Saturday, September 24, 2011

Successful 30 Year Alternative To Social Security Exists

From The Wall Street Journal, "Perry Is Right: There Is a Texas Model for Fixing Social Security: Public employees in three Texas counties have benefited from an 'Alternate Plan' for 30 years." by Merrill Matthews:
three Texas counties that decades ago opted out of Social Security by creating personal retirement accounts. Now, 30 years on, county workers in those three jurisdictions retire with more money and have better death and disability supplemental benefits. And those three counties—unlike almost all others in the United States—face no long-term unfunded pension liabilities.

Since 1981 and 1982, workers in Galveston, Matagorda and Brazoria Counties have seen their retirement savings grow every year, even during the Great Recession. The so-called Alternate Plan of these three counties doesn't follow the traditional defined-benefit or defined-contribution model. Employee and employer contributions are actively managed by a financial planner—in this case, First Financial Benefits, Inc., of Houston, which originated the plan in 1980 and has managed it since its adoption. I call it a "banking model."
Read the complete article here.

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