Survivalist Pro
Photo by Mary Taylor Pexels Logo Photo: Mary Taylor

Do millionaires get Social Security?

Although to some degree it might seem as if billionaires and millionaires in the U.S. shouldn't be collecting Social Security, the truth is there is no law against it, and mathematically it makes sense. Social Security isn't simply a welfare program, with money handed out to anyone who asks.

finance.yahoo.com - Can Millionaires and Billionaires Collect Social Security?
How many solar panels do I need to power a refrigerator?
How many solar panels do I need to power a refrigerator?

How many solar panels do I need to run a refrigerator? The average refrigerator takes about three or four average solar panels to run. The average...

Read More »
Last updated Jan 14, 2021
What is the maximum size of a tiny house?
What is the maximum size of a tiny house?

around 60 and 400 square feet That said, if you really do want a rule of thumb, it would seem that tiny houses usually range between around 60 and...

Read More »
Last updated Mar 21, 2019

Although to some degree it might seem as if billionaires and millionaires in the U.S. shouldn’t be collecting Social Security, the truth is there is no law against it, and mathematically it makes sense. Social Security isn’t simply a welfare program, with money handed out to anyone who asks. Rather, Social Security is funded by payroll taxes on workers.

Learn: 15 Worst States To Live on Just a Social Security Check

As millionaires and billionaires by definition earn more money than most Americans throughout their careers, they also pay a higher amount of tax into the program. Just because they may not be “in need” when they retire doesn’t mean that they haven’t funded the program along the way, more so even than most Americans. Here’s a quick look at how Social Security actually works, along with a discussion of how millionaires and billionaires do benefit more than some Americans from the structure of the program.

How Is Social Security Funded?

Social Security is funded by payroll taxes on workers. Current workers pay into the system now for the benefit of retirees, and when those workers retire themselves, their retirement will be funded by the next generation of taxpayers. When needed, additional money is paid into the system from the Social Security Trust Fund, which consists of excess contributions from prior years. One of the problems with Social Security as it is currently structured is that the Social Security Trust Fund is rapidly becoming depleted, and it may be insolvent in 2033 based on current projections. But retirees will still get payments from taxes paid into the system from current workers.

Take Our Poll: Do You Tip for Service?

What Is the Social Security Tax Rate?

Current workers pay a tax of 6.2% in Old-Age, Survivors and Disability Insurance taxes, along with 1.45% in Medicare taxes. Combined, workers pay 7.65% of their income into Social Security. Employers pay a matching 7.65% tax on behalf of their workers. As self-employed workers are both employers and employees, they have to pay both sides of the tax, amounting to a total of 15.3%.

Story continues

How Do Wealthy Americans Benefit From the Structure of Social Security Taxes?

Although all workers with earned income pay 6.2% in OASDI taxes, there is an income level above which that tax vanishes. For 2022, this Social Security wage base is $147,000. This means that if you earn more than this amount in 2022, you won’t have to pay that tax on your excess earnings. This can be a huge benefit for millionaires and billionaires, as they end up being taxed on only a small portion of their earnings. By contrast, most Americans end up paying OASDI and Medicare taxes on 100% of their earnings.

What Are the Average and Maximum Social Security Benefits?

Can Muslims eat shrimp?
Can Muslims eat shrimp?

Essentially all types of seafood are Halal suitable, based on verse 5:96 of the Qur'an, which states, “Lawful to you is what you catch from the sea...

Read More »
Last updated Mar 9, 2020
What are the 4 important things you need to survive in the wild?
What are the 4 important things you need to survive in the wild?

4 things you need to survive: FOOD, SHELTER, WATER, LAND Wikipedia says that survival means “Survival is the struggle to remain living.” The...

Read More »
Last updated Jun 7, 2021

For 2022, the average Social Security retirement benefit is $1,657. However, the maximum possible benefit is $4,194. To earn this benefit, you’d have to wait to file for Social Security until age 70, and you’d have to earn at least as much as the Social Security wage base for 35 years. In other words, most Americans draw nowhere near the Social Security maximum. This maximum payout helps level the playing field when it comes to millionaires and billionaires. While high earners can avoid Social Security taxes on their earnings above the wage base, their maximum payout is similarly capped. This is because the Social Security retirement formula doesn’t account for earnings above the wage base. Whether you earn $147,000 or $147 million in 2022, your Social Security taxes — and the credit you’ll get toward your future retirement benefit — will be the same.

When Might a Millionaire or Billionaire Not Be Eligible for Social Security Benefits?

Just because you reach retirement age doesn’t mean you qualify for Social Security benefits. Technically, you need 40 “quarters of coverage” to earn Social Security benefits, which for most workers means 10 years or more of paying Social Security taxes. But Social Security taxes only apply to earned income. In the eyes of the IRS, investment income, such as dividends from stocks and interest from bonds, doesn’t count as “earned income.” As many millionaires and billionaires inherited their wealth and live off investment income, this means they don’t pay Social Security taxes and are thus ineligible for retirement benefits unless they work and pay taxes that way.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Can Millionaires and Billionaires Collect Social Security?

finance.yahoo.com - Can Millionaires and Billionaires Collect Social Security?
How do you teach survival skills?
How do you teach survival skills?

Four Basic Survival Skills To Teach Your Kids Situational Awareness. Start out by regularly pointing out landmarks and creating family meeting...

Read More »
Last updated May 12, 2019
How long can a person live with only sips of water?
How long can a person live with only sips of water?

But there are claims that they have survived 8 to 10 days, even a drop of any fluid. You can stretch the amount of time to survive depending on...

Read More »
Last updated Jul 22, 2020
Can you put caravan on land you own UK?
Can you put caravan on land you own UK?

It's possible to keep touring caravans on agricultural land, but you may need planning permission. If you plan to do so, it's always worthwhile...

Read More »
Last updated May 5, 2019
Was N64 a failure?
Was N64 a failure?

When you think of failed Nintendo consoles, you probably think about the Wii U or Virtual Boy; you probably don't think about the Nintendo 64....

Read More »
Last updated Apr 25, 2019