"In addition," Bush said, "you'll be able to pass along the money that accumulates in your personal account, if you wish, to your children and -- or grandchildren."
What happens if someone doesn't have a will and has children from multiple relationships or marriages, asked Allan Lefcowitz of Washington. "Who will decide how the money is divided? Since, theoretically, the monies in the private account would be part of the individual's estate and pass through to heirs, would they not also be part of the assets to be divided in the event of a divorce?"
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Additionally, since a spouse under the current Social Security system is entitled to benefits, would a wife get a reduced benefit if her husband diverts funds to a personal account? According to Bush, the money in personal accounts would "belong" to the individual. So, Lefcowitz wonders if funds placed in the personal accounts can be divided between divorcing spouses. Would private Social Security accounts be exempt from community property laws?
By the way, according to the administration official, at retirement a participant would be required to buy an annuity in order to have a steady stream of payments over his or her lifetime. But if that is the case, realistically how much from the investment accounts would really be left to leave to heirs? "If you buy an annuity and die early, obviously, that limits the amount that you've been able to pass on," the official said.
Katrina E. McKinney of Boise, Idaho, said she supports Bush's plan, sort of. "There are too many unanswered questions to be able to make an educated decision," she wrote.
"Why are we being asked to support such massive changes without being given more information?" asked Susan Vadas of Columbus, Ohio. "That is a huge red flag for me."
Me too.
Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or send e-mail to singletarym@washpost.com. Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.
