At historic period 87, Buffett has been eligible to receive Social Security for a long prison term. Thanks to the highly predictable way in which the Berkshire CEO gets paid, it ‘s potential to run the numbers and get a harsh mind of how much the Oracle of Omaha should be eligible to receive from Social Security .
Why you can guess what Buffett gets from Social Security
The reason why it ‘s possible to get an idea of what Buffett gets in Social Security benefits is that the Social Security Administration bases its monthly retirement payments on a person ‘s career earnings. The SSA looks at a person ‘s 35 top-earning years after adjusting each annual total for ostentation, and it then calculates what ‘s known as average index monthly earnings. From there, the design goes through an SSA convention that determines a person ‘s primary policy amount. That ‘s the basis sum that a retiree is entitled to receive at full retirement age, but the actual payment can be higher or lower depending on whether the person claims benefits later or earlier than full retirement age .
Buffett has been very public in revealing his salaries over the years. In Berkshire ‘s proxy instruction for its annual meet in 1999, the company revealed that Buffett had earned $ 100,000 each class for the past 18 years, dating binding to 1981. That rehearse has continued to the confront day.
anterior to that, reports are slightly less complete. however, some junior-grade sources refer to Buffett getting a smaller $ 50,000 wage from Berkshire for at least a couple of years anterior to 1981. Others point to Buffett ‘s initial occupation working for Ben Graham ‘s partnership, receiving a starting wage of $ 12,000 a class in 1954 .
fortunately, it ‘s not necessity to know precisely how much Buffett made in decree to calculate what he credibly gets from Social Security. That ‘s because the SSA has already done it for us, because Buffett is one of a blue-ribbon few people who has systematically earned more than the maximal amount on which Social Security charges payroll taxes. It was n’t until 2008 that the wage base limit on Social Security exceeded Buffett ‘s $ 100,000 Berkshire wage, frankincense guaranteeing that for at least 28 years, Buffett earned the maximum amount. A $ 12,000 wage in the 1950s would have been well above the wage limit for Social Security at that time, equally would a $ 50,000 wage in the 1970s. It ‘s therefore fair to assume that Buffett ‘s earnings phonograph record entitles him to the maximum benefit .
The choices Buffett would have had
Like anyone, Buffett had to choose when to take Social Security benefits. If he ‘d claimed at the earliest available age of 62 back in 1992, then the maximum initial monthly payment would have been $ 860 per calendar month. Thanks to price of living adjustments along the way, that number would work out to $ 1,527 per month in Social Security benefits today .
Based on his birth year of 1930, Buffett ‘s full retirement historic period was 65. If he waited until then before claiming benefits, then he would have gotten an initial monthly total of $ 1,199 in 1995. That would have grown to $ 1,961 per month nowadays.
so far Buffett did n’t actually have much need to collect Social Security, and so it would have been reasonable for him to wait until the latest possible old age of 70 before claiming. If he did so, then he would have been entitled to an initial monthly benefit of $ 1,752 in 2000. Over the adopt 18 years, price of life adjustments would have boosted that sum to $ 2,562 per calendar month .
The interesting thing about Buffett and Social Security
Buffett has ideas about dealing with Social Security ‘s fiscal issues. One solution he ‘s suggested has been to eliminate the engage floor limit on Social Security taxes, thereby increasing the amount of tax income that the program brings in. In particular, those executives who make millions of dollars in salaries and other compensation would see the sum they had to pay into Social Security through payroll taxes rocket .
Yet what ‘s slightly ironic about that idea is that Buffett would n’t have had to pay markedly more in payroll taxes under his marriage proposal. Taxes on the full $ 100,000 would have amounted to $ 6,200 annually since 1990, with lower tax rates having applied in earlier years. however because he kept his wage low compared to his peers, he never would ‘ve had to pay the elephantine taxes that executives with seven- or eight-figure salaries would pay under his marriage proposal.
It ‘s amusing to think of the billionaire investor getting a $ 2,562 match from Social Security deposited into his bank report every month. Yet Buffett ‘s know shows how every worker, rich or poor people, stands to benefit from the Social Security broadcast .