What could replace Social Security in an independent Texas?

Although those currently receiving Social Security payments would continue to do so in an independent Texas, the question becomes one of what a replacement system could look like in an independent Texas.

Fortunately, Texas is already leading the way with concrete examples of what a Social Security replacement could look like.

Three counties in Texas have shown the public that they can opt-out of Social Security by setting up their own system for personal retirement accounts. This decision has allowed these counties to avoid any financial concerns and has provided many of their retirees with a higher amount of retirement income.

Employees of Brazoria, Matagorda, and Galveston County have experienced a growth in retirement savings annually. Under their model, both employee and employer contributions are handled by a financial planner. The agency “First Financial Benefits Inc.” of Houston currently manages their retirement accounts and has done so since the systems were set up beginning in 1981.

All of the contributions are collected, similar to bank deposits, and financial institutions begin bidding on the money. These same institutions guarantee that interest rates will not go down to a certain level, and may even go higher if everything goes smoothly in the market.

Under this model, accounts are able to earn between 3.75% and 5.75% each year, averaging at about 5% overall. This rate was even higher during the 1990s when it reached up to 7%. Employees make more money when the market is up and still earn something when it goes down.

The “Texas Model” in these three counties has paid higher-wage workers larger retirement benefits than Social Security would, and higher initial disability benefits, according to a 1999 GAO review, though the same review found Social Security did better for many low-wage workers and single-earner couples.

Guaranteed retirement benefits from a private organization are enticing for us in Texas, especially since studies have indicated the depletion of Social Security funds in the near future.

The model shown by the three counties proves that we Texans can set up our own retirement and pension system, and do so successfully, despite secession by way of TEXIT.