Fixed and Variable Longevity Annuities in Defined Contribution Plans: Optimal Retirement Portfolios Taking Social Security into Account / Vanya Horneff, Raimond Maurer, Olivia S. Mitchell.

Format:

Book

Author/Creator:

Horneff, Vanya.

Contributor:

National Bureau of Economic Research.

Maurer, Raimond.

Mitchell, Olivia S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w30853.

NBER working paper series no. w30853

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

This paper investigates retirees' optimal purchases of fixed and variable longevity income annuities using their defined contribution (DC) plan assets and given their expected Social Security benefits. As an alternative, we also evaluate using plan assets to boost Social Security benefits through delayed claiming. We determine that including deferred income annuities in DC accounts is welfare enhancing for all sex/education groups examined. We also show that providing access to well-designed variable deferred annuities with some equity exposure further enhances retiree wellbeing, compared to having access only to fixed annuities. Nevertheless, for the least educated, delaying claiming Social Security is preferred, whereas the most educated benefit more from using accumulated DC plan assets to purchase deferred annuities.

Notes:

Print version record

January 2023.