U.S. SENATOR BARBARA BOXER | Issues

In 1981, three counties in Texas–Galveston, Matagorda, and Brazoria–decided to opt out of Social Security and instead provide their public employees with a system of privatized accounts.

While the privatization proposal advocated by President Bush is not an exact replication of the Texas plan, the concept is similar enough to warrant an examination of the Texas plan to see the impact of plans to privatize Social Security. …

Under the Texas plan, a married couple that has earned the median income would receive a monthly annuity benefit of $1568. Under Social Security, that married couple would receive $1818 at retirement–$3000 more over the course of the first year of retirement. Because Social Security beneficiaries receive an annual cost-of-living adjustment, at age 80, that gap increases to $13,440 more per year under Social Security than under the Texas plan.

Minor children are clearly better off with Social Security’s survivor benefits. If a worker who earned the median income dies at the age of 40, after working 20 years, the surviving spouse and two minor children would receive Social Security survivor benefits more than two and half times greater than they would receive under the Texas Alternate Plans.