South Texas's Privatized Retirement Plan

In a small experiment several Texas counties set up their own privatized retirement plans instead of Social Security. Result: lower income workers and people who live longer do much worse - high income retirees did better.

"These plans won't work for most people and would destroy Social Security for the vast number of Americans who depend on it," said Eric Kingson, a professor of social work at Syracuse University who has studied the Galveston plan.

"What we can learn from the Galveston experience is who will win and who will lose if we move toward this privatization plan," Kingson added. "People who work long and hard at relatively low wages get a proportionately higher benefit from Social Security, and that's because its purpose is to provide a basic set of protections for Americans."

The bottom line for many Galveston County retirees is the size of their check every month. And some say they have been bitterly disappointed.

"I get around $460 per month now, but under Social Security, I would have gotten $1,000," said Joyce Longcoy, who retired in 1998 after 23 years working for Galveston County. "They are putting this up to be a model for the rest of the country. Some model."

This $460 per month has no annual cost of living increase and used a higher income tax rate.