Summary: The private annuities market would likely be able to provide annuities for individual accounts in a reformed Social Security system, but their structuring would significantly affect retirees' income. Requiring workers to buy annuities with their individual account balances would help preserve their retirement income but would also expose them to risks and costs in retirement that they do not currently face. Some options that would mitigate the effects of various costs on annuity payments would require limiting retirees' payout choices. In a reformed Social Security system in which individuals were required to buy annuities, they would need to fully understand the factors affecting their annuity income and its protection. The federal government would need to play some role in ensuring that insurance markets worked efficiently or in providing annuities if the private market failed to do so. To protect annuitants and ensure their equal treatment, the government might have to establish uniform guaranty protections for them and standardized solvency requirements for insurance companies. Policymakers would need to balance the states' longstanding authority to regulate insurance markets with the desire for uniform protections for the annuitants.
