Reply #8: WaPo article on Galveston plan - beats SS ONLY if you're single, well off, & die within 10 years

[highplainsdem]

http://www.washingtonpost.com/politics/galveston-alternative-to-social-security-held-up-as-model/2011/09/13/gIQArikIQK_story.html

For the highest-earning workers in the Gulf Coast county, the personal accounts have yielded nearly double what they might have collected under Social Security. But according to independent studies, the results have been less favorable to those on the lower end of the income spectrum.

In 1999, the Social Security Administration and the General Accounting Office (now the Government Accountability Office) separately examined the program adopted by Galveston and surrounding counties and found that its benefits depended on income and longevity: The lower one’s income and the longer one lived after retirement, the less advantage there was to participating in the program compared with Social Security. Also, Social Security payments increased with inflation, while payments under the Galveston plan did not.

“If you’re single, if you’re well off and you die within 10 years , maybe you’ve done better,” said Eric Kingson, a professor of social work at Syracuse University and a vocal critic of the Galveston alternative. “For most people, it’s somewhere between ‘very bad’ and ‘not very good.’ ”

Backers of the Galveston program say that the government agencies used skewed numbers in their analyses and that the benefits for lower-income workers are better than the reports reflected. Still, they acknowledge that it may not be as beneficial for lower earners because it does not distribute money according to a formula that helps the poor, the way Social Security does.