Q & A
Ask Rusty – Why change Social Security now? It’s a working “Ponzi Scam” - AMAC Foundation
Dear Rusty: Maybe everybody has the same reaction that I do to Social Security insolvency. I do not understand a system that has been basically run like a Ponzi Scam since its Inception; why have you decided (in 2026-2027) that now is the time to change a perfectly good Ponzi Scam. In all reality, this began with Babylon. I’m sure that if you searched the meaning of the words “Babylonian money magic,” you would understand what I’m talking about. If this is as good as the Earth has, why would you mess with a perfectly rotten thing. Why would you decide to change currencies to some sort of fragile digital currency? Signed: Skeptical Senior
Dear Skeptical Senior: You touch on an item that the AMAC Foundation has dealt with many times over the years, specifically the notion that Social Security has the characteristics of a Ponzi Scheme. Our position in response to that notion is that Social Security was created and operated with full transparency, with its financial status, formulas, and long-term deficits completely and publicly documented, and reported to the President and Congress annually. Unlike the infamous Charles Ponzi, the government has a permanent pool of contributors through mandatory FICA and SECA (self-employment) payroll taxes and is designed to remain in operation infinitely as long as there’s a taxpaying workforce. Moreover, the Social Security system is overseen by Congress, specifically the Senate Finance Committee and the House Ways and Means Committee, and the Government Accountability Office (GAO). The Social Security Administration is subject to routine hearings by these congressional overseers and maintains an independent Office of the Inspector General to ensure the integrity of its financial operations.
Contrary to Ponzi victims, all participants retiring from the workforce (and their dependents) recover their Social Security contributions via benefit payments, some more than others based on their level of participation in the system. Also, contrary to Ponzi Schemes, Social Security was designed as a social insurance system and has operated successfully in that mode for over nine decades.
What raises the notion of a Ponzi Scheme comparison these days is the looming insolvency facing Social Security just six years from now. This financial problem, however, has nothing to do with fraud. Rather, it is a function of workforce demographics and the fact that Congress has long deferred corrective action on a problem that has been known for the past four decades. We sometimes hear well-intentioned (but sometimes uninformed) comments from some Washington politicians invoking the Ponzi Scheme reference, but we believe that Congress is finally waking up to the urgency. And we also believe Congress is now starting to move seriously to set a course for correction in time to ward off the impact of insolvency. AMAC is proud to be a part of the collective thinking currently surfacing, and our Social Security Guarantee is in play as a plan to be considered. We invite you to review our SS reform plan (at https://amac.us/social-security-guarantee) and likewise to stay tuned to our Social Security Report website (https://socialsecurityreport.org/) where we post regular updates on a variety of matters pertaining to Social Security and retirement.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org. Because we are a non-profit organization, all services are free.