When it comes to government provision of retirement benefits, differences abound. Comparing the US Social Security program to the UK state pension illustrates a stark contrast. While both countries promise an old-age safety net, the US Social Security benefit for the highest-income earners looks more like a golden parachute than what President Franklin D. Roosevelt referred to as “some measure of protection to the average citizen and to his family … against poverty-ridden old age.”
Andrew Biggs writes at Forbes (emphasis added):
This year, a two-earner couple who each earned the maximum taxable salary over their careers can retire with combined Social Security benefits topping $96,000. That’s two to three times more than the maximum benefits offered in [the United Kingdom, Canada, Australia and New Zealand]. It’s not remotely needed to prevent poverty, and simply displaces real savings high-earners would do on their own. That in turn reduces economic growth.
As staggering as this figure is, it’s even higher than that. According to the Social Security Administration, in 2024, the maximum benefit for an individual earner who claimed benefits at age 70 and who earned at least the maximum taxable amount for 35 earnings years would be $4,873 per month. That amounts to nearly $117,000 per year for a two-earner couple in which both spouses meet the maximum benefit criteria.
Let’s compare this maximum Social Security benefit to the UK state pension.
A similarly situated UK couple that retired after 2016 could collect a maximum state pension of £21,202.40 today (this amount is expected to increase by 8.5 percent in April to just over £23,000 a year). If we translate that amount into the equivalent number of US dollars using the World Bank’s purchasing power parity (PPP) conversion rate, we arrive at $31,122.22 ($33,760.97 from April on). PPP compares the relative value of currencies by considering the cost of a basket of goods and services across different countries. Converting the state pension benefit from UK pounds into US dollars, using a PPP measure, gives us a better idea for the equivalent amount of dollars needed to achieve a similar living standard in the United States.
Roughly $34,000—that’s how much the UK high-earning couple would collect from the state pension in US purchasing power terms. The US couple would collect more than three times the benefit they would receive in the UK. That’s a staggering difference!
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