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Galveston County, Texas, in 1980, when our county workers were offered a different, and better, retirement alternative to Social Security: They reacted with keen interest and some knee-jerk fear of the unknown. But after 24 years, folks here can say unequivocally that when Galveston County pulled out of the Social Security system in 1981, we were on the road to providing our workers with a better deal than Franklin Roosevelt's New Deal.
When I was county judge in 1979, many county workers were concerned about the soundness of Social Security, as many people are today. We could either stay with it — and its inevitable tax increases and higher retirement ages — or find a better way. We sought an "alternative plan" that provided the same or better benefits, required no tax increases and was risk-free. Furthermore, we wanted the benefits to be like a savings account that could be passed on to family members upon death.
Our plan, put together by financial experts, was a "banking model" rather than an "investment model." To eliminate the risks of the up-and-down stock market, workers' contributions were put into conservative fixed-rate guaranteed annuities, rather than fluctuating stocks, bonds or mutual funds. Our results have been impressive: We've averaged about 6.5% annual rate of return over 24 years. And we've provided substantially better benefits in all three Social Security categories: retirement, survivorship, disability.
Our plan vs. Social Security
Upon retirement after 30 years, and assuming a more conservative 5% rate of return, all workers would do better for the same contribution as Social Security:
• Workers making $17,000 a year are expected to receive about 50% more per month on our alternative plan than on Social Security — $1,036 instead of $683.
• Workers making $26,000 a year will make almost double Social Security, $1,500 instead of $853.
• Workers making $51,000 a year will get $3,103 instead of $1,368.
• Workers making $75,000 or more will nearly triple Social Security, $4,540 instead of $1,645.
• Our survivorship benefits pay four times a worker's annual salary — a minimum of $75,000 to a maximum $215,000 — rather than Social Security's customary onetime $255 survivorship to a spouse (with no minor children). If the worker dies before retirement, the survivors receive not only the full survivorship but get generous accidental death benefits, too.
• Our disability benefit pays 60% of an individual's salary, better than Social Security's.
We got our plan in place before the U.S. Congress passed a "reform" bill in 1983 that closed the door for local governments to opt out of Social Security.
To be sure, our plan wasn't perfect, and we've had to make some adjustments. For instance, a few of our retired county workers are critical of the plan today because they say they are making less money than they would have on Social Security. This is because our plan allowed workers to make "hardship" withdrawals from the retirement plan during their working years. Some workers withdrew funds for current financial problems and consequently robbed their own future benefits. We closed that option down in January 2005.
Why not just cut a check in the amount that each American has paid in and once that check is cashed your out of the system.
That check is 114 trillion dollars which is the unfunded liabilities the US government has including SS and medicare.
If SS were to eliminated you'd have to get the budget in the black and then and only then could you start phasing it out by slowly dropping contributions and benefits over many decades if you want to insure people get what they were promised and rightfully have coming to them.
Why not just cut a check in the amount that each American has paid in and once that check is cashed your out of the system.
After a few decades the Social Security liability will shrink to zero and each American will be responsible for his or her retirement.
Why did Americans let the government burrow its way into people's retirements anyway?
Because prior to the reforms and programs of the New Deal, there was basically no middle class in the US as we know it. There were a small number of the super rich (investor class) and and a larger number of the well-off (merchants and businessmen), and a vast number of the working poor.
Most companies didn't offer substantial pensions. When a worker retired, he or she was supported by his meager savings. When that ran out, he moved in with relatives, adding to their financial stress, or starved to death.
The Social Security Act was intended to provide a modest "pension", made up of contributions over a working lifetime by both the worker and his employers, that would guarentee a dignified, comfortable old age for retirees.
Because prior to the reforms and programs of the New Deal, there was basically no middle class in the US as we know it. There were a small number of the super rich (investor class) and and a larger number of the well-off (merchants and businessmen), and a vast number of the working poor.
Most companies didn't offer substantial pensions. When a worker retired, he or she was supported by his meager savings. When that ran out, he moved in with relatives, adding to their financial stress, or starved to death.
The Social Security Act was intended to provide a modest "pension", made up of contributions over a working lifetime by both the worker and his employers, that would guarentee a dignified, comfortable old age for retirees.
And yes, it is Socialism with a capital "S"!
So the only way America can have a middle class is through:
Because prior to the reforms and programs of the New Deal, there was basically no middle class in the US as we know it. There were a small number of the super rich (investor class) and and a larger number of the well-off (merchants and businessmen), and a vast number of the working poor.
Most companies didn't offer substantial pensions. When a worker retired, he or she was supported by his meager savings. When that ran out, he moved in with relatives, adding to their financial stress, or starved to death.
The Social Security Act was intended to provide a modest "pension", made up of contributions over a working lifetime by both the worker and his employers, that would guarentee a dignified, comfortable old age for retirees.
And yes, it is Socialism with a capital "S"!
Yet this program seems to have worked better.
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