this post was submitted on 10 Mar 2025
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If the United States didn't have younger people to pay into the system, new investors, the "ponzi scheme" collapses.
The US government, the scheme operator, doesn't invest the money it receives. Instead, it hands it to previous investors
Now I'm not against a national insurance or something. But we know even with new investors the SS fund is going to run out.
If the government saved the money it was paid and treated it like a real savings account or treated it like insurance.
But the way it is now, it can't run forever. Just like a ponzi scheme
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.