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Social Security has long been a subject of intense discussion in America, but investing legend Warren Buffett’s position on the issue is unmistakably clear.
During an annual shareholder meeting for Buffett’s old company, Berkshire Hathaway, an audience member once posed a blunt question to him: “I’m asking for your opinion on Social Security. Shall we call it the government-sponsored Ponzi scheme for retirees (1)?”
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Buffett didn’t mince words.
He explained that Social Security is essentially a “transfer payment by the people who are in their productive years to the people who are past their productive years.” However, he liked that mechanism, stating, “I think that the obligation for the people who do well in this society is to provide a reasonable level of sustenance for those beyond their productive years.”
Buffett’s right-hand man, the late Charlie Munger, also defended the program. He said that he felt even more strongly than Buffett that the Republicans challenging Social Security were “out of their minds.”
His remarks were met with laughter and applause from the audience.
That said, the audience member’s concern didn’t come from nowhere. Here’s why some worry that Social Security is a Ponzi scheme, and how you can make your retirement more secure.
‘The biggest Ponzi scheme on earth’
Some of the most prominent economists of our time have questioned the sustainability of Social Security — or even compared it outright to a Ponzi scheme.
Most notably, Nobel Prize-winning economist Milton Friedman once called Social Security “the biggest Ponzi scheme on earth,” in a 1999 article for Hoover Digest (2).
And more recently, the issue has come back into the spotlight after President Donald Trump fired a labor statistics official in August 2025, filling the spot with economist E.J. Antoni — who has called Social Security a “Ponzi scheme” that “you’re not going to be able to sustain (3).”
His recommendation? “You need to sunset the program.”
But what exactly do Friedman and Antoni mean when they say Social Security is a Ponzi scheme, and where do the concerns come from?
Read More: Approaching retirement with no savings? Don’t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)
Is Social Security actually broken?
A Ponzi scheme is an illegal investment structure that pays returns to earlier investors using money contributed by newer investors — rather than from any profits earned by the company. To sustain itself, there needs to be a constant supply of new investors to pay off earlier investors, creating a vicious cycle that depends on bringing in more and more investors.
Eventually, the number of new investors dries up, and there is no more money to pay off the early investors.
And that’s when the whole thing collapses.
In some ways, it’s hard not to see some similarities with the problems facing the future of Social Security.
Currently, Social Security serves around 70 million beneficiaries (4), giving essential benefits to retirees, survivors, and disabled workers and dependents, among others. As it is structured, these benefits are paid out through a trust fund that works a lot like a checking account — basically, it brings in payroll taxes from the earnings of current workers to pay for the benefits of its current beneficiaries.
Not entirely unlike a Ponzi scheme, this arrangement works so long as the amount coming in from workers isn’t less than the amount going out to beneficiaries. Otherwise, there isn’t enough to pay for benefits, which will have to be cut to avoid a major collapse.
And that could be right around the corner, or as early as 2034, according to the 2025 OASDI Trustees Report (5).
Can it be fixed?
Faced with a looming collapse of the U.S. Social Security system, policymakers are being pressured to act.
“Social Security is barreling towards insolvency,” wrote the Committee for a Responsible Federal Budget (CRFP), a Washington-based think tank dedicated to responsible government spending (6). “If policymakers fail to act, they will effectively be supporting a 23% across-the-board benefit cut for all retirees in just eight years.”
Exactly how policymakers should act on fixing Social Security is the million-dollar or, if you go by its 2024 price tag, 1.48-trillion-dollar question (7).
When it comes to Trump’s position on Social Security, for example, he campaigned on a pledge to eliminate federal taxes on Social Security benefits. But according to the CRFB, those plans would have advanced insolvency by three years, from fiscal year 2034 to 2031 (8).
Then, when Trump’s One Big Beautiful Bill Act was passed into law in 2025, it introduced a temporary increase in the standard deduction for seniors above the age of 65, adding an additional $6,000 for individuals and $12,000 for couples to claim on their returns in 2026 (9). However, the increase in taxable deductions could lead to the fund depleting faster, according to the CRFB.
Even then, these new deductions will only last until 2028. After that, things are unclear.
In the middle of this insecurity, what is clear is you might want to take matters into your own hands rather than relying solely on Social Security — and being at the whims of policymakers.
Get a tailored wealth plan, just for you
Proactively investing and saving on your own could provide the necessary stability for your retirement.
But taking control of your financial future doesn’t need to feel like a gamble. If you’re unsure which path to take amid today’s market uncertainty, it might be a good time to connect with a financial advisor through Advisor.com.
This online platform connects you with vetted financial advisors suited to helping you develop a plan for your retirement.
Just answer a few quick questions about yourself and your finances, and the platform will match you up to three experienced financial professionals. You can view their profiles, read past client reviews and schedule an initial consultation for free with no obligation to hire.
Buffett’s gold star strategies
While an advisor’s recommendations will, of course, be tailored to your personal circumstances, they will likely all be proponents of a consistent investing strategy.
So too is Buffett. While his stock-picking acumen has earned him a net worth of between $140 billion and $150 billion (10), depending on when you check, he doesn’t suggest that most Americans pick their own stocks. In fact, he thinks they are probably better off with low-cost index funds and ETFs.
“A very low-cost index fund is going to beat a majority of the amateur-managed money or professionally-managed money,” he reportedly said at a press conference following Berkshire Hathaway’s earnings release in 2007 (11).
Sometimes it pays more to do less.
Set up automatic, passive investing strategies
If you are looking to start investing passively in low-cost ETFs, investing your spare change from everyday purchases through a micro-investing app like Acorns might be a good option.
With Acorns, you can link your bank account or credit card, and the app will round up your everyday purchases to the nearest dollar, then invest the excess into a smart investment portfolio.
For instance, if you make a $23.45 purchase at a restaurant, Acorns will round up the expense to $24 and automatically invest the 55-cent difference into a diversified portfolio of ETFs.
And if you sign up now with a recurring deposit, you can get a $20 bonus investment from Acorns.
Do your own research
While passive investing might be great, what about those budding investors who want to take a more hands-on approach? Where do they get their advice?
These are important questions considering there is no shortage of financial influencers and stock forecasters proliferating their version of financial advice across social media.
But Buffett, with his proven track record, has some advice for you, too.
“The only value of stock forecasters is to make fortune tellers look good,” he wrote in his 1992 Chairman’s letter (12), adding that “short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”
So, here’s the lesson: Rather than looking for short-term gains, focus on the long-run — and be sure to get your stock market analysis from a trusted, reliable source.
Trust a professional, not a prophet
If you want to take your long-term investing to the next level, you might want to consider using Moby.
Moby offers expert research and recommendations to help you identify strong, long-term investments backed by advice from former hedge fund analysts.
Moby’s team spends hundreds of hours sifting through financial news and data to provide you with stock and crypto reports delivered straight to you. Their research keeps you up-to-the-minute on market shifts and can help you reduce the guesswork behind choosing stocks and ETFs.
And the results speak for themselves: In four years, and across almost 400 stock picks, their recommendations have beaten the S&P 500 by almost 12% on average. They also offer a 30-day money-back guarantee.
Plus, their reports are easy to understand for beginners, so you can become a smarter investor in just five minutes.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The Financial Review (1); Hoover Institute (2); Media Matters (3); Brookings (4); Social Security Administration (5), (7); Committee for a Responsible Federal Budget (6), (8); Kiplinger (9); Forbes (10); Reuters (11); Berkshire Hathaway (12)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.