Is Social Security a 'Ponzi scheme?' Warren Buffett and Charlie Munger’s response — and how to secure your retirement

Core Viewpoint - The sustainability of Social Security is being questioned by prominent economists, with some likening it to a Ponzi scheme due to its reliance on current workers' payroll taxes to pay benefits to retirees and others [2][4][7]. Group 1: Economic Perspectives - Milton Friedman described Social Security as "the biggest Ponzi scheme on earth" in a 1999 article, highlighting long-standing concerns about its viability [1][2]. - E.J. Antoni, appointed by President Trump, has echoed similar sentiments, stating that Social Security is not sustainable [1][2]. - Charlie Munger defended Social Security, emphasizing its role as a transfer payment from productive individuals to those beyond their productive years, suggesting a societal obligation to support retirees [3]. Group 2: Structural Concerns - Social Security currently serves around 70 million beneficiaries, funded through a trust that collects payroll taxes from current workers to pay benefits [6]. - The system is at risk of insolvency if the incoming payroll taxes do not meet the outgoing benefits, with projections indicating potential cuts to benefits as early as 2034 [7][8]. - The Committee for a Responsible Federal Budget warns that failure to act could result in a 23% cut to benefits for all retirees within eight years [8]. Group 3: Policy Implications - Trump's campaign included a pledge to eliminate federal taxes on Social Security benefits, which could accelerate insolvency by three years, moving the timeline from 2034 to 2031 [9]. - The One Big Beautiful Bill Act introduced a temporary increase in standard deductions for seniors, but this could lead to faster depletion of the Social Security fund [10]. - Policymakers are under pressure to address the looming insolvency of Social Security, with the cost of potential solutions estimated at $1.48 trillion [8].