United States (US)
The United States is a federation of 50 states and the District of Columbia spanning six time zones from the Atlantic to the Pacific, plus Alaska and Hawaii.
Retirement & Pension in United States
State pension, contribution refunds, private pension vehicles, and international agreements.
US retirement is a three-legged stool: Social Security + employer plan + personal savings. Social Security alone replaces approximately 40% of pre-retirement income. The 401(k) is the dominant employer vehicle; traditional defined-benefit pensions are now rare outside government. The Social Security Fairness Act (signed January 5, 2025) repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) retroactively from January 2024, benefiting public servants with mixed public/private careers.
State Pension
Social Security (OASDI — Old-Age, Survivors, and Disability Insurance): 6.2% employee + 6.2% employer on the first $184,500 of wages in 2026 (Social Security wage base, up from $176,100 in 2025). Medicare: 1.45% employee + 1.45% employer on all wages (no ceiling); an additional 0.9% Medicare surtax applies to employees earning over $200,000 ($250,000 married). 40 quarters of credits (10 years of work) is the minimum to qualify for any benefit. Benefit is based on the highest 35 years of indexed earnings (AIME — Average Indexed Monthly Earnings).
Full Retirement Age (FRA): 67 for anyone born 1960 or later. Early claiming from age 62 results in a permanent reduction of up to 30%. Delayed claiming from FRA up to age 70 earns an 8% Delayed Retirement Credit per year, yielding up to 124% of the standard benefit. Maximum benefit at FRA in 2026: approximately $4,018/month. Average benefit: approximately $1,900/month.
40 quarters (10 years) of work credits required to qualify for any Social Security retirement benefit.
Log into ssa.gov/myaccount (my Social Security) for a personalised benefit estimate based on your actual earnings record. The estimate shows projected benefits at age 62, FRA, and 70. Review your earnings record annually for errors — uncorrected mistakes permanently reduce your benefit.
US citizens and most legal residents can receive Social Security payments abroad. Exceptions: payments cannot be made to residents of Cuba or North Korea. Non-US citizens from countries without a totalization agreement may face restrictions after extended absence. Direct deposit to a foreign bank account is available in most countries. The Social Security Fairness Act (signed January 5, 2025) repealed the WEP and GPO effective January 2024 — former public-sector employees who previously received reduced benefits due to WEP/GPO are now entitled to full benefits and back payments.
Pension Contribution Refund on Leaving United States
The US does NOT offer refunds of Social Security contributions to departing workers under any circumstances. There is no opt-out or withdrawal mechanism. However, totalization agreements allow US work credits to be combined with home-country credits to qualify for benefits in either country.
No refund system exists for Social Security contributions. All workers — regardless of nationality or length of stay — are ineligible for any refund.
Not applicable — no refund system exists.
Nothing is refunded. Contributions are non-recoverable.
Not applicable for refund. To claim totalization benefits, contact the SSA International Programs office and file Form SSA-2490-BK (Application for Benefits under a US International Social Security Agreement).
Non-citizens who leave the US without 40 quarters of Social Security credits lose those contributions unless their home country has a totalization agreement with the US (currently 30 countries). The agreement allows combined work periods to meet the minimum qualifying threshold in each country, and each country pays a pro-rata pension based on contributions made in that country.
International Totalization Agreements
The US has totalization agreements with 30 countries (as of 2026): Italy, Germany, Switzerland, Belgium, Norway, Canada, UK, Sweden, Spain, France, Portugal, Netherlands, Austria, Finland, Ireland, Luxembourg, Greece, South Korea, Chile, Australia, Japan, Denmark, Czech Republic, Poland, Slovakia, Hungary, Brazil, Uruguay, Iceland, and Slovenia. These agreements: (1) eliminate dual Social Security taxation for workers temporarily assigned abroad (one-country rule); (2) allow combining work credits in both countries to meet minimum qualifying thresholds; (3) enable each country to pay a pro-rata pension. Major expat destinations with NO agreement include: Mexico, India, China, UAE, Singapore, Thailand, and most of Sub-Saharan Africa. See ssa.gov/international for the full list and individual agreement pamphlets.
Private Pension Vehicles
401(k)
401(k) PlanW-2 employees whose employer offers a 401(k) plan. Most large and mid-size US employers offer one.
None directly, but employer matching contributions are effectively a subsidy — typically 50%–100% of the first 3%–6% of salary. Always contribute enough to capture the full employer match.
Traditional 401(k): pre-tax contributions reduce current taxable income; growth is tax-deferred; withdrawals taxed as ordinary income in retirement. Roth 401(k): after-tax contributions; growth and qualified withdrawals are permanently tax-free.
$24,500 employee elective deferral in 2026 (up from $23,500 in 2025). Age 50–59 and 64+: additional $8,000 catch-up = $32,500 total. Age 60–63 (SECURE 2.0 enhanced catch-up): additional $11,250 = $35,750 total. Total plan limit (employee + employer contributions): $72,000 in 2026.
Roll over to a new employer 401(k) or to a Traditional IRA when leaving a job. Do not cash out — a mandatory 20% withholding, 10% early withdrawal penalty (if under 59½), and income tax apply, often consuming 30–40% of the balance.
High earners ($150,000+ in FICA wages from the same employer in 2025) must make catch-up contributions on a Roth basis in 2026 (SECURE 2.0 rule).
Traditional IRA
Individual Retirement Account (Traditional)Individuals with earned income. Contributions are deductible if you have no workplace plan, or if income is below phase-out thresholds.
None.
Contributions may be tax-deductible (phase-out begins at $81,000 single / $123,000 married filing jointly for those covered by a workplace plan in 2026). Growth is tax-deferred. Withdrawals taxed as ordinary income.
$7,500 in 2026 (combined Traditional + Roth IRA limit). Catch-up age 50+: additional $1,100 = $8,600 total (the catch-up amount increased from $1,000 for the first time in 2026).
Fully portable between custodians via direct transfer or 60-day rollover.
Required Minimum Distributions (RMDs) begin at age 73 (SECURE 2.0). The non-deductible IRA is useful as a backdoor Roth IRA strategy for high earners who exceed Roth income limits.
Roth IRA
Roth IRAIndividuals with earned income below the phase-out range. Phase-out begins at $153,000 (single) / $230,000 (married filing jointly) in 2026; fully phased out above $168,000 single / $240,000 MFJ.
None.
After-tax contributions; all growth and qualified withdrawals are permanently tax-free. No RMDs during the account owner's lifetime. Contributions (not earnings) can be withdrawn at any time without penalty.
$7,500 in 2026 (shared with Traditional IRA limit); $8,600 if age 50+ (with increased $1,100 catch-up).
Fully portable between custodians.
The Roth IRA is especially valuable for younger workers in lower tax brackets who expect higher future rates. No RMD requirement makes it ideal for estate planning. Backdoor Roth conversion available for high earners.
HSA (Health Savings Account)
Health Savings AccountIndividuals enrolled in a qualifying High-Deductible Health Plan (HDHP). One of the most powerful retirement vehicles available due to triple tax advantage.
None.
Triple tax advantage: (1) contributions are tax-deductible or pre-tax via payroll; (2) growth is tax-free; (3) withdrawals for qualifying medical expenses are tax-free. After age 65, non-medical withdrawals are taxed as ordinary income (like a Traditional IRA) — making it effectively a fourth retirement account.
$4,400 individual / $8,750 family in 2026. Additional $1,000 catch-up for age 55+.
Fully portable across employers and custodians. The balance never expires.
Invest HSA funds in low-cost index funds rather than leaving in cash. The strategy of paying current medical expenses out of pocket and saving receipts allows tax-free reimbursement later — turning the HSA into a long-term investment account.
SEP-IRA / Solo 401(k)
Simplified Employee Pension IRA / Individual 401(k)Self-employed individuals and small business owners without employees (Solo 401(k)) or with employees (SEP-IRA).
None.
Pre-tax contributions reduce current taxable income. Growth is tax-deferred. Withdrawals taxed as ordinary income. Roth Solo 401(k) option available for tax-free growth.
SEP-IRA: 25% of net self-employment income up to $72,000 in 2026. Solo 401(k): $72,000 total in 2026 ($80,000 if age 50+; $83,250 if age 60–63 with enhanced catch-up). Solo 401(k) allows employee deferral portion of $24,500 + employer profit-sharing up to the $72,000 annual additions limit.
Rollover to a Traditional IRA or new employer plan when closing the business.
Solo 401(k) generally preferred over SEP-IRA for high-earning self-employed because the employee deferral component allows higher contributions at lower income levels. SEP-IRA is simpler to administer for small businesses with employees.
Early Retirement Options
Early access to 401(k)/IRA before age 59½ triggers a 10% penalty plus income tax unless an exception applies. Key exceptions: SEPP (Substantially Equal Periodic Payments / 72(t) rule — penalty-free but complex); Rule of 55 (access current employer 401(k) penalty-free if you separate from service at age 55 or later); first-time home purchase ($10,000 IRA lifetime limit); permanent disability; substantially equal medical expenses; health insurance premiums during unemployment. Roth IRA contributions (not earnings) can always be withdrawn without penalty. FIRE (Financially Independent, Retire Early) movement uses the Rule of 72(t), Roth conversion ladder, and taxable brokerage accounts to bridge the gap before 59½.
Pension Gap Warning
Social Security alone is insufficient for a comfortable middle-class retirement — it replaces roughly 40% of pre-retirement income for average earners and less for high earners. Target saving 15%–20% of gross income from early in your career. The 4% safe withdrawal rate suggests needing approximately $1 million in savings per $40,000/year of desired income. Americans are significantly under-saved: the median retirement account balance for working-age households is well below what is needed. Expats who spend years abroad without contributing to Social Security face a permanent reduction in lifetime benefits unless covered by a totalization agreement. Foreign workers in the US on temporary visas (H-1B, L-1, etc.) who leave before accumulating 40 quarters should research whether their home country has a totalization agreement with the US — otherwise their FICA contributions produce no benefit.
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Retirement & Pension
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