Pay as You Go vs. Investments

Consider first a static economy, with no inflation, no population growth, and stable wages. Under these conditions the rate of return for a pay as you go system is exactly zero, the same as putting money in a mattress. Social Security is purely insurance against living longer than average, with the benefits paid for by those who die younger than average. (Social Security also transfers some wealth between those making upper middle class wages over a long career to those making lower class wages.)