Yes, It's a Ponzi Scheme

I have had many people ask about Social Security and those who are on it ask me the question, "After we have paid into the program all our lives, why is it fair if someone starts cutting our benefits now?"

Good question, but the simple answer is that if you pulled out your statements from what you paid in over all those years and quickly add up what you have been paid out, many will find that they have more than received the money they paid. And of course the big problem is that the program was designed to start pay outs at age 65 when the life expectancy was only 66.  Today people start at 62 and live past 80 years, so just common sense would tell us that as life expectancy increased...the time a person should have paid into the system should have also increased.

I found this article that does a pretty good job of explaining the problems of the current system...and this writer is also referring to the system as a Ponzi Scheme.

Texas governor Rick Perry is being criticized for calling Social Security a “Ponzi scheme.” Even Mitt Romney is reportedly preparing to attack him for holding such a radical view. But if anything, Perry was being too kind.

The original Ponzi scheme was the brainchild of Charles Ponzi. Starting in 1916, the poor but enterprising Italian immigrant convinced people to allow him to invest their money. However, Ponzi never actually made any investments. He simply took the money he was given by later investors and gave it to his early investors, providing those early investors with a handsome profit. He then used these satisfied early investors as advertisements to get more investors. Unfortunately, in order to keep paying previous investors, Ponzi had to continue finding more and more new investors. Eventually, he couldn’t expand the number of new investors fast enough, and the scheme collapsed. Ponzi was convicted of fraud and sent to prison.

Social Security, on the other hand, forces people to invest in it through a mandatory payroll tax. A small portion of that money is used to buy special-issue Treasury bonds that the government will eventually have to repay, but the vast majority of the money you pay in Social Security taxes is not invested in anything. Instead, the money you pay into the system is used to pay benefits to those “early investors” who are retired today. When you retire, you will have to rely on the next generation of workers behind you to pay the taxes that will finance your benefits.

As with Ponzi’s scheme, this turns out to be a very good deal for those who got in early.

See it here;  http://www.nationalreview.com/articles/275908/yes-it-ponzi-scheme-michael-tanner

So what do you think may be the outcome when the new investors (today's workers) finally get fed up with paying into a system that they know is hopelessly bankrupt and they realize they will probably never get the value back of what they paid in?  I'm guessing there could be a problem.  And then what happens to all the retirees who are dependent on Social Security to continue living their current lives?  I'm guessing there will be a problem.

Let's remember though, that Ronald Reagan commissioned a bipartisan committee almost 30 years ago and they came out then and said, "There is a problem coming and the system needs serious reform."  But the voters who were 35 and 40 at the time (now they are 65 and 70) chose to ignore the warnings and now they expect the younger generation to continue paying into the Ponzi system...even though the younger generation is having a difficult time finding jobs and feeding their own families...

So how long will they continue voting to keep paying for Grandpa and Grandma's benefits from Social Security....and we haven't even discussed the Medicare program which is also turning into a fiasco of epic proportions.

Tough choices coming.