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An annuity is a financial instrument you can buy on the private market today. You pay the issuer (a bank or an insurance company) a flat amount of money in a one-time payment. In return, you receive a guaranteed annual amount until you die. If you die quickly, the issuing company pockets the difference. If you live for many years, the issuer has to grit its teeth and keep paying you, taking a loss if necessary. Therefore, the price of the annuity is geared to your life expectancy. The older you are, the less you'll pay.
Bush hasn't backed a specific plan, but the trial balloon is for something like this: When you retire, you'll still get a guaranteed benefit from "regular" Social Security, although, if you've chosen to divert any money into a private account, your guaranteed benefit will be less than under current law. The government then calculates how much more yearly income you need to avoid poverty. An annuity that will provide that much is purchased from the accumulated amount in your private account. That way, you can't spend yourself into poverty. The money that's yours to do with as you please, and that you can pass on to your heirs, is only whatever is left in your private account (if anything) after the price of the annuity is subtracted.
Therefore, quite a few people will find that this blather about "an ownership society" rings hollow. They'll actually have little or nothing to pass on to their heirs. This will be especially true of people who had lower earnings during their working lives, because they will have paid in less to Social Security and will therefore have a lower guaranteed benefit.
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