Social Security Retirement Estimator

A new Social Security retirement benefit estimator just went online this week at ssa.gov .

For my students, none may yet have the 40 credits (a credit is, essentially, a calendar quarter of work), or 10 years of work, necessary for retirement benefits -- so this estimator may not, for them, be personally usable.

Retirement must seem a long way away for my students... Oh, was I EVER that young???

- Rick

"Inflation" Doesn't Begin to Describe It

Per this CNN article, Zimbabwe has just introduced $100 billion banknotes (each of which is worth one U.S. dollar). According to the article, the Zimbabwe inflation rate is now at 2.2 million percent.

To put $100 billion in some perspective... per the U.S. Federal Reserve, the entire U.S. M1 money supply is less than $1.4 trillion...

- Rick

Retirement Issues - Post 4

Here's a paper, titled "Top Ten Myths of Social Security," by Prof. Richard Kaplan of the University of Illinois (hurrah!). The abstract quickly summarizes the ten myths - the body of the paper elaborates on each.

- Rick

Retirement Issues - Part 3

Robert Myers is one of the best-known names in the history of U.S. actuarial science. He was, for 23 years, the Chief Actuary of the Social Security Administration (SSA), and spent basically his entire career in government-oriented actuarial functions.

On the SSA website, there is the transcript of an Oral History Interview with Myers. It is rather long - but also rather interesting, and worth dipping into and scanning if you have some time. There are some references to actuarial history, but, more importantly, some enlightening discussion of how some of the key Social Security issues were originally addressed and subsequently developed. Issues such as the retirement test, pay-as-you-go funding philosophy, etc. - very interesting to hear the perspective of someone who was there.

By the way, if you've never seen it, check out the SSA Actuarial Resources page. Lots of good references, including to the annual Trustees Report, actuarial projections, etc. A great resource for those interested in retirement and pension issues.

- Rick

Retirement Issues - Post 2

From the Economic Policy Institute, an article entitled "How economic conditions affect retirement decisions" - specifically, the relationship between the level of unemployment and early retirement decisions. Some interesting statistical observations over the last three decades. Of course, the factors underlying movements in both these measures are critical to understand...

- Rick

Retirement Issues - Post 1

Recently, in Slate, there appeared a short article by Tim Harford suggesting that, contrary to traditional wisdom, most of us seem to be doing OK with respect to personally saving enough for retirement. An interesting read. Of course, this whole important area has a vast number of interrelated factors entering into it...

- Rick

The Texas Medical Malpractice Environment

From today's Wall Street Journal opinion page: an apparent medical malpractice tort reform success story.

- Rick

New Study on Life Expectancies

Here's a New York Times article on a recent government study on life expectancies, which reportedly finds that the gap between the life expectancies of richer versus poorer Americans has increased over the last couple of decades. This certainly has potential implications for several areas of actuarial science: life and mortality analyses, pension valuations, etc.

As always, much of life expectancy dynamics is a function of a few key mortality issues -- e.g., note the references to differential infant mortality.

- Rick

What's It All About?

An article from The New York Times explains the credit crisis in relatively simple terms. A decent place to start if you're just now trying to figure out what's goin' on.

- Rick

Is Black-Scholes a Black Hole?

From Portfolio.com, an article about the potential problems with the underlying assumptions and use of the ubiquitous Black-Scholes model. Fits right in with what we discussed in the UIUC graduate minicourse in Financial Mathematics earlier this semester: real-world distributions tend to have fatter tails than normal distributions.

- Rick

Insurers uber Bankers!

An Economist article suggests the possibility that insurer risk experts -- actuaries -- may have some insights into the management of modeling of risks that could be of use for banks. While that's likely true, of course the influence should optimally go in both directions.

My only problem with the article is the reference to "the green-eyeshade brigade of actuaries ." Many of our eyeshades are actually blue...

- Rick

Is the Economy "Predictable"?

Although "predictable" is often the word used (or at least implied) in such queries, perhaps the question "Is the Economy 'Modelable' " would be more appropriate.

Here's a recent WSJ opinion piece by Ed Phelps, 2006 Economics Nobel prizewinner, titled "Our Uncertain Economy." Lots of comments and references here which are relevant to modeling the economy and financial markets -- and to some recent UIUC classes. Earlier this semester, in our Financial Mathematics graduate minicourse (and, more briefly, in Math 476 last semester), we talked about mean-reverting stochastic process models. Phelps's references to the "natural" levels of interest rates and unemployment, and the difficulty of identify those values, are particularly germane to the parametrization of such models.

- Rick