This could have been your Social Security

While politicians argue about what, if anything to do with Social Security, maybe we should look at life without Social Security.

Thirty years ago three Texas counties opted out of Social Security.  Their employees continued to pay the same 6.2% tax that they would have under Social Security, and the counties continued to pay the 6.2% tax that any employer would pay.

But, there was one big difference.  Unlike your Social Security taxes paid, where the government spent every nickel it could get its hands on, all money collected was pooled and investment firms were asked to bid on the money.  The firms guaranteed a rate of return, that over the years, ranged between 3.75% and 5.75%.  But, not all of the money was invested.  Some of it went to purchase life insurance for each employee.

The results are worth noting.  Your death benefit under Social Security is $255.  Any employee of these counties has a tax free death benefit of four times the employees salary up to a maximum of $215,000.  If you die before collecting Social Security, you get nothing.  For the employees of these counties, the money in each employees account at death becomes part of the employees estate.

On the retirement benefits side,

  • an employee making about $26,000 will receive $1826 per month, but only $1007  under Social Security,
  • an employee making about $51,200 will receive $3600 per month, but only $1540 under Social Security, and
  • an employee making a high income will receive $5000 to $6000 per month, but Social Security “maxes” out at $2500.

And, if you are not convinced yet, none of these counties has any “unfunded” pension obligations, as they pay the “employer share” into the plan as they go.  Of course, our federal government cannot say the same about Social Security.

In 1983 Congress changed the law so that now, only public employees can opt out of Social Security.  But, should they change that law, is there any reason why this country couldn’t begin to phase in a program similar to this for all Americans?


17 replies
  1. Eric
    Eric says:

    Now everyone can see why George Bush wanted to privatize Social Security. He wasn’t all that dumb after all! ?Not only is the pay out stronger, but it also eliminates the probability that a corrupt Congress will spend your SS and then change the rules on withdrawal… kind of like they’re doing right now. ??

  2. Gary J
    Gary J says:

    ?Way to go SOS now I’m gonna be sick till the day I die because I get less than half of what I should be getting is someone with brains was running things. Over the years none of us have held elected people accountable for their actions. That is most of what the TEA party is about.? Send me a blue pill because I not going to recover from this information

  3. essneff
    essneff says:

    Imagine, Perry is?beaten up?for calling this great program a Ponzi scheme……maybe they are?right, ?its actually worst than a ponzi scheme….. if we ever do?reform this monstrosity, individuals should be able to opt out as one of thier options.. it is a terrible program for the youth of America????

    • NH-Jim
      NH-Jim says:

      Yes, it is worse.? With a ponzi scheme, one has a choice to partake and only has him/herself to blame for it.? With SS, one has no choice, he/she is a partaker in it by force.

  4. Dimsdale
    Dimsdale says:

    Ah yes, the Galveston plan.? I have been espousing this for years.? It is what Social Security should have been.? It shows the following:
    1) at least some politicians can be trusted with your money;
    2) investing in the stock marked isn’t a bad thing, particularly when you make very conservative (pun intended), safe, low risk investments;
    3) as SOS noted, the returns are huge compared to the National Ponzi Scheme, I mean Social Security, and it really is YOUR money, not some politician’s ethereal promise to pay;
    4) and yes, Bush was right, although he only tried to return a portion of our SS money to our control.? If young people were given the option, they could have a prospect of a decent retirement, not looming cuts and age qualification increases.
    5) they can’t threaten to stop printing the checks for YOUR money.
    Did I mention that it would be YOUR money?

  5. sammy22
    sammy22 says:

    What happened if an employee left for another job, was laid off or was fired? Did he take the “money” with him?

  6. sammy22
    sammy22 says:

    There are also 401k plans, managed by individual investors, which in 2008 became “201k” plans and not yet back to 401k. And there were the ultimate Ponzi schemes? by Bernie Madoff and others which totally went belly up and left lots of investors with big ZERO accounts.

    • Dimsdale
      Dimsdale says:

      These are higher/high risk plans designed to maximize yield with increased risk.? The Galveston plan is ultraconservative, and as such, has weathered the economic storm pretty well.? In the meantime, we talk of decreasing benefits/increasing age requirements for SS, as well as its potential demise.
      As for the other Ponzi schemes, you always have the ability to opt out, or better, not opt in.? Try that with SS.? People who join those expect huge paybacks, i.e. they got greedy, forgetting that there is no free lunch.

  7. sammy22
    sammy22 says:

    IF one knew the scheme was of the Ponzi variety, one WOULD not buy into it: you are deceived that the scheme is legit. As for getting out a Ponzi scheme, try one and see if you can opt out once you’re in! As for the Galveston Plan on a national basis I say we have one it’s called Social Security (and the vesting comes with you when you change jobs, are laid off or you are fired) .

    • Dimsdale
      Dimsdale says:

      We are constantly told that SS is legit, but only sanctioning by the government makes it so.? The involutary membership is irrefutable.? Why would I willingly get into a Ponzi scheme?? At least you admit there is a choice in the case of the non government approved Ponzi scheme.
      As for comparing SS and the Galveston alternative, did you actually read about the differences?

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