Social Security

Get Out of The Great American Ponzi Scheme

Dear Reader,

When you hear the words “Ponzi Scheme” you probably think of Bernie Madoff, the mastermind behind the largest Ponzi scheme in recorded history. He absconded nearly $65 billions of his client’s investments, life savings, retirement plans, hopes and dreams. 

While making himself very rich, he destroyed his client’s lives.

The Ponzi scheme that Madoff admitted to and was sentenced to 150 years in prison for is despicable. He scammed his clients for decades, most without the faintest idea until everything came crashing down at once.

Hundreds of people, individuals and corporations alike, lost billions when you add it all together.

What’s even more terrifying? A much larger group of people fail to realize they are currently being scammed—only legally. 

Social Security Is The Biggest Ponzi Scheme Of All Time 

For this scheme to work, younger citizens have to let the government take their money to give it to the older generations. “But don’t worry,” they’re promised, “when you’re older, the cycle will work the same for you!” 

But the problem with that promise is this system will soon fail as all Ponzi schemes do.

The funds are drying up.

When the program started in 1945, there were about 42 workers per beneficiary to pay the payroll tax supporting retirees’ benefits.

Today, the number is 2.8.

By 2034, the SSA reports, it will shrink 23% to 2.2. And by 2091, retirees will have totally outpaced workers. 

Also in 2034, reserve funds devoted to Social Security will have depleted, so worker taxation will be the sole revenue source for the program. This means benefits will have to be reduced if the government is going to keep paying everyone entitled. 

People are living longer, becoming more dependent on the program, and government has put no plan into action to make up for the deficit. 

Plus, when you calculate what you’ll make in Social Security, while you take your 35-highest-earning years, you could also be getting taxed on every installment, subtracting Medicare premiums, the list goes on.

Not to mention, returns on your investment in Social security are minimal compared to what that money can do if you actually put it to work (ie. buying assets).

The point is to understand where your money is going. You have options. 

All Pension Plans Are Ponzi Schemes 

Pension plans rely on younger workers contributing to pay off retiring workers. 

One reason so many pension plans are in trouble, like Social Security, is because the plans are underfunded. 

That means if new workers don’t contribute, or the stock market doesn’t gain 20% per year, the old guys are toast. 

I’d love to tell you about the last time I was scammed, but… all I can say is that most con men, like Madoff are very convincing, intelligent, charming people, they’ve succeeded because they’re capable of conning otherwise smart people. 

Trust me, I’ve been there, too.

They have friends who believe in them and encourage you to believe in them. They have to be convincing, or their Ponzi scheme would never work in the first place.

Are any of these convincing, intelligent, charming people in charge of your money? 

The New Depression

Panic silently spread throughout the world in August 2007. The banking system was seizing up. This set in motion a domino effect that threatens even now to bring down the entire world economy.

In spite of massive government bailouts and stimulus packages estimated to be over $7 trillion to $9 trillion worldwide, some of the world’s biggest banking and business institutions, such as Citigroup and General Motors, wobbled. The crisis threatened not only major corporations and multinational banking conglomerates, but also the security of hardworking families.

The short story to be told here is how the smartest financial brains in the world, the people we look to for financial wisdom, the men and women who went to the best schools in the world, supposedly receiving the best financial education in the world, caused the biggest financial crisis in world history, a crisis some have called the New Depression.

The question that arises is this: If they’re so smart, if the leaders of our financial institutions received the best financial education money could buy, why is the world in such a financial crisis? Why are the rich getting richer, the poor getting poorer, and the middle class shrinking? 

Could the problem be the poor quality of our leaders’ financial education and the lack of financial education of the masses?

What Is Real Financial Education?

That’s a good question, and one that has many different answers depending on who you talk to.

Many people would say that it’s teaching kids how to save money, balance a checkbook, and use a credit card responsibly. For others, it means teaching how to invest in the stock market and manage a 401(k).

Administrators in lots of schools are proud to say they have financial education in their curriculum. In reality, it is financial training, not financial education. Just as Pavlov trained his dogs to salivate even if there was nothing to salivate about, millions of highly educated people are trained into the mass labor force rather than educated when it comes to the subject of money.

But then you have to ask, “How did the graduates of our best schools—Harvard, Yale, Princeton, Oxford, and Cambridge—guide us into the world’s biggest financial crisis?”

And that leads to a million more questions.

Why are retirement plans across the nation in trouble? Did those who manage those retirement plans really receive a financial education? Are kids in schools receiving a financial education? Are schools preparing students for the real world of money?

My generation—the baby boom generation—and their kids have only known the biggest economic boom in history. 

The baby boomers do not know what a true depression is. 

For the most part, all we’ve known are good times. The baby boomers were blessed by being born into a massive economic boom, a boom that began in 1971 when all the world’s money became Monopoly money. Many people in my generation made wheelbarrows full of money. 

But then, 2007 happened, and after the crash, many of my generation lost those wheelbarrows.

Worse than being out of money, they may be out of time.

I am afraid my generation and their kids are not prepared for the economic decline, a depression that may be coming. 

Don’t let that be your story. 

Know where your money goes, know what your options are, and adjust accordingly.


Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

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