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May 17, 2005

Fed's Gramlich questions Social Security actuaries

Federal Reserve Board Governor Edward Gramlich said on Friday the actuaries of the Social Security program were overly optimistic on the likely future returns of stocks and bonds.

"Given the GDP assumptions that the trustees are using ... I think 4.5 (percent real return on stocks) and 1.5 (percent real return on bonds) would make sense to me," Gramlich told a forum on Social Security sponsored by the National Academy of Social Insurance. In contrast, the Social Security actuaries assume a 6.5 percent return on equities and a 3 percent return on bonds.

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Posted by Tom Troceen