income replacement rates

Income replacement rates measure the percentage of a person's working income that a benefit (like a pension or Social Security) provides after retirement or in case of disability. For example, if you earned $50,000 annually and your retirement benefit is $30,000, the replacement rate is 60%. This helps assess how effectively the benefit maintains your standard of living when you're no longer earning your full paycheck. Higher replacement rates mean greater income stability in retirement or during disability, while lower rates indicate a significant income gap that might need additional planning or savings.