The retirement product that will get you killed
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Hey, I’ve got a proposal for you. You and your friends will put some money into a fund. Every year, all of you will get an equal share of the profits from that fund. It may not be a lot of money right now, but here’s the twist: as your friends start dying (naturally or otherwise), your share of the pie will increase. When you’re the last one left, you’ll be raking in the dough. Of course, you’ll be completely alone, but you will have a pile of money to sit on as a throne, so.
This set-up is called a tontine, and it’s basically an invitation to get murdered. The tontine has a long history dating back to the Middle Ages (working title for this article: "One weird trick kings used to make money"), and were basically everywhere across Europe and America up until the early twentieth century, when they were illegalized because of rampant abuses and scandals. You may recognize it from pop culture ranging from Agatha Christie’s 4.50 from Paddington to television cartoons (https://en.wikipedia.org/wiki/Raging_Abe_Simpson_and_His_Grumbling_Grandson_in%22TheCurse_of_the_Flying_Hellfish%22) and Archer.What do these three pieces of pop culture have in common, besides the tontine? Mysterious deaths and attempted assassinations.
Despite the undeniable fact that being involved in a tontine is sure to result in murder, there are some experts who believe it should come back. That’s what Moshe Milevsky, professor at York University in Toronto, argues in his book King William’s Tontine: Why the Retirement Annuity of the Future Should Resemble its Past. Like most internet writers, I didn’t actually read this book, but it has four-and-half stars on Amazon, so he’s got to have a point.Experts seem to like it because it’s basically a souped-up annuity. Annuities can make a lot of sense on paper – you buy one when you retire and then get a guaranteed payout every year. But annuities aren’t particularly popular. There’s a pretty good reason why – unless you live for a while, there’s a good chance you won’t make a profit off the annuity. If you die the day after, or even years after you buy the annuity, the company offering it pockets your cash.
Tontines are similar to annuities – you pay in and you get a guaranteed payout every year – but when you die, that money goes on to the other people in your tontine. But people don’t love tontines because they’re feeling particularly altruistic. Instead, they think (or will guarantee that) they’re going to live longer than everyone, and profit in the end. To steal the words of Jeff Guo, writer for the Washington Post: "If people irrationally fear annuities because they seem like a gamble on one's own life, history suggests that they irrationally loved tontines because they see tontines as a gamble on other people's lives."Besides all of the possible financial benefits of choosing a hypothetical modern tontine over an annuity (continue reading Guo’s piece for even more on that, or go to Amazon and read that entire textbook on it), there are some personal benefits, too. Imagine you set up that tontine I described in the first paragraph. Now, you’re obviously going to be incentivized to live in the healthiest way possible. You’ll probably join a gym or something, maybe even stop drinking. You may also go vegan and paleo and drink an all Soylent diet. You may also have to start going to a therapist to deal with the fact that you are constantly paranoid that your friends and coworkers are going to murder you in your sleep. All of this leads to a healthier, happier you!Of course, despite all this noise around resurrecting and modernizing the tontine, they remain illegal in America (as does murder). As of right now, you can’t even set up a casual, private tontine with your friends or coworkers or volleyball team or Soulcycle class. In the end, this is probably a good thing – if there’s one thing I’ve learned from the 1998 Sam Raimi film A Simple Plan, you can’t trust anyone with a large sum of money and (spoiler alert for a film released almost twenty years ago) unless you’re Bill Paxton you’ll probably end up dead.
Image: Tony Webster
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