A caller recently called Social Security a Ponzi Scheme. He said that the future value of the amounts deposited to Social Security is less than if the worker saved that same amount on their own.
Social Security is not a Ponzi Scheme. The stock market is.
On the surface, it may seem that even on a small salary, one could accumulate a large sum with consistent savings and compound interest. But it is a fool’s errand to believe that for several reasons.
- His calculations do not include inflation over 50 years, which makes the future value of the savings much less than it seems.
- Social Security benefits are inflation-adjusted yearly, known as the Cost of Living Adjustment (COLA).
- Employers get a tax break at the recipient’s expense as there is no matching tax, and it is doubtful they would be forced to pay the portion they pay now.
- If there is a flood of people’s savings, it will reduce the value of savings and banks will pay less interest.
- There are many more technical economic reasons that go beyond the scope of this post.
Please listen to the entire video. It is well worth it. We must stop being indoctrinated ad nauseam for those who simply want to privatize the program at all costs.
