Do Millionaires Collect Social Security?

Many individuals wonder if wealth disqualifies someone from receiving Social Security benefits. The Social Security system is a broad program designed to provide a safety net for workers and their families, funded through payroll taxes. Eligibility for these benefits is determined by a person’s work history and contributions to the system, rather than their current financial status or net worth.

Understanding Social Security Eligibility

To qualify for Social Security retirement benefits, individuals must accumulate a sufficient number of “work credits.” These credits are earned through covered employment, where a portion of earnings is paid into the Social Security system via Federal Insurance Contributions Act (FICA) taxes. Each year, a worker can earn up to four work credits.

For retirement benefits, most individuals need to earn a total of 40 work credits, which typically equates to about 10 years of work. These credits do not need to be earned consecutively; they accumulate over a person’s working lifetime. While individuals can begin receiving benefits as early as age 62, their monthly payout will be permanently reduced. Full retirement age (FRA), the age at which one can receive 100% of their calculated benefit, varies by birth year.

How High Income Affects Social Security

A person’s current millionaire status or overall net worth does not affect their eligibility to collect Social Security benefits, provided they have met the required work credits. The system is based on an individual’s earnings record over their working life, specifically the 35 years of highest indexed earnings. These past earnings determine the primary insurance amount (PIA), which is the benefit received at full retirement age.

There is an annual maximum amount of earnings subject to Social Security taxes, known as the Social Security taxable maximum or wage base. Earnings above this threshold are not subject to Social Security taxes and do not count towards benefit calculations. This means that while high earners contribute more taxes up to this cap, their benefits are calculated based on earnings only up to this taxable maximum.

An “earnings test” can affect individuals who claim Social Security benefits before reaching their full retirement age and continue to work. This test reduces benefits based on current earned income, not overall wealth or investment income. For those under full retirement age throughout 2025, $1 in benefits will be withheld for every $2 earned above $23,400. In the year an individual reaches full retirement age, a more generous limit applies, with $1 in benefits withheld for every $3 earned above $62,160, but only for months prior to reaching FRA. Once full retirement age is attained, the earnings test no longer applies, and individuals can earn any amount without their Social Security benefits being reduced.

Taxation of Social Security Benefits

While eligibility for Social Security benefits is not wealth-dependent, the taxation of these benefits is directly tied to a recipient’s total “combined income.” Combined income includes adjusted gross income (AGI), tax-exempt interest, and half of the Social Security benefits received. This calculation determines what portion, if any, of Social Security benefits is subject to federal income tax.

The Internal Revenue Service (IRS) establishes income thresholds at which Social Security benefits become partially taxable. For single filers, if combined income is between $25,000 and $34,000, up to 50% of benefits may be taxable. If combined income exceeds $34,000, up to 85% of benefits may be taxable. For those filing as married filing jointly, if combined income is between $32,000 and $44,000, up to 50% of benefits may be taxable. If combined income exceeds $44,000, up to 85% of benefits may be taxable.

These income thresholds are not adjusted for inflation, meaning that as incomes generally rise over time, more individuals may find their Social Security benefits subject to taxation. High-income individuals, including those considered millionaires, are very likely to have their Social Security benefits taxed at the 85% level due to their substantial income from other sources such as investments, pensions, or continued employment. This taxation occurs at the individual’s ordinary income tax rates.