Social Security — the primary retirement savings tool and biggest tax payout for millions of Americans — is a bad deal, critics contend.

They argue that the mandatory payroll tax is a poor investment because it only provides an average annual payment of $17,500 — a lousy return on the funds withheld.

“Americans would be better off keeping their payroll tax contributions and putting them into private retirement accounts than having to sacrifice them to the government’s broken Social Security system,” according to the Heritage Foundation’s study, “Is Social Security Worth Its Cost?”

But a Social Security official counters that the government program is more comprehensive than private accounts.

“It is important to note that Social Security provides much more than a retirement pension,” Social Security Chief Actuary Steve Goss said in response to the study.

“About one-third of benefits paid are for disability and survivors insurance protection,” Goss said. “Such benefits cannot be provided from individual savings in a retirement account.”

Goss also contends that some people wouldn’t do well in private retirement accounts in part because private sector firms would charge high management fees.

The Social Security system’s revenues are collected through payroll taxes levied at 6.2% each on the worker and the employer.

The average Social Security recipient receives $1,461 a month.

The Heritage study found younger workers paying into Social Security over decades stand to lose the most. Their returns will be between -0.04% and -14.53%.

Rachel Greszler, one of the report’s authors, noted that annual return is versus a 4.76% return for those making conservative private investments — half in stocks and half in government bonds, according to the study.

“We are telling young people to put money into this program that guarantees zero or negative returns,” Greszler said, adding that the long-term results of private investments are likely even better than that 4.76%.

Social Security taxes and benefits have been much debated. Taxes have been raised and benefits cut several times over 40 years.

“I tell people to be very conservative about Social Security payments in building a retirement plan,” said Ronald Roge, a Long Island adviser. “It should be no more than a third of your income.”

However, both critics and defenders of Social Security can agree on this: The system faces a crisis over the next 15 years. Goss said that the program’s “reserves will become depleted in 2035.”

That would mean a 20% cut in benefits, he said — adding, in a sentiment that the program’s critics echo, “Congress will need to act.”