black swan

I am living in Australia but was reading about the American social security system for retirees.
Apparently you can draw retirement at 62yrs but receive less than if you wait until you are 65yrs. My question is do you have to pay into it like the British system while you are working with insurance stamps. Or is it taken out of the tax you have paid while working, like the Australian system, which is means tested.

civilservant

You pay in while working, 40 quaters is required.

The reality of course is that you are paying the SS for current retirees, and people working when you retire are paying yours (if it still exists then!)

carcajou

You pay while you are working.

A lot of people depend on it, and one of the great fears of the Millennial generation is that it won't be there when we retire.

As civilservant said 40 quarters is the minimum but you won't get much if that's all you pay in. They average your income over 40 years and then drop your 10 worst years - so if you have only 40 quarters that is 20 years they will count as "zero."

robin1234

You can start your retirement income anytime between age 62 and age 70. Full retirement age is 66. There is a simple table that indicates what percentage of full retirement income, 66 being 100%, you'll get if you start the income stream any month between age 62 and age 70.

Yes, there's a tax called FICA, separate from income tax, the equivalent of UK NI contributions (stamps as was.)

Pulaski

It is more like the British National Insurance. It is a mandatory "tax" that you pay while you're working, but it is separate from income tax.

Unlike UK NI you cannot make voluntary payments into the US SS system while you are outside the US.

black swan

Thank you for explaining this to me. It does sound more similar to the British system, an insurance for retirement. Unfortunately Australia does not have such a system & so is means tested, although future generations will be able to access Superanuation.