Tag Archives: madoff

Thoughtful Thursday – Ponzi Schemes and Social Security

screamMy sis and I were having lunch the other day and got started on the topic of Madoff and the alleged Ponzi scheme he allegedly ran for several years. (Innocent until proven guilty hence the alleged comments.)

What’s a Ponzi scheme? It’s when someone is offered a high rate of return on an investment and the money paid to them comes from other investors and not from any kind of profit made by the company.

So my sis says, “You know who’s got the biggest Ponzi scheme going — the U.S. government.”

To which I went, “Huh?” (I hadn’t had enough coffee that day!)

Carmen, my sister, replied, “Social Security. Think about it. We pay and pay into the system and eventually we’ll get paid from the monies other people are paying into the system.”

Dare I say that both of us added to that comment, “Or not get paid.” Yes, many of us worry Social Security won’t be around when we reach the age where we can collect (which age seems to be getting higher and higher every time we look).

Now, practically speaking, I’m sure Social Security gets monies from other ways, such as interest, taxes, etc., but in general, it’s paying off one set of investors with money from another set of investors. To keep going, it will obviously need lots of other investors out there paying into the system unless some kind of bail out eventually occurs.

What do you think about Social Security? Has it treated you right? If you’re not yet retirement age, are you counting on it being there for you?

My thoughts on this Thoughtful Thursday and looking forward to hearing some of your thoughts on it as well.