Ponzi Scheme vs Social Security

The richest man in the world has now proclaimed that Social Security is a Ponzi Scheme. Nothing could illustrate his total misunderstanding and complete disregard for the powerful benefits of the program.

Ponzi Scheme

The first element of a Ponzi scheme is that the initial contribution is gained through fraud. Bernie Madoff told his investors their money was being invested in stocks, options, and complex investment instruments. They gave him their money. None of it was invested in stocks, options or investment instruments.

Ponzi Schemes create fraudulent records to support the deception that they are valid investment instruments with a defined rate of return.

A customer of a Ponzi scheme may ask for a payout based on the fraudulent representation of their returns. A Ponzi scheme pays out those requests by fraudulently accepting donations from others.

Ultimately when more people ask for their money than the Ponzi criminals can collect from new victims the Ponzi Scheme collapses, and no one gets paid!

Social Security

Workers pay 6.2% of their salaries into the Social Security Fund. www.ssa.gov Their employers match that contribution. These contributions are not fraudulently procured. They are based on a guarantee that the worker will receive a lifelong pension that begins between the ages of 62 and 70.

The dollar amount of that pension is based on a formula that is derived from the best 35 years of Adjusted Gross Income in the individual’s work history.  

Social Security invests its money in Government Treasuries. The most conservative and secure investment instrument. It is audited by the GSA. The last audit discovered less than 1% of improper payments. Almost all of them over payments to valid Social Security Recipients.

In 2023 there were 71 million Americans receiving Social Security Benefits. The average monthly benefit was around $2,000 a month. These benefits have been paid without interruption for 85 years.

It is true that Social Security uses current contributions to pay current benefits. When those contributions are not enough to cover benefits, they use money from a trust fund which has been built up over decades. It is estimated that this trust fund will run out of money in 2035.  There are a number of solutions to correct this imbalance.

Put A Sock In It

Ponzi schemes defraud their investors and ultimately result in catastrophic financial outcomes. Social Security collects money from workers with a guarantee that they will receive benefits when they request them. That guarantee has been upheld since the programs inception. Combined with Medicare, senior citizens in our country have the lowest percentage below the poverty line of any age group.

So please. Put a sock in it Mr. Musk. Those of us who worked all our lives to create the most dynamic economy in the history of the world paid for and deserve the benefits that Social Security has faithfully delivered since its inception.