Unfortunately, social security is welfare, for exactly the reasons you describe.
1. There is no asset balance in your name. You are only entitled to the benefits provided by law, and the law can be changed.
2. You have no contractual right to benefits. This was ruled by the U.S. Supreme Court back in 1960.
3. There is no direct relationship between your contributions and your benefits. They are heavily skewed toward lower incomes. At the very bottom, each dollar of additional average income yields 90 cents. At the top 1/3rd, every additional dollar of average income yields about 15 cents. This is effectively means testing.
Almost every dollar you have paid in social security taxes was immediately paid to beneficiaries in that fiscal year. A small percentage was invested in the equivalent of US treasury bonds, but those will be gone by 2033. After that — by law — social security must reduce benefits to match incoming taxes. That’s expected to be a 25% reduction.
If you had invested your (and your employer’s) contributions in US treasury bonds, you would probably have a lot of money. I did the calculations: after 40 years of contributing since 1974, I would have about $850,000. By the time I actually plan to start benefits, it would be close to $1.4 million.
Social security was not sold as welfare. It was pitched for everyone, to broaden the appeal. But Roosevelt even admitted one reason for SS was to get older people with jobs to retire, so younger people could take the job and reduce its nemployment.
One way or another, SS will end in the next few decades. It is unsustainable, because future generations can’t afford the taxes needed to keep it going in the present form. I can’t afford to give up all of my benefits, but I am willing to take a significant cut in order to reform it and transition current taxpayers into a private, actuarially sound retirement plan.
My parent’s generation didn’t have the courage to end SS In an orderly manner. Mine has to find it, for the sake of our children and grandchildren.
I’m not arguing with the way it is. I’m just saying it is misleading to call it welfare in the modern sense of the word. The word entitlement is used with SS payments, but that’s equally misleading. It is a deferred payment scheme, and a bad one from an investment sense, as you point out. Personally, I think I should have the option to quit SS and, upon signing those rights away, my employer would still have to pay his share, but I can direct it to where I think it should be. This also means I have a titled asset should I die. Bush tried to get this through, but people said “it’s too complicated...I don’t know anything about investing!” So, because the average voter has the economic IQ of dust, all of us are screwed.