Retirement Forecasting:

Evaluation of Models Shows Need for Information on Forecast Accuracy

PEMD-87-6A: Published: Dec 31, 1986. Publicly Released: Dec 31, 1986.

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GAO reviewed 71 federal retirement models that forecast: (1) federal retirement program costs; (2) the retirement behavior of civilian workers; and (3) the levels and distribution of retirement income.

GAO found that: (1) documented models exist for all three retirement outcomes and the efforts to develop and maintain them are considerable; (2) the amount, completeness, and content of the documentation varies between models; (3) retirement decision models have the most complete documentation, while program cost models have the least; (4) maintenance occurs regularly for program cost models, infrequently for retirement decision models, and periodically for retirement income models; (5) for some models, a lapse or discontinuation of essential data sets means that projections are based on antiquated data; (6) there is a lack of published information on forecasting accuracy for most models and little evidence of serious attempts at validation; and (7) the models it reviewed lacked quality and credibility evaluations. GAO believes that agencies need more systematic information on how developers validate their models and the results of those validation efforts.

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