Rich People Should Not Get Social Security

By Douglas A. McIntyre Published Sep 30, 10:15AM EDT

Quick Read

Some predict that Social Security will run out of money in 2035.
One idea for how full payments could be extended is to phase out those to people with high retirement income.

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Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund will run out of money in 2035, according to most estimates. It will not really run out. Its ability to pay 100% of its obligation will drop, probably to 77%. This will ruin the lives of millions of seniors who count on the payments for a large part, if not all, of their income. If the cost-of-living adjustment (COLA) for Social Security and Supplemental Security Income (SSI) rises faster than expected, the crisis might hit a year earlier.

Among ideas about how full Social Security payments could be extended beyond 2035 is to push out the age at which people can be paid. People who take benefits when they turn 62 would not be able to take them until they reach age 64. Those who take full benefits at 67 could not get them until they turn 69. People who delayed until 70 to get higher benefits could not take them until they are 72. One challenge to that is that the life expectancy of Americans has not changed much in the past decade. Due to the COVID-19 pandemic, the future actually dropped in 2020, 2021, and 2022.

Another option is to suspend COLA completely. Retirees would absorb the effect of inflation. The problems with Social Security would be balanced on the back of their incomes.

Yet another alternative is to increase what people pay into Social Security. Today, this is 6.2% of wages up to a total annual income of $176,100. The top limit could also be higher, perhaps up to $250,000.

Among the easiest ways to save Social Security full payments for a time is to phase out or stop making payments to people with high retirement income. The average monthly Social Security payment is $2,002. People with active and passive retirement income of $5,000 a month would only get $1,000. Those with active and passive income above $10,000 a month would get no payments at all.

People with high retirement incomes may argue that they paid into Social Security, often for decades, and they should get their money back. With Social Security in trouble, that may be tough luck.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.