Social Security benefits replace a larger share of past earnings for low earners. While high earners receive larger benefits, their benefits replace a smaller share of what they had been making.
The higher their earnings (up to a maximum taxable amount, $160,200 in 2023), the higher their benefit. Social Security benefits are progressive: they represent a higher proportion of a worker's previous earnings for workers at lower earnings levels.
The maximum benefit is $3,627 for someone at full retirement age (FRA). The absolute maximum benefit that an individual can receive per month is $4,873 in 2024. You must wait until full retirement age to claim benefits and have been a high earner for 35 years to get the maximum.
The amount a person receives in Social Security benefits is not directly affected by their current income or wealth. Therefore, even if someone is a millionaire or billionaire, they can still receive Social Security benefits if they have a qualifying work history.
The point is that if you earned $120,000 per year for the past 35 years, thanks to the annual maximum taxable wage limits, the maximum Social Security benefit you could get at full retirement age is $2,687.
If your pay at retirement will be $100,000, your benefits will start at $2,026 each month, which equals $24,315 per year. And if your pay at retirement will be $125,000, your monthly benefits at the outset will be $2,407 for $28,889 yearly.
As we have established, retiring on $500k is entirely feasible. With the addition of Social Security benefits, the possibility of retiring with $500k becomes even more possible. In retirement, Social Security benefits can provide an additional $1,800 per month, on average.
Social Security deductions are only taken from income up to $160,000. However, Social Security payments are based on all income earned. So the very rich pay in a very small percentage of their income, but can end up getting really big Social Security checks.
Do actors receive Social Security? Everybody who has paid FICA taxes. That includes actors, presidents, Mr. Kissinger, and even Bill Gates.
The reason is simple: Social Security is taxed only on the first $160,200 of your annual income. This means that someone whose paycheck is $83,333 a month – or $1 million over the course of a year – stopped contributing to Social Security taxes on Feb. 28, 2023.
If you are married and you and your spouse have worked and earned enough credits individually, you will each get your own Social Security benefit.
The maximum Social Security benefit at full retirement age is $3,822 per month in 2024. It's $4,873 per month in 2024 if retiring at age 70 and $2,710 if retiring at age 62. A person's Social Security benefit amount depends on earnings, full retirement age and when they take benefits.
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.
If you've worked and paid Social Security taxes for 10 years or more, you'll get a monthly benefit based on that work.
Each survivor benefit can be up to 100% of your benefit. The amount may be reduced if the women start benefits before their own full retirement age, but they don't have to share — the amount isn't reduced because you've had more than one spouse.
The only way to receive Social Security benefits if you have not worked is if you are the dependent or spouse of a deceased worker.
But even if you never worked and therefore don't have an earnings record, you're not necessarily out of luck. If you're married (or were married) to someone who's entitled to Social Security, you can collect spousal benefits equal to 50% of your husband or wife's benefits at full retirement age.
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
Population Profiles
Every year, roughly 6 percent of covered workers have earnings above the taxable maximum.
Wealthy clients, having no immediate need for the money at retirement, often don't take Social Security until age 70 or beyond.
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
Under the 4% method, investment advisors suggest that you plan on drawing down 4% of your retirement account each year. With a $750,000 portfolio, that would give you $30,000 per year in income. At that rate of withdrawal, your portfolio would last 25 years before hitting zero.