Can Millionaires Collect Social Security?
Millionaires and Social Security: Understand how eligibility is earned, income affects benefits, and when taxes apply.
Social Security is a program designed to provide financial protection to millions of Americans, funded primarily through dedicated payroll taxes. This system operates on an earned benefit principle, meaning eligibility and benefit amounts are tied to an individual’s work history and contributions over their career. It is not a welfare program based on financial need, but rather an insurance system that provides benefits to qualified workers and their families.
Earning Social Security Benefits
Eligibility for Social Security retirement benefits is determined by an individual’s work history, specifically by the accumulation of “work credits.” These credits are earned throughout a person’s working life by paying Social Security taxes on their earnings. In 2025, one work credit is earned for each $1,730 of earnings, and an individual can earn a maximum of four credits per year.
Most individuals need to accumulate 40 work credits to qualify for retirement benefits, which typically translates to 10 years of covered employment or self-employment. Once these 40 credits are earned, an individual is considered “fully insured” and becomes eligible for Social Security retirement benefits. This eligibility is independent of an individual’s accumulated wealth or assets. Thus, individuals who have contributed through payroll taxes and earned sufficient work credits are eligible for benefits, regardless of their current financial net worth.
How Income Affects Social Security Benefits
While accumulated wealth does not impact Social Security eligibility, ongoing earned income can affect benefit payments for individuals who claim benefits before their Full Retirement Age (FRA). The Social Security Administration (SSA) applies an “earnings test” to beneficiaries who are working and receiving benefits prior to reaching their FRA. This test compares current earnings against specific annual limits.
For those under FRA, if earnings exceed the annual limit, a portion of their Social Security benefits will be temporarily withheld. For instance, in 2025, for every $2 earned above the annual limit of $22,320, $1 in benefits is withheld. In the year an individual reaches FRA, a different earnings limit applies, where $1 in benefits is withheld for every $3 earned above a higher limit, which is $59,520 in 2025, but only for earnings before the month they reach FRA.
These withheld benefits are not permanently lost. When the individual reaches their Full Retirement Age, their monthly benefit amount is recalculated to account for the withheld benefits. This recalculation results in a higher monthly payment for the remainder of their retirement. The Primary Insurance Amount (PIA), which forms the basis of the monthly benefit, is calculated from an individual’s highest 35 years of indexed earnings. Higher lifetime earnings generally lead to a higher PIA, up to a maximum benefit amount.
Taxing Social Security Benefits for High Earners
Even if an individual qualifies for and receives Social Security benefits, a portion of those benefits may be subject to federal income tax, particularly for high earners. This taxation depends on what the Internal Revenue Service (IRS) refers to as “provisional income,” also known as “combined income.” Provisional income is calculated by taking an individual’s Adjusted Gross Income (AGI), adding any tax-exempt interest income, and then adding one-half of their Social Security benefits.
There are specific provisional income thresholds that determine the taxable portion of Social Security benefits. For a single filer, if provisional income is between $25,000 and $34,000, up to 50% of their Social Security benefits may be taxable. If provisional income exceeds $34,000, up to 85% of their Social Security benefits may be taxable.
For those filing a joint return, if provisional income is between $32,000 and $44,000, up to 50% of benefits may be taxable. If provisional income exceeds $44,000, up to 85% of their Social Security benefits may be taxable. This tax mechanism primarily affects individuals with higher overall incomes. Some states also impose their own income taxes on Social Security benefits.