The Congressional Budget Office has issued a comprehensive look at measuring “replacement rates” for Social Security, a measure that compares Social Security benefits to pre-retirement earnings and serves as an indicator of the adequacy of retirement benefits.
CBO’s paper might be a bit of a deep dive for those who haven’t looked at the issue before, and it doesn’t come out with a clear recommendation. But readers will at the least come to understand that how you measure retirement income adequacy is at least as important as the earnings and benefits that you measure.
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1 comment:
Replacement rate is one thing. Payable benefit are an entirely different animal. Now what is the cost of those replacement rates at 10.6% SS-OASI tax rate based on US Treasury Rates?
You can calculate and have a high replacement rate, but the true test is cost rate and their corresponding replacement rat. Or another way to look at it is based on the replacement rate what is the actuarial cost rate?
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