There are options one could meet that would allow one to retire to the U.S. Read our article and learn more about Retirement Plans!
The retirement system in the United States combines federal benefits (such as Social Security), private savings, tax-deferred savings accounts, and employer-sponsored retirement benefits—such as defined contribution plans or defined benefit plans such as pensions. The Social Security system only provides less than half of the income that most Americans earn while working; therefore, the US system is highly subsidized by private savings.
Retirement Plans
There are many types of retirement plans in the United States, and most have significant tax benefits. Almost all require that you contribute to them, and some are solely funded by your employer (or yourself if you are the business owner). Some are funded entirely by you. Most offer the deferral (and, in the case of the Roth IRA, the permanent nonrecognition of income or taxes) of payment and taxes until you withdraw the funds, and they may provide for a deduction against your taxable income for contributions that you make. There are two primary types of retirement plans: defined benefit plans and contributions plans.
Defined Benefit Plan
A defined benefit plan, funded by the employer, promises you a specific monthly benefit at retirement. The plan may state this promised benefit as an exact dollar amount, such as $100 per month at retirement. Or, more often, it may calculate your benefit through a formula that includes factors such as your salary, your age, and the number of years you worked at the company. For example, your pension benefit might be equal to 1 percent of your average salary for the last five years of employment times your total years of service.
Defined Contribution Plan
On the other hand, a defined contribution plan does not promise you a specific benefit amount at retirement. Instead, you and/or your employer contribute money to your account in the plan. In many cases, you are responsible for choosing how these contributions are invested and deciding how much to contribute from your paycheck through pretax deductions. Your employer may add to your account, in some cases, by matching a certain percentage of your contributions. The value of your account depends on how much is contributed and how well the investments perform. At retirement, you receive the balance in your account, reflecting the contributions, investment gains or losses, and any fees charged against your account. The 401(k) plan is a popular type of defined contribution plan. There are four types of 401(k) plans: traditional 401(k), safe harbor 401(k), SIMPLE 401(k), and automatic enrollment 401(k) plans. The SIMPLE IRA plan, SEP, employee stock ownership plan (ESOP), and profit-sharing plan are other examples of defined contribution plans.
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