What is a ‘ponzi scheme’ and does Social Security fit the definition? Elon Musk’s claims, explored

If there’s one thing Elon Musk loves more than disrupting industries, it’s disrupting facts. During his recent appearance on Joe Rogan’s podcast, the White House adviser declared Social Security to be “the biggest Ponzi scheme of all time.” Bold claim?

According to Musk, the federal government is hemorrhaging $500 billion to $700 billion in waste through entitlement programs like Social Security, and that’s why it needs to be “eliminated.” Musk also claimed that “20 million dead people” — twice the number of the current population of New Jersey — are still marked as alive in the Social Security database. Spoiler alert: it’s not true. The Social Security Administration has debunked this repeatedly. According to Social Security’s own inspector general, over seven fiscal years (2015–2022), improper payments totaled $71.8 billion. That’s less than 1% of the $8.6 trillion in benefits paid out during that period, and most of those were overpayments to living people, not ghost retirees cashing checks from beyond the grave. 

What is a Ponzi Scheme?

The richest man in the world called Social Security a Ponzi scheme. Now, he's pushing to take away our seniors' benefits that they have EARNED through a lifetime of hard work. pic.twitter.com/kznNeajyOJ

— Sen. Tammy Baldwin (@SenatorBaldwin) March 12, 2025

A Ponzi scheme, for those who (luckily) have never attended Trump University, is a fraudulent investment scam where returns to earlier investors are funded by payments from new investors, rather than from actual profits. Named after Charles Ponzi — an Italian immigrant who, in the roaring 1920s, promised investors massive returns through international stamp arbitrage — the classic Ponzi scheme collapses spectacularly once the flow of gullible newcomers dries up.

Social Security, by contrast, is a pay-as-you-go system, where current workers’ payroll taxes help fund current retirees’ benefits. It’s transparent, structured, and overseen by law. Is it perfect? No. Does it face long-term funding challenges? Sure. But those challenges don’t make it a Ponzi scheme any more than your bank account is a Ponzi scheme because it relies on deposits to stay solvent.

The program was born out of the Great Depression, when millions of Americans were out of work, and elderly poverty was rampant. In 1935, President Franklin D. Roosevelt signed the Social Security Act into law, calling it “a cornerstone in a structure which is being built but is by no means complete.” Over the decades, Social Security expanded to include survivor benefits (1939) and disability insurance (1956), becoming one of the most successful anti-poverty programs in U.S. history. Today, it provides benefits to 69 million Americans, including retirees, disabled workers, and survivors of deceased workers. For nearly 9 out of 10 Americans aged 65 or older, Social Security is a critical source of income. For many, it’s the difference between living with dignity and living in poverty.

Historically, Social Security has enjoyed bipartisan support. But in recent years, some Republicans have taken a harder line, viewing Social Security as an unsustainable entitlement program in need of drastic reform — or outright privatization. Still, most Americans, regardless of political affiliation, overwhelmingly support Social Security. According to a 2025 poll by National Institute on Retirement Security, 87% of Americans (including 86% of Republicans) believe it should remain a budgetary priority. Why? Because it works. If Musk wants to critique Social Security, fine. Let’s have that debate. But let’s base it on facts.