Lawful retirement provision: Old Age Insurance

The Security System of the USA is comprised of the Survivors Insurance, the Disability Insurance and the Old Age insurance. Unlike the German system, all Americans pay contributions to the American pension scheme, even self-employed people. However, a similarity is that the basis of both the German and the American pension scheme is a pay-as-you-go system. This means people in gainful employment pay the older generation’s pensions.

An important difference is the fact that the American pension scheme was never devised to come up for insurance for old age by itself. Unlike in Germany, it has always been nothing more but a grant of a basic insurance. American retirees can only keep the lifestyle they’re used to if they additionally resort to operational and private retirement provision. The German pension scheme is becoming more and more like the American one in this aspect, because operational and private retirement provision are starting to become more and more important there as well.