the fine print will read that it is subject to market conditions.
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Old 01-30-2015, 11:02 AM
 
7 posts, read 5,338 times
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Thanks for reply, I will look up some of this options.
But what you are saying is basically that after I pay off 40 quarters of social security tax(which is equal 10 years) I will get social security when I reach retirement age? What then makes people motivated to work until late age? How do they count the retirement then? is it average of the money I will make in those 10 years(40 credits)?
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Old 01-30-2015, 11:14 AM
 
Location: Central Massachusetts
4,800 posts, read 4,850,322 times
Reputation: 6379
Quote:
Originally Posted by florida2001 View Post
Hi,
I just want to ask what you have to do in order to be eligible for retirement (pension) in USA. I'm 35 years old and have been living here over 10 years, but still do not know what to exactly to do in order to plan for retirement.
My questions are How long do you need to work in order to be eligible? As a self employee I understand you need to pay social security tax every year which is 12.4%, what I do not understand is how long do you need to contribute this.
what is the minimum retirement in USA?
Quote:
Originally Posted by florida2001 View Post
Thanks for reply, I will look up some of this options.
But what you are saying is basically that after I pay off 40 quarters of social security tax(which is equal 10 years) I will get social security when I reach retirement age? What then makes people motivated to work until late age? How do they count the retirement then? is it average of the money I will make in those 10 years(40 credits)?
Yes that is correct. It takes the amount of money earned in that period and with some calculations you will get a stypend and not much of a retirement income.

Your other question as to what is in place to keep people motivated enough to keep working until retirement age, is simple nothing but self preservation and dignaty. I would never take money for doing nothing. That is what makes some people isanely mad. It has lots of faults in the system and some people take advantage of those faults.
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Old 01-30-2015, 11:43 AM
 
Location: Los Angeles area
14,018 posts, read 17,744,100 times
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I'm not sure Florida2001 is understanding what he is being told. If a person works and pays FICA taxes for 40 quarters (10 years), that is the MINIMUM requirement to received Social Security retirement benefits beginning at age 62 for a reduced benefit. But the amount of the benefit after only 40 quarters will be minimal. The more years one works, up to 35 years (140 quarters), the higher the benefit will be (the wages being equal).

Therefore, the more years (up to 35) and the higher the wages (up to a certain cap which is somewhere around $115,000 a year), the greater the benefit amount.

Florida2001, I hope you are not hoping to live off what you will get after working for ten years. If so, you are in for a very rude shock indeed.
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Old 01-30-2015, 12:36 PM
 
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of course not, Im just trying understand the system here.
I actually asked, because I know few people who have dual citizenships working here, paying income and social security taxes and want to go back to their home countries to retire. For them the minimum of 10 years is basically enough.
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Old 01-30-2015, 12:45 PM
 
7 posts, read 5,338 times
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I have another question, how the person who has never worked or worked only couple of years let's say 10 can live when she reach retirement age. Some women in this country do not work , they are housewives or have only part times. How do they cumulate the credits or how do they plan the retirement?
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Old 01-30-2015, 01:09 PM
 
Location: East of Seattle since 1992, originally from SF Bay Area
29,806 posts, read 54,486,657 times
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The longer you work and the more you make the bigger your social security benefit will be. For the maximum you have to work at least 35 years, since the highest 35 years of pay are used in the calculation.

For pensions offered by companies the years can vary greatly. Here for example, you can get a pension after only 5 years working, though it won't be much. The maximum would be at age 65 with 30 or more years of service. Compensation is based on years of service and the 60 highest continuous months of pay (most of the time this is the last 60 months of working).
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Old 01-30-2015, 02:25 PM
 
674 posts, read 839,994 times
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Quote:
Originally Posted by florida2001 View Post
I have another question, how the person who has never worked or worked only couple of years let's say 10 can live when she reach retirement age. Some women in this country do not work , they are housewives or have only part times. How do they cumulate the credits or how do they plan the retirement?
Stay-at-home wives get 1/2 of their husband's FRA SS benefits. (So can any wife for that matter if it is more than theirs would be). Divorced women get half as well as long as they stay married 10 years. And widows get their husbands full amount he would get at FRA when they reach 60.
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