In this essay, I examine at length Peter Diamond's arguments for Social Security as it exists currently. An excerpt:
I doubt that elderly people who maintain their assets in lump sum format rather than as annuities are as irrational as Diamond and others suggest. In the real world, the elderly face many more sources of uncertainty than just their date of death. For most other sources of uncertainty, a lump sum provides better protection than an annuity.
For example, take the risk of a sudden jump in expenses, due to a medical problem or other crisis. If you have a lump sum, you can handle the spike in cash needs without having to take out a loan.