American taxpayers fund the services provided by local, state and federal government. But what services are provided to United States citizens only? Many people in this country are not U.S. citizens, but are here legally. Non-citizens often have work visas and pay taxes, which in turn are used to fund many entitlement programs. Legal aliens are eligible to participate in most government-sponsored entitlements.
Entitlements can take the form of insurance (individuals pay into the system and receive benefits in the future), or assistance (benevolent payments based on need).
Most industrialized countries offer services to their citizens as well as legal residents. Many basic welfare entitlements are based on length of residence in the country. Some governments have mandatory participation rules for either government or private programs.
International Social Assistance
The current U.S. Social Security system taxes current workers and redistributes funds to elderly citizens who have previously contributed to the fund. The system was established in the 1930s and has been in dire need of a financial overhaul because there are fewer young workers and the elderly are living longer in retirement. To qualify, you have to be a U.S. citizen or legal resident and meet other previous work requirements.
Government run pension plans worldwide are currently in financial crisis due to legacy defined payment systems which provide a specific amount to recipients. Including non-citizen residents in government social plans makes sense because many legal aliens contribute to the economy by working, paying taxes and spending. Most countries do not, however extend benefits to illegal aliens or those who don't meet residency requirements. (You've probably contributed to this fund, but will you reap the benefits? Find out in our Introduction To Social Security.)
A Global Citizen's World
Globalization increases the need to align Social Security benefits for workers who reside overseas. While this may seem like a daunting task, the International Social Security Association cites a successful program used by four South American countries as a best practice for international pensions. Argentina, Brazil, Paraguay and Uruguay use an electronic Social Security system that allows individuals to request and manage pension benefits between the countries.
The U.S. has agreements with 24 countries that coordinate Social Security benefits between a worker's home country and the United States. The agreements reduce Social Security taxation of multinational companies who employ expatriate workers. They allow citizens of the countries involved to receive entitlements they qualified for while working outside their home country.
However, there are multiple provisions and exceptions. For example, if you are an Italian citizen who became eligible for U.S. Social Security, you may continue to receive U.S. benefit payments even if you move away from the States. But, if you are a citizen of a non-agreement country, your U.S. pension benefits may stop if you leave the U.S. for more than six months.
Also, the rules are different for people who qualify for Social Security as a dependent or survivor. International Social Security regulations are fluid, so if you are a U.S. citizen planning to move to another country or a legal U.S. resident, visit the Social Security website as well as the entitlement website for other foreign countries to understand your rights. (Find out how to increase your benefits to their maximum by reading 4 Unusual Ways To Boost Social Security Benefits.)
Entitlement Coverage Around the World:
- Argentina - Social insurance and individual accounts open to employed persons earning more than 12,000 pesos per year
- Australia - Social assistance available to anyone residing in Australia
- Canada - Pensions available to citizens and legal residents
- France - Social assistance available to all elderly persons residing in the country
- Germany - Voluntary pension coverage of foreigners unless they are covered by their home country's pension
- Italy - Pensions available to citizens, European Union citizens and non-citizen legal residents
- Japan - National pension available to all residents of Japan
- Mexico - Mandatory individual account system for all private sector employees
- Russia - Social assistance available to citizens and refugees
- Saudi Arabia - Social insurance available to Saudi employees only
- Singapore - Contributory insurance available to anyone earning 50 Singapore dollars per month
- South Africa - Social assistance available to citizens, permanent residents and refugees with disabilities
- The Netherlands - Social insurance is available to anyone living in The Netherlands
- United Kingdom - Old age pensions for citizens and legal residents
Like the U.S., other industrialized countries offer earnings related pensions, old age pensions, assistance to the disabled, some form of healthcare, workers' compensation, unemployment insurance and welfare to families with children. These entitlements vary in terms of eligibility but for the most part, being a citizen or a legal resident has its perks. (Discover how this act negatively affects your lump-sum withdrawals. Don't miss Pension Law Could Reduce Your Payout.)
RetirementLearn how to decide between a traditional or Roth version of the 401(k), 403(b) or 457(b) retirement plans to help you build your nest egg.
RetirementSpending your retirement years in Ecuador can be an affordable and attractive proposition, provided you know the country's laws.
RetirementThe new myRA accounts seem to deliver on their promise of being “simple, safe and affordable.” Just be prepared for paltry annual returns.
RetirementIt can be beneficial in any number of ways: mentally, occupationally and even financially.
TaxesAs 2015 nears its end, here are some financial moves retirees can make before December 31 that can help to lower your tax bill.
Investing BasicsAre you considering hiring a fee-only financial advisor or one who is compensated via commissions? Read this first.
RetirementWho wouldn't want to retire early and enjoy the good life? The question is, "How much will it cost?" Here's a quick and dirty way to get an answer.
RetirementAdjusting to retirement can be challenging, but when it happens unexpectedly it can be downright difficult. Thankfully there are ways to successfully transition.
RetirementWe discuss the advantages of seeking professional help when it comes to managing our retirement account.
RetirementA traditional IRA gives you complete control over your contributions, and offers a nice complement to an employer-provided savings plan.
Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
Depending on the terms of your plan, catch-up contributions you make to 401(k)s or other qualified retirement savings plans ... Read Full Answer >>