Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



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.


lifecycle saving, retirement plan, annuity, longevity, delayed claiming, household finance

JEL Code

G11, G22, D14, D91

Working Paper Number



We acknowledge research support from the TIAA Institute as well as funding provided by the German Investment and Asset Management Association (BVI) and the Pension Research Council/Boettner Center at The Wharton School of the University of Pennsylvania.

Copyright/Permission Statement

Opinions and any errors are solely those of the authors and not those of any individuals cited or any institutions with which the authors are affiliated. ©2023 Horneff, Maurer, and Mitchell


The authors are grateful for comments from John Ameriks, Mark Iwry, Jake Lund, and Richard Shea, and for participants at Goethe University’s ICIR Conference on “Private and Social Insurance Implications of Demographic Change.”

Included in

Economics Commons



Date Posted: 11 January 2023