Can Millionaires Collect Social Security Benefits?

Social Security is a federal program providing financial protection to millions of Americans, including retirees, those with disabilities, and survivors of deceased workers. A common inquiry concerns how personal wealth, particularly for high-net-worth individuals, interacts with eligibility for and the amount of Social Security benefits. Understanding this program’s mechanisms, from initial qualification to benefit calculation and potential taxation, clarifies its universal application.

Social Security Benefit Eligibility

Eligibility for Social Security retirement benefits primarily depends on an individual’s work history and contributions to the system, rather than their accumulated wealth. To qualify for retirement benefits, most individuals born in 1929 or later need to earn a minimum of 40 work credits. Credits are accumulated through earnings where Social Security taxes have been paid.

An individual can earn up to four credits each year. For 2025, one Social Security credit is earned for every $1,810 in covered earnings, meaning an individual must earn $7,240 to receive the maximum four credits for the year. Accumulating 40 credits typically translates to at least 10 years of covered work, which do not need to be consecutive. Therefore, a millionaire who has met these work credit requirements through their career earnings is eligible to receive Social Security benefits, like any other qualifying individual.

Calculating Social Security Benefits

Social Security benefits are determined by a formula considering lifetime earnings. The Social Security Administration (SSA) calculates an individual’s Average Indexed Monthly Earnings (AIME) based on their 35 highest-earning years, adjusted for historical wage growth. If an individual has fewer than 35 years of earnings, the missing years are counted as zero, which can reduce the overall average. AIME determines the Primary Insurance Amount (PIA), the base monthly benefit received at full retirement age.

The PIA calculation applies a progressive formula, meaning lower earners receive a higher percentage of their average indexed monthly earnings as benefits compared to higher earners. This is achieved through “bend points,” which are specific dollar amounts that divide an individual’s AIME into segments. For individuals who become eligible for Social Security in 2025, the PIA formula applies 90% to the first $1,226 of AIME. It then applies 32% to the AIME between $1,226 and $7,391, and 15% to any AIME above $7,391. These bend points are adjusted annually based on the national average wage index.

While higher earners receive a smaller percentage of earnings back, their higher absolute earnings typically result in a larger benefit, up to a maximum cap. Earnings above the annual maximum taxable limit are not subject to Social Security taxes or counted in benefit calculation. In 2025, the maximum amount of earnings subject to Social Security tax is $176,100. For someone reaching full retirement age in 2025, the maximum PIA is $4,018 per month. Those who delay claiming benefits until age 70 can receive a higher monthly amount, reaching up to $5,108 per month in 2025, reflecting delayed retirement credits.

Taxation of Social Security Benefits

Social Security benefits may be subject to federal income tax, especially for those with higher incomes like millionaires. The taxability is determined by a calculation involving “provisional income.” Provisional income is calculated by adding your Adjusted Gross Income (AGI), any tax-exempt interest income, and half of your Social Security benefits.

There are specific income thresholds that determine what percentage of Social Security benefits may be taxable. For single filers, 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 benefits may be subject to federal income tax. For married couples filing jointly, the thresholds are $32,000 to $44,000 for up to 50% taxation, and over $44,000 for up to 85% taxation.

These provisional income thresholds are not adjusted for inflation, which means more retirees may find their benefits becoming taxable over time as other income sources increase. A millionaire’s diverse income streams (e.g., investments, pensions) are included in the provisional income calculation. Their substantial non-Social Security income typically places them above the highest thresholds, leading to 85% of their Social Security benefits being subject to federal income tax.