As most adults my age, I know what my Social Security benefits will be. I could have chosen to start collecting Social Security at age 62. My full retirement age is 66 years and 10 months. I could wait until I reach the 70-year mark before the government forces me on the Social Security rolls. The longer one waits, the larger the monthly check.
The question is, how long will Social Security be around? It is projected to be insolvent in 10 years.
Elon Musk was recently raked over the coals for calling Social Security a Ponzi scheme.
Before we can prosecute or defend him for this statement, we have to understand what a Ponzi scheme is. Most people realize that it is an illegal business. However, as represented on social media, many do not know what a Ponzi scheme is or don’t realize how Social Security works.
While Charles Ponzi was not the first or only one to scam investors with this approach, his name will forever be associated with it. In the 1920s, he swindled about 40,000 investors out of $15 million. In 2008, Bernie Madoff was arrested for running a Ponzi scheme that defrauded investors out of almost $18 billion.
According to the SEC, “A Ponzi scheme operates by taking money from new investors to pay current investors.” A Ponzi scheme continues as long as new and old investors continue to contribute funds, and as long as most investors do not demand full payment.
In simple terms, a Ponzi scheme takes money from Peter to pay Paul, with the fraudsters keeping a portion of it for themselves.
Now, let’s look at how Social Security operates.
I have been contributing to Social Security for almost 50 years. During that time, the government did not set aside my contributions and invest them to pay me when I retired—that is the definition of a retirement fund. The money was paid out to retirees.
This technique worked for decades, especially after World War II with the baby boomer generation—those born between 1946 and 1964. During that time, the U.S. population increased with a birth rate between 21 and 26 per thousand people.
Today’s birthrate is below 14 per thousand, meaning there are less workers paying into Social Security while the baby boomers retire.
The result is less Peters to pay more Pauls. That, my friends, is the same as a Ponzi scheme and what causes one to fail.
Ponzi and Madoff took from the funds for their own benefit. Social Security administrators take the place of Ponzi and Madoff as those profiting from the scheme. The current administrative overhead for Social Security is $6.7 billion per year. According to Just Facts President James Agresti, that is “enough to pay more than 300,000 retirees the average old-age benefit.”
As reported on blogssa.gov, the Trump Administration has “set a staffing target for the SSA of 50,000, down from the current level of approximately 57,000 employees.” The average annual salary for those working at SSA in 2024 — according to govsalaries.com — was $97,963. That equates to a savings of over $685 million a year. This is evidence Donald Trump is not trying to destroy Social Security, but save it.
There is one difference. In the deceptions run by Ponzi and Madoff, the investors had no idea how their investments were being used; we do.
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DOGE update: The estimated savings from the Department of Government Efficiency is currently at $140 billion. Below is a partial list of what Musk and DOGE saved American taxpayers last week.
The Department of Veterans Affairs (VA) paid $4.56 million yearly for minor website updates. Now, one internal VA software engineer is doing the same job, working 10 hours per week.
The U.S. General Services Administration saved $1 million by converting 14,000 magnetic tapes (a 70-year-old technology for information storage) to modern digital files.
The Institute of Museum and Library Services (IMLS) cut $15 million for diversity, equity and inclusion (DEI) grants.
It’s incredible how some Democrats refuse the evidence right in front of them. Democrat Senator Chris Coons from Delaware last week on Fox News said, “I don’t believe what DOGE says about virtually any government agency.” If President Barack Obama had started DOGE, I bet he would be singing a different tune.
