History of the American pension scheme

The establishment of the American pension scheme is closely linked with the measures that were taken by Franklin D. Roosevelt in 1935 in the New Deal, facing the worldwide economic crisis. Here, the American state took over the responsibility to ensure citizens’ social security through a broad system that worked at federal level for the first time. The underlying principle in the American pension scheme is, just like in Germany, a pay-as-you-go system. This means that the people currently in gainful employment pay for the pensions of the currently old citizens by contributing to the pension funds. Since 1950, pension payments are adapted to the current inflation.

The point at which retirement age is reached in the USA depends on one’s birth year. Every American born in 1960 or later can retire at the age of 67. People who choose early retirement – this is possible from the age of 62 on – face according deductions. Those who, on the other hand, retire only after the age of 67, can obtain bonuses on their pension.