At the age of 70 with a net worth of about $104.3 billion, Bill Gates is eligible to receive Social Security, just like the rest of us.
In fact, he can collect about $5,181 per month, or about $62,172 every year.
That amount is determined by a wage limit of $184,500, which means any money he makes above that amount isn’t figured into the calculation.
“Gates might earn millions daily from Microsoft dividends and investment returns, but Social Security calculates his benefits using only those capped wage amounts from his early Microsoft salary days. You face the same cap on your earnings, whether you’re making $200,000 or $200 million annually. The system literally cannot see income beyond that ceiling,”.
Also, by waiting until 70, Bill Gates, you, and I can earn even more money from Social Security.
Here’s what you should know.
Social Security is only designed to replace about 40% of your working income, according to the Social Security Administration. They add, “Your full retirement age is 67. Starting retirement benefits before your full retirement age (as early as age 62) lowers this percentage, and starting benefits after your full retirement age (up to age 70) increases it.”
But if you wait until your full retirement age, you’ll receive 100% of your earned benefits. Better, for every year you wait beyond full retirement up to 70 years of age, you can receive another 8% boost to your benefits.
Americans will learn the hard way about Social Security
For Bill Gates, money obviously won’t be a problem for him… for the next thousand years.
But for the rest of us, thinking that Social Security will be enough to live on in retirement, it’s not going to happen. According to Dave Ramsey, by 2034, Social Security’s reserves are expected to run out of money if nothing changes. “Depending on what Congress does (or doesn’t do), future retirees might need to prepare for the possibility of reduced benefits, and workers might see a hike in Social Security taxes,” added Ramsey.
Instead, what you want to do is ensure that you do have enough.
One way to do that is by maxing out your contributions to existing retirement accounts
Accounts with tax advantages – 401(k)s, IRAs, health savings accounts, etc. – are great ways to save and invest for the future. In many cases, contributions to these accounts can help cut your taxable income for the 2025 tax season. You have until April 15, 2026, to contribute the maximum amount for it to apply to your 2025 taxes.
Also, if your employer offers a match program, contribute enough to receive the highest employer match possible. You can also max out your health savings account if you have one. Let’s say your employer will match up to 6% of your salary; maximize that.
Consider this. Let’s say you earn $100,000 a year and that your employer will match 50% of your contributions up to 5% of your salary or $5,000. With your contribution and the employer match, $7,500 is saved every year. Over 30 to 40 years of that, you’ll have a solid balance.
Two, put extra money into retirement at any chance
Put extra money on hand into retirement instead of just spending it on anything.
You should be setting aside 15% of your household income for retirement if you can, said Ramsey.
He recommends investing 15% of gross household income into tax-advantaged retirement accounts (401(k)s, Roth IRAs) to build wealth, with debt under control and with an emergency fund established.
“An example from Ramsey Solutions highlights how people under 40 can save $1 million for retirement. If someone is making $80,000 annually, they would need to invest $1,000 per month to reach that 15%. Putting that into “good growth stock mutual funds” could bring in more than $1.5 million in a retirement nest egg by age 65. Holding off retirement another five years could result in $2.8 million,” added Benzinga.com.
Three, get out of debt
According to Dave Ramsey, focus on the smaller balances first. That way, you free up even more cash for the heavier debt. Then, once the smaller debts are paid off, you now have new cash flow to tackle to make extra payments on higher interest balances.
Then, as noted by Ramsey Solutions, “Make minimum payments on all debts except the smallest—throwing as much money as you can at that one. Once that debt is gone, take its payment and apply it to the next smallest debt (while continuing to make minimum payments on your other debts).”
Four, know your retirement needs
If you really want to retire, you need to understand what your needs will be. That includes calculating your retirement expenses, healthcare needs, housing, and lifestyle costs.
Know how much you may spend in retirement: Do you plan to travel? Do you plan to buy an expensive car, a home, or maybe sit in a casino? Or, do you plan to just take it easy at home and put money away for your children?
Know how much you expect to pull from retirement funds every year: The last thing you want to do is run out of money during retirement. To help, analysts recommend a 4% average withdrawal rate per year to make sure you will have enough cash on hand to live. While 4% is a widely accepted approach for many retirees, check in with your financial advisor.
Five, diversify your portfolio
Diversification is also vital for minimizing risk and maximizing returns over the long haul. Orman suggests using a mix of stocks, bonds, and other investment tools, such as real estate. She also argues it’s important to review and adjust your diversified portfolio, especially as you get closer to retiring.
And finally, one of the best things you can do is visit with a financial advisor – an expert who can help guide you and help you figure out your individual finances.
The image featured at the top of this post is ©Jamie McCarthy / Getty Images Entertainment via Getty Images.