Elon Musk says he’s ‘increasingly optimistic’ about the future of Social Security — but cuts aren’t off the table as Musk claims there's excess waste and fraud in federal benefits programs

The reality of waste and fraud in the Social Security program

The Social Security Administration (SSA) has already identified waste — and did so last August under the former Biden administration, when the SSA’s Office of the Inspector General reported $71.8 billion in improper Social Security payments from fiscal years 2015 through 2022. These were mostly overpayments.

At the time, the inspector general made recommendations to address the overpayments and noted that while $71.8 billion is a sizable figure, it amounts to less than 1% of benefits paid over the seven-year period — meaning 99% of the SSA’s payments were issued correctly.

Now Trump appointee Leland Dudek, the SSA’s acting commissioner, is cracking down on overpayments to save about $7 billion over the course of the next decade.

The SSA will withhold all benefits from beneficiaries who were overpaid (accidentally or otherwise) until the beneficiaries pay back their ‘debt.’

As for fraud, Musk’s characterization of Social Security as a Ponzi scheme is inaccurate.

A Ponzi scheme is a scam where a con artist recruits investors for a fake company and pays them with cash collected from later investors to create the illusion of profit. Meanwhile, the con artist steals cash from all investors until the number of new investors dwindles and the scam collapses.

In contrast, Social Security benefits are a legitimate and transparent government program funded through payroll taxes. Employers and employees each pay 6.2% of the tax, for a total of 12.4%, while self-employed workers pay the full 12.4%.

It is true that there are fewer people ‘paying in’ to the Social Security program as the youngest of the baby boomers retire and a low birth rate means fewer working Americans are supporting more retirees.

But the benefits are real and yearly increases guaranteed through cost-of-living adjustments, or COLA, to ensure recipients’ purchasing power keeps up with inflation.

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Addressing long-term solvency

In fact, demographics — not fraud or waste — appear to be the biggest threat to the Social Security program.

The Trustees of the Social Security and Medicare trust funds report states that by 2033, the Old-Age and Survivors Insurance (OASI) Trust Fund will run short of funds and only be able to pay 79% of benefits.

To address long-term solvency, there are a number of options being floated:

• Cut back on Social Security benefits, likely to be an unpopular option.
• Increase the wage cap so higher-income earners pay more in payroll taxes.
• Raise the payroll tax rate — a hard sell to the 73% of employees “struggling to afford anything beyond their basic living expenses,” per the 2025 Wage Reality Report.
• Raise full retirement age to 70, something one in four Americans would support, according to a 2024 Transamerica Institute study.
• Increase the number of working years used to calculate benefits from 35 years to 40.

For Americans worried about the future of their Social Security benefits, there’s a lot of uncertainty ahead.

It may be a good time to talk to a financial adviser to ensure you’re saving enough for your own retirement and that you can supplement Social Security benefits with other retirement savings such 401(k)s, individual retirement accounts, investments and personal savings.