Key Points
Even billionaires are entitled to Social Security based on the way the program works.
Some lawmakers have proposed means testing for Social Security eligibility.
Taking Social Security away from the rich changes the purpose of those benefits.
Are you ahead, or behind on retirement? SmartAsset’s free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don’t waste another minute; get started by clicking here here.(Sponsor)
There are millions of older Americans who rely on the income they get from Social Security to stay afloat in retirement. And without those benefits, people who retire without savings would be in big trouble.
But it’s not just low-income retirees who are able to collect Social Security. People with millions of dollars in savings are entitled to benefits just the same. Heck, even billionaires are able to get those benefits on a monthly basis.
But will that rule change? Some lawmakers may push for it. But it’s highly unlikely that Social Security will be taken away from the wealthy for one big reason.
It’s not a matter of need
The fact of the matter is that many older Americans today need Social Security to survive financially. But Social Security is not a need-based program, or a welfare program.
Rather, Social Security is something people who pay into the system are entitled to. And there’s no reason to deny seniors Social Security just because they have a lot of money.
To collect Social Security in retirement, you have to pay taxes on your income and earn 40 work credits in your lifetime. If you do that, you’re able to get benefits. Period.
Now the more you earn, up to a point, the larger a monthly retirement benefit you’re entitled to from Social Security. But earning millions of dollars a year during your working years and/or being a multi-millionaire in retirement doesn’t render you ineligible for benefits — nor should it.
Means testing for Social Security is unlikely to happen
Social Security is facing a major funding shortfall that could result in broad benefit cuts in about a decade from now. To address that issue, lawmakers have been trying to come up with ways to pump more money into the program.
Some proposals introduced so far include pushing back full retirement age and raising the amount of Social Security tax workers have to pay on their wages. But the idea of means testing has been introduced, too.
Simply put, what means testing would do is assess each retiree’s need for Social Security. Those who are deemed to have enough money to do without benefits wouldn’t get them if this system were to be implemented.
But because means testing would change the whole premise of Social Security, it’s unlikely to become reality. Social Security is not supposed to be a need-based program. And so for the most part, lawmakers will probably do what they can not to change the nature of it.
Of course, lawmakers will have to arrive at a reasonable solution or otherwise have to deal with the financial fallout of benefit cuts. But denying the rich Social Security most likely isn’t the answer.
Some wealthy retirees may opt not to take benefits because they’re not meaningful to them. But that should be a matter of choice, not obligation. At the end of the day, anyone who pays into Social Security like they’re supposed to should be allowed to collect benefits once they’re old enough to do so.
The post Will Social Security Be Taken Away From the Wealthy? appeared first on 24/7 Wall St..
