You might have been asking yourself, do millionaires get social security in the US? The answer is yes. There is no law that prohibits billionaires and millionaires from collecting social security. When they reach the age of 62, they can start getting social security benefits. However, you are entitled to full benefits when you reach the full retirement age of 66 years. Many billionaires like Warren Buffett are among the billionaires getting social security.
In this article, we are going to answer this question, do billionaires get social security in the US?
Can Millionaires Collect Social Security?
Yes. Just like other citizens pay taxes, billionaires and millionaires also pay taxes. As such, they are also entitled to collect social benefits. However, they must have been getting some earned income for at least 10 years. It is because social security is contributed from earned income like from employment or businesses.
How is Social Security Funded?
The social security program is not just a welfare program that gives money to anyone who asks for it. Instead, it is funded by the taxpayers’ money. Current workers contribute to the social security program and the money benefits people who are already retired. When current workers retire, their social security benefits will be funded by the next generation of taxpayer workers.
And due to the increasing number of retirees each subsequent year, sometimes the contributions from current workers may not be enough to benefit current retirees. In such a case, additional money is paid to the Social Security Trust Fund which is an excess of contributions from workers in the previous years.
Also read: Where do billionaires live in the US?
How Much Social Security Do Millionaires Get?
You might wonder, how much do millionaires get in social security? The short answer is, it depends. Social security is calculated by averaging your earnings throughout the 35 highest earning years and then dividing by 12 to determine monthly average earnings.
Once you get the monthly average earnings, the following formula is applied:
- 90% of the first $885
- 32% of the amount between &885 and &5,336
- 15% of the amount above $5,336
From the above formula, you will note that the highest social security benefit a newly retired American can get is $2,687 at retirement age. The current retirement age in the US is 66 years.
What is Social Security Tax Rate?
For employed people, both the employer and employees contribute towards social security. Employees pay a tax of 6.2% as survivors and disability insurance tax. In addition, they also pay 1.45% Medicare tax. In total, they contribute 7.65% of their income to social security. Their employers pay a matching percentage of 7.65%.
Read more: Do you pay taxes on social security?
For self-employed people, since they themselves are employers and employees at the same time, they have to pay 15.3% towards social security.
Why Some Millionaires Might Not Qualify for Social Security
For some reason, millionaires and billionaires may fail to qualify for social security. What are some of these reasons?
Social security is paid from earned income. Many rich people’s income is from passive income like dividend income and investments. Unfortunately, social security is paid from earned income and not from investment income. as such, many millionaires fail to qualify for social security.
To collect social security benefits, you need to have worked for a minimum of 40 quarters or 10 years of earned income. To get maximum social security benefits, you must have earned a maximum amount of income for at least 35 years. And since many billionaires and millionaires do not work for many years before venturing into investments, they fail to qualify for social security benefits.
Summary: Do Millionaires Collect Social Security?
Billionaires and millionaires who have been getting earned income for at least 10 years are entitled to social security benefits. Income from income streams like investments does not qualify for social security benefits. Unfortunately, many millionaires do not qualify for social security benefits because their income is from investment income.