Pensions for Non-Workers in the USA

Pensions in the United States are often associated with traditional employment. Yet, non-workers such as stay-at-home parents, caregivers, and others can also access retirement benefits. This article explores how pensions work for non-workers in the USA.

Social Security Benefits

Social Security is an essential source of retirement income for many, including non-workers. This federal program provides financial support during retirement, primarily based on your work history and accumulated credits. Generally, you need to earn 40 credits, each representing about three months of work, to qualify for Social Security retirement benefits.

Even without the full 40 credits, you can still access Social Security through other means:

Spousal Benefits

Spousal benefits are available to married individuals or those who were married for at least ten years. If your spouse qualifies for Social Security benefits, you may receive spousal benefits despite not working. You can receive up to 50% of your spouse's Social Security income.

For example, if your spouse is entitled to \$2,000 per month, you may receive up to \$1,000 per month, offering significant financial support during retirement.

Survivor Benefits

Survivor benefits apply when an eligible worker passes away and extend to surviving spouses and dependents. To qualify, you must be a surviving spouse or dependent of a deceased worker who was eligible for Social Security benefits.

The survivor benefits amount varies based on the deceased worker's earnings and when you start receiving benefits. Surviving spouses can typically receive between 71.5% to 100% of the deceased worker's benefit. For instance, if the deceased was eligible for \$2,500 monthly, the surviving spouse might receive between approximately \$1,787 and \$2,500.

Such benefits provide crucial financial stability for non-workers during retirement.

Supplemental Security Income (SSI)

Supplemental Security Income (SSI) offers financial assistance to elderly or disabled individuals with limited income and resources. While not a traditional pension, it is a critical income source for eligible non-workers.

To qualify for SSI, you must:

• Be at least 65 years old or have a qualifying disability.
• Have limited income and resources.
• Be a U.S. citizen or meet specific alien status requirements.

SSI benefits help cover basic living costs, making them vital for those not in the workforce.

Other Options

Non-workers in the USA can explore additional retirement savings options alongside government programs:

Spousal IRA

Married individuals who file taxes jointly can benefit from a spousal IRA. Your working spouse can contribute to an Individual Retirement Account (IRA) in your name, allowing you to save for retirement similarly to working individuals.

Non-Working Individuals and Traditional IRAs

While typically requiring earned income to contribute to a Traditional IRA, non-working spouses can benefit if they file taxes jointly. Your working spouse can contribute to a Traditional IRA on your behalf.

Roth IRAs

Roth IRAs are another option for non-workers. Contributions are made with after-tax dollars, and qualified withdrawals during retirement are tax-free, providing a valuable saving tool for those without significant earned income.

Planning for a Secure Retirement

Non-workers in the USA must consider various options for retirement planning. It's crucial to know the eligibility criteria and benefits tied to programs like Social Security and SSI. Additionally, exploring IRAs can help secure a financial future.

Working with a financial advisor or retirement planner can guide you in maximizing benefits and making informed investment choices. They can help create a retirement strategy suited to your specific needs.

While pensions are often linked to employment, non-workers in the USA have access to Social Security, SSI, and various retirement savings options for their retirement plans.