The Effects of Alternative Demographic and Economic Assumptions on MINT Simulations: A Sensitivity Analysis
Research and Statistics Note No. 2014-03 (released April 2014)
by Patrick J. Purcell and Dave Shoffner
The Social Security Administration's (SSA's) Modeling Income in the Near Term (MINT) estimates income/wealth of future retirees. Estimates are based on demographic information from the Survey of Income and Program Participation: individual earnings histories and projections of interest rates, wage growth, mortality rates, and disability rates. Historically, MINT simulations were based exclusively on SSA's Office of the Chief Actuary's (OCACT's) intermediate-cost projections of key demographic/economic variables. The authors present the results of a sensitivity analysis in which they ran MINT using OCACT's low-cost/high-cost projections of mortality and disability trends. Those simulations estimated characteristics of the population aged 65 or older in 2040 under alternative projections of mortality/disability trends. The authors then describe simulations in which future real rates of return on stocks held in retirement accounts differ from the historical mean real rate of return used in baseline simulations. Sensitivity analyses can help MINT users choose model parameters with the greatest impact on simulation results.