Millions of retirees depend on Social Security benefits for
seniors, but a surprising portion of those benefits are going to retirees
with six-figure incomes.
A report from the Washington Post and IRS data indicate
that seniors with annual incomes over $100,000 receive more than one-third of
benefits. As the Social Security program faces insolvency and Congress debates
over potential ways to reform the program, this distribution of benefits evokes
questions about the program’s structure and just where those benefits should be
going.
Here’s why even high earners receive Social Security benefits, the proposals
this information is fueling, and the potential changes that Congress is
exploring.
What the Washington Post revealed about Social Security payments
In August, the Washington Post editorial board ran an article highlighting
Social Security’s pressing insolvency and where benefits payments are going. The
piece criticized the Social Security program.
“Social Security is out of step with modern times,” read the piece. “Most
countries with fiscally sensible retirement programs follow the same basic
structure: A tax-funded transfer payment as a floor, with means-tested benefits
and compulsory private savings above that. Such a structure ensures that
benefits are targeted where they are most needed without overburdening the
government’s budget.”
The piece suggested that since retirement accounts are the largest source of
household wealth, “a big chunk of Social Security benefits goes to people who
don’t need them.” The piece revealed that over one-third of benefits go to
seniors with incomes of over $100,000, and it predicted that that share “is
likely to increase over time.”
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How the Social Security program works
The figure about the amount of benefits going to high-income retirees may be
eye-opening to anyone who thinks of Social Security as being a safety net for
lower-income individuals. However, it’s largely a function of how the Social
Security program works.
Social Security benefits are directly tied to an individual’s work history and
previous earnings. To calculate an individual’s benefit amounts, the Social
Security Administration (SSA) calculates an average indexed monthly earnings
(AIME) figure that’s based on the individual’s 35 best-paid years. Individuals
who earned higher amounts during those years have a higher AIME than individuals
who earned less.
Other factors impact benefits, too, like the age when an individual decides to
claim Social Security benefits. Someone who claims early at age 62 may lose up
to 30% of their monthly benefit to make up for the increased amount of time that
they’ll be claiming benefits. If someone waits until age 70 to claim, Social
Security adds to the monthly payments to make up for the fact that the
individual collects benefits over a shorter amount of time.
Social Security’s insolvency problem
The Washington Post article arrives during a time when conversation around
Social Security is already heated.
The Social Security Trustees’ 2026 report
projected that the Old-Age and Survivors Trust Fund may become depleted by the
fourth quarter of 2032, which is one quarter earlier than the 2025 projection. If
the trust fund becomes depleted, the program’s revenue would only be able to pay
78% of total scheduled benefits. Such a situation could result in an automatic
benefits reduction.
As a result, Congress is under pressure to identify a solution to keep the
program solvent and avoid benefits cuts. That’s generated lots of conversation
about the program, and hearing that a large portion of benefits are going to
people with six-figure incomes may feel extra frustrating, knowing that the
program is headed toward insolvency.
The proposal to cap Social Security payments
In March 2026, the Committee for a Responsible Federal Budget (CRFB) proposed
implementing a six-figure limit on Social Security benefits. The limit would
place a $100,000 cap on the total benefit a couple retiring at the Normal
Retirement Age could receive; a single retiree would face a $50,000 limit.
According to the CRFB, implementing the limit may offer numerous financial
benefits to the program, including saving it between $100 billion and $190
billion over a decade, and eliminating between one-quarter and one-half of the
solvency gap if the cap were indexed to average wages.
The CRFB states that
though the cap would reduce scheduled benefits, it would also increase payable
benefits for most beneficiaries, since law prohibits Social Security from going
into debt after it’s insolvent.
“In 2060, the inflation-indexed SFL would boost payable benefits for
the bottom 80% of beneficiaries, with a 4% benefit increase for the bottom
half,” writes the CRFB. “Under the Fixed SFL, 70% to 80% of seniors
would enjoy a benefit increase, with an 8% to 25% increase at the bottom.”
The argument against capping Social Security benefits
The Social Security program wasn’t built as a means-based system, and higher
earners receive higher benefits simply because they paid more into the program
during their working careers. The Social Security formula still replaces a
larger percentage of income for lower-income workers, offering them financial
support.
Implementing a means-based cap on benefits would fundamentally change the
program. It would also alter the benefits that have been promised to high
earners who have been paying into the program.
Bottom line
If implemented, a means-test or cap would mainly affect benefits for high
earners, though its exact impact would depend on the cap’s amount. It’s possible
that a means-test cap could help keep Social Security solvent, avoiding benefit
reductions for mid- and low-earners.
The means-test isn’t the only option on the table. Congress is exploring other
ideas, such as raising the retirement age and increasing taxes for higher
earners. Since the future of Social Security is uncertain, it may be a good idea
to stress-test your retirement plan to see how well you could navigate if benefits were
reduced and you received less each month.
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Author Details
Josh Koebert
Josh Koebert has spent more than 16 years digging into the data behind how Americans earn, save, and retire. As a Senior Data Journalist at FinanceBuzz, his work covers both ends of that challenge: the job market and real estate pressures that shape how much people can save, and the Social Security policies, 401(k) strategies, and retirement income gaps that determine what they’ll actually have when they get there.
