At its very beginning, SS was cringe worthy, for several reasons. Rational people described it as a way for minimum wage workers, with no other means of retirement, could have a retirement. Certainly not salaried people.
However, it was passed by its advocates with the idea of nationalizing all retirements under the government umbrella. So, in a manner of speaking, it was created with the duplicity of Obamacare, an effort to nationalize health care. Included in the deal was the national identification number system on Social Security cards, that they swore up and down would *never* be used for identification.
It was created smack dab in the middle of the New Deal, in 1935, when congress was heavily Democrat, and there had already been many socialist and fascist-style schemes foisted on America.
There had already been the agricultural equivalent of the “red terror” with federal officers going from farm to farm, killing livestock and destroying crops. On top of the Great Depression, it broke the will of most to resist.
I don't think it was intended to "nationalize" retirement: there were still privately funded pensions in many industries. But, there were a subset of people that didn't, and just like Obamacare: they upended the entire nation for that subset of people.
The ugly truth: Social Security included the middle class, because it was the only way to pay for it. But, by selling it to the middle class, they created a large constituency to protect it.
And here's how they hood-winked the middle class: they set up the benefit formula so that the middle class actually paid for most of the benefits of the lower income workers. From a posting I wrote earlier:
The payroll tax is flat, up to 118K per year (in 2015).
Over your lifetime, the highest 35 years of wages are used to calculate your benefit. If you don't have 35 years of earning, 0 is used for the remaining years.
Wages are indexed by average wage growth (which is similar to inflation, but not exactly). So, at retirement, you have what is called AIME, or average indexed monthly earnings.
The AIME is then plugged into a formula to determine your benefit. You might be thinking: they take my AIME, multiply it by 50% (or whatever), and that's my benefit. So, everyone gets a benefit proportional to the wages that were taxed. Right?
Nope, that's not how it works. In 2016, the calculation is:
Repeat the calculation for a median AIME, like $5,157/month. Their Social Security Benefit at FRA would be $2,148/month, or 42% of their AIME.
Finally, at a low income level: $856/month. Their benefit would be $770/month, or 90% of their AIME.
As you can see, Social Security is means-tested. Low-income wage earners receive replacement of almost all of their income in retirement, vs. between 1/4 and 1/3 for higher income workers.
Depending on what assumptions you use for rate of return and life expectancy, it turns out that if your average wage is BELOW the median income, you get an above-average return from your Social Security contributions. Conversely, if you were ABOVE the median income, you get a below-average, or even negative return.
Frankly, if this had been obvious at the time, I don't think Social Security would have ever passed. But, ObamaCare wouldn't have passed either, if we knew what we knew now.