It's a lovely idea, and there's no doubt politicians going back at least as far as Franklin Roosevelt have gone to considerable pains to convince Americans this is exactly what's going on. It's so less warm and cozy, after all, to say the "Social Security tax" was just another general purpose tax, spent as it came in on wars and Solyndra subsidies and locking up pot smokers, while in the meantime Social Security checks are nothing but welfare payments to the unemployed elderly, directly transferred from the paychecks of today's young workers - as long as we have some left.As Suprynowicz points out even the Social Security Administration's own website reveals this to be a myth. No less than the United States Supreme Court, in the 1960 ruling in Flemming v. Nestor, ruled that Social Security is not a contractual agreement requiring the government to make payments to you or anyone else, you have no property right to your Social Security benefits.
The notion that "It's insurance, it's an annuity" is far more attractive - the only teensy problem being that it's not true.
In other words, as soon as the money is taken out of your paycheck, it no longer belongs to you in any way, shape or form. The money isn't in an account with your name on it, you cannot pass it on to your heirs, and if you die before you begin collecting all of the money you paid in goes to someone else who's not related to you. And if Congress decides to change the law regarding who can collect and/or how much, the only recourse you have is to try to get another Congress to change it.
Starting a couple years ago SS began taking in less money than it pays out every year. So the only way to continue to pay benefits at the current levels is to raise taxes, cut other spending or take on more debt.
Beginning with those retiring last year, SS will now have a negative return for the average retiree. That's right, the average SS recipient will now receive less money than he paid in.
Would you put your money in an investment with a negative return? Not if you didn't have a choice and you don't have a choice with Social Security. It's such a great bargain that the government forces people to participate and it's defenders go ballistic over any attempts to let people opt out of it - except for government workers, that is.