Horneff, VanyaMaurer, RaimondMitchell, Olivia S2023-05-232023-05-232023-01-132019-02-13https://repository.upenn.edu/handle/20.500.14332/43669Most retirees take payouts from their defined contribution pensions as lump sums, but the US Treasury recently moved to encourage firms and individuals to convert some of the $15 trillion in plan balances into longevity income annuities paying lifetime benefits from age 85 onward. We evaluate the welfare implications of this reform using a calibrated lifecycle consumption and portfolio choice model embodying realistic institutional considerations. We show that defaulting a fixed fraction of workers’ 401(k) assets over a dollar threshold is a cost-effective and appealing way to enhance retirement security, enhancing welfare by up to 20% of retiree plan accruals.Opinions and any errors are solely those of the authors and not of the institutions with which the authors are affiliated. ©2017 Horneff, Maurer, and MitchellG11, G22, D14, D91life cycle saving; household financelongevity risk; 401(k) plans; retirementEconomicsWorking Paper