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Think Privatizing Social Security Won’t Work: Think Again It Already Does in Texas

In the vice presidential debate a smirking (and lying) Tim Kaine claims that Hillary Clinton has a plan to save Social Security and Medicare.  How did he say she would do it?  By raising taxes on everyone who has a job.  He said that privatizing Social Security is an unworkable scheme.  The truth is privatization has only been tried once.  During the Reagan administration,  Galveston, Matagorda and Brazoria Counties ,Texas was given permission to leave the Social Security program and set up their own retirement plan for public employees.  Guess what?  It was wildly successful.  That is an understatement.

In the vice presidential debate a smirking (and lying) Tim Kaine claims that Hillary Clinton has a plan to save Social Security and Medicare. How did he say she would do it? By raising taxes on everyone who has a job. He said that privatizing Social Security is an unworkable scheme.
The truth is privatization has only been tried once. During the Reagan administration, Galveston, Texas was given permission to leave the Social Security program and set up their own retirement plan for public employees. Guess what? It was wildly successful.

Social Security as it stands today is a hugely corrupt and flawed system. During the LBJ presidency all Social Security funds were ordered to be placed in the general fund because he didn’t want the people to see how much money he was spending in Viet Nam.

It has allowed democrats to steal money from retirees to ever increase spending. There is no money in the Social Security fund, just IOUs from Congress. IOUs that cannot be collected without printing several trillion dollars that would greatly weaken the dollar.

The Texas plan which is known as the “Alternative Plan” is now well established, having been started in 1981. Whereas Social Security does not make interest, the Texas plan makes a guaranteed income every year and never under 3,75%.

In good years, it makes almost double that. The funds are bundled together and banks compete for the funds. The winning bidder guarantees the plan a profit no matter what happens in the stock and bond market. Therefore their retirement plan increases in value every year.

When an employee retires, they have a choice. They can take a lump sum, they can take a monthly benefit for a set number of years or they take take a set amount a month for life.

From Forbes:

A lower-middle income worker making about $26,000 at retirement would get about $1,007 a month under Social Security, but $1,826 under the Alternate Plan, according to First Financial’s calculations.

A middle-income worker making $51,200 would get about $1,540 monthly from Social Security, but $3,600 from the banking model.

And a high-income worker who maxed out on his Social Security contribution every year would receive about $2,500 a month from Social Security vs. $5,000 to $6,000 a month from the Alternate Plan.

More importantly, the employee owns the account. If the employee dies, the remainder of their account becomes part of their estate. Not so Social Security.

My wife died at age 55 and all the money she paid in for 37 years went up in smoke with the exception of a $255 benefit for burial expenses. Before her death, she was paying $3000 a year into SS and Medicare, yet neither she nor my son and I got any benefit from all the money she paid in.

Can you look at the differences in the plans and with a straight face say that SS is the better of the two plans? Look at the poorest Americans that see just $1007 a month. What kind of life can you have at that level of finances. The Alternative Plan yields $819 more a month or $9,828 more in a year’s time. That’s a huge difference and a middle class earner makes a whopping $24,600 a year more.

Which plan would you prefer to have?

H/T Forbes

 

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