Thursday, February 03, 2005

Benefit Offset

That's the phrase of the day, the week, the month folks. It means that your private account isn't so private and your personal account isn't so personal. Money you put in your private accounts -- quite possibly the vast majority of that money -- will simply be taken away from your social security benefit. It appears that the WaPo people actually picked up on this:

Even more curiously, a "senior administration official" who briefed reporters on the Social Security proposal earlier today disclosed details of the White House plan that I don't think will play well in Peoria. Most significantly, this official revealed that most or all of the earnings from new "personal" or privatized accounts will be paid not to the holder of the account, but to the government. The senior official called this a "benefit offset." It's one way to finance the creation of these private accounts, but it's going to cause quite a political stir, I think.

But, this shouldn't be a big surprise. Benefit offsets have always been part of the whispered plans.


A lot or even most of the money in your private account is just going to deducted from your benefits. Zero sum game.

A lot or even most of the money in your private account is not going to be able to be left as an inheritance -- you'll be required to buy an annuity upon retirement, and if you die one day later the money will be all gone.