The majority of people are familiar with the term Ponzi Scheme. The name comes from Charles Ponzi’s investment fraud of the 1920s. Ponzi Schemes are frauds that involve paying out existing investors of a non-existent business with funds raised from new investors. Investors are attracted by high returns and low risks. The scheme will eventually collapse because it won’t be able to bring in enough new money to pay the investors who are withdrawing money.
Social Security isn’t an investment, and all working citizens are forced to pay into it, whether they like it or not. It is very much like a Ponzi scheme. Most people do not realize that the money paid in today does not go into a special account or lockbox. The contributions of today pay for the retirement distributions of tomorrow. Social Security is a Ponzi Scheme. We could see a Ponzi scheme collapse due to the fact that people are living longer and retiring later.
According to CBO 2020 (Congressional Budget Office), Social Security trust fund will run out of money by 2031. Over the years, there have been small changes in the way Social Security is taxed. These have helped to delay the inevitable. We have a serious problem if we don’t make some major changes. You have to continue attracting new investors in a Ponzi scheme. We need to continue hiring workers for Social Security. With the declining average birthrate, we simply won’t have enough workers to meet the original promise. The current retirees need to receive their benefits, so it’s too late to create private social security accounts. Benefits will be reduced every decade until the demographics of the population change.
As the dollars you paid in to the system are not yours, your heirs will not receive them when you die. Social Security is therefore a very discriminatory system. Black Americans have a life expectancy five years lower than white Americans. They are less likely to receive as much money in benefits. Asian Americans live an average of 11 years longer than African Americans. Hispanic Americans also live seven years longer.
Technically, Social Security is not a Ponzi Scheme. It’s not fair.
