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Do Billionaires Get Social Security? — The Motley Fool



The short answer is yes. Even though they don’t need the extra income, billionaires can qualify for Social Security benefits when they reach age 62, and many of the richest Americans are currently collecting a monthly Social Security check. However, since Social Security benefits are capped, billionaires don’t receive much more from the Social Security Administration than most middle-class Americans.

Some billionaires might not qualify for the maximum, or any benefit at all

One key point to be aware of is that Social Security retirement benefits are based on your earned income, such as wages from a job. Many of the wealthiest Americans get their income from passive business activities, or from dividend income on their investments, which is not counted for Social Security purposes.

Image Source: Getty Images.

  • To qualify for a Social Security retirement benefit, you need a minimum of 40 quarters (10 years) of earned income from a covered occupation. To get the maximum possible Social Security benefit, you must have earned the maximum amount of income that’s subject to Social Security taxes for at least 35 years. (In 2017, for example, you’d have to earn the maximum taxable amount of $127,200.)

What this means is that if a billionaire inherited their fortune, and their only income source has been investment income, they may not qualify for any Social Security benefit at all.

As another example, let’s say a self-employed entrepreneur worked for 15 years and then sold his or her company for several billion dollars and never worked again. This person would likely be eligible for a Social Security benefit, but with only 15 years of earned income on their record, they’d likely get far less than the maximum benefit.

What’s the maximum Social Security benefit?

Having discussed the reasons some billionaires might not qualify, let’s take a look at how much a wealthy retiree might get from Social Security if they did qualify.

As I briefly mentioned earlier, Social Security retirement benefits are calculated based on 35 years of earnings. Specifically, the SSA looks at your income in the 35 highest-earning years of your career (capping the figures at the maximum taxable amount for each year and adjusting them for inflation). Then it takes the average of those 35 adjusted income figures and divides it by 12 to produce your “average indexed monthly earnings,” or AIME.

Your AIME is then plugged into a formula to determine your primary insurance amount — that is, the monthly benefit you’ll be eligible to receive at your full retirement age. As of 2017, a retiree’s primary insurance amount is determined by adding up the following:

  • 90% of the first $885 in AIME
  • 32% of AIME between $885 and $5,336
  • 15% of AIME above $5,336

I’ll spare you the mathematics of calculating the highest possible Social Security benefit: At full retirement age, the maximum benefit is $2,687. However, since you can earn a delayed-retirement credit of 8% per year for waiting, until as late as age 70, people reaching this age now can get a maximum benefit of $3,547 per month. That would be a nice permanent monthly paycheck for the average American, though it’s unlikely to make much of a difference for a billionaire.

To sum it up

The bottom line is that while billionaires can qualify for Social Security, they must have earned income for a minimum of 10 years — not just passive sources of income such as investments. And unless they earned more than the Social Security taxable maximum in each of 35 years, they’ll receive less than the maximum possible retirement benefit, which is currently $2,687 per month at full retirement age.


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Stock Markets

Guess shares tank on lower-than-expected quarterly sales



Tradebuddy.onlines of Guess Inc. GES, +0.96% fell 12% late Tuesday after the retailer reported third-quarter sales that missed Wall Street expectations. Guess said it lost $2.9 million, or 4 cents a share, versus earnings of $9.1 million, or 11 cents a share, in the year-ago period. Adjusted for one-time items, Guess earned $10.4 million, or 12 cents a share, compared with $9.6 million, or 11 cents a share a year ago. Sales rose 3.3% to $554 million, compared with $536 million a year ago. Analysts surveyed by FactSet had expected adjusted earnings of 12 cents a share on sales of $564 million. Retail revenue in the Americas fell 11%, offset by increases in Europe and Asia, the company said.

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This Little-Known Chinese Stock Is on Fire — The Motley Fool



Chinese stocks have done reasonably well in 2017, with the Shanghai Composite Index up about 10%. Yet that’s lower than the 15% return of the S&P 500, and when compared with emerging markets overall and the MSCI EM Index’s 25%-plus return, China’s stock market has underperformed.

However, it’s been a strong year for stocks of Chinese companies listed in the United States through American depository shares (ADS). High-profile Chinese companies such as Alibaba (NYSE:BABA) and (NASDAQ:JD) have provided investors year-to-date returns of 106% and 52% as of this writing. Even better, shares of social-media live-streaming platform provider YY (NASDAQ:YY) have blown both out of the water. Below, you’ll find what you need to know about this company.

JD data by YCharts

YY has a long runway for growth

Like Alibaba and, YY benefits from demographic tailwinds. About 731 million Chinese citizens — more than half of the total population — had Internet access as of year-end 2016. That figure has rapidly increased, growing by approximately 19% per year since 2005. Not only are more Chinese citizens gaining Internet access, but the ranks of the middle class with disposable income are swelling. The Brookings Institute estimates middle-class consumption in the Middle Kingdom will grow 8.5% per year until 2030.

As the leading live-streaming mobile and PC provider, YY benefits from both increased Internet penetration rates and disposable income from a rising middle class. The company currently has 73 million mobile live streaming monthly active users, a 37% year-over-year increase. Look for user growth to continue from its host of online-dating, music, gaming, and sports sites.

YY had a strong quarter

YY’s run appears to be mostly supported by the financials. In the recently reported third quarter, the company increased net revenue 48% from last year’s quarter and net income per ADS by 52%, and the pace of that growth has been quite a bit higher than those who follow the stock closely had anticipated. The company expects strong top-line growth to continue, issuing projections for sales to grow in the fourth quarter by between 36% and 41%. 

Picture of Shanghai at night.

Image source: Getty Images

YY is relatively cheap

Unlike its Chinese peers Alibaba and, YY is cheaply valued, with shares currently trading at a forward earnings multiple of about 15 times what investors expect YY to earn in 2018. That’s attractive in comparison to the S&P 500’s corresponding forward multiple of about 20. Meanwhile, Alibaba and trade at much more expensive valuations of 36 and 42 times forward earnings estimates, respectively.

It’s not often you find a company growing its top and bottom lines approximately 50% while trading at multiples lower than the overall market. If you’re an investor in Alibaba and and are looking for more ways to profit from the demographic shift in China, put YY on your due-diligence list before Wall Street catches wind of the name.



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