The Galveston, Texas, alternative to Social Security that GOP presidential candidate Rick Perry has praised has paid off for high earners, but those on the lower end of the pay scale have not fared as well, The Washington Post
Galveston County employees ditched Social Security in the late 1970s, fearing that the program would not be around in the future. At the time, federal rules allowed them to opt out and they chose a system of personal savings accounts, the Post reported.
High earners are pulling in nearly double what Social Security would have provided but studies show those with lower income and who live longer do not fare as well. Additionally, Social Security payments increase with inflation, the Galveston plan does not, the Post reported.
“If you’re single, if you’re well off and you die within 10 years [of retirement], maybe you’ve done better,” Eric Kingson, a professor of social work at Syracuse University and a vocal critic of the Galveston alternative, told the Post. “For most people, it’s somewhere between ‘very bad’ and ‘not very good.’ ”
Galveston program backers said the plan may not be as good for those with lower income. “We did not weight it in favor of higher- or lower-income people,” Rick Gornto, the financial planner who devised the program, said according to the Post. “You put your money in, you invest it, and you get your money out.”
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