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"In 1916 an Italian immigrant named Charles Ponzi created an investment fund that paid large dividends without making any investments. Money from new investors was transferred to old investors while the new investors received money from newer investors yet. The system had flexibility and boldness and worked as long as an ever-expanding pool of suckers could be found. Charles Ponzi made a profit on this, and so does the U.S. Government." - P. J. O'Rourke, on the subject of Social Security.

A worker's rate of return is based on the amount of money paid into the system, the worker's monthly benefit and life expectancy. Since Social Security is skewed to help those with lower incomes, people with higher wages tend to get a lower return than those with lower wages. However, some of this progressive tilt is offset because lower-wage workers generally have shorter life expectancies (and receive fewer benefits) and longer working lives (and pay taxes longer). A person who starts his working life immediately after high school and works from age 18 to age 67 will pay into the system for 49 years; however, Social Security only credits individuals for their 35 highest earning years. Extra taxes paid by those who begin working early do not earn additional benefits.

In general, workers born before World War II paid significantly less in taxes than they will receive in benefits - and can expect a higher rate of return than subsequent generations. By contrast, baby boomers can expect a rate of return of less than 2 percent, and Generation Xers can expect less than 1 percent. Children born today can expect a rate of return from Social Security of almost zero, assuming that the program can pay full promised benefits.