The Social Security Scam

Executive Summary

Is Social Security itself a scam? Have you been contacted by a scam artist claiming to be from Social Security?

In this show we will discuss both of these seemingly related topics.

We will talk about the newest phone scams surrounding Social Security. What are these phone calls about and why is the Social Security office calling you? Spoiler alert – don’t answer those calls!

We will also discuss the viral emails that describe Social Security as a huge Ponzi Scheme run by the government. We’ll talk about a viral email that suggests people would be better off investing on their own rather than putting into the Social Security system. Dan does the math and shares his view on privatizing Social Security.

Author: Daniel J. Wendol

Daniel J. Wendol is the owner of the Dolphin Financial Group. He is licensed as an investment advisor representative and also has an insurance license. He combines the investing and insurance worlds with a focus on retirement. Each week Dan hosts Dolphin Financial Radio, a podcast about the wide-ranging issues people face leading up to and through retirement.

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Podcast Transcript

Daniel Wendol 0:00
Today’s show is called the “Social Security Scam.” And if you’re like me, you can read that in one of two ways. You can read it as the Social Security system is a scam and is a big, fat losing proposition for American taxpayers, and we will talk about that, just like that because Tony has some emails he wants to share with me. Or you can look at it as the Social Security scam that’s going around and the incessant phone calls that I myself have been getting, telling me that my social security information has been stolen. It’s a big scam. We’re going to talk about both in today’s show.

Hello, and welcome to another adult financial radio. I’m Dan Wendol. The host alongside me is Tony Shore. And Tony, we’re going to talk about the social security scam. And as you heard my intro, we can talk about it in one of two ways. Let’s talk about it in both ways, which way do you want to start?

Tony Shore 1:25
Well, I think we should start with these phone calls you’ve been receiving. There is so there is at least one or two or multiple social security, quote unquote scams that scammers are using to try to scare people into giving up some information saying there with social security or that your Social Security is in jeopardy. So let’s talk about that. First. I know you’ve been getting a few calls.

Daniel Wendol 1:53
Over the past two days I’ve literally I just counted I’ve gotten 14 phone calls in two days. Two days and all about social security. Well, I have you know what I should do and maybe I’ll do that in the next one, it’ll be great if we get if I get a call right now during the show up in a play it, but they’re all from 800 numbers to my cell phone. So that’s, that’s Problem number one. Yep, I block every one of them afterward. And I still so they call them a different 800 number each time. And they all start off the same way with an automated voice saying, dear citizen, and I’m like, oh, boy, and it’s a mechanical voice. So it’s not like a robot sounding voice it is a robot. It’s a female robot voice saying dear citizen, and I just hang up because as soon as I get a message that’s automated. I’m already on defensive and then it when it says dear citizen, it’s like come on now. At least know my name. If you’re going to try and scam me,

Tony Shore 2:57
right? That’s not a good scam because everyone hangs up. At that point, or at least everyone should, but obviously it must work once in a while or they probably wouldn’t do it.

Daniel Wendol 3:07
Well, I’ve had I’ve had clients in the past and I’m talking I remember the first time I, I had a client tell me they got scammed. This is before they were my client, but it was about 10 years ago, maybe more. They had said that they got a call that their grandson was in jail in Canada. Oh, yeah. And they sent bail money so that but that one still goes around that one, you know, you gotta send bail money. Yep. Then we had we still get the your computer’s broken calls, right? Oh, yeah. Yeah,

Tony Shore 3:40
yeah. My mother in law cell phone. Yeah. My mother in law got taken by that one.

Daniel Wendol 3:44
Yeah. Right. And so what do you do? You have to give me your social security number and your bank account info to get you know, so I can help you. No, no, no, you don’t. And now the most recent one is the Social Security scam. Well, you know, and you said that there was a website now the handle this from Social Security?

Tony Shore 4:03
Um, I believe there is Yeah, I read it in the article. Am I supposed to have that in front of me? We were supposed to do show prep, what are you talking about?

Daniel Wendol 4:10
Tony, listen, I can get you out of this jam. Just give me your social security number.

Tony Shore 4:16
Well, they can go to ssa.gov and find it from there. Sure, but yeah,

Daniel Wendol 4:23
yeah, you sent me that link I read it Believe it or not, I read the thing you sent me I’m like reverse but it was a the Social Security Office is well aware of this. And this so they’re trying to build up awareness and they’re also trying to stop it because it’s ridiculous. And so they have a system where you can go online and and submit the, the offending phone number and little details, right. With the idea being that they’re going to have a team working on it to try and stop this, but I mean, it’s, it’s like, you know, it’s gonna it’s not something you can fix. At least I don’t think so. Where are we supposed to have spam solicitations on a cell phone stopped. Wasn’t that supposed to happen? Like last couple months?

Tony Shore 5:03
Oh, well, yeah, it’s there’s been like a few times where, you know, it’s it’s the infamous no call list that worked out pretty well.

Daniel Wendol 5:11
Yeah, what a joke. It did not work.

Tony Shore 5:14
Right as we still have the phone calls

Daniel Wendol 5:17
I get, it’s out of control. So the bottom line though, is people listening. When you you’re not going to get a call from Social Security Office it’s plain and simple, they’re not going to call you and say what’s your social security number? Or, you know, you’re not gonna get a call from the police saying your IDs been stolen? Please tell me your ID, your social security number so I can verify that it’s been stolen. Well, if it was stolen, you’d know it. Right. You would have that info in front of us. Don’t give your information over the phone. Social Security is going to mail you something. If anything, Medicare will mail you something. They’re not going to call you up and and tell you. Hey, we got a compromise situation here. Hurry up, give me your cell phone number. You know, give me your social security number. You know what they are doing Tony and I don’t know if I want you to tell me more about your mother in law getting scammed, but they’re asking for payment in the form of, of gift cards.

Tony Shore 6:14
Yes. That’s a big part of a lot of the scams is if they ask you to send them gift cards or that they can be paid off and gift cards, then you know for sure it’s a scam because no legitimate organization does that.

Daniel Wendol 6:31
Well, I sometimes pay my taxes, they call up, the IRS, and they say scratch off the back of the gift card and tell me the number that you see. And I do that in hundred dollar increments and I buy like you know what, 20 or 30 of them to pay my taxes. That’s not Yeah, that’s the big scam that’s a big someone’s asking you to pay with a with a, you know, Western Union money gram or whatever it’s called and scratching off the Apple iTunes card or whatever best place giftcard just don’t do that please. Right, please.

Tony Shore 7:03
Yeah. So and you know, we the article that you’re referring to in the Washington Post recently. You know, they they interviewed people that this lady gets nine to 10 calls a day. They’re all and that’s just one type of scams, Social Security scam calls, where they say, you know that you’re a warrants out for your arrest because your money and your Social Security is going to be suspension and here’s your case ID you got a call back immediately with a credit card number. And so obviously, this is bad and don’t do it right. But there is the link where you can report it. It is ssa.gov as I said earlier, and then you do a slash the forward slash IPFF and slash, home so as ssa.gov/IPFF/home that’s the best way if you want to get there even quicker a better secure way. secure.ssa.gov so imposter scam they call it the SSA imposter scam reporting form, and you can report it and they will investigate it. So that’s legitimate anything@ssa.gov as long as it doesn’t have another dot something after that is legitimate.

Daniel Wendol 8:34
I think that’s good to know. And it’s imposture, not impasta, right? Because you I know you’re a big pasta fan.

Tony Shore 8:43
Wow. That was so do we have the cricket noises we can play when you make a joke like that? I mean, when a joke really, really bombs on the show. We should have a special sound.

Daniel Wendol 8:56
Blame the Food Network. I saw that on TV.

Tony Shore 8:59
The sound Dan’s comedy career just crash crashing into the ground.

Daniel Wendol 9:06
Again, no respect. So, you, you, you get these calls or is it just me

Tony Shore 9:11
I’ve gotten them to I’ve never gotten that many though. And that lady who gets nine a day you’ve got 14 in two days that’s crazy. I’ve gotten a couple in the last month, I’ve probably gotten two or three that are social security related.

Daniel Wendol 9:27
It’s crazy. So they’re obviously making money doing it or else they wouldn’t do it. So don’t be a victim.

Tony Shore 9:33
The Social Security Administration and the IRS are never ever ever, ever, ever, ever going to call your phone or text you.

Daniel Wendol 9:43
And demand payment in you know, and as Tony knows from personal experience, if you do have a warrant out for your arrest, they will come to your house they’re not going to call.

Tony Shore 9:52
I do not have personal experience with that, thank the Lord but yeah, no, obviously If there’s a warrant out for your arrest, they’re not going to call you. No one’s going to call you.

Daniel Wendol 10:05
Let’s let let you off the hook and move on to the other these social security scams. You sent me that forwarded chain mail that’s been going around for probably as long as I’m working. Yep. So security is no longer called Social Security. It’s called federal benefits. Remember that one you sent me?

Tony Shore 10:24
Oh, yeah. Yeah. I love that how, how the real the thing they’re trying to get you upset about is that Social Security is now going to be referred to as a federal benefit payment.

Daniel Wendol 10:37
Entitlement. Yes,

Tony Shore 10:38
And so we should all be upset because it’s not an entitlement. It’s it’s money we paid in out of our earned income. So they’re trying to get you all hot and bothered about this.

Daniel Wendol 10:53
Well, entitlement has a negative connotation. It’s like you’re you’re getting something that you didn’t really earn.

Tony Shore 11:00
Federal benefits. People are proud they don’t want to be- I’m not getting a federal benefit. Oh, social security. And some people think, Oh, yeah, like Social Security, it’s a great government benefit. Well, it’s not really you pay into it. So.

Daniel Wendol 11:13
Right. And so they’re feasting off of that. And so the idea is just get people upset about that. So they say, well, what’s going on? So security, and then they start to question and the email goes on, and I’m sure everyone’s gotten it at some point, or it’s a posted on Facebook or something. It goes on to talk about how you are paying into it. And you’re not getting anything back. And, and I have, I’ve talked about I do seminars on this, and I’ve talked about how, how to get the most out of social security. And there’s always people that say, you know,they give me my money back, I’d rather have my own money, then pay taxes into it, and I could do better than the government can and I’m not going to argue with that, because I kind of agree in some way,

Tony Shore 12:03
this is where you and I might start to part ways.

Daniel Wendol 12:07
Well, I’m gonna, you know, so I want to take issue with the part here I’m reading the email. Here it goes it says, Remember, not only did you contribute to Social Security, but you’re employer did too. It totaled 15% of your income before taxes. And so if you averaged only $30,000 over your working life, $30,000 a year, that’s close to $220,000 in social security taxes, meaning that money went into social security and then if you if you do some calculations of what it would have been if you instead take that money and give it to the government, if you did that and did something with yourself, you would made a whole lot more than Social Security pays out. And so it’s a slippery slope, because I kind of, well the first problem

Tony Shore 12:55
You may have, but you also may have lost it all.

Unknown Speaker 12:57
Right, well, let’s let’s let it let’s start with the 15%. You’re not paying 15% of your income into Social Security. That’s not happening, what it is 12.4%. So you are paying 6.2% I believe it is into social security and then your employer matches.

Tony Shore 13:15
So you’re only paying 6.2% right now, not the 15 and not even the 12 that’s covered by your employer.

Daniel Wendol 13:22
Well, I pay that because I am my own employer. So technically, I do pay 12, but it’s not 15. So there’s, there’s a problem.

Tony Shore 13:29
The majority of the people listening are probably not self employed, but some of them might be.

Unknown Speaker 13:33
Right. Right. And but if even if you can make the case, well, if my employer is going to pay 6.2, I’d rather than pay that to me, because you know, I can do better, right? So let’s but the first part is 15% is wrong. It’s more like 12%. The other 3% goes to Medicare. So that’s another story. Right? Yep. So that’s the first problem I have with it. But let’s assume let’s just humor the writer and say, okay, fine, you’re putting in 12% 15% whatever. That’s 12% too many, right? What could you do with that money? And so they say if you average $30,000 a year of your working life now, you put in Social Security over, I don’t know, 40 years, the average person works, maybe, you know, they start at 20 and they retire in their 60s. So say at least 40 years $30,000 average, I mean, 40 years ago, $30,000 that was a high earner, right? So, to say the average working salary of 30k I disagree with, but we got to remember, though, that there’s a cap. So someone saying, well, I make a million dollars a year, I’m paying 150,000 into social security as a self employed. No, that’s not what’s happening. There’s a cap on how much you actually put in into Social Security. Right? And I’m going to look it up. There’s a cap. I’m gonna look up what it is. The threshold it looks like $137,700 in 2020. Okay, so that means that if you make $137,700 they’re going to their Social Security is going to tax 6.2% of that. And your employer will match. If you make $500,000. They’re only going to tax $137,000. Right, and that $137,000 has not always been that high. It’s it’s, you know, it’s always increasing. But, you know, 30 or 40 years ago, it was not that high. So, bottom line is there’s a limit as to how much of your benefit is taxed. But back to the case. So average income 30K, that’s, you know, that that might be realistic going forward now, maybe even higher. But here’s the kicker. It says what could you do with that money? If you took the same amount you put in and you got a 5% return after 49 years, that would be $893,000 versus the $220,000 in the example. This is where you and I might kind of agree and I think I’m, I’m saying that the Social Security system is not a scam. But is the money doing what you would expect it to do? And I’m going to say, no. You’re putting in money and your expectation is you’re going to get it back later in life. That’s the whole point. What the government, if you were going to do that, if that was the case, if that’s exactly what Social Security was, is you’re putting money in and you’re going to get it out later in life, then I would agree you could take that money and do something better with it, rather than give it to the government to manage. But that’s not what social security is all about. We have to remember what social security truly is. Do you remember what the name of Social Security really is Tony?

Tony Shore 16:54
Well, they say in the article or the letter, the email – A federal benefit program this this scam letter or whatever it is a federal benefit payment. But I don’t know what the actual name is beyond that. I’ve always called it Social Security.

Daniel Wendol 17:12
Right? It’s the social security and pension old age. Let me let me look it up because

Tony Shore 17:18
Oh, yeah, yeah, it does have a longer, right, you’re right

Daniel Wendol 17:21
It’s not just about giving your money back. Federal Old Age Survivors and Disability Insurance. OASDI. So you have to factor in that the money that goes in not only has to cover the return to you if you live into your old age, but it has to cover your survivor. So if you’re married, or you even if you’re on Social Security, you have kids, they’re going to get some social security and they didn’t put any in, right? And then you also have to factor in disability. So people can’t work, get social security disability, where does that money come from? They didn’t put in long enough, you know, let’s say you’re 40 years old, you become disabled and you’re getting Social Security benefits you clearly you’re going to get more out of the Social Security system then you put into it. So it’s not necessarily dollarfor dollar you put in and you get out, right? You have to factor in that other thing, which makes Social Security a little unique. It’s it’s a safety net, not a pension.

Tony Shore 18:30
Not an outright benefit, right. And not a and not necessarily a pension. But it’s a it’s a safety net. It’s a hybrid. It’s unique. And I think that’s a good point, a point that you make, but Dan, I want to interject here. Because we’re running out of Showtime. This email that they send out to get people riled up. And your point about, hey, if you took if you got 12%, let’s say, if you got to keep that 12% you’re assuming a lot there though, like your company’s still going to give you that 6%. The government forces them now, if the government didn’t do that, they’d have to force them to give it to you. And how would that be checked in? You know, that type of thing? I don’t think a lot of companies would want to do that or be able to do it or would do it. But let’s just assume in some magical land that your company will keep if they say, Hey, we’re going to prioritize this or we’re going to do away with social security. And you get to keep that money and invest it yourself all those working years. My whole problem and the reason that premise doesn’t work at all, is because we all know you can look at study after study if you gave somebody that extra money if I had 12% more than I make right now take home if I could take home 12% more or had 12% more to do with what I wanted to, invest, put it in a retirement account. I wouldn’t. Statistics show I would not do that I would spend it. If you give people more money, and you give them the freedom to do what ever they want with it, they will spend it. That’s why we have social security. That’s why it was created. You can’t just give somebody money and and just say, well, now they’re going to do the right thing. They’re going to invest it and that investments going to grow. And they’ll have that money to live on in retirement. So we don’t need to worry about them. They’re covered for retirement. Well, that’s a pie in the sky crazy thinking, in my opinion, because no, they’re not the majority of the people. Now, I’m not saying there aren’t those people who aren’t going to immediately take that 12% be very fastidious, and invest it wisely, so it will grow. But let’s say they invest it wisely. So it grows. And the year they get ready to retire is 2008. And so they’ve got all that invested in say the stock market, right. So they can make their 5% and the Dow drops 40%. Well, then then they lose all that extra money or a lot of it. So I mean there’s their money is at risk, whereas you you’re guaranteed a certain amount of payout from the government if you get a social security check so I err on the side of I know I can’t screw it up.

Daniel Wendol 21:22
No. You err on the side of a Nanny State. You need the government to hold your hand is what you’re saying. You basically said in a nutshell, that people can’t care for themselves that the government needs to do it. That’s what I hear.

Right. Just look at your history. You get extra income, you’re getting extra toppings on the pizza. That’s what’s happening.

Tony Shore 21:34
Well with their own money. They can’t be trusted with all their own money if you want them to have any left by retirement. The majority of Americans out there myself included.

Well, that might be, that hits a little close to home. But yeah, there’s some underlying truth to that.

Daniel Wendol 21:54
I’m not gonna argue with you about that. I agree, because we can’t even get Americans to save for their own retirement on their own as is. They don’t have enough.

Tony Shore 22:04
Yeah, like you should be putting money into a 401k. Social Security isn’t enough. We all know this. Everyone says it. But yet there are still people who don’t put enough into their 401k or aren’t saving for retirement. The studies have shown that. So, I think it’s good we have a safety net. I’m not talking about a nanny state believe me, I’m with you on that. I think that i think that you know, I’m not for communism, I think if you take away drive and freedoms that people need to be able to control and make their own decisions up to a point but our country has developed the safety net and people rely on it. I think it’s a good thing. But yes, does the government mismanage it? Of course they do. They mismanage everything. But would my Corporation mismanage it if we left it up to the company I worked for? Sure they will. I think mean, I don’t trust the government or my company to do what’s in my best interest. You can’t. So you have to stay on top of it.

Unknown Speaker 23:07
Well, I mean, I can go either way with this. But I will say, look what happened with the pension system. The private pensions of the companies was basically the company putting money aside for you to give you income the future and people didn’t think about it. Yep. Then they switched it over and changed it into the 401k. And let’s just assume that they’re giving the same amount of benefit. What’s happening is that people are now forced to manage that 401k themselves and they’re failing. People are failing at that. So you’re right, that instead of saving it for the rainy day, or for the pension stream, or the income, they’re paying off the Black Friday bill, buying a new car, moving, getting a new house, all the things they want to do without thinking about the future. Instant gratification. So in the sense that Social Security is a kind of a skewed system that favors those that need it more, I would, I would say that that’s true. And if you just do dollar for dollar, I would personally, rather invest in myself. But that’s because I have the discipline and education to do so. But for the vast majority people, I agree with you, we’re in a society that does not really care about the long term, we care about instant gratification. And social security is basically the only safety net we have. So I’m agreeing with you, I don’t think we should get rid of it. But I totally also agree with the statements that were made in that sensational email that we probably could do better.

Tony Shore 24:35
Sure, and I agree with you there. We definitely could do better. I mean, obviously, the numbers. If you look at the numbers, and like you always say Dan, do the math. Which is the best? Well, the math will bear that out. And it does it does. And I know you personally could do better if they’d let you have that 12.2% or whatever it is instead of putting it into Social Security and hoping you get some of it back later. I see your frustration.

Daniel Wendol 25:04
Maybe. What if I became disabled? Then what? Right? So yeah, you can’t you can’t ignore the fact that it also helps you if you become disabled or widowed, you know

Tony Shore 25:14
Yeah, if you become disabled and can’t work, then you’re not building up that 12% a year, they’re not going to giving it to you if you’re not working.

Daniel Wendol 25:21
And I don’t want to wait until I’m 67 or 70 to take it if I’m, you know, in my 40s and I become disabled. I need that help. So yeah, you can’t it’s not apples to apples. And I guess that’s the big takeaway from this. But,

Tony Shore 25:35
The bottom line is these emails they send out to get your riled up and say they’re changing the name of social security and the government is running a huge Ponzi scheme. They’re just trying to overhype and it’s just it’s the far right and the far left, both trying to, or crazies and not even part of a political party, jJust I don’t know why people send these out. It’s like a chain email that goes around. And there’s a number of them. There’s some that are really Pro, like, you gotta, you know, the government is doing great with their social security and blah, blah, blah, and it’s going to be around forever. That’s one side that I see. And I get those emails too. And then I see this one where it says, you know, the government’s ripping us off. Social Security is horrible.

Daniel Wendol 26:23
I would say so security isn’t is not horrible, but the government is ripping us off. How’s that?

Tony Shore 26:27
How’s that for it? Depends. Answer. But yeah, yeah, I know, you always look at the logic and the math, which is why, you know, I think you’re good at what you do and why people, your clients are really benefited by working with a trusted financial professional like yourself, Our listeners need to have a trusted financial professional that can look at the big picture, look at your situation. Look at where your Social Security is going to be at, look at you know, your work history, and where you’re going. And you know, your family health history, things like that to take into account. Okay, when do I file? How do I maximize my social security? How much do I invest for retirement? What’s in my 401k? And what do I do with that? You know, there’s a lot of questions that go along with it. But Social Security, they’re scams all over the place, trying to scare you using scare tactics, and take advantage of you.

Daniel Wendol 27:24
So if people want to, to understand how to get the most out of social security, especially if they’re self employed, hey, should I be contributing this month? Should I do something different? Can I can I go a different route? There’s plenty of different avenues you can take. And those are the types of things that I like to do. I also sometimes play defense with people if any of my clients get a call that they’re not sure about, they just call me up and say, is this real? And usually I’m saying no – just hang up.

Tony Shore 27:25
Yeah, yeah, unfortunately, these days, the majority of it isn’t, unless you get an envelope that says it’s from the IRS in your mailbox or the social Security Administration then probably not.

Daniel Wendol 28:03
Well, I appreciate your perspective Tony. What is that on your shirt? Is that blood leaking through your bleeding heart? No, it’s just pizza sauce. Okay, listeners thanks for listening to this. Don’t fall victim to a social security scam. And also don’t think that Social Security is a scam. Either way, the word scam and Social Security seems to be on the tip of the tongue lately and just avoid the…you know what I do? Just don’t answer the phone. That’s the new thing – just don’t answer the phone.

Thanks for listening to Dolphin Financial Radio