A shareholder once asked Warren Buffett, Charlie Munger if Social Security is a 'government-sponsored Ponzi scheme for retirees' — their answer was received with laughter and applause

‘One of the most successful things the government has ever done’

Buffett’s right-hand man, the late Charlie Munger, was an even bigger supporter of Social Security.

Despite being a self-described “right-wing Republican,” Munger strongly defended the program. During that 2005 shareholder meeting, 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.

Munger was generous with his praise for the program.

“Social Security is a very capitalistic institution with profoundly good effects,” he noted. “It’s one of the most successful things the government has ever done in terms of efficiency and good effects.”

The richest 1% use an advisor. Do you?

Wealthy people know that having money is not the same as being good with money. WiserAdvisor can help you shape your financial future and connect with expert guidance . A trusted advisor helps you make smart choices about investments, retirement savings, and tax planning.

Try Now

Buffett's prescription for Social Security

Buffett also shared with the audience what he would do if he were at the helm of the Social Security program.

He took issue with the Social Security wage base, which is the maximum amount of earnings that are subject to the Social Security payroll tax in a given year. In 2005, the amount was pegged at $90,000.

“Right now we quit taxing for Social Security at $90,000. But — and that means that everybody in my office is paying — or most of them — are paying 12.4 — 12.2 or 12.4 percent, counting what the company contributes, toward this,” he said.

Buffett pointed out that because this payroll tax ceased to exist at earnings over $90,000, higher-income individuals, including himself, pay a lower proportion of their total income towards Social Security. He criticized this as “sort of nonsense in this society.”

Advocating for a change, Buffett proposed a substantial increase in the Social Security wage base.

“I would lift the $90,000 way up. In fact, I might apply it, you know, on all incomes. Then you’d really get people’s attention,” he said.

Since his 2005 remarks, the Social Security wage base has indeed risen substantially. For 2024, it stands at $168,600, an increase from the 2023 limit of $160,200.

Furthermore, Buffett expressed his support for increasing the retirement age.

I would certainly increase the retirement age,” he suggested. “I mean, the world in 2005 is much different than the world in 1937, in terms of longevity prospects and the ability to function productively.”

Buffett's observations are well-founded. When President Roosevelt signed the Social Security Act into law in 1935, life expectancy in America was only 59.9 years for men and 63.9 for women. Fast forward to today, and these numbers have increased to 74.8 for men and 80.2 for women.