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By Rick Kahler CFP™

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Lately, I’ve been hearing the same question from clients and readers alike: “Is Social Security even going to be there in five years?” Fueling this concern is a recent viral comment from Elon Musk, who told Joe Rogan that Social Security is “the biggest Ponzi scheme of all time.” That quote has been repeated in every corner of the internet, stirring up uncertainty and fear.

Elon Musk is a genius, but his brilliance in technology and innovation doesn’t automatically translate into expertise in public policy. When it comes to Social Security, he’s outside his lane. Calling it a Ponzi scheme may make for a great soundbite, but it’s a fundamental mischaracterization.

Social Security is not a Ponzi scheme. Not even close.

A Ponzi scheme is a form of financial fraud that lures investors with the promise of high returns. Instead of earning those returns through legitimate investments, the scheme pays earlier investors using money from newer ones. Eventually, the model collapses when there aren’t enough new participants to keep it going, leaving most people with significant losses. This is what happened to those who trusted Bernie Madoff, operator of one of the worst Ponzi schemes in history. Ponzi schemes are illegal, deceptive, and doomed from the start.

Social Security, in contrast, is a government-run, pay-as-you-go tax program. It’s fully transparent; you know exactly where your money is going. The payroll taxes you and your employer pay are used to provide income to today’s retirees, people with disabilities, and surviving family members of deceased workers. This isn’t a con, it’s a social contract.

So why the confusion? Part of the issue is that Social Security does, on the surface, resemble the flow of a Ponzi scheme: money coming in from the young to support the old. But similarity in structure doesn’t make it fraudulent. The program does not promise high returns, it promises a modest, inflation-adjusted benefit to support people as they age.

Social Security does face challenges. The trust fund reserves, built up during years when payroll taxes exceeded payouts, are projected to run dry around 2033. If Congress does nothing, benefits will need to be cut by about 20%. That’s serious, but it’s a solvency issue, not a scam.

And the solvency issue is fixable. There are numerous bipartisan proposals to shore up the system for the long term, from raising the payroll tax cap to gradually adjusting benefits. These aren’t radical ideas, they’re common-sense repairs. A bipartisan mix of 100 CFPs in a room could work out a solution in two days.

When clients ask me if the system will be around in five years, what they’re really asking is: Can I trust it? Can I trust the government? Can I trust that my years of work and tax payments will mean something in retirement? These are not just policy questions. They are emotional questions based on fear of scarcity and a desire for security. When someone with Elon Musk’s influence wrongly calls Social Security a Ponzi scheme, his attention-grabbing soundbite shakes the emotional foundation of that trust.

If we’re serious about preserving Social Security, let’s start by calling it what it is: a commitment to our elders. A tax-supported promise to care for one another across generations.

Social Security is not a fraud, it’s a shared responsibility based on the kind of society we want and woven into the fabric of American life. Yes, it needs some adjustments, but it’s not broken. Rather than eroding public trust with misleading comparisons, we should be focused on debating public policy and how we can strengthen and sustain the program for future generations.

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ME-P NOTE: An increase in Social Security benefits is on the horizon, providing a potential financial cushion against rising inflation. The Cost of Living Adjustment (COLA) for 2025 is set at 2.5% monthly, translating to an average annual increase of approximately $600 for beneficiaries. This adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. While not guaranteed annually, COLA has historically been implemented in most years due to persistent inflationary trends.

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