In the United States, pretty much every worker pays into Social Security. This includes very high earners. And everyone who paid into the program gets retirement benefits, even if they are really rich and don't need the money. It's not a means-tested benefit limited to those with low earnings.
Social Security benefits are based on a percentage of income earned throughout the 35 highest-earning years in your career. So those who make more money get bigger benefits checks. The specific amount is based on how much money was made over the relevant 35 years, as well as when benefits were claimed.
So what if someone were making $1 million a year -- a hefty sum that would make them one of the top earners in the country? How much would their retirement check be?
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This is how much millionaire workers get from Social Security
An income of $1 million a year amounts to a monthly payment of about $83,333.33.
Retirement benefits are generally designed to replace about 40% of pre-retirement income. However, they replace less for high earners because the benefits formula is progressive. Still, with such a high monthly salary, this would suggest that someone who earned a million each year for 35 years of their career could expect to get a monthly Social Security check equal to close to $33,333.
That wouldn't happen, though. In fact, in 2024, the most a person who had earned $1 million throughout their career could receive in benefits is $4,873. And that's only if they claimed their first retirement payment at age 70.
Why do millionaires get such a small Social Security benefit relative to earnings?
Now, let's be clear -- $4,873 is a lot of money. But not to someone used to making a million.
So why don't millionaires get bigger Social Security benefits? The reason is simple. High earners don't pay Social Security taxes on all their income, and only a portion of their income is considered as part of their wages when benefits are calculated.
Each year, the Social Security Administration establishes something called the "wage base limit." In 2024, the wage base limit is $168,600. The amount adjusts due to wage growth over time.
All income earned up to the wage base limit is taxed. It's added to your earnings record, and if it is one of your higher-earning years, it is factored in when your average wages are calculated over the 35 years included in your benefits formula. The average wage that is calculated determines your monthly Social Security benefit.
But if you earn income above the wage base limit, as you would if you earned $1 million a year, none of that extra money would be subject to Social Security tax. None of it will count in your benefits calculation, so your benefit won't grow because of it. This is true whether you earn $1 million or $10 million or $100 million. No matter how much you make, not a dime over $168,600 will be counted when your Social Security benefits are determined.
So while millionaires get more Social Security than those who earned far less, it's not as much more as you might think. And the reality is that the maximum monthly Social Security benefit is not ever going to replace enough of your income to allow you to live the lifestyle you are accustomed to no matter how much you make.
So whether you're a millionaire or earn far less, it's up to you to save and invest throughout your career so you can have security as a senior.
