Billionaires & Social Security Benefits
It is among the most commonly known facts that billionaires receive get social security retirement benefits just like anyone else. Curious to know how much they get? Here we explain how much social security income they can expect by using a social security calculator. We will try to decipher whether it’s fair that billionaires are allowed to accept social security benefits when they are already so financially well of.
Many of the billionaires in America qualify for social security benefits, and usually, names like Warren Buffet tend to pop up. People usually assume that billionaires must be getting the maximum benefit from social security, and that might not be completely wrong. However, you must remember that is not always the case due to the nature of the Social Security program.
What’s the Maximum Social Security Benefit in 2017
Social security is usually calculated by looking at all of a person’s earnings throughout their entire career and then adjusting each of the year’s total to account for inflation. A person’s 35 highest earning years, up to each year’s Social Security taxable maximum earnings, are averaged and divided by 12 to decide lifetime monthly earnings. Once this has been decided, it is then applied to a formula: 90 percent of the first USD 885, 32 percent of the amount between USD 885 & USD 5,336 and 15 percent of the amount more than USD 5,336.
A person can use a worksheet, available with the social security administration, to estimate his or her social security benefit. To save some time, we would like to mention that the highest possible monthly benefit made available to a newly retired American in the year 2017 is USD 2,687 at the full retirement age. If one opts to wait before claiming the benefit beyond the full retirement age, the person will experience an 8 percent increase per year. The full retirement age is currently 65, and a person can increase their social security benefit by 32 percent.
Hence, as long as a billionaire’s income was more than the maximum taxable Social Security wages in each of at least 35 years, the person would be entitled to getting USD 2,687 per month at the full retirement age. The person can also get USD 3,547 if the person chooses to wait until age 70 to claim the benefit.
It’s vital to mention that only earned income is taxed, and considered for social security benefits. In other words, the income that is considered for a billionaire must come from self-employment or a job. Income from other sources like investment gains, dividends, inheritance, interest income and passive business income among others are not counted toward social security qualification.
Hence, if a billionaire has inherited a fortune, and his or her only source of annual income through the lifetime was dividends and interest on investments, it’s very likely that the person will not qualify for a social security benefit. Qualifications for social security retirement benefits require at least ten years, or 40 quarters, of income from an occupation that is covered. In a case where a billionaire has an earned income for over ten years, but it’s less than 35 years, the person would get social security benefit, but it will be far lower than the maximum amount.
Should Billionaires Be Allowed to Get Social Security At All?
A regularly debated topic among social security facts is that the social security administration is not in good financial condition at the moment. In fact, if nothing is done in this regard, the chances are high that the reserves of the program will be depleted by the year 2034. At that point, across-the-board benefit cuts would be a necessity. In such a situation people often wonder whether wealthy people and billionaires should even get social security retirement benefits or not. Those who argue that they shouldn’t get it would more likely agree to a means-tested benefit that means eliminated or reduced benefits for retirees who don’t need the money.
We don’t think that a majority of the population would risk curtailing their social security benefits through means testing. So, for now, billionaires will continue to adhere to the requirements for social security if they wish to collect anything extra during retirement.