September 23, 2011
By Susan Chew
In the late 1970s Galveston’s county employees made the decision to opt out of Social Security and open personal saving accounts. They did this out of fear that Social Security would not be around when it came time for them to retire. This move has been the prime example for those who oppose Social Security as it is currently structured, especially the Republicans in the 2012 presidential race.
According to independent studies, individuals who are on the lower end of the income spectrum did not do well with the personal accounts. The studies have shown that the lower one’s income and the longer one lived after retirement, the less advantage there was to private accounts. This was partly because payments did not increase with inflation as they would have with Social Security. Even backers of the personal accounts, who claim that the government agencies used skewed numbers, acknowledge that the Galveston program may not be as beneficial to lower earners, because the program does not distribute the money according to a formula that helps the lower earners, as Social Security does.
Having the states run Social Security would only produce more results like those in Galveston, which at a minimum hurt the middle class and those who earn less.
