I ran the numbers and found that retirement benefits for nearly all earners could easily be paid for by the Social Security taxes paid on their earning record. It only takes about 30 hours a week at federal minimum wage ($7.25) to fill the first bend point ($895/mo) in the Social Security Primary Insurance Amount. Assuming someone earns this much from age 35 to age 70 then takes SS at age 70 and lives to be 100 their rate of return on SS taxes (including employer portion) would be about 6.3%.
Okay, so let's run those numbers. $7.25/hour * 30 hours/week * 52 weeks a year = $11,310/year in income.
If we assume they were paying the current social security payroll tax of 12.4%/year, that means they paid $1,402/year in social security taxes.
Over 35 years, they've paid $395,850 in taxable earnings. Let's call it 400k. And .124*400k = $49.6k in social security taxes.
Now what about those benefits? Our hypothetical retiree averaged $942/month for their 35 highest earning years. The first bend point is at $895, so their monthly benefit is ($895*.9) + ($942-$895*.32) = $820/month. But you have them retiring at 70, which is three years past full retirement age, so their benefit is $820*1.08^3 = $1,033/month.
Then you have them live from 70 to 100, so $1,033 * 12 months * 30 years = $371,880 in total benefits.
That's a ratio of pay in to pay out of ~7.5:1.
Now in reality a 70 year old woman has, statistically only 16.5 years left to live, so that drops out the payout to $205,534 with a payout ratio of ~4:1.
I'm not quite sure how you're calculating the return, but even if we assume the taxes payed into social security compound at a rate above inflation*, and even if we assume that rate was 6.3% above inflation** and even if we assume the retiree continued to earning a constant zero volatility*** return of 6.3% while they were pulling money out of their personal social security lock box, they end up more than $140,000 in the hole by the end of their 35 year long retirement.
And this doesn't even get into spousal benefits which are paid out while you and your significant other are both still alive and create an automatic 50% bump in the total social security payout for low income single earner households (and single earner households are significantly more likely to be low income than dual income households, so this represents another net transfer from high income to low income households).
Social security is a remarkably progressive system that transfers wealth from high income households to lower income households. Now that's nothing wrong with that. Our hypothetical person who worked for 35 years making less than $12,000/year almost certainly had no chance to accumulate significant retirement savings, and if it weren't for social security would likely either be out on the streets or become a burden on their children (if they had any) once they were no longer able to work. So I'm happy that this part of social security works so well. But it is indeed an progressive system where those with high incomes dramatically subsidize those with low incomes. And we should be open about that.
*Which they haven't because most of it was immediately paid out to older retirees, and what wasn't paid out was invested in government treasuries earning approximately the same rate as inflation. If we pretend each retiree's payments are really sitting somewhere earning stock market like returns until they retire, it's easier to make the numbers balance on social security, but you end up creating a hypothetical sovereign wealth fund worth approximately $7.5 trillion dollars.**** And yes, if we have a $7.5 trillion sovereign wealth fund to support future social security payments, there wouldn't be any problems sustaining the current payout and pay in rates indefinitely.
**Which is pretty good even for the stock market, which has volatility, which social security does not.
***Volatility is the reason that the stock market can have a long term CAGR of 6.8%, but even spending 4% of your initial investment each year can sometimes mean you run out of money. Even so you're able to pull out more per year than if you put your money all into bonds or other low volatility investments. If we assume 3.5%/year
****Assumptions: 125M working adults in america, the average adult has been working for 18 year (random guess), and has been earning an average of $16,000/year (seems low, but another random guess), and their contributions have been invested and have been compounding at 6% annually after inflation (about what you'd get from a moderately aggressive stock/bond investment mix).