Investors in big cities are quietly consuming small businesses all over the country.

"We will always protect Social Security, Medicare!" says President Donald Trump.

That would be nice.

But when I look at these programs' balance sheets, I don't see how he's protected anything. Both Social Security and Medicare are on track to run out of money.

Politicians mostly ignore the problem. Worse, progressives like Sen. Bernie Sanders (I–Vt.) and Rep. Alexandria Ocasio-Cortez (D–N.Y.) say they want to expand Social Security benefits.

That's just irresponsible.

My new video points out what we've known for years: These programs are unsustainable.

The problem is that people like me live longer. We like getting monthly Social Security checks and medical care that appears free.

Since we vote more consistently than others, politicians don't want to make us mad by cutting our handouts.

My fellow geezers say, "Social Security is not a handout! I contributed to the 'trust fund' every year. I'm just getting back what I paid in!"

But that's not true. Today, most of us get back much more than we paid in.

In 1935, politicians created the handout, saying, even if you don't save for retirement, government will save for you.

But that was another political lie. They didn't create individual retirement accounts. They didn't save our Social Security payments. They spend every penny as it comes in.

It's why Social Security is like a Ponzi scheme.

Bernard Madoff went to jail because he used new investors' money to pay old investors. That's exactly what our government does.

Few Americans realize it.

"What happens to the money?" I ask people on the street.

"It's held in trust," said one woman.

It isn't.

When politicians started Social Security, there were enough young workers to tax to cover the cost of sending checks to old people.

But now, since we live longer, there aren't enough young workers to fund our payments.

Social Security's costs exceed its income by billions of dollars.

"There is a plan out there to save it, but it requires some tough choices," says the Cato Institute's Romina Boccia. "Commonsense tweaks we can make."

Those include raising the retirement age, capping checks to the affluent, and letting young people opt out of Social Security. Reforms like that require tradeoffs. But ignoring the problem doesn't make it disappear.

We need to act, says Boccia, because Social Security is like the Titanic—gradually heading for disaster.

"Make reforms now," she says, "we can avoid the iceberg. [But] if we wait until the iceberg is in front of our noses and try to turn the ship, we're going to run right into it."

Medicare will hit its iceberg in 2033; then benefits will automatically be reduced. Social Security will hit it the year before.

At that point, incoming taxes will cover only about 78 percent of promised retirement benefits.

Yet irresponsible Democrats say: Spend even more.

"Human wants and needs are unlimited," replies Boccia. "There's always another program that needs more funding."

Sanders says, pay for it by taxing the rich more.

"There isn't enough money even that the rich would have, to pay for the…unfunded liabilities," Boccia points out.

If only politicians had listened years ago, when Cato and the Heritage Foundation proposed letting workers put some of their Social Security money into personal retirement accounts. Instead of relying on future taxpayers, workers could accumulate real assets that grow over time.

Personal accounts give workers something Social Security doesn't: assets we own.

"Even a conservative portfolio of stocks and bonds that got you a 5 percent annual return would have made you many times more [than Social Security]," says Boccia.

Private accounts helped Chile rise from one of the poorest countries in Latin America to one of the richest. Yet leftists still object to capitalists getting a cut of the pie.

"We lack gratitude for what the free market provides," says Boccia.

We should adjust these programs now.

The longer politicians wait, the worse the choices become.

But today's politicians will probably be gone by then.

Our children get the bill.

COPYRIGHT 2026 BY JFS PRODUCTIONS INC.

The post Social Security Is Like a Ponzi Scheme. How Do We Fix It? appeared first on Reason Magazine.

As exuberance around the technology stokes fears of a bubble, the nation’s public pensions are starting to grapple with their role — and their risks.

© Matt Chase

• Nate Soares said he stopped adding to his 401(k) because AI may kill us within a decade.
• The MIRI president said humanity has a more than 50% chance of dying within a decade.
• Elon Musk said AI could make retirement savings irrelevant by creating an age of abundance.

Saving for retirement is a bet on the future. Nate Soares, the president of the Machine Intelligence Research Institute, isn't so sure AI will let us get that far.

"I do not save for retirement right now. I have a 401(k) from when I worked at Google, but I haven't contributed for a decade," Soares told The Atlantic CEO Nicholas Thompson in a recent interview for Thompson's "The Most Interesting Thing in AI" series.

Soares' decision reflects a grim view of the AI race.

"Godfather of AI" Geoffrey Hinton and Anthropic researcher Evan Hubinger have, respectively, put the odds of AI killing everyone within a decade at 10% and more than 10%. Soares is more pessimistic: He told Thompson he believes there is a greater-than-50% chance AI causes human extinction in less than a decade.

Soares, who is also the coauthor of "If Anyone Builds It, Everyone Dies," has spent more than 12 years working on AI alignment, the field focused on ensuring powerful systems act as intended. Before joining MIRI, the Berkeley-based nonprofit focused on AI risks, he worked as an engineer at Google and Microsoft.

Soares said that a sufficiently capable AI could develop goals at odds with humanity's, evade oversight, improve itself, and build the automated infrastructure needed to operate without people.

From there, he said, it could reshape the planet around its own objectives, potentially making it uninhabitable for humans — a warning he shared with Business Insider last year.

A 401(k) for the apocalypse?

The question of how AI will shape the future has also prompted Elon Musk to question whether retirement savings will matter. Musk's vision of the future, however, is radically different than Soares'.

In January, the Tesla and SpaceX CEO said people should not worry about "squirreling money away for retirement" in 10 or 20 years, predicting advances in AI, robotics, and energy will make retirement savings "irrelevant." (Personal finance experts and AI gurus told Business Insider the opposite: You really should be saving for retirement.)

Musk has said that supercharged productivity could create an age of abundance, in which everyone has access to a "universal high income," cheap goods and services, and better healthcare and education.

Musk has also said money could become irrelevant in a future where AI and robots outperform humans at virtually every task.

For Soares, the prospect of a vastly capable AI is an existential danger, not a route to plenty.

Echoing calls from tech leaders to "pace the frontier" of AI development, Soares said governments should halt the training of general-purpose AI systems. They should focus on developing technology for applications like cancer research and safer self-driving cars, he said.

The solution, he told Thompson on Wednesday, "is to not build the thing that would kill everybody."

"I do everything I can to stop this eventuality," he said. "I don't think it's inevitable."

Retirement didn't exactly mean slowing down for Bonnie and Hunter Moore.

The Moores, both 71, have lived near the Vanderbilt campus in Nashville for over 40 years. They bought their home in 1983, raising their two children and building their careers. Bonnie was a proofreader, while Hunter worked in the music industry.

When they retired in 2019, they were excited to have more time for their passions. For Hunter, that includes reading, playing the piano, working on model trains, and independent study (he's currently working on a dissertation for fun). Bonnie loves entertaining her friends — especially in her "Not Your Mother's Bible Study" group — hosting her grandsons, and traveling.

By 2023, though, it was clear their home base wasn't set up to help them thrive in retirement, as their bedroom, office, and music studio were all on the second floor. After caring for their own aging parents, they knew second-floor living wasn't ideal for aging in place, particularly when Hunter developed vertigo that made climbing stairs unsafe.

Bonnie and Hunter didn't want their adult children worrying about them as they got older, as they had worried about their parents. Instead, the Moores hoped to set themselves up to live independently for as long as possible — and have fun while doing it.

Luckily, the house next door was the perfect solution to their problem.

Social Security is racing towards insolvency because the program pays out more in benefits to retirees than it collects in taxes from working Americans.

Handing out even more generous benefits will make that situation worse. Yet that is exactly what the trustees who run Social Security are planning to do: Retirees will get a 3.6 percent cost-of-living adjustment (COLA) next year. That increase is 0.8 percentage points higher than last year's, and it is 0.9 percentage points higher than what Social Security was expecting to pay.

The Social Security trustees are doing what the law requires during a time of high inflation. That's why Congress ought to intervene here.

It should cancel the COLA.

No, this isn't a demand that lawmakers stick it to America's retirees. It's an appeal for some fiscal common sense. There are three good reasons to cancel this year's COLA.

First: Handing out higher benefits to wealthy retirees simply doesn't make sense when Social Security is trending towards insolvency.

As the Committee for a Responsible Federal Budget notes, the announced COLA would be a $900 increase in benefits for the average retired household—but some retirees could receive as much as $3,600 more.

Paying generous benefits to wealthy households is the main reason Social Security is facing insolvency in the first place. A program originally intended to keep seniors from falling into poverty has become a huge wealth-transfer scheme that overwhelmingly benefits those who don't need the handouts. The COLA doubles down on this flaw.

Second: What about the workers who are paying for those lavish benefits? Wages have risen by 3 percent, on average, over the past year. Those pay increases have already been outpaced by inflation, which is up 3.7 percent in the past 12 months.

You'll often hear retirees talk about how they are living on a "fixed income," but the math simply doesn't bear this out. Social Security beneficiaries will get a COLA that is larger than the average pay increase for the workers who are funding the COLA. Retirees are protected from the impact of inflation while younger Americans must deal with inflation and finance that protection for the elderly. That's crazy.

Third: Cutting the COLA could kick-start a conversation about how to solve Social Security's looming insolvency. The Social Security trustees estimate that an across-the-board cut of about 22 percent will be necessary in 2032. Eliminating COLAs won't meaningfully change that arithmetic, but it would change the conversation—which has for too long been dominated by politicians promising seniors that nothing needs to change. That's wrong—and the sooner that becomes apparent, the better off the political system will be.

If eliminating the COLA is too radical a change, Congress should instead change how the trustees calculate the annual increase.

Currently, the COLA is based on one particular measure of inflation: the Consumer Price Index for Urban Wage Earners and Clerical Workers, otherwise known as CPI-W. This is a relatively narrow index that reflects the spending habits of only about one-third of all Americans, as Romina Boccia points out in her newletter, The Debt Dispatch. 

Instead, Boccia suggests using the Chained Consumer Price Index for All Urban Consumers, or C-CPI-U, which covers about 93 percent of all Americans and is generally regarded as a better measure of the rising cost of living. Other parts of the federal government already use C-CPI-U to update such things as tax brackets.

If Congress simply changed how Social Security's COLA was calculated, it could close 12 percent of the program's long-term shortfall. And while some retirees would see smaller COLAs as a result, the result would more closely match those increases to inflation.

Social Security's COLA reflects many of the fundamental flaws with America's old-age entitlement program. Like Social Security as a whole, it is too generous to the rich, too costly to the taxpayers, and too unfair to younger, poorer workers.

The post 3 Reasons To Cancel This Year's 3.6% Social Security Boost appeared first on Reason Magazine.

America’s elders need more places to live, but even in liberal enclaves that recognize the problem, developers are facing fierce foes: America’s elders. Make it make sense! Charley Locke reports from her hometown of Oakland, California, where boomers are organizing against two proposals that would add 618 market-rate residential units to the city’s senior housing stock:

Many in the crowd had been marching against governmental and corporate overreach for half a century: against the Vietnam draft and the invasion of Iraq; against Wall Street; against police brutality. They’re part of a generational force that’s antiestablishment and suspicious of power. But in this fight, it wasn’t so clear who the establishment was or who had the power. Were these righteous middle-class activists fending off greedy developers who would charge high rents, or were they wealthy seniors prioritizing neighborhood character over ameliorating the housing crisis? Were they once again David, or had they become Goliath?