Wednesday, January 28, 2009

Allan Sloan revisits Social Security reform

Allan Sloan revisits the issues raised in a previous column, which I commented on here. He corrects an error regarding the personal accounts plan put forward in 2005 by President Bush.

My mistake of commission was writing that under the plan proposed by former president George W. Bush's Social Security commission, people of limited financial means would have had to turn their private accounts into annuities when they retired.

I was wrong. Retirees of limited means would have had the option of using their accounts to buy retirement annuities but would also have had the option of making small regular withdrawals. That's a big difference -- and a big mistake on my part, for which I apologize.

This matters, because forcing people to buy annuities with their year-end 2008 balances would have locked in current stock market values for recipients' lifetimes. Making small withdrawals, by contrast, would allow retirees a chance to recoup their losses when the market recovers.

Allan's general point – that the state of the stock market at the time you retire can affect how well you do under personal accounts – still has merit, even if I don't totally agree. But this column shows that he wants to get the details right and that he pays attention to people who disagree with him, which is what you want to see in a columnist.

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