Posted by: patenttranslator | March 7, 2019

A Few Ideas for Retirement Strategies for Independent Translators

About 25 years ago when I was in my early forties, I used to like to discuss all kinds of things with interesting people from different countries in a discussion group on Compuserve called FLEFO (Foreign Language & Education Forum). This was long before Facebook’s arrival on the scene, and it was in fact very similar to what Facebook is now, without the cute animal videos and dozens of profile photos, but with plenty of heated exchanges of opinion back when internet could be accessed only very slowly through a thin telephone line and most people used it only for email.

One topic that translators living in different countries discussed already back then was the possibility or impossibility for freelance translators, who were even then in exactly the same position as independent contractors are now, to retire in the same way as employees.

Two or three decades ago, most employees still had an employer-defined pension plan and therefore knew more or less exactly with what kind of income they would be able to retire. But defined pensions were later converted in the United States to something called 401K plans, and most of the money from most of these private pension plans would later be gambled away, i.e. stolen by the Wall Street. The result is that while US government pensions still exist, relatively few private employers now offer a defined pension plan. So most employees are now left up the creek without a paddle as the saying goes when it comes to retirement.

Typically, people in their twenties, thirties and even forties don’t worry too much about how will they be able to make the ends meet in retirement because they have so many much more pressing things to worry about. They start worrying about their income in retirement only when they are already in their fifties or sixties, at which point may be too late for them to come up with a good strategy.

I remember that when I once said back then on FLEFO that I did not expect Social Security to be there for me when I’m old, an older guy told me that I should not believe rumors about the impending collapse of Social Security because it is a solid program that will be there for me in 20 or 30 years when I’m going to need it, unless corrupt politicians give it away to Wall Street.

Fortunately, he was right and the rumors and propaganda spread by Wall Street, which would love to sink its claws into Social Security and start gambling with what is to the banksters a very nice piece of change that they are not profiting from at all, were wrong.

So far, at least, the money has not been gambled away yet.

Social Security, which was signed into law by President Franklin D. Roosevelt in 1935 in the United States, and similar programs for retirees in other countries work on a similar but not identical principle. If you pay your Social Security taxes, once you reach your retirement age (if you live that long), you will receive a certain fixed monthly amount from the Social Security fund for as long as you live, an amount that will keep increasing a little bit each year depending on inflation.

In my lifetime I have lived, worked and paid taxes as a foolhardy Bohemian traveler & adventurer in four countries: Czechoslovakia (that’s what the country was called before the Czech and Slovak politicians split into two countries, Czech Republic and Slovakia, without bothering to ask the people what they thought about it), Germany (while it was still West Germany), Japan and the United States. But because I did not work and paid taxes long enough in Germany or Japan to accumulate enough so-called work units to claim pension payments from these countries, I only applied for old age retirement payments from two countries: Czech Republic and United States.

The Czechs gave me a small old age pension for 10.8 years of working, serving in the army and paying my taxes there as of 2015, while the United States, where I lived and worked for most of my working life, which is to say for 37 years, afforded to me a much larger old age pension as of last year.     

Although the Czech pension is very small, about a third of an average pension and Czech pensions are quite small, the fact is that I worked there for barely 2 years and the remaining years which helped me to qualify for almost 11 years on the Czech pension were the years I spent studying at my high school and university and serving in the army.  

But there are also other, important advantages to having a Czech pension. For one thing, the Czech state pays the monthly health insurance premiums for all retirees who receive a Czech pension, no matter how big or small it may be. This does not exist for example in the United States where health insurance payments, co-payments and deductibles for various medical procedures and medications typically take a pretty big bite out of a retirement pension, even for retirees who are on Medicare, the popular US health insurance program for seniors.

But still, there is a whole lot of things that Medicare simply does not pay for, including eye and dental care, presumable because seniors have excellent eyes and teeth and thus do not need medical coverage for that kind of thing.

Medicare is also useless for seniors who move abroad as it works only in the United States.

Incidentally, about two years when I needed a new pair of glasses, the cost of the glasses including the eye exam and the glasses was almost a thousand dollars, double of what it used to cost me a few years ago, and Medicare paid a whopping 34 dollars for it.  

Another recent advantage of the Czech Social Security system is that as a senior, I pay only about 40 cents (in US dollars) for a yearly coupon for public transport in the fair city of České Budějovice where I now live, and seniors also get 75% off the fare on throughout buses and trains in Czech Republic and Slovakia.

So, all things considered, the small Czech pension is nothing to sneeze at and I am very glad that I did have enough work units to qualify for it. 

Because I have spent most of my working life and paid my taxes for many years in the United States, the US Social Security pension is in my case fairly generous. And so it should be given that my income was not bad at all and I was paying diligently my Social Security taxes, which were often higher in my case than my income taxes in America.

But now I am able to benefit from all those taxes I paid into US Social Security because I am receiving close to the top level of the retirement income, since the US Social Security retirement payments are based on how much people paid into the system over the years and the cut-off for the top level of retirement income is much higher than for example in Czech Republic.

But not only that: my ex-wife is also benefiting from all the taxes that I paid over the years into the Social Security system in the United States because in addition to what I receive from the US Social Security system, she is also receiving a half of my pension, not from me as the case might be in other countries, but independently of my income from the US Social Security system. It makes perfect sense to me that although we are divorced, together we are now receiving an amount corresponding to 1.5 pensions based only on my Social Security taxes: we both spent two decades of our lives taking care of two future taxpayers; she deserves to be compensated in some manner for that as well.

When I mention this little known fact to Czech women of retirement age who often receive a really tiny pension if they stayed many years at home with children, they look at me with unbelieving eyes and always say the same thing in exasperation:”We have nothing like that here!”  

I wanted my wife to stay home when our children were small in the eighties and the nineties, although we started with an agreement that once they were about 15, she would go back to work to help me pay the bills. But she liked puttering around in the garden and cleaning the house, doing the laundry and fattening me up so much that she never did go back to work since her last job as chef at a restaurant in San Francisco featuring Japanese-Italian “fusion cuisine” ….. in 1989. I still have a yellowed clipping of a review of her then-trendy restaurant written in the eighties by a feared San Francisco restaurant column writer (in which her last name is of course misspelled).

Fortunately, thanks to President Franklin D. Roosevelt and the law that he signed in 1934, she too has her own retirement income now, even though a relatively small one.

Unlike people that I like to call “monolinguals”, translators do have some specific advantages when it comes to options for retirement. By definition we speak more than one language and most of us have lived in several countries and are familiar with other cultures. We actually like learning about other cultures and new languages.

I guess one could say we are weird that way.

It’s best to realize that even though we may have a thriving business and make good money at the moment if we are working our butts off while we are still young, all of that is likely to come to an end at some point and we will need to have a strategy for retirement when the time comes.

If we live in a country with a high cost of living, one option for retirement that we have is moving to a country that has the kind of weather that is compatible with our idea of what good weather should be like, a culture, food and a language that we enjoy, and last but not least, a place where our dollars, pounds, Euros or whether other currency we may be getting in our pension payment can be stretched a little bit further.

Millions of American baby boomers have done so or are planning to do so in the near future. So before we decide to join them or reject the idea if it is not suitable for our personal circumstances, it makes sense to take a look at the pros and cons of such a strategy that will hopefully result in a decent and interesting life in retirement.

It is my hope that my post today will be somewhat useful to some people exactly for that purpose.  

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Responses

  1. 🙂

    Like

  2. Ah Steve, I get a lot of smiles from your post-retirement reports of life in Prague. Please keep them up.

    Liked by 1 person

  3. Anyone knows if 7 years of work in the US qualify for any pension at all, as small as it might be?

    Like

    • I am not sure, but I think you need 10 years, or what the Social Security Administration calls 10 work credit units, to qualify for US Social Security payments, if you worked and paid US Social Security taxes. So you would probably need three more years (based on what I know, but I am no authority on the subject.) But if you have also paid Social Security taxes in another country that has a bilateral “totalization” agreement with US, those seven years will be counted towards your working years in another country. For example, all EU countries and many other have signed this agreement with US, which is how I qualified for a small Czech Social Security pension.

      This guy has a Youtube channel dedicated exclusively to US Social Security issues. He is really good and periodically he answers questions from people live on this channel, so you may want to ask him directly.

      Like

      • Thank you very much!

        Like


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