TLDR;
This video provides a comprehensive overview of the retirement system in America, focusing on Social Security. It explains how to earn retirement rights, how the salary is calculated, and the factors that influence pension amounts. The video also touches on survivor benefits and the importance of additional retirement savings through private pension systems and investments.
- Social Security is a state-supported retirement system in America, similar to Türkiye's Social Security Institution.
- Retirement rights are earned through a credit system, with 40 credits needed to qualify for retirement.
- The Social Security Administration (SSA) calculates retirement benefits based on the highest earning 35 years of a person's work history, adjusted for inflation.
- The video highlights the possibility of receiving dual pensions from both Türkiye and America.
- It emphasizes that relying solely on Social Security for retirement may not be sufficient, and additional savings through private pension systems and investments are crucial for a comfortable retirement.
Introduction to Retirement in America [0:00]
The video introduces the topic of retirement in America, addressing common questions about eligibility, conditions, and potential benefits. It promises a detailed explanation of the American retirement system, including scenarios based on different salary rates and working years. The presenter aims to provide clarity on how retirement calculations are made and what conditions must be met to retire in the United States.
Understanding Social Security [2:31]
The presenter explains that Social Security in America is a state-supported retirement system, similar to the Social Security Institution in Türkiye. It covers retirement pensions, disability benefits, and survivor benefits for widows and orphans. A 6.2% FICA tax is deducted from employees' salaries, with employers contributing an equal amount. FICA tax covers Social Security and Medicare, providing healthcare during retirement.
Earning Retirement Rights in the USA [3:36]
The video clarifies that it is possible to retire dually from both Türkiye and America. Individuals can earn new retirement rights in America even if they are already retired or receiving a pension from Türkiye. To earn retirement rights in the USA, a credit system is used, requiring at least 40 credits to be eligible for retirement. A maximum of 4 credits can be earned each year, meaning one can qualify to retire within 10 years. In 2025, earning one credit requires $1,730. Anyone earning over $69,920 annually can earn the maximum of 4 credits per year.
Salary Calculation System [6:07]
The Social Security Administration (SSA) calculates retirement benefits by examining the highest earning 35 years of an individual's work history. If someone has worked less than 35 years in America, the SSA adds zeros for the remaining years to make up the 35-year period. The SSA then calculates the Average Indexed Monthly Earnings (AIME), adjusting for inflation to determine the average monthly income.
Band Points Calculation [8:52]
The SSA uses band points to calculate retirement benefits, aiming to protect low-income workers. Band Points are the breaking points that determine which rates will be applied to which slices of AIE value. For 2025, the first band point is $1,174, and the second is $7,078. The first $1,174 of the AIME is multiplied by 90%, the portion between $1,174 and $7,078 is multiplied by 32%, and the part above $7,078 is multiplied by 15%. The sum of these results determines the monthly salary at full retirement age (67 years old).
Band Point Calculation Example [11:19]
The presenter provides an example of how retirement benefits are calculated using band points. If an individual's AIME value is $6,000, the first $1,174 is multiplied by 90% ($1,056.60), and the remaining $4,826 (up to $6,000) is multiplied by 32% ($1,544.32). The sum of these values ($1,056.60 + $1,544.32 = $2,600.92) represents the monthly retirement benefit at age 67.
Retirement Scenarios and Age Adjustments [13:48]
The video explores different retirement scenarios based on annual income and years worked. For example, someone earning $50,000 per year for 10 years would receive a pension of $1,062 at age 67. Retiring early at 62 results in a permanent 30% reduction in benefits, while delaying retirement until age 70 increases benefits by 24%. The presenter provides a table illustrating various scenarios with different income levels ($50,000, $100,000, $150,000) and work durations (10, 20, 30 years), showing the impact on monthly retirement benefits at different retirement ages (62, 67, 70).
Additional Considerations for Retirement Planning [19:49]
The presenter notes that even with 10 years of work, individuals have the chance to create a nice retirement income in terms of foreign currency, in terms of dollars, after the age of 67 or if they want earlier, after the age of 62. For those planning to retire in the United States, Social Security benefits alone may not be sufficient to maintain their standard of living. Therefore, it is crucial to consider additional retirement savings through private pension systems and investments. The presenter mentions that private pension systems can be supported by companies or set up individually.
Payment Method and Cost of Living Adjustments [21:47]
Retirement benefits are deposited monthly into a designated bank account and continue for life. The benefits are subject to annual cost of living adjustments (COLAs) to account for inflation. The presenter contrasts this with the situation in Türkiye, where inflation statistics and pension adjustments may not accurately reflect the real cost of living.
Early Retirement, Medicare, and Survivor Benefits [23:10]
While individuals can retire as early as age 62 with reduced benefits, Medicare (free healthcare) does not begin until age 65, regardless of retirement age. In the event of death, survivor benefits may be available to certain relatives, such as spouses, children under 16 (or disabled), and dependent parents over 62. The amount paid varies depending on the deceased person's Primary Insurance Amount (PIA), with spouses typically receiving 70% to 100% of the deceased's salary. There are limits on the total amount paid to the family, usually around 150% to 180% of the deceased's salary. Applying for Survivor Benefits is necessary to receive them.
Conclusion and Additional Financial Planning [27:21]
The presenter summarizes the key points of the American retirement system and emphasizes the importance of understanding the details and planning accordingly. They reiterate that Social Security benefits alone are often insufficient for a comfortable retirement in the United States. The presenter encourages viewers to explore private retirement systems, company-supported plans, and individual investments to secure their financial future. Future videos will cover these topics in more detail, including individual retirement systems and various investment options like stocks, real estate, and crypto.