Replacement rates - AEI
You may have heard financial experts use the words- replacement rates -but what does that mean? Replacement rates are common and useful tools by which individuals and policy analysts plan for retirement by assessing the sufficiency of Social Security benefits and overall retirement income. A famous example of a replacement rate is the one used by the Social Security Administration, which states that Social Security replaces about 40 percent of the worker’s pre-retirement earnings. But is that correct? Andrew G. Biggs, a senior fellow at the American Enterprise Institute (AEI), discusses replacement rates and the retirement crisis. Read Mr. Biggs’ paper here…
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