If you’re watching American retirees from abroad, you might notice something puzzling. Some older Americans with substantial assets—nice homes, investment portfolios, perhaps rental properties—still seem to have more disposable income than their net worth alone would suggest. They’re traveling frequently, dining out regularly, and living comfortably without appearing to draw down their savings. What’s the secret?
The answer lies in a government program that might not exist in the same form in your country: Social Security. This isn’t a means-tested welfare program or a safety net reserved for the poor. In the United States, Social Security is a near-universal retirement benefit that goes to almost everyone who worked in the country for a sufficient period, regardless of how much wealth they’ve accumulated.
Understanding the Basics
Social Security operates as a social insurance program funded through payroll taxes during people’s working years. When Americans reach retirement age—currently between 62 and 67, depending on when they were born and when they choose to start collecting—they become eligible for monthly payments that continue for the rest of their lives. These payments aren’t trivial amounts. The average Social Security retirement benefit in 2024 is around $1,900 per month, though many retirees receive considerably more.
Here’s what surprises many international observers: there’s no asset test. A retiree with millions in stocks, bonds, and real estate receives their Social Security check just the same as someone with minimal savings. The benefit amount is calculated based on earnings history during working years, not current financial need. Someone who earned a high salary throughout their career will receive a larger monthly benefit than someone who earned less, up to the program’s maximum.
The Wealth Multiplier Effect
For affluent older Americans, Social Security functions as a guaranteed income floor that lets them preserve and even grow their existing wealth. Consider a retired couple with $2 million in investments. If they’re both receiving Social Security, they might be collecting $4,000 to $5,000 per month or more in combined benefits. That’s $48,000 to $60,000 annually in income that requires no drawdown of principal.
This guaranteed income covers a substantial portion of their basic living expenses. Meanwhile, their investment portfolio can remain largely intact, continuing to grow through market returns and compound interest. The wealth isn’t being spent down to fund retirement—it’s being supplemented by government payments. Over a twenty or thirty-year retirement, this dynamic can actually increase a wealthy retiree’s net worth rather than deplete it.
The contrast with countries that have means-tested pension systems is stark. In nations where government retirement benefits phase out or disappear entirely for those with substantial assets, wealthy retirees must fund their lifestyles entirely from their own resources. American retirees face no such limitation.
Why This System Exists
Americans debate the fairness of this arrangement regularly. Critics argue that sending monthly checks to millionaires represents a misallocation of resources in a program facing long-term funding challenges. Defenders counter that Social Security was designed as social insurance, not welfare, and that people paid into the system throughout their working lives with the expectation of receiving benefits regardless of their eventual financial situation.
The political reality is that Social Security’s universality is also its protection. Because benefits go to virtually everyone, the program maintains broad political support across economic classes. Wealthy retirees who receive benefits become stakeholders in the program’s continuation, making it extremely difficult for politicians to cut or eliminate payments.
The Practical Impact
For those observing American retirees from abroad, this helps explain certain patterns. That elderly American couple renting a villa in Tuscany for a month or spending winters in Southeast Asia may indeed have substantial savings, but their ability to travel so freely often rests on Social Security providing their baseline income. The American retiree who seems remarkably generous with grandchildren or who maintains an expensive hobby isn’t necessarily wealthier than peers in other countries—they’re just receiving a steady government payment that frees up their personal assets for discretionary spending.
This system also shapes American retirement planning in ways that might seem unusual to international observers. Financial advisors in the United States often counsel clients to delay claiming Social Security as long as possible—up to age seventy—because monthly benefits increase for each year of delay. Wealthy Americans with sufficient assets to live on can afford to wait, thereby maximizing their eventual government benefit. It’s a strategy that makes sense only in a system where the wealthy remain eligible for benefits regardless of their net worth.
A Distinctly American Approach
Not every developed country structures retirement this way. Many nations provide means-tested pensions that decrease or disappear as retiree wealth increases. Others have more modest universal pension systems that provide a basic income floor but don’t scale up significantly for higher earners. The American approach—generous benefits that continue regardless of wealth and scale with lifetime earnings—occupies a particular niche in global retirement policy.
Understanding this helps contextualize what you’re seeing when you encounter affluent American retirees abroad or in your own country. Their apparent wealth isn’t an illusion, but it’s being amplified by a government benefit stream that many international observers don’t realize exists or don’t recognize as applying to the wealthy. That monthly Social Security deposit, arriving like clockwork, makes a substantial difference in how American retirees can live and spend—regardless of how much they’ve already accumulated.
