Leaving Something Behind

The New York Time's editorial page takes on a much publicized portion of the President's Plan (the one he hasn't actually proposed yet). Namely the assertion that "Personal Accounts" would allow one to pass on the money to one's descendents in the event that one didn't spend it all. Well, maybe not.

Under the president's proposal, when you retired you would not be able to start spending the money in your private account until after you bought an annuity, a financial contract in which you hand over a lump-sum payment and, in return, get a monthly stream of income for life. The upside of buying such an annuity would be that you'd be protected against outliving all of your money. The downside is that even if you died immediately after retirement, the most your heirs would inherit would be the amount that remained in your private account after you had paid for the mandatory annuity. (If you lived longer, of course, you might well need to spend the remainder to supplement the annuity's low monthly payout.)

Hmmmmm. Troubling. But not surprising.