The Social Security calculator assumes the following: all workers will retire at age 65; average income is wage indexed to 2005 dollars; Initially, the maximum contribution to the individual accounts would be set at $1,000, but this limit increases annually by $100 a year until workers could contribute up to 4 percent of their taxable earnings into the account.
The benefit reductions calculated on this website are in 2005 dollars and are based on the Congressional Budget Offices economic assumptions. This assumes price indexing of the initial benefit, plus a risk-adjusted rate of return of 3.0 percent above inflation on the private account This is the risk-adjusted real rate of return used by CBO in their analysis of Model 2 of the President Bushs Commission to Strengthen Social Security. Several recent studies, including one by the investment firm Goldman Sachs, have confirmed that differences in returns between personal accounts and the current system disappear once transition costs and increased risk are taken into account.
