Add inflation indexing for Social Security and consumption #2
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- Added consumption_inflation_rate parameter (default 2.5% matching C-CPI-U) - Consumption now grows annually with inflation over simulation period - Created inflation.py module with utilities for inflation calculations - Support for actual C-CPI-U data from PolicyEngine-US (when available) - Real return calculation using Fisher equation This ensures retirees' consumption keeps pace with cost of living increases, making simulations more realistic. The 2.5% default matches long-term C-CPI-U averages.
- Added social_security_cola_rate parameter (default 2.3% based on CPI-W) - Social Security benefits now increase annually with COLA - Spouse Social Security benefits also receive COLA adjustments - Pensions remain flat (most private pensions don't have COLA) - Documentation explains difference between CPI-W (SS COLA) and C-CPI-U (consumption) This ensures Social Security keeps pace with inflation as it does in reality, using the CPI-W index that SSA actually uses for COLA calculations. The 2.3% default matches historical CPI-W averages.
- Replaced user-adjustable inflation rates with actual projections - SSA COLA uses actual SSA uprating schedule (varies 1.9%-2.5% through 2034) - Consumption uses actual C-CPI-U projections (around 2.0% annually) - Hardcoded values from PolicyEngine-US for reliability - These match CBO projections and ensure consistency with tax calculations This provides more accurate simulations using the same inflation projections that drive tax bracket adjustments and Social Security COLAs in reality.
…2100 Filed issue to track replacing hardcoded inflation values with direct PolicyEngine-US API calls once PR #6384 is merged, which extends SSA uprating and C-CPI-U projections to 2100. Currently hardcoded because simulations often need 30+ year projections but PolicyEngine-US only has values through 2035.
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Summary
This PR adds proper inflation adjustment for consumption and Social Security benefits using actual CBO projections from PolicyEngine-US.
Changes
Implementation Details
cola.pymodule with functions to get inflation factorspolicyengine_us/parameters/gov/ssa/uprating.yamlpolicyengine_us/parameters/gov/bls/cpi/c_cpi_u.yamlTesting
Follow-up Work
Once PolicyEngine/policyengine-us#6384 is merged, replace hardcoded values with direct API calls to PolicyEngine-US (see
issues/use_policyengine_projections.mdfor implementation plan).🤖 Generated with Claude Code