this post was submitted on 10 Mar 2025
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It IS a scheme, in that it's a system, plan, or action.
It is NOT a Ponzi Scheme because it does not promise investment returns or exaggerate profitability.
It's there to keep retirees & the disabled out of abject poverty, which does not provide returns you can usually see on a balance sheet. Greater good & all that...
I'm not arguing if the system is good or bad. I think there should be a good retirement system in place.
Average person makes 65k in America
SS is 12.4% usually split between employee and employer.
That's 8k a year.
Average SS monthly payment is ~2k
18 to 62 is 44 years of payment.
65k × 12.4% = ~8k per year payment
44 × 8 = ~350k
62 to 78 is 16 years. 2k × 12 = 24k per year
16 × 24k = ~384k
So looking right now if I made average pay, paid SS when I was 18, worked until 62, collected SS at 62, died at 78. I would be looking at a 10% return on my investment
Even more if I live past 78
If I came to you said said. "Would you invest for the next 44 years and I'll give you your money back after and 10% more over 16 years, but I'm going to have to have new people entering my "scheme" to pay you..."
That would be a ponzi scheme.
If the government simply kept the money paid and then paid it back with interest earned loaning it out until time to pay. SS wouldn't be in a crisis.
Social Security is an investment in the health of our society, it's not a financial instrument. You can't pool risk and get predictable returns without cutting corners & dropping high-risk members (hello health insurance industry).
It's not a Ponzi Scheme by definition.