“Ponzi scheme – a fraudulent investment operation that pays quick returns to initial contributors using money from subsequent contributors rather than profit, after Charles Ponzi , who famously perpetrated such a scheme in the United States of America in the early 20th century” – from www.dictionary.com

Would you consider Social Security an “investment operation”?

Working Americans contribute money to it.  They are required – forced – to do so by Federal law.  

Other Americans – those who are retired – receive checks from Social Security monthly.

Did you have the impression that your Social Security tax is paid into an account, to be held until you retire and can start receiving checks drawn on the money you paid in?

It does not work like that.  If that is what you thought, your thinking is incorrect.

A fund of several trillion dollars is maintained by the Social Security Administration, but that fund is basically like a typical checking account – money received from everyone’s payments of Social Security tax goes in, monthly payments to retirees go out.

Does Congress or any other government agency take money out of that Social Security account?  

In fact, money from that account is loaned, to Congress or others – at interest.  All loans are charged interest.  That interest measures millions; even trillions.  The interest from loans is a major source of income to keep the fund solvent.  

Some news reports state that the fund only holds enough money to cover two years of operations.  Some report that the fund will be totally wiped out by 2035.  But that is not the intention of the fund. 

Taxes are deposited into the fund, like income deposited into a checking account.  

Checks for retirees – and the cost of the operation of the Social Security Administration itself – are paid out of the fund, like the checks you write to pay the bills.

Can that system continue to work into the future?

Baby Boomers are history’s biggest generation, but the population-by-age-chart shows that they are no longer the most numerous.  Age has taken its toll.

U.S. Population by age (from https://en.wikipedia.org/wiki/Baby_boomers))

Baby Boomers were born after World War II, between 1945 and 1962, which means they are now aged 64 to 80.  As is true for anyone, reaching old age has reduced their population.  They are no longer the biggest population segment.

Social Security may be a Ponzi scheme, but as long as the number of people paying in is sufficiently greater than the number receiving Social Security checks, the system will continue to function – if administration costs are kept under control.  

Elon Musk has been looking into just that issue.  DOGE – the Department of Government Efficiency – may be the best friend that younger generations have, when the time comes for them to retire.

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