Publication Date



[Excerpt] Part of DOL’s mission is to promote the retirement security of America’s workers, a goal that has become increasingly challenging. One tool for assessing the adequacy of retirement income is the replacement rate. However, recommendations for the replacement rate that a household should target vary widely, in part because of the diverse underlying assumptions used to develop the rates. GAO was asked to review what consumption in retirement looks like and how target replacement rates are developed.

GAO examined (1) whether and how spending patterns vary by age, (2) key factors used to develop target replacement rates, and (3) the usefulness of information on such rates provided by DOL. GAO analyzed data from the BLS’s 2013 Consumer Expenditure Survey, the most recent available; analyzed 59 articles and reports that discussed how to develop, calculate, or evaluate replacement rates; collected non-generalizable information from 14 retirement services firms and financial planners recommended by researchers and actuaries who have studied replacement rates; and reviewed DOL materials and interviewed officials.


Suggested Citation
U.S. Government Accountability Office. (2016). Retirement security: Better information on income replacement rates needed to help workers plan for retirement (GAO 16-242). Washington, DC: Author.