Working paper
Registered Index-Linked Annuities in Qualified Retirement Plans
TIAA Institute Research Paper Series, Vol.No. 202
SSRN
11/16/2023
DOI: 10.2139/ssrn.4635032
Abstract
Many Americans continue to be financially underprepared for their retirement. Automatic enrollment in employer-sponsored qualified retirement plans (QRPs) has helped, but the target date funds commonly used as default investment choices have their own problems. We propose a target-date version of the recently developed Registered Index-Linked Annuities and we suggest that these “TD-RILAs” provide a more cost-effective and more transparent way to attain a diversified equity exposure, the level of which decreases over time. A theoretical analysis explores the optimal structure of TD-RILAs and their comparison to target date funds from an investor’s perspective. A large-scale lab experiment sheds further light on investors’ preferences, focusing on the importance of product transparency, the employer’s default investment choice, and the role of information in improving financial literacy. We conclude that TD-RILAs would be a suitable addition to QRPs and may even rival target date funds as Qualified Default Investment Alternatives.
Details
- Title: Subtitle
- Registered Index-Linked Annuities in Qualified Retirement Plans
- Creators
- Cameron Ellis - University of IowaThorsten Moenig - Temple CollegeJacqueline Volkman Wise - Saint Joseph's University
- Resource Type
- Working paper
- Publication Details
- TIAA Institute Research Paper Series, Vol.No. 202
- Publisher
- SSRN
- DOI
- 10.2139/ssrn.4635032
- Number of pages
- 140 pages
- Language
- English
- Date posted
- 11/16/2023
- Date updated
- 11/16/2023
- Academic Unit
- Finance
- Record Identifier
- 9984539756302771
Metrics
1 Record Views