I get lots of emails from readers expressing sentiments similar to what these guys recently sent me: “Why should rich people get Social Security? I think it’s just morally wrong that wealthy people should be able to collect a Social…
that wealthy people should be able to collect a Social Security check.” Here is another example: “Why all the fuss about Social Security going broke? We could save the system forever if we just take rich people off the program.”
People are also reading… But if we were to do the unthinkable and means-test the program, especially as part of some package of reforms intended to “save Social Security,” then where do you draw the line? I mean, how rich is too rich to get Social Security? When I ask this question of guys like those who sent me the emails I included above, they will usually quickly say something like: “Billionaires shouldn’t get Social Security.
And speaking of what rich people pay into the system, let me make some points about a related issue. Many people think that one of the Social Security reforms should be a plan to make rich people pay more into the system. In other words, if you dramatically raise or even eliminate the wage cap to help “save Social Security,” what you’d have to do is place a cap on the benefits paid out of the system to wealthier people to make that kind of reform work. And that would be a hard thing to pull off politically.
So how does Social Security achieve that goal? With a benefit formula that is skewed to give lower-income people a better deal out of the system than that offered to wealthier folks. That doesn’t mean that low-income people get higher benefits than better-off people do. Warren Buffett, for example, certainly gets a significantly higher Social Security benefit than the maid who cleans his mansion will get someday when she retires.
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