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Income Replacement and The Life Cycle Model
Andrew G. Biggs, resident scholar at the American Enterprise Institute (AEI), takes a look at how retirement income replacement rates are calculated according to the Social Security Administration’s Office of the Chief Actuary (SSA OACT). His analysis points out a bit of a disconnect between these replacement rate calculations and “The Life Cycle Model” (the theory “that a household’s consumption at any given time is determined not so much by its current income as by the total income available to the household over its lifetime.”) Read his article, posted on www.aei.org here…