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Measuring the adequacy of retirement incomes

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Author
Colin Brown
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Conference Paper 95/1

Paper presented at the Colloquium of Superannuation Researchers, University of Melbourne, July 1995.

This paper discusses measures of the adequacy of retirement incomes developed by the Retirement Income Modelling Task Force and applies those measures to a number of alternative retirement income streams. It concludes that the most appropriate measure is the replacement rate of pre-retirement consumption expenditure. This is because it measures most directly how well people are able to maintain their pre-retirement living standards into retirement. It also concludes that people will be able to achieve a better retirement income where they draw down on the capital of their investments rather than seeking to live on the earnings of those investments alone.