The Social Security System

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The Social Security System

• A Catastrophic Problem
• A Transforming Solution

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Social Securitys Catastrophic Problem
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Social Securitys Transforming Solution

• Prefunding Retirement Benefits
• Exposing Retirement Funds to Market Rates of
  Return
• Personalization of Social Security Accounts Its
  really your money!

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Personal Social Security Accounts in Action . . .

• . . . In Texas!

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The Lucky Few

• Galveston County
• Brazoria County
• Matagorda County

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How An IRA Works
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How the Galveston Plan Works
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Galveston Plan Contributions vs. Social
Security Contributions

• Under the Galveston Plan, employees contribute
  LESS than do employees under the Social Security
  System
• Under the Galveston Plan, employers contribute
  the same amount that employers contribute under
  the Social Security System

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Survivorship Benefits Compared

• Social Security 255

• Galveston Plan 3x the workers salary, between
  50,000 and 150,000!

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Galveston Plan Delivers Far Superior Retirement
Benefit
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Rates of Return Compared

• Social Security Less than 3 on average (thats
  lower than the rate of inflation).
• Galveston Plan Between 5 and 15.5, averaging
  abou 7.8.
• Have to be careful--there is a lot more
  redistribution going on in Social Security than
  most people think. A few workers get a very good
  rate of return from the current Social Security
  system.

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Galveston Plan Delivers Far Superior Disability
Benefit
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Why is the Galveston Plan Important?

• 20-year track record of success shows it can be
  done.
• Rates of return supply a precedent for
  projections for other proposals.

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Can Galveston Plan be a Model for Federal Social
Security Transformation?

• Yes, with a few slight changes

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Galveston Plan Contributions

• In the Galveston Plan, workers contribute 9.737
  percentage points of their income toward
  retirement savings.
• The Galveston Plan privatized everything,
  retirement, disability, survivorship, not just
  retirement.

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Social Security Transformation is Bigger than the
Galveston Plan

• No one is seriously proposing privatizing
  everything (as Galveston does) at the federal
  level. 0nly the retirement portion of Social
  Security.
• So, to maintain the remaining portions of Social
  Security, fewer percentage points are available
  for personal accounts.

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How Much is Available for Personal Accounts?
This is the maximum available for personal
accounts
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What Would that 6.3 Get You?
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Benefits of Social Security Transformation

• Biggest Tax Cut in World History
• Biggest Debt Reduction in World History
• Biggest Wealth Creation Device in World History
• Dramatically Broaden the Distribution of Wealth
• Greater Social Equity for Minorities

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For More Information

• www.ipi.org