NBER

Daniel Liebler

Goethe University Frankfurt
Finance Department
Theodor-W. Adorno Platz 3
60323 Frankfurt am Main
Germany
Tel: +49 69 798 33657
Fax: +49 69 798 763 33657

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Goethe University

NBER Working Papers and Publications

October 2019Implications of Money-Back Guarantees for Individual Retirement Accounts: Protection Then and Now
with Vanya Horneff, Raimond Maurer, Olivia S. Mitchell: w26406
In the wake of the financial crisis and continued volatility in international capital markets, there is growing interest in mechanisms that can protect people against retirement account volatility. This paper explores the consequences for savers’ wellbeing of implementing market-based retirement account guarantees, using a life cycle consumption and portfolio choice model where investors have access to stocks, bonds, and tax-qualified retirement accounts. We evaluate the case of German Riester plans adopted in 2002, an individual retirement account produce that includes embedded mandatory money-back guarantees. These guarantees influenced participant consumption, saving, and investment behavior in the higher interest rate environment of that era, and they have even larger impacts in a low-...

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