Governor Perry has compared Social Security to a Ponzi scheme. Do you agree or disagree?

Question

Please compare and/or contrast Social Security's structure with a Ponzi scheme.  Do you agree with Perry?  Is he stretching the truth?  Is it a complete lie?

Life Insurance products in the private sector require that premiums cover BOTH current claims for your age group and the net present value of future claims.  

For example, you purchase a whole life policy at age 25.  You will pay premiums until you are age 65 [if you live that long].  The insurance company must [by state law] charge you enough premiums to cover the likelihood that you will die before you turn 65.  Most of the people who are the same age as you will live until after age 65.  The company must have a reserve to pay death benefits at ages 66, 67, 68, 69, etc. until everyone in your age group has died.

Social Security has no such reserve.  It relies on taxes [premiums] collected from people who are the youngest of age to pay the benefits to people who are collecting monthly checks.

Perry says a Ponzi scheme works the same way.  It requires an every 'investor' to pay the administrator of the scheme in order enter.  The administrator uses the money to pay the previous investors their 'earnings'.

http://en.wikipedia.org/wiki/Ponzi_scheme

kathy_is_a_nurse · Accepted Answer

BTW:

My husband is a certified financial planner and a member of a financial planner think tank. He just finished a book on retirement and among other things, it says, "Social Security is a Ponzi Scheme!"

LAN · Answer

The reason your life insurance comparison fails is because the money we send in to SS isn't invested for future use, it's immediately spent on government bills.  And the money you get back eventually is taken from others at that time.  If you look up the definition of ponzi scheme instead of just repeating what liberals want you to think then you will see that SS is absolutely a ponzi scheme.

? · Answer

I am hoping Perry loses in the primary but he is right about Social Security. If you listen to what he says he is saying it is a Ponzi scheme and a lie to our young people. People are taking more out than they are putting in and it has been that way since the first social security check. There will not be enough money for our young workers when they retire. Where I disagree with him is he is talking like Social Security needs to be abolished and what we really need is reform so Social Security's properly funded for our young workers when they retire.

whoyeah · Answer

â Perry exaggerated when he called Social Security a "Ponzi scheme" that won't be there for "kids that are 25 or 30 years old today." Social Security's finances — while troubled — are an open book, not an investment scam, and the program could still support 74 percent of promised benefits in 2085.

Anonymous · Answer

If you look at the way a ponzi is run, it is identical. People like Mark B are not reading the question. They dont like Perry, we get that, but if you know how a Ponzi operates, you would agree. No Gee Wally, it does not NEED anyone skimming to work, that is just a benefit to the guy skimming.

daisy · Answer

of course it is.  the problem is becoming that there is more money going out now.  it is kind of comical in that when chris matthews called it a ponzi scheme there was no big uproar.

NOpublican&#39;s in 2012 · Answer

Not a Ponzi scheme , Rick Perry is a nut and this will be his demise, 85% of americans are happy with and appove of SS

Yak Rider · Answer

Totally agree.

? · Answer

A Ponzi scheme needs someone skimming off the top. SS is more like a bond that you can't cash in until you're in your sixties.

? · Answer

Rick Perry is completely out of his mind crazy.

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Governor Perry has compared Social Security to a Ponzi scheme. Do you agree or disagree?

12 Answers