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.
Author: | Vanya HorneffGND, Raimond MaurerORCiDGND, Olivia S. MitchellORCiDGND |
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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 |