The Long-Term Real Interest Rate For Social Security
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Overview: This paper published by U.S. Department of the Treasury considers the Social Security real interest rate, examining historical interest rates and estimates derived from Treasury inflation-indexed securities. The paper demonstrates that historical experience with nominal rates of return and realized inflation back through 1870 results in a long-term real interest rate just under 3 percent, although in the more recent historical record, rates have been somewhat higher. Forward-looking projections based on inflation-indexed Treasuries for the past three years have averaged about 2.8 percent.