What Percent of Workers Max Social Security?
Hello, I’m Kevin - a financial planner who helps tech professionals and their families live great lives.
Make yourself at home - we’ll get to Social Security in a moment.
But first - here are some links you may want to save for later.
My Goal? Help People Reach Financial Independence!
How to Minimize Lifetime Taxes
Now, let's get on to the blog! 😀
I learned an amazing fact the other day.
6% Earn More Than the Social Security Max
Each year, only about 6% of covered workers earn more than the Social Security taxable maximum!
The maximum changes each year based on the growth in the national average wage. The limit is $160,200 for 2023.
Earned income above that avoids the Social Security tax.
What’s Included in Social Security Wages?
Social Security earnings includes:
base salary and wages
bonuses and commissions
Restricted Stock Unit (RSU) vests, etc.
Benefits of Reaching the Maximum
Tech workers often go weeks or even months without having to pay the Social Security portion of the FICA (Federal Insurance Contributions Act) tax each year. That 6.2% of gross pay instead goes to their checking account.
Hitting the Social Security maximum improves cash flow - which is especially helpful going into the holiday season!
However, these employees must still pay the Medicare portion of the FICA tax. There’s no limit on that 1.45% tax on earned income.
Did the 6% Surprise You?
I was shocked only 6% of covered workers reach the Social Security taxable maximum income each year.
How about you? Were you surprised?
Does knowing change your financial perspective?
Hey, thanks for reading my post on how rare it is for a worker to reach the Social Security income maximum.
Just a reminder, I share a lot of resources that can help you.
Disclaimer
In addition to the usual disclaimers, neither this post nor this image includes any financial, tax, or legal advice.
