By Frank James

To most people, the $2.5 million the 68-year old Ruth Madoff gets to keep after agreeing to give up the rest of the billions of dollars in tainted assets she shared with convicted Ponzi scam artist husband Bernie, sounds like a lot of money.

And it is. Brett Arends of The Online Wall Street Journal estimates she'll have income of $125,000 a year to live on assuming she lives to 100.

As Arends writes, there are still some unknowns. An excerpt:

The first thing to note is that the cash doesn't come completely free and clear. She may still face claims from the Securities & Exchange Commission, the Securities Investor Protection Corporation, and the trustees liquidating her husband's business and estate. It is also unclear how much Social Security she will have to live on as well.

Another assumption has to be that her children won't be much financial help to her since two sons worked for the their father's defunct firm.

Back to the $125,000 a year, which would place her comfortably in the top decile when it comes to household income in the U.S. But she'll obviously not be living in the style she had become accustomed to.

Another Arends excerpt:

That's a pretty good income. It's a lot more than many of her husband's ruined victims will have. But it will hardly support her past lifestyle. Mr. and Mrs. Madoff, according to court papers, owned homes in Manhattan, Montauk, N.Y., and Palm Beach, Fla., along with millions of dollars in furniture, art, furs, and the like.


Sounds like she's going to have to do, on a bigger scale, what a lot of Americans are doing right now: Downsize.


If Ruth Madoff spends a third of her $125,000 a year on accommodation, that will come to about $3,500 a month -- enough perhaps for a (modest) two bedroom in Manhattan, but nothing glamorous. It will rent more in Florida. Especially if she moves inland from Palm Beach -- to somewhere like Sunrise.


The good news? There's an Ikea nearby. And lots of factory outlets. And in Florida she will be able to survive without her $36,000 Russian sable coat.

The obvious irony of all this is that while her circumstances are greatly reduced, they're not nearly as low as many of her husband's victims, for example, Allan Goldstein, 76, who talked with Scott Simon of Weekend Edition Saturday who, with his wife, is living with his kids.

That's an outcome that will probably strike many people as unfair.

12:35 - June 29, 2009