Posted on 2/14/2005, 11:29:43 PM by Graybeard58
Two of the Democrats' chief criticisms of President Bush's plan to supplement Social Security with voluntary retirement accounts is they don't work and are too risky.
However, the experience of county employees in Galveston, Texas, says otherwise. They've worked under an entirely privatized system since 1981 that beats the pants off the racket run by the federal government in every measurable way.
As was their right back then, Galveston employees opted out of Social Security in favor of their own, private retirement system, and chose a funding formula quite similar to Social Security's. They contribute 6 percent of their wages to the system, the county matches that, and the money is invested conservatively in stocks, bonds and mutual funds.
The program also sets aside money for disability and life insurance policies that provide employees with perks Social Security beneficiaries can only dream about.
From 1982-97, while the "Social Security Trust Fund" supposedly was earning 2 percent interest a year on money it "invested" in Congress' IOUs, Galveston's annual rate of return was 8.6 percent -- more than four times that of Social Security. Because of the miracle of compound interest, Galveston workers have amassed small fortunes that belong to them, not the government.
Few investments are safer than government bonds, but Galveston weathered three recessions, 9/11, and the wars in Iraq and Afghanistan and never had a year in which it lost money.
So what does this all mean to Galveston's retirees? The plan's administrator says workers who make $17,000 a year can retire at 65 with a monthly pension of $1,285, a much greater benefit than the $503 they would get under Social Security. Employees who make $51,263 a year retire on $3,846 a month, or an eye-popping $2,309 more than they would get under Social Security. On top of all that, when they die, their spouses get lump-sum survivor's benefits (some as high as six figures), and their heirs get the unspent retirement funds. The Social Security death benefit is a measly $255.
The Social Security Administration estimates that 7 million public employees nationwide opted for private accounts before Congress eliminated that choice in 1983. By 1999, they had socked away $17 billion in private accounts. Those billions found their way into the economy, where they helped create jobs that produced more income, wealth, products, services and sales for the local, state and federal governments to tax. Meanwhile, the trillions put into Social Security were flushed through the "trust fund" and into the general fund, where they paid for pork projects, political patronage and other forms of incumbency insurance, as well as government waste.
"**flushed** through the "trust fund""
Now there's an apt characterization if there ever was one.
The dims response to GWB's initiative to overhaul SS is just another view of how they look to get our money. SS is not about retirement, it is about keeping the dims at the public trough. When, if ever, will America say enough?
Absolutely agreed!!! They get our money, piss it off, and then want more all the while telling us we're too ignorant to manage our own affairs....
My husband at 16 years of age invested $650 in a mutual fund and left it there until he retired. He did not add a penny or take away a penny from 1950 to 1997. He plowed all dividends back into the fund for all those years. By 1997, the mutual fund had grown to $175,000! In other words, time and compounding changed $650 into $175,000. In 1997, he started taking out the dividends instead of reinvesting them--over $75,000 extra income. Today, the fund still contains $164,000. This is the success we could have if the Democrats didn't hate Bush and America so much. Damn them!
This really takes the cake. I think it is great for Galveston; but I wonder why the rest of us were denied this choice?
I agree with that whole heartedly but even a small change in the right direction is welcome.
No changes will likely affect me as I am 59 years old.
I have invested over the years and it would have been nice to be able to invest more of my own money instead of pissing it away through that grand Ponzi scheme called social security.
The quickest way to get this passed is say, "All right,Dems, you win!" "All gubmint employees, teachers retirement, civil servant bennies, and railroad retirement, are hereby folded into the greatest plan ever devised, Social Security!"
You would have private accounts by next Monday.
I lived in Galveston county when this happened. CBS did a piece on it and showed the workers driving their 32 ft motorhomes to their vacation homes on the beach. They would ask what they did and they retired from the sewer department or some such thing. NOT ONE, NO NOT ONE, said they wished they had stayed in social secuirty. Somebody( probably from FNC) will have to go down there and do a follow up to show these bozo's what bozo's they are. Chile did the same thing, and I'm sure there are other examples. What if congress critters were forced into the ponzi scheme call Social Security? They should have to live under the same rules they make.
I love stories like this (especially when I encourage people to invest for the long-term in diversified portfolios for a living).
Can I ask which fund he used? (Not that it makes a big difference, being patient and reinvesting as he did will work with most large-cap Growth & Income funds. I'm just curios.)
Congrats to your husband--and to you for marrying someone so wise.
My husband invested in Affiliated Fund as a young man and left the $650 dollars there until his hair turned gray--advice from his dad who made him aware of time and compounding. Thank you for recognizing his wisdom and self-discipline. The fund still has $164,000 in it.
Lord Abbott Affiliated? Great fund. That is fantastic.
If only all kids could be taught this.
I agree with you, but our children must be taught at home about investing. Schools are woefully negligent.
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