NCPA - National Center for Policy Analysis


April 26, 2005

What has been good for Galveston County may, indeed, be good for this country, says Judge Ray Holbrook, who was Galveston County judge from 1967 to 1995, and oversaw the creation and administration of the Galveston County alternative plan which allowed county workers to opt out of Social Security in favor of a privatized plan in 1981.

Upon retirement after 30 years, and assuming a 5 percent rate of return -- more conservative than Galveston workers have earned -- all workers would do better for the same contribution as Social Security:

  • Workers making $17,000 a year are expected to receive about 50 percent more per month on the Galveston County alternative plan than on Social Security -- $1,036 instead of $683.
  • Workers making $26,000 a year will make almost double Social Security's return, $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.

Galveston County's survivorship benefits pay four times a worker's annual salary -- a minimum of $75,000 to a maximum $215,000 -- versus Social Security, which forces widows to wait until age 60 to qualify for benefits, or provides 75 percent a worker's salary for school-age children. In Galveston, if the worker dies before retirement, the survivors receive not only the full survivorship but get generous accidental death benefits, too.

Galveston County's disability benefit also pays more: 60 percent of an individual's salary, better than Social Security's.

Galveston County's retirees have prospered, and its working people have had the security of generous disability and accidental death benefits. Most important, the county didn't force its children and grandchildren to be unduly taxed and burdened to pay for current retirees while they are struggling to raise and provide for their own families, says Holbrook.

Source: Ray Holbrook and Alcestis "Cooky" Oberg, "Galveston County: A Model for Social Security Reform," Brief Analysis No. 514, National Center for Policy Analysis, April 26, 2005.

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