George Kamel - The Biggest Ponzi Scheme Ever

Starting point is 00:00:05 Social Security is a ticking time bomb set to run out of money in 2034 if nothing changes. But that's not even close to the most concerning part. You see, this is a completely broken system that screws over everyone who participates. And since all U.S. workers are required to pay into the program, that means it's screwing you. We're screwed. Let's start by making sure we're all on the same page with how Social Security works. Right after I give a Hunger Games salute to delete me for sponsoring this video. Don't put some reverb in.

Starting point is 00:00:38 It'll sound cool. No, no, we got it. We got it. It all starts with taxes. Everyone's favorite aphrodisiac. That's not a character in the Bible homeschoolers. Don't Google it. There's Meshach.

Starting point is 00:00:51 Aphrodisiac and Abednego. Those are the three. Final answer at Trivia Night. Just, it's Shad Rag. It's your boy Shad. Every worker pays 12.4% of their income in Social Security taxes up to an annual limit. Now, if you work for an employer, they'll split that payment with you, which means you'll only see 6.2%

Starting point is 00:01:09 come out of your paycheck. But if you're self-employed, you'll pay the full shabang yourself. So take our imaginary Gen Z friend, McCartolin, for instance. McCartolin makes $4,000 a month working at her local AI data center. Dysopian, I know, but likely all of our futures. Now, McCartolin will pay 6.2%, or $248 from her monthly paycheck in Social Security taxes, and the data center will pay the other $248, bringing McCartellan's total Social Security tax to $496. So where does that money go, you have? Well, it's used to pay out current Social Security benefits, including retirement, disability, and survivor benefits. Now, if there's any money left over, it goes into the Social Security trust funds, which you can think of as a Costco-sized walk-in fridge for all the money leftovers.

Starting point is 00:01:54 Now, those leftovers are then invested in U.S. Treasury securities. And this all started in 1935 during the Great Depression to provide a basic financial safety net for older Americans who could no longer work and have little or no income. And it sounds like a good idea, right? I mean, worst case scenario, it's a great way to give retirees an income boost. Right? Right? Right? Wrong.

Starting point is 00:02:19 Turns out, Social Security is actually screwing you in several different ways. And it all starts with the fact that the program is running out of money. Since 2010, Social Security has operated at a deficit, which is a fancy way of saying that, for the past 16 years, everything going in has not been enough to cover what's going out. That means benefits are currently being paid out of the trust fund, which is getting smaller by the day. So much so that eventually there won't be any money left if Congress doesn't act.

Starting point is 00:02:46 Specifically, a report from the Social Security Administration's own website projects the trust fund reserves will be depleted in 2034. And it projects the reserves for old age and survivor insurance will deplete even sooner by 2032. Now, the government will likely step in to keep that from happening and we'll go over some of the likely fixes in a minute. But let's pretend for a second that Social Security wasn't running out of money. That would be good news, right?

Starting point is 00:03:09 Again, no. Because this system is so broken that it screws you even when it works as intended. And here's some quick math to explain. Imagine you start working full-time at the age of 23, and you retire at 60, earning an average of $50,000 a year during that time. Over those 37 working years, you'd pay about $3,100 annually in Social Security taxes for a total of roughly $150,000 grand over your career. And at age 67, which is Social Security's full retirement age,

Starting point is 00:03:38 you would start receiving about $2,000 per month. So if you started collecting benefits at age 67 and you lived to age 85, you'd receive about $456,000 in total. Now, first glance, sounds like a great deal. I put $115,000 in. I get over $450 grand back. Hot diggedy dog. Here's the problem.

Starting point is 00:03:58 If you invested that same $3,100 a year from age 23 to age 60, and you earned an average of 10% in the stock market, you'd have about $2.4 million by age of $8.000. which is saying all those years of paying into Social Security cost you about $2 million. Sorry. Now at this point you might be thinking, wait, why don't we just do that? Can I turn down Social Security and just invest that money instead? No, you can't!

Starting point is 00:04:23 And that's the whole point here. Social Security is a crappy financial system that you were required to participate in. The government doesn't ask for your consent and you can't opt out of it. And if you're angry about this, good. Now you know how the colonists felt when they threw tea in the Boston Harbor. Boston Harbor. That water still tastes better than macha. I promise you that. That's some dirty water. I'm from Boston. I can say that. The water will give you cyclospora. Show me on the board, cyclospora.

Starting point is 00:04:48 And if that doesn't make you mad, this will. At its core, Social Security is really just a legalized Ponzi scheme. Now, for the uninitiated, a Ponzi scheme is a scam where money from new investors is used to pay earlier investors instead of coming from real profits. And the whole thing falls apart when there aren't enough new investors and most people lose their money. Now this is not to be confused with pyramid schemes, which is when your old high school friend Megan sends you a DM saying, hey girl, and next thing you know, you've bought Rodan & Fields Lash Boost serum. And now you're in something called a downline? What does this meet, Megan? Tell me, I just wanted beautiful lashes. You promised me it was a good work from home opportunity. I do have beautiful lashes though. Check these bad boys out.

Starting point is 00:05:31 Rodan and Fields call me. Partnership. Please don't actually. I don't trust anyone name Rodan. It's a stupid, stupid non-name. So here's an example of a Ponzi scheme. Let's say I start an investment program and collect $100 from 100 people for a total of 10 grand. Well, instead of actually investing that money to earn a return for my clients, I use it to send $500 checks to the first people who join the program. Those checks don't come from profits. They come from everyone else's contributions. And the only way I can keep sending them is if enough new people keep paying into the system. That is a textbook Ponzi scheme. And it should sound familiar because I just described the basic design of Social Security.

Starting point is 00:06:13 Did you see that coming? And don't forget, since 2010, the program has operated at a deficit, meaning payouts are coming from the reserves in addition to new taxes. But hey, this isn't the first time Social Security has faced a cash flow problem. Back in 1983, the program was in a similar pickle. Thanks to inflation, it got close to not having enough cash to send benefit checks. So, the government stepped in with some fixes to keep the program above water. They raised payroll taxes, they gradually increased the full retirement age from 65 up to 67,

Starting point is 00:06:43 and they taxed some Social Security benefits for higher income retirees. So you might be wondering, why doesn't the government do that again? Come to the rescue and save this thing. Well, you see, that would suck. As Reagan once said, the nine most terrifying words in the English language are, I'm from the government and I'm here to help. Think about it. Do you really want to pay more into this broken system, along with having to wait even longer before seeing a dime of return on your investment?

Starting point is 00:07:09 Plus, none of those fixes would solve the absolute putrid growth of the money that's sitting in this trust fund. Those U.S. Treasury securities the money gets invested in, they grow by about 2.5% annually, ak.a. slower than molasses, paint-drying, snails, and your five-year-old telling a story. Get to it, bud. Get to it. Have you ever had a dreams that you had? And that's a big part of why the Social Security Trust Fund can't support itself anymore. I mean, think about it. Money grows faster than that, sitting in a high-yield savings account with Fairwind's Credit Union,

Starting point is 00:07:43 a sponsor of today's video. So the government may be letting your money sit around and get eaten by inflation, but you don't have to. When you sign up for a smart bundle with Fairwinds, you'll get a high-yield savings account with over 3% APY, a no-monthly fee-checking account and access to 35,000 fee-free ATMs. Plus, you want to have to deal with bankers and customer service reps that make you wish you were talking to literally anyone else. Fairwin's team is top-notch, and they want you to win with money. So get started today at fairwins.org slash Ramsey or click the link in the description. And it turns out, Social Security isn't the only thing quietly working against you without permission.

Starting point is 00:08:18 Hundreds of data broker sites have your address, phone number, and your family's info, and they're always ready to sell it to the highest bidder. And that's where Delete Me comes in, a sponsor of today's video. Their privacy experts track it down across hundreds of these sites and get removed on your behalf, and then they keep monitoring all year long behind the scenes. And you'll get reports showing you exactly what they've removed and how much time they've saved you. And unlike Social Security, it actually works. And right now, you can get 20% off an annual plan at join deleteme.com slash George or use the link in the description.

Starting point is 00:08:48 All right, I've been dogging Social Security pretty hard in this video. But to be fair, it is a lifeline for a lot of people out there. For many, that check is the difference between having groceries and going without. So let me be crystal clear. I am not saying we bulldozed the program and stop sending checks to 78-year-olds using them to keep the lights on. Instead, I think we need to be asking one simple question. Can't we do better? If we are dead set on having a government program to offer financial aid to retirees and those with disabilities,

Starting point is 00:09:15 is a 100-year-old system that was built to get Americans through the Great Depression really our best bet? The answer is, of course, no. But implementing something better would require two things. that feel like a long shot. First, someone in D.C. would need to design a better system. And second, Congress would need to agree on that system. And I don't know about you, but I think we are more likely to witness a Manosphere influencer becoming likable than that happening.

Starting point is 00:09:39 The only coworker I need is Adderall. The truth is, even when Social Security works, the average payment is only two grand a month, which is not enough for 99% of people to survive on. And if it doesn't work, well, then us younger generations paid a whole lot into this thing to get maybe nothing out. But here's some good news. You don't have to wait on Washington to fund your retirement, and you don't have to pin your future to a program that has been running on fumes for the last 16 years. The second you stop treating Social Security like a retirement plan, everything changes.

Starting point is 00:10:08 Yes, you're still on the hook for that 6.2% tax, but you can get to a place where the next Social Security is going broke headline leaves you with nothing but a mild shoulder shrug. You can fund retirement on your own terms and ride off into the sunset with an income that's actually big enough to keep you aflopped. So bottom line, you are your best shot at a great retirement. And that should be a relief, not a burden. And if you don't believe me, maybe you'll believe Aaron Talks money. She recently came on my channel, and we discussed this exact topic, along with other wealth building tips to help you retire with dignity.

Starting point is 00:10:40 So click here to watch it next or use the link in the description. That's it for today. Thanks for watching. See you next time. And pay your taxes.

George Kamel - The Biggest Ponzi Scheme Ever

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