RSSA Roadmap Economic Default Settings

Economic Default Settings

As of Friday, July 26, 2024

The RSSA Roadmap utilizes three economic settings to estimate future benefits. The Default Settings and Assumptions can be accessed via the Settings tab of the RSSA Roadmap Dashboard.   They are:

·        Inflation Rate

·        Nominal Rate of Return

·        Real Rate of Return

Overview

The RSSA Roadmap Economic Default Settings and Assumptions follow a commonly used methodology to determine the real rate of return or the rate to calculate the net present value (NPV) of future Social Security benefits.

The methodology uses a financial equation to calculate the default long-term inflation projection by subtracting the 30-year Treasury Inflation-Protected Securities (TIPS) from the 30-year nominal Treasury bond yield.

These figures are reported monthly by the FederalGovernment and can be located using the following link: https://www.federalreserve.gov/datadownload/Build.aspx?rel=H15

Our goal is to calculate our Economic Default Settings and Assumptions on a monthly basis with adjustments being made twice a year based on January and July results.   Additional adjustments may be warranted from time to time based on the recommendation of RSSA’s economic advisors.

Users may override the Economic Default Settings and Assumptions, but this is not recommended unless they completely understand the impacts of economic influences and the affects, they may have on results. Additionally, lifetime benefit results will change based on these settings.

Calculated Inflation and Real Rate of Return

Month             Statistic           Name                                                                                      Value      Rounded

6/2024             TCMNOM      30 Year Constant Maturity (Nominal Rate of Return)            4.44%     4.50%

6/2024             TCMII              30 Year TIPS                                                                              2.17%     2.25%

Inflation Calculation (Step-by-step):

( ( 1 + ”30 Year Constant Maturity” Rounded ) / ( 1+ ”30 Year TIPS” Rounded ) - 1 )

( ( 1 + 4.50% ) / ( 1 + 2.25% ) - 1 )

( 104.50 / 102.25 ) - 1

1.0222- 1       

2.22%  Rounded to the nearest 0.25%

2.25% Rounded Inflation Rate

Real Rate of Return Calculation (Step-by-step):

( ( 1 + ”30 Year Constant Maturity or Nominal Rate of Return ) / ( 1 + ”Inflation” Rounded ) - 1 )

( ( 1 + 4.50% ) / ( 1 + 2.25% ) - 1 )

( 104.50   /   102.25 ) - 1

1.0220- 1       

2.20%  Real Rate of Return

The RSSA Roadmap® Economic Default Settings and Assumptions may affect lifetime benefit amounts and the Primary Insurance Amount (PIA) if future earnings are projected.

If you have any questions regarding these calculationsor the methodology used, please contact us using the Support tab or https://rssa.com/roadmap-support/.