Putting the pension back in 401(k) retirement plans : optimal versus default longevity income annuities
- A recent US Treasury regulation allowed deferred longevity income annuities to be included in pension plan menus as a default payout solution, yet little research has investigated whether more people should convert some of the $15 trillion they hold in employer-based defined contribution plans into lifelong income streams. We investigate this innovation using a calibrated lifecycle consumption and portfolio choice model embodying realistic institutional considerations. Our welfare analysis shows that defaulting a small portion of retirees’ 401(k) assets (over a threshold) is an attractive way to enhance retirement security, enhancing welfare by up to 20% of retiree plan accruals.
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| Author: | Vanya HorneffGND, Raimond MaurerORCiDGND, Olivia S. MitchellORCiDGND |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-479692 |
| URL: | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3289916 |
| Parent Title (English): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 607 |
| Series (Serial Number): | CFS working paper series (607) |
| Publisher: | Center for Financial Studies |
| Place of publication: | Frankfurt, M. |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2018 |
| Year of first Publication: | 2018 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2018/11/29 |
| Tag: | 401(k) plan; annuity; household finance; life cycle saving; longevity risk; retirement |
| Issue: | September 9, 2018 |
| Page Number: | 43 |
| HeBIS-PPN: | 439817080 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
