Warren Buffett, Charlie Munger were once asked if Social Security is a 'government-sponsored Ponzi scheme'. Here's how they responded — plus how to ensure your retirement is secure
Disclaimer: We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.
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 Buffett’s company, Berkshire Hathaway’s, annual shareholders meeting in 2005, an audience member posed a blunt question: “I’m asking for your opinion on Social Security. Shall we call it the government-sponsored Ponzi scheme for retirees?”
Buffett clarified 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.” And 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.”
Don't miss
Let US retail giants like Walmart, Whole Foods, and Kroger provide YOU with passive income — become a 'grocery landlord' with this 1 simple move
Cost-of-living in America is still out of control — use these 3 'real assets' to protect your wealth today, no matter what the US Fed does or says
These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
Buffett’s right-hand man, the late Charlie Munger, strongly defended the program. He said that he felt more strongly than Buffett that the Republicans who were 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 is not unfounded.
‘The biggest Ponzi scheme on Earth’
Nobel Prize-winning economist Milton Friedman once called Social Security “the biggest Ponzi scheme on earth.”
Concerns over the sustainability of the program have heightened more recently, with the Congressional Budget Office projecting the exhaustion of the Social Security Old-Age and Survivors Insurance Trust Fund by the fiscal year 2032.
Instead of solely relying on Social Security for your retirement, you can also take matters into your own hands. Proactively investing and saving on your own can provide stability amid Social Security’s uncertain future.
Here are two ways to do just that:
Read more: Generating 'passive income' through real estate is the biggest myth in investing — here’s how you can do it in as little as 5 minutes
Real estate
Investing in real estate is widely regarded as a robust strategy for retirement planning due to its potential for generating passive income and capital appreciation over time.
Well-chosen properties can offer a reliable source of rental income, which can be used to cover living expenses in retirement, reducing dependency on traditional retirement savings or Social Security.
Additionally, real estate often appreciates over time, as property values and rental rates tend to increase with the cost of living.
These days, you can invest in rental properties without becoming a landlord. Arrived is an online platform where you can invest in shares of rental homes without taking on the responsibilities of property management.
Aimed at lowering the barrier to entry for rental property investing, Arrived is backed by Jeff Bezos and boasts over 250,000 registered investors.
For those feeling a tad more ambitious, consider First National Realty Partners, a platform that enables individual investors to tap into institutional-quality, grocery-anchored commercial real estate.
As a private equity firm, FNRP acts as the deal leader, providing expertise, doing the legwork and streamlining the process, while investors passively collect distribution income.
Gold
Precious metals — particularly gold — have been a popular hedge against inflation. The reason is simple: They can’t be printed out of thin air like fiat money.
Moreover, investors often rush toward gold in times of crisis, making it the go-to safe haven asset.
Amid surging inflation and geopolitical instability, gold prices have reached new heights, now standing at over $2,150 per ounce.
The most direct way to play the precious metal is to own bullion. Investors can also buy shares of gold mining companies or ETFs.
One way to invest in gold that also provides significant tax advantages and retirement security is with a gold IRA through Goldco.
Opening a Gold IRA allows investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold.
This makes it an attractive option for those seeking to ensure their retirement funds are well shielded against economic uncertainties.
A tailored retirement plan just for you
Ultimately, everyone’s financial situation is unique, characterized by different obligations, goals and risk tolerance.
While we all aspire to build retirement portfolios filled with shock-proof assets, many Americans also face other financial responsibilities, like mortgages or student loans.
Ensuring you have enough money to meet current financial obligations and invest for the future can be a difficult task to tackle on your own. This is why consulting a professional is important.
WiserAdvisor is an online platform that connects you with vetted financial advisors.
All you have to do is answer a few questions about yourself and your finances and WiserAdvisor will match you with a few FINRA/SEC registered financial advisers best suited to your situation and goals. You can then book a free, no-obligation consultation to see if they’re the right fit to help you get on track for the retirement you want.
What to read next
Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead. Get in now for strong long-term tailwinds
Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
84% of ultra-rich Americans boost their wealth through this 1 'private' asset class — get access within minutes even if you don't have millions
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
