I think it is unfortunate that so many people view Social Security retirement benefits as a "savings" program rather than a welfare program, largely because it allows them to psychologically differentiate between the "good" government checks they do (or will) receive and the bad, nasty welfare checks that moochers get. So I would rather that people thought of Social Security as "welfare" not to stigmatize it but rather to de-stigmatize other government programs. And it's not like I'm the first person to make this observation.
Most of the reactions to this are emotional, assuming that I am making the common right-wing move that welfare = bad, therefore Social Security = bad, and honestly I can see the confusion there. Maybe the cause of rehabilitating the word "welfare" in the American mind is hopeless and I should pick a different word. See the final paragraph.
As to substantive disagreements, the two that I have seen (online and in person) are 1) No, it really is a savings program, and 2) No, it's actually a form of insurance. I don't think these are merely definitional quibbles, either, since I think there are actual factors that meaningfully distinguish savings and insurance from Social Security.
To respond to the "it's really savings" argument, it's usually enough to point out that current retirees are paid by current workers, that Social Security checks started being cut right after the program was passed and before anything could have been "saved" individually or socially, and that the program is (mildly) progressive--that is, the lowest quintile of earners are typically paid more in benefits than they paid in taxes, and the highest quintile of earners pay more in taxes than they receive in benefits. This is handy estimate of taxed paid vs. benefits received for different demographics and age cohorts.
That said, it is only mildly progressive:
Results show that the Social Security program is modestly progressive on a lifetime basis, about halfway between a pure DC program and a program paying a flat-dollar benefit.
If I were designing a program it would be much more redistributive! And considered alone, payroll taxes are somewhat regressive, since they're capped, and the amount that a retiree is paid does, in part, reflect past earnings (and thus taxes paid). Also, for the most part you have to have paid payroll taxes to get Social Security later--with some major exceptions, as it is also possible to receive retirement benefits without having worked at all. While it is not perfect considerations of social equity are built into the program that are not typically associated with "savings" programs.
Taking all this into account Social Security does not look very much like a savings plan, but like a welfare program that was designed to be only a little bit redistributive, and to have broad popular support. The fact that you are in a sense "owed" social security payments in the same sense that your bank owes you your savings does not make it into savings either. My assets may be someone else's liabilities but this does not mean that if the government declares that I am owed something that I have thereby saved anything.
There are some other arguments that Social Security is a form of savings. One is that any government plan that most pay into, and most collect from, is a form of "savings," regardless of the disconnect between the payments and benefits. (Maybe add on to this the bookkeeping maneuver of the Social Security Trust Fund, whereby the government is required to pay back money it borrowed from itself.) The problem with this argument is that it proves too much: Is any government program that I pay taxes for, and hope to benefit from, really a form of savings? Is any inter-generational social program really a form a savings? Would it still be plausible to claim that Social Security was a form of savings if it was funded via normal income taxes and if equal benefits were paid to all the elderly regardless of their previous work history? In this latter case, if not, I wonder where the line is that transforms a program from being a straight-up government transfer program to an esoteric form of savings.
In short I think to meaningfully be a savings program Social Security would have to work more or less like many people think it does--that is, that you pay into an account with your name on it, that you then draw out from (with interest). And when it runs out, it runs out. That would be a suck-ass program but it would be savings program for sure.
The fallback position here is, I suppose, to say that it's a social savings program, not an individual one. But at this point this just sounds like another word for either insurance, or welfare.
A number of economists who realize that Social Security can't be accurately described as "savings" instead maintain that it is a form of insurance.
To be fair it's also right there in the name.
This is an interesting way of looking at things but in the end I think it is wrong. You insure against risk, spreading it around a population. If you're lucky, you pay more in premiums than you get in benefits because needing insurance benefits is usually associated with something bad happening.
But getting old is not a "risk," it's inevitable, unless of course you die first. It's something to plan for, not something to insure against. If you do not receive retirement payments, again it is likely because you have died. Not great.
(It is true that many important insurance programs need nearly everyone to pay in, and shouldn't allow people to opt out of paying premiums, because that defeats the whole point. But then this is also true of taxes that fund welfare programs.)
Mark Thoma writes that "Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not 'mainly welfare.'"
This sounds like an excellent idea for a social program but it doesn't describe Social Security as it exists, which pays benefits regardless of need. It's like a fire insurance program that pays you whether or not your house burns down. (He does try to address this argument, making correct observations about political realities and buy-in, but it is those very realities that transform the program into what it is, mildly redistributive welfare, and what make it no longer "insurance."). This of course points to a major rhetorical danger of the "insurance" framing, which is that it immediately suggests means-testing as a common sense cost-saving measure. Compared to that, "savings" is probably a better framing!
Elsewhere he writes,
When I think of welfare, I think of pure money transfers from one group to another without any economic basis for the transfer. In such cases, one person’s gain arises from another’s loss."
There is an important distinction between needing insurance ex-ante and needing it ex-post. Insurance does redistribute income ex-post, but that doesn't imply that it was a bad deal ex-ante (i.e., when people start their work lives).
Thus, by this definition, farm subsidies are welfare. Steel tariffs are welfare. R&D tax credits are probably even welfare, and so is AFDC. All of these are pure ex-post redistributions. That is fundamentally different from the purchase of insurance.
But AFDC (TANF, really) could also be seen as a form of economic risk insurance. In fact it likely has more of a claim to being "insurance" than Social Security, since it is more about actual risk (losing one's job and savings) than about a near certainty (growing old). Similarly farm subsidies could be described as a form of "insurance" designed to stabilize domestic food supplies, etc.
welfare is the catch-all
To me this leaves welfare as being the accurate word to describe what happens when the government taxes B to pay A. I don't think the fact that the government also premises that later it will tax C to pay B changes very much, as typically governments at least promise to provide some sort of benefit to taxpayers in terms of lighthouses, libraries, and riot police.
I don't think it works to say that it's only "welfare" if the payment is based on need, as that deprives us of terms such as "corporate welfare," but if that's the working definition then sure, Social Security is not welfare (in addition to not being savings or insurance). "Entitlements" has been spoiled so maybe we can go with "benefits."