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Social Security was designed to keep older Americans from falling into poverty. Yet the largest share of benefits reported on federal tax returns is going to people with six-figure incomes.
IRS data (1) for 2023 shows that 37% of the Social Security benefits reported on individual income tax returns appeared on returns with adjusted gross income of at least $100,000. That was the biggest share of any income group.
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Returns with adjusted gross income below $25,000 accounted for 24% of reported benefits. Those between $25,000 and $50,000 received 15%, while the $50,000-to-$100,000 group received 25%, according to the IRS numbers.
Who is collecting the biggest slice?
Starting off, that 37% figure needs some context.
The IRS table measures Social Security benefits reported on federal tax returns and sorts those returns by adjusted gross income. It doesn’t represent a complete count of every dollar the Social Security Administration paid in 2023.
People whose only income is Social Security generally don’t need to file a federal return (2). That means some of the program’s lowest-income recipients may be missing from the IRS data. The figures can also include retirement, survivor and disability benefits. Additionally, a return with more than $100,000 in income may cover a married couple rather than a single affluent retiree.
Still, there are straightforward reasons higher-income retirees can receive large Social Security payments.
Retirement benefits are based on a worker’s 35 highest-earning years and the age at which benefits begin. Someone who consistently earned more during their career will generally receive a larger monthly check than someone who earned less, up to the program’s limits.
In 2026, the maximum monthly retirement benefit is $2,969 for someone claiming at age 62, $4,152 at full retirement age and $5,181 at age 70 (3). Reaching those maximums requires a long history (generally, at least 35 years) of earnings at or above Social Security’s taxable limit.
Higher earners also paid more into the system during their careers. Employees and employers each pay a 6.2% Social Security payroll tax on earnings up to $184,500 in 2026 (4). Earnings above that limit aren’t subject to the Social Security portion of the payroll tax and don’t generate a larger retirement benefit.
Social Security already tilts its benefit formula toward workers who earned less. The program replaces a larger share of career-average earnings for lower-wage workers (5), even though higher earners can still receive larger checks in absolute dollars.
Is the system really tilted toward the rich?
One can reasonably argue that Social Security is an earned insurance benefit. A worker who paid the maximum payroll tax for decades followed the same rules as everyone else and built a legal entitlement to a larger payment.
On the other hand, it could be argued that Social Security should concentrate its limited resources on protecting older Americans from poverty rather than sending its largest checks to households with six-figure incomes. If affluent retirees continue to earn full benefits, preserving payments for people who depend on Social Security could eventually require higher taxes, deeper cuts elsewhere or more government borrowing.
That argument becomes harder to dismiss as the program approaches its funding deadline. The 2026 Social Security Trustees Report (6) projects that the program’s Old-Age and Survivors Insurance Trust Fund will be depleted in the fourth quarter of 2032. At that point, continuing revenue would cover only 78% of scheduled benefits unless Congress changes the law.
For someone expecting $2,500 a month, a 22% reduction would equal to a loss of $550 a month, or $6,600 a year.
Means-testing benefits or slowing their growth for top-earning retirees could preserve more money for lower-income households. Those policies could also weaken the connection between payroll taxes and eventual benefits. They could even penalize people who saved diligently and add another layer of complexity to an already difficult claiming decision.
The rules may eventually change. In the meantime, however, there are several steps you can take to claim everything you qualify for and reduce the amount that your retirement income depends on Congress.
Give your retirement cash room to breathe
A cash reserve can help cover major bills without forcing you to sell investments during a market downturn. It can also give you more flexibility about when you begin Social Security, since claiming before full retirement age permanently reduces your monthly payment.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.
That’s 10 times the national deposit savings rate, according to the FDIC’s July report.
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/month minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8 million FDIC Insurance eligibility through program banks.
Make Social Security the supporting act
The closer you are to retirement, the less time you have to compensate for a future benefit change. Younger workers have a longer runway, but they may also have to live with any future reforms for more of their retirement.
Building investments outside Social Security can give you another income source and make a future reduction less disruptive.
If you prefer a hands-off, tech-forward approach to building wealth, Vanguard’s Digital Advisor puts the investing expertise of one of the world’s largest asset managers right at your fingertips.
It takes the guesswork out of investing by building a personalized portfolio for you using Vanguard’s well-known low-cost ETFs and mutual funds, then it keeps things running smoothly with automatic rebalancing.
The platform also offers guidance on saving for retirement and lets you set additional goals as your life evolves. Plus, it can help you think through debt repayment strategies, potentially freeing up more cash to invest toward your long-term plans.
With a minimum investment of just $100, it’s an easy way to get started with professionally guided investing.
For every $10,000 in an all-index portfolio, you’ll pay approximately $15 to $16 per year.*
You can even test-drive the Vanguard experience with no advisory fees for the first 90 days.
*All investing is subject to risk, including the possible loss of the money you invest.
Get a second set of eyes on your numbers
Getting your fair share also means avoiding preventable mistakes. Your benefit is calculated using your earnings history, so you might want to start by reviewing your record through your my Social Security account (7). Missing earnings could result in a smaller payment.
Claiming age can make a big difference. Someone born in 1960 or later who claims at age 62 generally receives 70% of their full retirement benefit. Waiting beyond full retirement age earns delayed retirement credits until 70. However, there are many reasons to retire earlier than that — health, for instance.
If you’re wondering when the best time to retire is for you, a financial advisor can help crunch the numbers and build a plan that works.
But hiring an advisor can be a lifelong commitment, one that can make or break your retirement. That’s why finding reliable advisors is crucial.
That’s where Advisor.com can come in. The platform connects you with an expert near you for free.
Advisor.com does the heavy lifting, vetting advisors based on track record, client ratios and regulatory background. Plus, their network comprises fiduciaries, who are legally required to act in your best interests.
Just enter a few details about your finances and goals and Advisor.com’s AI-powered matching tool will connect you with a qualified expert best suited for your needs based on your unique financial goals and preferences.
Finding the right advisor isn’t always easy — there’s no one-size-fits-all solution. That’s why Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they’re the right fit for you.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Internal Revenue Service (1), (2); Social Security Administration (3), (4), (5), (6), (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.