CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

Updated Long-Term Projections for

Social Security

AUGUST 2008

1985 1995 2005 2015 2025 2035 2045 2055 2065 2075

0

3

4

5

6

7

8

Potential Range of Scheduled 

Social Security Outlays and Revenues

Percentage of Gross Domestic Product

Actual Projected

Outlays

Revenues
Pub. No. 3174
The Congress of the United States O Congressional Budget Office

A

PAPER

CBO

Updated Long-Term Projections for 

Social Security

August 2008
Notes

All of the years referred to in this paper are calendar years.

Numbers in the text and tables may not add up to totals because of rounding.
Preface

This Congressional Budget Office (CBO) paper updates CBO’s previously published 

long-term projections of the Social Security program’s finances. The projections cover the 

75-year period spanning 2008 to 2082. The paper was prepared by Noah Meyerson, Jonathan 

Schwabish, Michael Simpson, and Julie Topoleski of CBO’s Long-Term Modeling Division 

under the supervision of Joyce Manchester. Charles Pineles-Mark provided computer programming support.

Leah Mazade edited the paper, and Kate Kelly proofread it. Maureen Costantino designed the 

cover and prepared the paper for publication. Lenny Skutnik printed copies of the paper, 

Linda Schimmel handled the print distribution, and Simone Thomas produced the electronic 

version for CBO’s Web site.

Peter R. Orszag

Director

August 2008

Contents

The Finances of the Social Security Program 2

The Uncertainty of Projections of Social Security’s Finances 3

Summarized Outlays and Revenues 4

Trust Fund Ratios 4

The Distribution of Social Security Taxes and Benefits 5

First-Year Benefits 5

First-Year Replacement Rates 5

Lifetime Benefits 6

Lifetime Payroll Taxes and Lifetime Benefits for Workers, 

Dependents, and Survivors 6

Assumptions Used in CBO’s Analysis 7

Appendix A: Changes in CBO’s Long-Term Social Security Projections 

Since December 2007 31

Appendix B: Differences Between CBO’s Long-Term Projections of 

Social Security’s Finances and Those of the Social Security Trustees 33

Box

1. Comparing Revenues from Income Taxes on Benefits Under 

Two Long-Term Fiscal Scenarios 3

Figures

1. Potential Ranges of Social Security Outlays and Revenues as a 

Percentage of GDP Under the Scheduled Benefits Scenario, 

1985 to 2082 9

2. Social Security Outlays as a Percentage of Gross Domestic Product 

Under the Scheduled Benefits and Payable Benefits Scenarios, 

1985 to 2082 10

3. Potential Range of the Social Security Trust Fund Ratio Under the 

Scheduled Benefits Scenario, 1985 to 2082 11

4. Probability That the Social Security Trust Funds Will Have Been 

Exhausted, by Year, 2008 to 2082 12

5. Median First-Year Social Security Retirement Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort 13
VI UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

6. Median First-Year Social Security Disability Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort 14

7. Median Replacement Rates for Retired-Worker Social Security 

Beneficiaries Under the Scheduled Benefits and Payable Benefits 

Scenarios, by Birth Cohort 15

8. Median Replacement Rates for Disabled-Worker Social Security 

Beneficiaries Under the Scheduled Benefits and Payable Benefits 

Scenarios, by Birth Cohort 16

9. Median Lifetime Social Security Retirement Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort 17

10. Median Lifetime Social Security Disability Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort 18

11. Potential Range of Lifetime Social Security Payroll Taxes Under the 

Scheduled Benefits Scenario, by Birth Cohort and Lifetime Earnings 19

12. Potential Range of Lifetime Social Security Benefits Under the Scheduled 

Benefits and Payable Benefits Scenarios, by Birth Cohort and 

Lifetime Earnings 20

13. Potential Range of the Ratio of Lifetime Social Security Benefits to Lifetime 

Taxes Under the Scheduled Benefits and Payable Benefits Scenarios, by 

Birth Cohort and Lifetime Earnings 21

Tables

1. Social Security Revenues and Outlays as a Percentage of Gross Domestic 

Product in Selected Years Under the Scheduled Benefits Scenario 22

2. Summarized Social Security Revenues, Outlays, and Surpluses or 

Deficits for Selected Periods Under the Scheduled Benefits Scenario 23

3. Probability That Social Security Outlays Will Exceed Revenues by 

Specified Percentages in Selected Years Under the 

Scheduled Benefits Scenario 24

4. Social Security Benefits Received by Retired Workers Under the 

Scheduled and Payable Benefits Scenarios, by Birth Cohort, 

Lifetime Earnings Level, and Sex 25

5. Social Security Benefits Received by Disabled Workers Under the 

Scheduled and Payable Benefits Scenarios, by Birth Cohort and 

Age of Onset of Disability 28

6. Probability That the Social Security Trust Funds Will Be Sufficient to 

Pay Specified Percentages of Scheduled Benefits, by Birth Cohort 29

Figures (Continued)
Updated Long-Term Projections for 

Social Security

The Congressional Budget Office (CBO) regularly 

prepares long-term projections of the future paths of revenues and outlays for the Social Security program.1 This 

latest report presents projections for the 75-year period 

from 2008 through 2082. (All years referred to in this 

report are calendar years.) The projections differ somewhat from earlier results because of newly available programmatic and economic data, updated assumptions 

about future demographic and economic trends, and 

improvements in CBO’s models. Such long-term projections are necessarily uncertain; nevertheless, the general 

conclusions presented here hold true under a wide range 

of assumptions. 

Today, Social Security’s revenues each year are greater 

than its outlays, but as the baby-boom generation (people 

born between 1946 and 1964) continues to age, growth 

in the number of Social Security beneficiaries will accelerate, and outlays will grow substantially faster than revenues. CBO projects that outlays will first exceed revenues 

in 2019 and that the Social Security trust funds will be 

exhausted in 2049.2

 If the law remains unchanged, the 

Social Security Administration (SSA) will then no longer 

have the legal authority to pay full benefits.

In this analysis, CBO presents its projections of future 

Social Security benefits under two scenarios.3

 In the “payable benefits” scenario, outlays include only those benefits that SSA will have the legal authority to pay under 

current law. That scenario incorporates the assumption 

that once the Social Security trust funds are exhausted, 

SSA will reduce all benefits by a percentage that varies 

each year, so that the program’s total outlays equal its 

total available revenues. CBO assumes that such a reduction will apply to all benefits—those paid to both existing 

and new beneficiaries. In the other scenario, termed the 

“scheduled benefits” scenario, outlays include the full 

benefits as calculated under current law, regardless of the 

amounts available in the trust funds. 

CBO’s projections indicate that future Social Security 

beneficiaries will receive larger benefits in retirement—

and will have paid higher payroll taxes—than current 

beneficiaries do, even after adjustments have been made 

for inflation and even if the scheduled payments are 

reduced because the trust funds are exhausted. However, 

CBO estimates that under both scenarios, those benefits 

1. CBO first released long-term Social Security projections in 

The Outlook for Social Security (June 2004). It published updated 

projections in March 2005 and June 2006 and in December 

2007, as part of The Long-Term Budget Outlook. Those projections 

will now be updated annually. Appendix A reviews the changes in 

CBO’s projections since the end of 2007, and Appendix B presents the differences between CBO’s current projections and the 

2008 projections of the Social Security trustees (formally, the 

Board of Trustees of the Federal Old-Age and Survivors Insurance 

and Federal Disability Insurance Trust Funds).

2. The Social Security trust funds (the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund) serve 

mainly as an accounting mechanism to track revenues and outlays 

for Social Security. The trust funds’ balance summarizes the 

cumulative accounting history of the Social Security program in a 

single number, because the balance equals the present value of all 

past revenues minus the present value of all past outlays. The 

funds’ balance also represents the total amount that the government is legally authorized to spend on Social Security. See Congressional Budget Office, Federal Debt and the Commitments of 

Federal Trust Funds, Issue Brief (October 24, 2002; revised May 6, 

2003).

3. Those scenarios are distinct from the extended-baseline scenario 

and the alternative fiscal scenario presented in The Long-Term 

Budget Outlook. In this report, the assumptions embodied in the 

payable benefits and scheduled benefits scenarios are consistent 

with those underlying the extended-baseline scenario, which 

adheres closely to current law.
2 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

will represent a smaller percentage of beneficiaries’ preretirement earnings than is the case now. 

The Finances of the Social Security 

Program 

The Social Security system is currently running an annual 

surplus. In 2007, the program’s total outlays (benefits and 

administrative costs) measured relative to the size of the 

economy equaled 4.3 percent of gross domestic product 

(GDP), whereas the program’s dedicated revenues 

equaled 4.9 percent of GDP. (Dedicated revenues comprise Social Security payroll taxes and the portion of 

income taxes on benefits that is credited to the Social 

Security trust funds. Such revenues exclude interest credited to the funds.) 

As the baby boomers retire, the number of Social Security 

beneficiaries will grow considerably, and absent legislative 

changes, spending for the program will climb to nearly 

6 percent of GDP in 2035, CBO projects. Spending will 

decline slightly over the following 20 years, to about 

5.6 percent of GDP, as an increasing number of baby 

boomers die. However, demographers generally expect 

life expectancy to continue to increase, and scheduled 

Social Security outlays are projected to resume their 

upward trajectory after 2055, reaching 5.8 percent of 

GDP in 2082.

The amount of dedicated revenues credited to the Social 

Security trust funds, however, is likely to shrink somewhat as a share of GDP, from 4.9 percent of GDP today 

to 4.7 percent in 2082. Social Security benefits are 

funded primarily through payroll taxes, with a small portion of revenues derived from income taxes on the benefits of higher-income beneficiaries. CBO projects that 

although total earnings will remain a nearly constant 

share of GDP, taxable earnings will decline as a share of 

GDP because a growing share of compensation will be 

paid in the form of nontaxable health benefits. Thus, in 

the absence of changes to the program, revenues from 

payroll taxes will decline as a share of GDP over the 

75-year projection period, falling from 4.8 percent in 

2008 to 4.2 percent in 2082.

In contrast, revenues credited to the Social Security trust 

funds from taxes on benefits are projected to grow in the 

coming decades. Under current law, receipts from income 

taxes will increase as a share of the economy because existing reductions in income tax rates expire, more taxpayers 

become subject to the alternative minimum tax, and taxpayers move into higher tax brackets because of economic 

growth.4

 As a result, under current law, the revenues 

credited to the Social Security trust funds from taxes on 

benefits are also projected to increase, from 0.1 percent of 

GDP today to 0.5 percent in 2082. (For projections 

under an alternative assumption about future 

revenues from income taxes on benefits, see Box 1.) 

Nevertheless, total revenues credited to the trust funds are 

projected to decline slightly as a percentage of GDP.

Consequently, CBO projects that beginning in 2019, 

annual outlays for Social Security will exceed the program’s revenues (see Figure 1 on page 9).5

 Even if spending for the program ends up being lower and revenues 

higher than expected, a gap between the program’s 

income and outgo is likely to remain for the indefinite 

future.6

That gap will ultimately eliminate the balances in the 

trust funds and make it impossible, under current law, to 

pay the full amount of scheduled benefits. Payable benefits will equal scheduled benefits until the trust funds are 

exhausted (see Figure 2 on page 10); thereafter, they will 

equal the Social Security program’s revenues. In 2049—

CBO’s projected date for the trust funds’ exhaustion—

revenues will equal only 84 percent of scheduled outlays. 

Thus, payable benefits will be 16 percent lower than 

scheduled benefits. Beginning in about 2070, the gap 

between scheduled and payable benefits will begin to 

grow, and by 2082, CBO projects, payable benefits will 

be 19 percent less than scheduled benefits. 

4. For details, see Chapter 5, “The Long-Term Outlook for Revenues,” in Congressional Budget Office, The Long-Term Budget 

Outlook (December 2007).

5. The data underlying all figures as well as other related projections 

are available in a supplementary data file on CBO’s Web site 

(www.cbo.gov).

6. CBO generally presents outlays and revenues relative to GDP, but 

another common practice is to show them relative to taxable payroll. Those projections are presented in Table W-2 of the supplementary data file.
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 3

CBO

The Uncertainty of Projections of Social Security’s 

Finances

Many of the factors that will affect Social Security’s longterm finances are subject to significant uncertainty, and a 

full exposition of projected finances includes both the 

expected outcomes and the inherent uncertainty surrounding such estimates. CBO therefore calculated 

ranges of possible outcomes associated with its projections for the program. To do that, it used standard statistical techniques to analyze patterns of past variation in 

most of the demographic and economic factors that 

underlie the analysis—for example, fertility and mortality 

rates, interest rates, and the rate of growth of productivity. CBO then ran 500 simulations, each time randomly 

changing the assumed values for those factors to reflect 

the historical variations. Individually, the simulations 

have little meaning, but together, they compose a distribution of possible outcomes.7

For this analysis, CBO displays those distributions of 

outcomes with an 80 percent range of uncertainty—

that is, by CBO’s estimate, there is an 80 percent chance 

that the actual value will fall within that range. For 

example, although CBO projects that Social Security outlays will equal about 5.8 percent of GDP in 2032, its 

Box 1.

Comparing Revenues from Income Taxes on Benefits Under 

Two Long-Term Fiscal Scenarios

In The Long-Term Budget Outlook, published in 

December 2007, the Congressional Budget Office 

(CBO) developed its long-term projections of the 

Social Security program’s finances under two scenarios that incorporated different assumptions about 

future income tax receipts. The first was the so-called 

extended-baseline scenario, which extends CBO’s 

current-law baseline concept and is the basis for the 

projections in this update. (CBO’s 10-year baseline is 

a benchmark for measuring the budgetary effects of 

proposed changes in federal revenues or spending. As 

such, the estimates that make up the baseline largely 

reflect current law.)

The second scenario, an “alternative fiscal scenario,” 

deviates from CBO’s baseline projections even during 

the next 10 years, incorporating some changes in policy that are widely expected to occur and that policymakers have regularly undertaken in the past. Under 

that scenario, none of the currently scheduled 

changes to tax law (for example, the expiration at the 

end of 2010 of the tax changes enacted in 2001 and 

2003) would take effect, and the alternative minimum tax would be indexed to inflation.

CBO’s long-term projections of outlays for the Social 

Security program as well as the revenues the program 

is likely to receive from payroll taxes are identical 

under both the extended-baseline and the alternative 

fiscal scenarios. However, income tax receipts under 

the alternative scenario would be lower than under 

the extended-baseline scenario, as would revenues 

from income taxes on benefits. As a result, projections of Social Security finances are somewhat less 

favorable under the tax assumptions of the alternative 

fiscal scenario. Revenues from the taxation of benefits 

would equal 0.3 percent of GDP in 2082 rather 

than the 0.5 percent projected under the extendedbaseline scenario, CBO estimates. In addition, under 

the alternative fiscal scenario, 75-year summarized 

revenues would be 5.0 percent of GDP or 13.9 percent of taxable payroll, instead of 5.1 percent of 

GDP or 14.2 percent of taxable payroll. The 75-year 

summarized balance (that is, the summarized deficit 

in the Social Security trust funds) under the alternative scenario would be -0.47 percent of GDP or 

-1.30 percent of taxable payroll rather than -0.38 percent of GDP or -1.06 percent of taxable payroll 

under the extended-baseline concept.

7. CBO’s analysis includes effects of the uncertainty of a number of 

assumptions about future economic and demographic trends. 

Uncertainty about fertility rates and productivity growth causes 

the most variation in long-term Social Security projections. For 

more details, see Congressional Budget Office, Quantifying Uncertainty in the Analysis of Long-Term Social Security Projections 

(November 2005), especially pages 29 and 34.
4 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

uncertainty analysis indicates a 10 percent chance that 

outlays will be less than 5.0 percent of GDP in that year 

and a 10 percent chance that they will exceed 6.8 percent 

of GDP (see Table 1 on page 22). In any case, outlays are 

virtually certain to be notably higher than their current 

share of 4.3 percent of GDP. 

Summarized Outlays and Revenues

Long-term projections of annual outlays and revenues 

present the overall magnitude and timing of the budgetary effects of the Social Security program under current 

law. To present the results more succinctly, analysts frequently summarize the program’s scheduled outlays and 

revenues in a single number for a given period (for example, total outlays over 75 years). 

Summarizing outlays or revenues by taking a simple average of projected annual values would be misleading 

because it would not take into account the fact that, even 

after adjustments for inflation, a dollar today is more 

valuable than a dollar in the future. CBO thus summarizes the data by computing the present value of outlays 

or revenues for a given period and dividing that figure by 

the present value of the stream of GDP (or taxable payroll) over that same period.8

 In calculating the summarized measures, CBO makes two other adjustments as 

well. First, it adds the current trust fund balance to summarized revenues to reflect Social Security=s financial history (incorporating the net effect of the program’s past 

annual surpluses and deficits). Second, it adds an additional year’s worth of projected outlays to summarized 

outlays to reflect the goal of having a “cushion” in the 

trust funds at the end of the period being considered. 

In CBO’s projections, Social Security’s 75-year summarized outlays under the scheduled benefits scenario come 

to 5.45 percent of GDP, and summarized revenues 

equal 5.07 percent, resulting in a summarized deficit of 

0.38 percent of GDP—or, when calculated as a share of 

taxable payroll, 1.06 percent (see Table 2 on page 23). In 

other words, CBO projects that if payroll tax rates were 

increased immediately and permanently by 1.06 percentage points—from the current rate of 12.40 percent to 

13.46 percent—then at the end of 2082, the trust fund 

balance would equal projected outlays for 2083.

The 75-year summarized balance, however, may be much 

greater or smaller than -0.38 percent of GDP. In CBO’s 

estimation, there is a 10 percent chance of a deficit of 

more than 0.9 percent of GDP and also about a 10 percent chance that the 75-year summarized balance will be 

positive—that is, a surplus.

For another perspective on Social Security’s finances, 

CBO estimated the probability that total outlays would 

exceed total revenues by a given amount in a particular 

year (see Table 3 on page 24). The likelihood that outlays 

will exceed revenues in 2030 is about 97 percent, CBO 

projects, and there is almost a 50 percent chance that the 

gap will be larger than 1 percentage point of GDP; the 

chance of its being 2 percentage points (or more) of GDP 

is only 6 percent. The probability that outlays will exceed 

revenues is slightly lower after 2035, following the deaths 

of the baby boomers, but it still remains in the vicinity of 

90 percent. The probability of a gap of 2 percentage 

points or more grows in later years, however, reaching 

almost 25 percent by 2080.

Trust Fund Ratios

Another common measure of Social Security’s finances is 

the ratio of the balance in the Social Security trust funds 

to the program’s annual outlays. That calculation indicates how many years’ worth of benefits could be 

financed by a given balance. 

The trust fund ratio for 2008—the balance in the Social 

Security trust funds at the beginning of the year divided 

by projected outlays for the program for that year—

equals 3.6, according to CBO’s estimates. The ratio is 

projected to peak at 4.1 in 2016 and then decline quickly 

(see Figure 3 on page 11). 

CBO has projected that 2049 is the year in which the balance in the trust funds, and thus the trust fund ratio, will 

fall to zero. But, as shown in Figure 3, there is a 10 percent chance that the trust funds will be exhausted in 2034 

or earlier and a greater than 10 percent chance that they 

will not be exhausted before 2082. The negative balances 

shown in Figure 3 for 2050 and beyond represent CBO’s 

estimates of the cumulative amount of scheduled benefits 

that cannot be paid out of the program’s current-law 

8. The present value is a single number that expresses a flow of current and future income (or payments) in terms of an equivalent 

lump sum received (or paid) today. The present value depends on 

the rate of interest used (the discount rate). For example, if $100 is 

invested on January 1 at an annual interest rate of 5 percent, it will 

grow to $105 by January 1 of the next year. Hence, at an annual 

5 percent interest rate, the present value of $105 payable a year 

from today is $100.
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 5

CBO

revenues. (The negative balances could also be interpreted as the amount that the program would need to 

borrow to pay scheduled benefits, but the Social Security 

program does not have the legal authority to borrow 

money.)

Another way to consider the data that underlie Figure 3 is 

to examine the probability that the trust funds will be 

exhausted by a given year (see Figure 4 on page 12). By 

CBO’s estimates, there is an 11 percent chance of the 

funds’ being exhausted before 2035, a 54 percent chance 

of exhaustion by 2050, and an 86 percent chance of 

exhaustion by 2082.

The Distribution of Social Security 

Taxes and Benefits

Grouping Social Security participants by age or by other 

characteristics and examining how taxes and benefits are 

distributed among those groups can illuminate the program’s effects on people and the economy. CBO used several measures to present the Social Security payroll taxes 

paid and benefits received by people in different age and 

income categories, grouping individuals by their 10-year 

birth cohort—for example, people born in the 1940s— 

and by the quintile (fifth) of their lifetime household 

earnings. (The top fifth of earners, for instance, makes up 

the highest earnings quintile.) Those measures include 

the initial annual benefit received, the ratio of that benefit to average lifetime earnings, the lifetime benefits 

received, and the lifetime taxes paid. CBO presents benefits net of the income taxes that higher-income beneficiaries pay on benefits and that are credited to the Social 

Security trust funds.

First-Year Benefits

CBO’s analysis indicates that, in general, future Social 

Security beneficiaries are likely to receive higher real firstyear annual benefits than today’s beneficiaries, even under 

the payable benefits scenario. Furthermore, each birth 

cohort is projected to receive higher real benefits than the 

preceding one.

The initial annual benefit that a retired worker (a beneficiary aged 62 or older who receives benefits on the basis 

of his or her own work history) receives calculated in real 

(inflation-adjusted) dollars is a measure of his or her purchasing power.9

 The initial benefit amount depends in 

part on when an individual decides to claim benefits—

the later the age, the greater the annual benefit. Thus, any 

changes over time in the age at which most people first 

claim benefits will result in changes in average initial benefits. To ensure that the data are comparable over time, 

CBO in this analysis considered a hypothetical benefit 

amount: the median benefit that a worker would receive 

if everyone claimed benefits at age 65.

The initial annual benefit that a worker is scheduled to 

receive depends on the formula used to compute benefit 

levels, which is specified by law, and on his or her history 

of earnings. The growth of average earnings will generally 

cause average scheduled first-year benefits to rise over 

time (see Figure 5 on page 13 and Table 4 on page 25). 

However, under current law, the growth of first-year benefits will be partially offset by the scheduled increase in 

the normal retirement age, which is gradually rising from 

65 for people born in 1937 and earlier to 67 for those 

born after 1959. That increase is effectively equivalent to 

a reduction in benefits, regardless of the age at which benefits are claimed. Payable benefits are projected to fall by 

16 percent in the year that the trust funds are exhausted 

but then to resume their upward path (from that lower 

point) as earnings grow.

The trends for first-year benefits for disabled workers 

(disabled beneficiaries who receive benefits on the basis of 

their work histories) are similar to those discussed above. 

However, the scheduled increase in the normal retirement 

age will have no direct effect on those benefits. CBO thus 

projects that real first-year disability benefits will increase 

steadily over time under both scenarios (see Figure 6 on 

page 14 and Table 5 on page 28).

First-Year Replacement Rates

The replacement rate—the ratio of first-year benefits to 

average career earnings—provides a different perspective 

on the benefits that various groups of retired-worker beneficiaries receive.10 The scheduled increase in the normal 

retirement age will lower the replacement rate for future 

9. At the end of each year, the Social Security Administration adjusts 

benefits by the amount of any increase in the consumer price 

index, so in real terms, an individual’s benefit remains constant.

10. In such calculations, “average career earnings” refers to the average 

of a retired worker’s highest 35 years of covered earnings as 

indexed to compensate for past inflation and for real growth in 

average earnings nationwide. (Covered earnings may be greater 

than the earnings that are subject to the Social Security payroll tax 

because covered earnings include those above the maximum taxable amount.)
6 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

beneficiaries (no matter when they claim benefits) compared with the rate for people who are claiming benefits 

now. If Social Security benefits are paid as scheduled, the 

median replacement rate for beneficiaries born in the 

1990s will be slightly less than the rate for beneficiaries 

born in the 1940s, CBO estimates (see Table 4 on 

page 25). For individuals in the lowest earnings quintile, 

the replacement rates for the 1990s birth cohort will be 

higher than for individuals born in the 1940s, but the 

reverse will occur for those in the highest earnings quintile, CBO projects. Under the payable benefits scenario, 

the replacement rate will drop noticeably at all earnings 

levels for cohorts that receive benefits after the trust funds 

are exhausted (see Figure 7 on page 15).

The progressive nature of Social Security’s benefit formula means that replacement rates are higher for workers 

who have lower earnings. And because disabled workers 

tend to have lower earnings than retired workers have, 

replacement rates for disabled workers tend to be higher 

than those for retired workers (see Table 5 on page 28 

and Figure 8 on page 16).11

Lifetime Benefits

Another way to measure the income that retired-worker 

beneficiaries receive from Social Security is to look at lifetime retirement benefits—that is, the present value of all 

benefits that a worker gets from the program. By CBO’s 

estimate, it is likely that benefits received by each birth 

cohort will be greater, on average, than those received by 

the preceding cohort even under the payable benefits scenario. The trend in median lifetime retirement benefits 

(shown in Figure 9 on page 17) differs from the trend 

in median first-year benefits (shown in Figure 5 on 

page 13), for two reasons. First, as life expectancy 

increases, beneficiaries will collect benefits for longer 

periods, and scheduled lifetime benefits will grow faster 

than scheduled first-year benefits. Second, cohorts that 

begin receiving benefits before the trust funds are 

exhausted will collect the full amount of their scheduled 

first-year benefits. However, some cohorts will still be 

receiving benefits when the trust funds become 

exhausted, and as a result, their payable lifetime benefits 

will be lower than their scheduled lifetime benefits (see 

Table 4 on page 25).

The present value of the median lifetime benefits paid to 

disabled-worker beneficiaries, including the retirement 

benefits they receive after reaching the normal retirement 

age, is much greater than the present value of lifetime 

benefits paid to retired-worker beneficiaries. Disabled 

workers receive larger lifetime benefits than do retired 

workers because they tend to receive benefits longer and 

because those benefits are paid earlier in their lifetime, 

which increases the benefits’ present value (see Figure 10 

on page 18 and Table 5 on page 28). As with retirement 

benefits, projected lifetime disability benefits are greater 

for each birth cohort than for the preceding one.

Lifetime Payroll Taxes and Lifetime Benefits for 

Workers, Dependents, and Survivors

The three measures discussed above cover only benefits 

for retired- and disabled-worker beneficiaries. A more 

comprehensive perspective comes from considering the 

present value of the total amount of Social Security payroll taxes paid over a lifetime and the present value of the 

total amount of Social Security benefits—payments to 

retired and disabled workers as well as to dependents and 

survivors—received over a lifetime. (Measures of taxes 

comprise all Social Security payroll taxes levied on individual earnings—both the employer’s and employee’s 

shares.) CBO has estimated ranges of uncertainty (specifically, the range within which 80 percent of the possible 

values are likely to fall) for lifetime measures of taxes and 

benefits to reflect the inherent uncertainty in the demographic and economic assumptions that CBO used for its 

projections (see the later discussion).

CBO projected measures of lifetime payroll taxes, lifetime benefits, and the ratio of lifetime benefits to taxes by 

10-year birth cohort:

B Figure 11 on page 19 shows the 80 percent range of 

uncertainty for the projected lifetime payroll taxes that 

individuals within a particular birth cohort will pay 

under the scheduled benefits scenario. Projected 

increases in real taxable earnings result in proportional 

increases in lifetime payroll tax levels. In dollar terms, 

the uncertainty is greatest for workers in the highest 

quintile of lifetime earners. However, when the range 

of uncertainty for lifetime taxes paid is measured as a 

percentage of median lifetime taxes paid for each 

quintile and cohort, the range is approximately equal 

across quintiles. 

11. For disabled-worker beneficiaries, average career earnings are calculated not over 35 years but over the same number of years that is 

used in calculating benefits. For example, in the case of a worker 

who became disabled at age 50, average earnings would be calculated over the highest 23 years of earnings.
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 7

CBO

B Figure 12 on page 20 presents equivalent projections 

for average lifetime benefits, which comprise all benefits received by individuals within a birth cohort 

(including retired-worker, disabled-worker, dependent, and survivor benefits) minus the income taxes 

paid on those benefits and credited to the Social Security trust funds. Results are shown under the scenarios 

for both scheduled and payable benefits. 

B Figure 13 on page 21 presents the ratio of those two 

measures: the present value of total net benefits 

received over a lifetime divided by the present value of 

total Social Security payroll taxes paid over a lifetime. 

(For example, a benefit-to-tax ratio of 150 percent 

means that benefits are 50 percent greater than taxes.) 

Scheduled taxes are not sufficient to pay for full scheduled benefits, so those ratios are unrealistically high. 

The ratio is higher for those in the lowest earnings 

quintiles and lower for those with higher earnings, in 

part because the Social Security benefit formula is progressive and in part because those with low household 

earnings are more likely to receive disability or dependent benefits, or both.

The uncertainty regarding future benefits can be presented in a different way as well—by showing the likelihood that a cohort will receive a specified percentage of 

scheduled benefits (see Table 6 on page 29). According to 

CBO’s projections, the 1940s cohort, for example, is virtually certain to receive all of its scheduled first-year benefit. The 1990s cohort, under the payable benefits scenario, has only a 32 percent chance of receiving all of its 

scheduled first-year benefit but an 84 percent chance of 

receiving at least 70 percent of that benefit. 

The trust funds’ exhaustion may occur after a group has 

begun collecting benefits, so the odds of collecting a 

given percentage of first-year benefits are generally higher 

than the odds of collecting the same proportion of lifetime benefits. For example, although the 1940s cohort 

has a 100 percent chance of collecting virtually all of its 

first-year benefits, under the payable benefits scenario it 

has an 89 percent chance of receiving all of its scheduled 

lifetime benefits. Still, the cohort has a 99 percent chance 

of receiving at least 95 percent of its scheduled benefits. 

The 1990s cohort, in contrast, has only a 13 percent 

chance of receiving all of its scheduled lifetime benefits 

under the payable benefits scenario and a 55 percent 

chance of receiving at least 85 percent of them.

Assumptions Used in CBO’s Analysis

A number of basic assumptions underlie all long-term 

projections of the Social Security program’s finances.12 To 

project overall trends in demographics and disability, 

CBO adopts the assumptions of the Social Security trustees—specifically, for this analysis, the assumptions in the 

2008 trustees’ report on the aggregate fertility rate, the 

rate of decline in mortality, the level of immigration, and 

the rates of disability incidence and termination. CBO’s 

long-term economic assumptions are based on the 

assumptions used in its baseline budget projections. 

Thus, for the first 10 years of the 2008–2082 projection 

period, CBO used assumptions based on the values of the 

variables in its February 2008 economic forecast.13 The 

assumptions for later years are based on the baseline’s 

underlying economic assumptions for 2018. (CBO used 

no specific assumptions about the growth of GDP or taxable payroll but instead computed projected levels of 

those variables on the basis of more basic economic and 

demographic assumptions.)

The two most important economic variables for Social 

Security projections are the rate of growth of earnings and 

the rate of interest on the U.S. Treasury bonds credited to 

the trust funds. CBO projects that real earnings will grow 

at an average annual rate of 1.4 percent over the projection period, an estimate based on four underlying 

assumptions: 

B Growth of Labor Productivity. CBO assumed that over 

the long term, total factor productivity (average real 

output per unit of combined labor and capital “services”) would grow at a rate of 1.3 percent annually. It 

then used an economic model to compute the resulting growth in labor productivity (measured as growth 

in output per hour worked), which is projected to 

average 1.9 percent annually. 

12. For a more detailed explanation of these assumptions, see 

Congressional Budget Office, The Outlook for Social Security, 

Chapter 3.

13. See Congressional Budget Office, An Analysis of the President’s 

Budgetary Proposals for Fiscal Year 2009 (March 2008).
8 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

B Changes in the Ratio of Taxable Earnings to Total 

Compensation. CBO assumed that the share of 

compensation that workers receive as nontaxable 

health benefits would continue to increase during the 

2008–2082 projection period, which would reduce 

the average rate of growth of taxable earnings. Specifically, CBO assumed that the long-term annual rate of 

decline in earnings as a share of compensation would 

slow from about -0.25 percent to about -0.05 percent 

in 2082, for an average -0.13 percent, a pace that 

would reduce the projected growth of real wages by 

the same amount.

B Difference Between Growth in the Consumer Price 

Index and the GDP Deflator. The consumer price 

index (CPI) and the GDP deflator are two different 

measures of inflation. The GDP deflator is used for 

computing measures of total economic growth and 

therefore the growth of the taxable wage base. However, Social Security benefits are adjusted yearly for 

inflation by the growth in the CPI for urban wage 

earners and clerical workers (CPI-W). As a result, 

when the GDP deflator grows more slowly than the 

CPI-W, the growth of real earnings is reduced. CBO 

assumes that the gap, and thus the reduction in real 

earnings growth, will average 0.3 percentage points.

B Growth in Average Hours of Work. CBO assumed 

that, in general, the number of hours worked by people in the labor force would remain constant. However, different segments of the population work, on 

average, different numbers of hours. (For example, 

men tend to work more hours than women, and people in their 30s tend to work more hours than people 

in their 50s.) As a result, projections of total average 

hours worked varied slightly because of projected 

changes in the composition of the labor force. 

CBO assumed that the real rate of interest on the bonds 

credited to the Social Security trust funds would be 

3.0 percent a year, a figure that it also used for the discount rate in its present-value calculations. In addition, 

CBO assumed that annual inflation—as measured by 

growth in the CPI-W—would be 2.2 percent and that 

the unemployment rate would be 4.8 percent. 
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 9

CBO

Figure 1.

Potential Ranges of Social Security Outlays and Revenues as a Percentage of GDP 

Under the Scheduled Benefits Scenario, 1985 to 2082

Source: Congressional Budget Office.

Notes: The dark lines indicate CBO’s projections of expected outcomes. Shaded areas indicate the 80 percent range of uncertainty around 

each projection based on a distribution of 500 simulations from CBO’s long-term model. (An 80 percent range means that there is a 

10 percent chance that actual values will be above that range, a 10 percent chance that they will be below it, and an 80 percent chance 

that they will fall within the range.)

In the scheduled benefits scenario, workers each year receive full benefits as calculated under current law.

CBO projects that under current law, outlays will begin to exceed revenues in 2019 and that starting in 2049, scheduled benefits 

cannot be paid in full.

GDP = gross domestic product.

a. Includes scheduled benefits and administrative costs.

b. Includes payroll taxes and revenues from the taxation of benefits.

1985 1995 2005 2015 2035 2025 2045 2055 2065 2075

0

4

3

5

6

7

8

Actual Projected

Outlaysa

Revenuesb
10 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Figure 2.

Social Security Outlays as a Percentage of Gross Domestic Product Under the 

Scheduled Benefits and Payable Benefits Scenarios, 1985 to 2082

Source: Congressional Budget Office.

Note: In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

1985 1995 2005 2015 2025 2035 2045 2055 2065 2075

0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

Payable Benefits Scenario

Actual Projected

Scheduled Benefits Scenario
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 11

CBO

Figure 3.

Potential Range of the Social Security Trust Fund Ratio Under the 

Scheduled Benefits Scenario, 1985 to 2082

Source: Congressional Budget Office.

Notes: The trust fund ratio is the ratio of the total balance in the Social Security trust funds (the Old-Age and Survivors Insurance and the 

Disability Insurance Trust Funds) at the beginning of a calendar year to total Social Security outlays during that year. 

The dark line indicates CBO’s projection of expected outcomes; the shaded area indicates the 80 percent range of uncertainty around 

the projection based on a distribution of 500 simulations from CBO’s long-term model. (An 80 percent range means that there is a 

10 percent chance that actual values will be above that range, a 10 percent chance that they will be below it, and an 80 percent chance 

that they will fall within the range.)

In the scheduled benefits scenario, workers each year receive full benefits as calculated under current law.

1985 1995 2005 2015 2035 2025 2045 2055 2065 2075

-20

-15

-10

-5

0

5

10

Actual Projected
12 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Figure 4.

Probability That the Social Security Trust Funds Will Have Been Exhausted, 

by Year, 2008 to 2082

(Percent)

Source: Congressional Budget Office.

Note: The Social Security trust funds are the Old-Age and Survivors Insurance and Disability Insurance Trust Funds.

2008 2018 2028 2038 2048 2058 2068 2078

0

10

20

30

40

50

60

70

80

90
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 13

CBO

Figure 5.

Median First-Year Social Security Retirement Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort

(Thousands of 2008 dollars)

Source: Congressional Budget Office.

Notes: First-year benefits are projected by assuming that all workers claim benefits at age 65. Values are net of income taxes paid on benefits 

and credited to the Social Security trust funds (the Old-Age and Survivors Insurance and Disability Insurance Trust Funds).

In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

1940 1950 1960 1970 1980 1990 2000

0

10

15

20

25

30

10-Year Birth Cohort Beginning in Specified Year

Scheduled Benefits Scenario

Payable Benefits Scenario
14 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Figure 6.

Median First-Year Social Security Disability Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort

(Thousands of 2008 dollars)

Source: Congressional Budget Office.

Notes: Values are net of income taxes paid on benefits and credited to the Social Security trust funds (the Old-Age and Survivors Insurance 

and Disability Insurance Trust Funds).

In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

1940 1950 1960 1970 1980 1990 2000

0

10

15

20

25

30

10-Year Birth Cohort Beginning in Specified Year

Scheduled Benefits Scenario

Payable Benefits Scenario
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 15

CBO

Figure 7.

Median Replacement Rates for Retired-Worker Social Security Beneficiaries 

Under the Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort

(Percent)

Source: Congressional Budget Office.

Notes: Replacement rates are first-year benefits as a percentage of average career earnings. (First-year benefits are calculated net of income 

taxes paid on benefits and credited to the Social Security trust funds—that is, the Old-Age and Survivors Insurance and Disability 

Insurance Trust Funds.)

In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

1940 1950 1960 1970 1980 1990 2000

0

30

40

50

60

70

10-Year Birth Cohort Beginning in Specified Year

Scheduled Benefits Scenario

Payable Benefits Scenario
16 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Figure 8.

Median Replacement Rates for Disabled-Worker Social Security Beneficiaries 

Under the Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort

(Percent)

Source: Congressional Budget Office.

Notes: Replacement rates are first-year benefits as a percentage of average career earnings. (First-year benefits are calculated net of income 

taxes paid on benefits and credited to the Social Security trust funds—that is, the Old-Age and Survivors Insurance and Disability 

Insurance Trust Funds.)

In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

1940 1950 1960 1970 1980 1990 2000

0

30

40

50

60

70

10-Year Birth Cohort Beginning in Specified Year

Scheduled Benefits Scenario

Payable Benefits Scenario
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 17

CBO

Figure 9.

Median Lifetime Social Security Retirement Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort

(Thousands of 2008 dollars)

Source: Congressional Budget Office.

Notes: To calculate their present value, lifetime retirement benefits have been adjusted for inflation (to produce constant dollars) and discounted to age 60. Values are net of income taxes paid on benefits and credited to the Social Security trust funds (the Old-Age and 

Survivors Insurance and Disability Insurance Trust Funds).

In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

1940 1950 1960 1970 1980 1990 2000

0

100

200

300

400

500

10-Year Birth Cohort Beginning in Specified Year

Scheduled Benefits Scenario

Payable Benefits Scenario
18 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Figure 10.

Median Lifetime Social Security Disability Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by Birth Cohort

(Thousands of 2008 dollars)

Source: Congressional Budget Office.

Notes: Lifetime benefits include disability benefits and retirement benefits paid to disabled workers who have reached the normal retirement 

age designated by law. To calculate their present value, benefits have been adjusted for inflation (to produce constant dollars) and 

discounted to age 60. Values are net of income taxes paid on benefits and credited to the Social Security trust funds (the Old-Age and 

Survivors Insurance and Disability Insurance Trust Funds).

In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

1940 1950 1960 1970 1980 1990 2000

0

100

200

300

400

500

10-Year Birth Cohort Beginning in Specified Year

Scheduled Benefits Scenario

Payable Benefits Scenario
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 19

CBO

Figure 11.

Potential Range of Lifetime Social Security Payroll Taxes Under the 

Scheduled Benefits Scenario, by Birth Cohort and Lifetime Earnings

(Thousands of 2008 dollars)

Source: Congressional Budget Office.

Notes: Taxes comprise both the employer’s and employee’s share of Social Security payroll taxes. To calculate their present value, amounts 

have been adjusted for inflation (to produce constant dollars) and discounted to age 60. 

In the scheduled benefits scenario, workers each year receive full benefits as calculated under current law.

Shaded areas indicate the 80 percent range of uncertainty around each projection based on a distribution of 500 simulations from 

CBO’s long-term model. (An 80 percent range means that there is a 10 percent chance that actual values will be above that range, a 

10 percent chance that they will be below it, and an 80 percent chance that they will fall within the range.)

The distribution of lifetime household earners comprises only those who live to at least age 45. The distribution is divided into fifths, 

or quintiles, for presentation. 

Lowest Quintile of Lifetime Household Earners

Middle Quintile of Lifetime Household Earners

Highest Quintile of Lifetime Household Earners

1940 1950 1960 1970 1980 1990 2000

0

200

400

600

800

1,000

1,200

1,400

1940 1950 1960 1970 1980 1990 2000

0

200

400

600

800

1,000

1,200

1,400

1940 1950 1960 1970 1980 1990 2000

0

200

400

600

800

1,000

1,200

1,400

10-Year Birth Cohort Beginning in Specified Year
20 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Figure 12.

Potential Range of Lifetime Social Security Benefits Under the Scheduled Benefits 

and Payable Benefits Scenarios, by Birth Cohort and Lifetime Earnings

(Thousands of 2008 dollars)

Source: Congressional Budget Office.

Notes: Benefits comprise Social Security benefits (including retired-worker, disabled-worker, spousal, and survivor benefits) net of income 

taxes paid on benefits and credited to the Social Security trust funds (the Old-Age and Survivors Insurance and Disability Insurance 

Trust Funds). To calculate their present value, amounts have been adjusted for inflation (to produce constant dollars) and discounted 

to age 60. 

In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

The areas encompassed by the solid and dotted lines indicate the 80 percent range of uncertainty around each projection based on a 

distribution of 500 simulations from CBO’s long-term model. (An 80 percent range means that there is a 10 percent chance that actual 

values will be above that range, a 10 percent chance that they will be below it, and an 80 percent chance that they will fall within the 

range.)

The distribution of lifetime household earners comprises only those who live to at least age 45. The distribution is divided into fifths, 

or quintiles, for presentation.

1940 1950 1960 1970 1980 1990 2000

0

200

400

600

800

1,000

Lowest Quintile of Lifetime Household Earners

Middle Quintile of Lifetime Household Earners

1940 1950 1960 1970 1980 1990 2000

0

200

400

600

800

1,000

10-Year Birth Cohort Beginning in Specified Year

Highest Quintile of Lifetime Household Earners

1940 1950 1960 1970 1980 1990 2000

0

200

400

600

800

1,000

Scheduled Benefits Scenario

Payable Benefits Scenario
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 21

CBO

Figure 13.

Potential Range of the Ratio of Lifetime Social Security Benefits to Lifetime 

Taxes Under the Scheduled Benefits and Payable Benefits Scenarios, by 

Birth Cohort and Lifetime Earnings

(Percent)

Source: Congressional Budget Office.

Notes: Benefits comprise Social Security benefits net of income taxes (as shown in Figure 11); taxes comprise the employer’s and employee’s 

shares of Social Security payroll taxes (as shown in Figure 12). 

In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

The areas encompassed by the solid and dotted lines indicate the 80 percent range of uncertainty around each projection based on a 

distribution of 500 simulations from CBO’s long-term model. (An 80 percent range means that there is a 10 percent chance that actual 

values will be above that range, a 10 percent chance that they will be below it, and an 80 percent chance that they will fall within the 

range.)

The distribution of lifetime household earners comprises only those who live to at least age 45. The distribution is divided into fifths, 

or quintiles, for presentation.

1940 1950 1960 1970 1980 1990 2000

0

50

100

150

200

250

300

Lowest Quintile of Lifetime Household Earners

Middle Quintile of Lifetime Household Earners

1940 1950 1960 1970 1980 1990 2000

0

50

100

150

200

250

300

10-Year Birth Cohort Beginning in Specified Year

Highest Quintile of Lifetime Household Earners

1940 1950 1960 1970 1980 1990 2000

0

50

100

150

200

250

300

Scheduled Benefits Scenario

Payable Benefits Scenario
22 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Table 1.

Social Security Revenues and Outlays as a Percentage of Gross Domestic 

Product in Selected Years Under the Scheduled Benefits Scenario

Source: Congressional Budget Office.

Notes: Revenues include payroll taxes and income taxes on benefits as a share of GDP in the specified year, and outlays equal scheduled 

benefits and administrative costs.

In the scheduled benefits scenario, workers each year receive full benefits as calculated under current law.

a. The range within which there is an 80 percent probability that the actual value will fall (that is, the range between the 10th and 90th percentiles for each measure based on a distribution of 500 simulations from CBO’s long-term model). Balances (surpluses or deficits) do not 

equal the difference between the outlays and revenues displayed because each value is drawn from a different simulation.

4.87 4.80 4.70 4.68

4.30 5.83 5.57 5.75

____ ____ ____ ____

Annual Surplus

or Deficit (-) 0.58 -1.03 -0.87 -1.07

4.87

4.30

___

Annual Surplus

or Deficit (-) 0.58 -3.1 to -0.1

4.6 to 5.0

5.0 to 6.8

-2.0 to -0.4

4.3 to 5.0

4.5 to 7.0

-2.3 to 0.1

____________ ___________ ____________

Actual

2007 2057 2082 2032

Revenues

Outlays

Revenues

Outlays

80 Percent Range of Uncertainty for CBO's Projectionsa

CBO's Projections

4.2 to 5.1

4.6 to 7.7
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 23

CBO

Table 2.

Summarized Social Security Revenues, Outlays, and Surpluses or Deficits for 

Selected Periods Under the Scheduled Benefits Scenario

Source: Congressional Budget Office.

Notes: Summarized revenues are the present value of annual revenues over the relevant period plus the trust fund balance at the beginning of 

the period divided by the present value of GDP or taxable payroll over that period. Summarized outlays are the present value of annual 

outlays, plus an adjustment to cover one more year of outlays at the end of the projection period, divided by the present value of GDP 

or taxable payroll over the period. The summarized balance (surplus or deficit) is the present value of revenues minus the present 

value of outlays, divided by the present value of GDP or taxable payroll over the period.

In the scheduled benefits scenario, workers each year receive full benefits as calculated under current law.

a. The range within which there is an 80 percent probability that the actual value will fall (that is, the range between the 10th and 90th percentiles for each measure based on a distribution of 500 simulations from CBO’s long-term model). Balances (surpluses or deficits) do not 

equal the difference between the outlays and revenues displayed because each value is drawn from a different simulation.

Period

25 Years (2008–2032) 5.56 5.24 0.32

50 Years (2008–2057) 5.20 5.41 -0.20

75 Years (2008–2082) 5.07 5.45 -0.38

25 Years (2008–2032)

50 Years (2008–2057)

75 Years (2008–2082)

25 Years (2008–2032) 14.82 13.97 0.86

50 Years (2008–2057) 14.28 14.84 -0.56

75 Years (2008–2082) 14.16 15.22 -1.06

25 Years (2008–2032)

50 Years (2008–2057)

75 Years (2008–2082)

-0.3 to 1.7

-2.0 to 0.5

-2.7 to 0.1

14.5 to 15.1

14.0 to 14.5

13.9 to 14.4

12.9 to 15.1

13.5 to 16.3

13.9 to 16.9

80 Percent Range of Uncertainty for CBO's Projectionsa

As a Percentage of Gross Domestic Product

5.4 to 5.7

5.0 to 5.4

4.8 to 5.3

4.8 to 5.7

4.9 to 5.9

5.0 to 6.0

-0.1 to 0.6

-0.7 to 0.2

CBO's Projections

As a Percentage of Taxable Payroll

Revenues Outlays Surplus or Deficit (-)

80 Percent Range of Uncertainty for CBO's Projections

a

-0.9 to 0

CBO's Projections
24 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Table 3.

Probability That Social Security Outlays Will Exceed Revenues by Specified 

Percentages in Selected Years Under the Scheduled Benefits Scenario

Source: Congressional Budget Office.

Notes: Revenues include payroll taxes and income taxes on benefits as a share of GDP in the specified year, and outlays equal scheduled 

benefits and administrative costs.

In the scheduled benefits scenario, workers each year receive full benefits as calculated under current law.

Year

2010 0 0 0 0 0 0

2020 73 5 0 0 0 0

2030 97 49 6 1 0 0

2040 93 53 16 3 0 0

2050 87 44 15 3 1 0

2060 88 49 16 3 1 0

2070 87 52 23 7 1 0

2080 90 59 24 10 3 1

or More or More

Probabilities, by Percentage of GDP by Which Outlays Exceed Revenues

0 Percent 1 Percent 2 Percent 3 Percent 4 Percent 5 Percent

or More or More or More or More
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 25

CBO

Table 4.

Social Security Benefits Received by Retired Workers Under the Scheduled and 

Payable Benefits Scenarios, by Birth Cohort, Lifetime Earnings Level, and Sex

Continued

10-Year

Birth Cohort

Starting in Year

1940 15,900 15,900 44.6 44.6 155,600 155,600

1950 16,500 16,500 44.0 44.0 176,500 176,300

1960 16,800 16,800 42.9 42.9 187,300 184,900

1970 17,700 17,700 44.3 44.3 203,200 190,000

1980 20,700 19,000 43.2 39.8 240,400 205,300

1990 23,800 20,000 42.7 35.9 283,600 235,300

2000 27,400 22,700 42.8 35.5 331,700 267,700

1940 8,700 8,700 72.9 72.9 81,900 81,900

1950 9,600 9,600 69.6 69.6 92,700 92,700

1960 10,300 10,300 66.6 66.6 103,900 103,000

1970 11,100 11,100 70.6 70.6 108,000 103,000

1980 12,400 11,400 70.3 63.2 122,600 106,200

1990 14,200 12,000 69.3 58.7 147,800 122,600

2000 16,300 13,600 70.0 58.0 170,900 138,300

1940 17,500 17,500 43.0 43.0 173,200 173,200

1950 18,100 18,100 42.7 42.7 195,500 195,400

1960 18,300 18,300 41.5 41.5 207,800 205,200

1970 19,300 19,300 42.7 42.7 222,500 207,900

1980 22,500 20,600 41.5 38.4 268,300 227,800

1990 25,900 21,800 41.1 34.7 314,100 260,000

2000 29,900 24,800 41.1 34.1 369,700 296,400

1940 23,900 23,900 30.3 30.3 265,800 265,800

1950 25,900 25,900 28.7 28.7 313,000 312,900

1960 27,600 27,600 27.0 27.0 338,900 334,600

1970 30,200 30,200 27.5 27.5 376,000 347,900

1980 35,100 32,100 25.4 23.5 450,700 383,200

1990 39,700 33,500 25.2 21.3 521,700 433,200

2000 45,800 38,200 25.3 21.2 608,400 492,400

Median for Those in the Lowest Household Earnings Quintile

Median for Those in the Middle Household Earnings Quintile

Median for Those in the Highest Household Earnings Quintile

Scheduled Payable

All Retired Workers

Median for All Workers

Scheduled Payable Scheduled Payable

First-Year Benefits First-Year Replacement Present Value of Lifetime

(2008 Dollars) Rate (Percent)a Benefits (2008 Dollars)b
26 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Table 4. Continued

Social Security Benefits Received by Retired Workers Under the Scheduled and 

Payable Benefits Scenarios, by Birth Cohort, Lifetime Earnings Level, and Sex

Continued

10-Year

Birth Cohort

Starting in Year

1940 20,300 20,300 39.8 39.8 182,000 182,000

1950 20,500 20,500 39.8 39.8 206,800 206,500

1960 20,100 20,100 39.2 39.2 214,700 211,800

1970 20,800 20,800 40.6 40.6 228,800 213,900

1980 24,500 22,400 39.5 36.3 270,800 230,900

1990 27,900 23,500 39.1 33.0 318,800 263,700

2000 31,800 26,500 39.3 32.6 370,600 298,800

1940 9,800 9,800 63.6 63.6 83,000 83,000

1950 10,500 10,500 62.7 62.7 96,500 96,500

1960 11,100 11,100 61.2 61.2 106,500 106,500

1970 11,800 11,800 65.3 65.4 112,500 107,700

1980 13,200 12,100 66.7 60.6 127,300 110,300

1990 15,000 12,700 66.2 56.0 152,500 125,600

2000 17,400 14,600 65.6 54.8 176,900 143,500

1940 21,000 21,000 39.1 39.1 210,300 210,300

1950 21,300 21,300 39.3 39.3 232,600 232,600

1960 20,800 20,800 38.7 38.7 235,900 233,800

1970 21,700 21,700 40.0 40.0 247,100 233,000

1980 25,500 23,300 38.9 35.6 302,000 255,700

1990 29,300 24,700 38.6 32.4 354,700 293,100

2000 33,600 27,900 38.5 31.9 413,600 333,700

1940 25,200 25,200 23.8 23.8 302,600 302,600

1950 27,600 27,600 22.7 22.7 354,400 354,200

1960 29,300 29,300 21.7 21.7 389,900 383,400

1970 32,300 32,300 22.2 22.2 435,000 402,000

1980 37,400 34,300 20.6 18.8 512,400 432,900

1990 42,300 35,900 20.3 17.1 584,500 487,300

2000 49,000 41,000 20.3 17.0 681,400 551,800

Median for the Highest Household Earnings Quintile of Men

Male Retired Workers

Median for All Male Workers

Median for the Lowest Household Earnings Quintile of Men

Median for the Middle Household Earnings Quintile of Men

(2008 Dollars) Rate (Percent)a Benefits (2008 Dollars)b

Scheduled Payable Scheduled Payable Scheduled Payable

First-Year Benefits First-Year Replacement Present Value of Lifetime
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 27

CBO

Table 4. Continued

Social Security Benefits Received by Retired Workers Under the Scheduled and 

Payable Benefits Scenarios, by Birth Cohort, Lifetime Earnings Level, and Sex

Source: Congressional Budget Office.

Notes: In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

First-year benefits and replacement rates are computed for all individuals who are eligible to claim Old-Age Insurance benefits at 

age 62 and who have not yet claimed any other benefit. All workers are assumed to have claimed benefits at age 65. All values are net 

of income taxes paid on benefits and credited to the Social Security trust funds. 

The median values for the categories of all workers, all female workers, and all male workers differ from the median values in the 

respective middle quintiles because individuals are sorted into quintiles on the basis of household earnings rather than benefits.

a. First-year benefits as a percentage of average career earnings.

b. The present value of all retired-worker benefits received. To calculate their present value, benefits have been adjusted for inflation (to 

produce constant dollars) and discounted to age 60. Values are net of income taxes paid on benefits and credited to the Social Security 

trust funds (the Old-Age and Survivors Insurance and Disability Insurance Trust Funds).

10-Year

Birth Cohort

Starting in Year

1940 12,700 12,700 50.6 50.6 136,700 136,700

1950 13,600 13,600 49.5 49.5 153,800 153,700

1960 14,300 14,300 47.5 47.5 167,900 164,900

1970 15,400 15,400 48.7 48.7 183,200 171,100

1980 17,700 16,400 47.5 43.9 217,100 185,800

1990 20,700 17,400 46.5 39.2 256,500 212,000

2000 23,800 19,700 46.7 38.7 300,700 242,400

1940 7,900 7,900 80.9 80.9 78,200 78,200

1950 9,000 9,000 76.3 76.3 89,700 89,600

1960 9,700 9,700 72.2 72.2 100,600 99,900

1970 10,400 10,400 73.2 73.2 104,100 99,000

1980 11,600 10,600 72.4 65.0 118,200 101,700

1990 13,500 11,400 71.5 59.9 144,600 120,000

2000 15,300 12,700 71.3 59.5 165,200 132,500

1940 13,300 13,300 49.0 49.0 149,600 149,600

1950 14,700 14,700 47.5 47.5 167,200 167,200

1960 15,500 15,500 45.2 45.2 185,800 182,900

1970 16,800 16,800 45.9 45.9 199,500 185,900

1980 19,500 17,900 44.9 42.0 238,700 202,400

1990 22,700 19,200 44.3 37.3 284,200 235,700

2000 26,000 21,400 44.6 36.8 331,600 266,400

1940 18,400 18,400 40.2 40.2 206,500 206,500

1950 21,600 21,600 37.7 37.7 254,600 254,100

1960 22,300 22,300 35.9 35.9 265,400 259,900

1970 23,700 23,700 36.3 36.3 293,000 272,100

1980 29,400 27,000 34.2 31.3 359,700 304,800

1990 33,800 28,400 33.8 28.4 419,200 347,700

2000 38,600 32,200 33.5 28.0 486,900 391,300

Median for the Highest Household Earnings Quintile of Women

Female Retired Workers

Median for All Female Workers

Median for the Lowest Household Earnings Quintile of Women

Median for the Middle Household Earnings Quintile of Women

(2008 Dollars) Rate (Percent)a Benefits (2008 Dollars)b

Scheduled Payable Scheduled Payable Scheduled Payable

First-Year Benefits First-Year Replacement Present Value of Lifetime
28 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

Table 5.

Social Security Benefits Received by Disabled Workers Under the Scheduled and 

Payable Benefits Scenarios, by Birth Cohort and Age of Onset of Disability

Source: Congressional Budget Office.

Notes: In the scheduled benefits scenario, workers receive full benefits as calculated under current law. In the payable benefits scenario, 

workers receive full benefits until the trust funds are exhausted. Then benefits are subjected to an across-the-board cut each year so 

that total projected benefits equal projected revenues.

First-year annual benefits and replacement rates are computed for all individuals who are eligible to claim Disability Insurance 

benefits. All values are net of income taxes paid on benefits and credited to the Social Security trust funds.

a. First-year benefits as a percentage of average career earnings.

b. The present value of all disability benefits received and retired-worker benefits received after the normal retirement age (the age at which 

a worker becomes eligible for full retirement benefits). To calculate their present value, benefits have been adjusted for inflation (to 

produce constant dollars) and discounted to age 60. Values are net of income taxes paid on benefits and credited to the Social Security 

trust funds (the Old-Age and Survivors Insurance and Disability Insurance Trust Funds). 

c. Results are not presented for those groups because data are not available for people who died before 1984.

10-Year

Birth Cohort

Starting in Year

1940 13,200 13,200 47.3 47.3 213,000 213,000

1950 13,900 13,900 49.6 49.6 220,900 220,800

1960 15,100 15,100 52.1 52.1 218,600 217,600

1970 16,800 16,800 53.6 53.6 239,700 234,800

1980 18,700 18,300 53.6 53.2 285,200 264,900

1990 21,900 19,500 52.9 48.6 356,000 309,400

2000 25,000 21,400 52.9 46.1 429,000 358,100

1940 c c c c c c

1950 c c c c c c

1960 9,200 9,200 59.1 59.1 317,500 317,500

1970 10,100 10,100 62.7 62.7 346,100 344,200

1980 12,000 12,000 61.1 61.1 422,000 417,000

1990 14,400 14,400 57.6 57.6 509,400 494,300

2000 16,200 16,200 58.0 58.0 603,100 560,700

1940 c c c c c c

1950 12,800 12,800 51.0 51.0 247,500 247,500

1960 13,700 13,700 53.2 53.2 242,700 242,200

1970 15,200 15,200 55.0 55.0 242,400 241,200

1980 17,000 17,000 55.2 55.2 278,100 273,000

1990 19,900 19,500 54.1 53.3 353,400 321,700

2000 22,600 20,000 54.3 48.1 433,800 364,300

1940 14,700 14,700 47.5 47.4 196,100 196,100

1950 16,300 16,300 48.7 48.7 191,700 191,700

1960 18,000 18,000 50.0 50.0 189,300 188,500

1970 19,700 19,700 51.1 51.1 216,300 211,700

1980 22,800 22,200 50.9 50.2 265,400 238,000

1990 26,500 22,600 50.3 43.3 333,400 277,500

2000 30,500 25,400 50.5 42.1 400,500 325,500

Payable Scheduled

First-Year Replacement Present Value of Lifetime

Payable

Benefits (2008 Dollars)b Rate (Percent)a

Scheduled Scheduled

First-Year Benefits

(2008 Dollars)

Payable

Median for All Disabled Workers

Median for Disabled Workers with Disability Onset Through Age 39

Median for Disabled Workers with Disability Onset from Ages 40 to 54

Median for Disabled Workers with Disability Onset from Ages 55 to the Normal Retirement Age
UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY 29

CBO

Table 6.

Probability That the Social Security Trust Funds Will Be Sufficient to Pay 

Specified Percentages of Scheduled Benefits, by Birth Cohort

Source: Congressional Budget Office.

a. The sum of all payable benefits for all individuals in a birth cohort divided by the sum of scheduled benefits for that cohort. 

10-Year

Birth Cohort 99 95 90 85 80 75 70 65 60 55

Starting in Year or More or More or More or More or More or More or More or More or More or More

1940 100 100 100 100 100 100 100 100 100 100

1950 100 100 100 100 100 100 100 100 100 100

1960 93 95 98 99 99 99 100 100 100 100

1970 61 67 75 82 88 92 97 99 100 100

1980 41 48 54 64 75 84 89 94 97 98

1990 32 35 43 52 63 75 84 92 97 99

2000 25 31 40 48 58 67 77 86 93 97

1940 89 99 100 100 100 100 100 100 100 100

1950 60 89 98 100 100 100 100 100 100 100

1960 39 63 82 92 98 99 100 100 100 100

1970 28 43 60 76 88 96 98 100 100 100

1980 20 34 49 65 79 93 98 99 100 100

1990 13 25 40 55 68 81 92 98 99 100

2000 7 18 29 43 58 74 87 94 97 99

Probabilities, by Percentage of Benefits Payablea

First-Year Benefits

Lifetime Benefits

APPENDIX

A

Changes in CBO’s Long-Term Social Security 

Projections Since December 2007

The Congressional Budget Office’s (CBO’s) longterm projections of the finances of the Social Security 

program have changed since CBO released The LongTerm Budget Outlook in December 2007. CBO’s current 

estimates cover the same period as those in the earlier 

report—2008 through 2082—but they make use of new 

data, more current assumptions about demographics and 

the economy, and improvements in modeling.

CBO’s current estimates show a smaller shortfall than its 

2007 projections. Projections of revenues as a share of 

gross domestic product (GDP) have decreased by 2 percent, from 5.15 percent to 5.07 percent. Projections of 

summarized 75-year outlays have declined by 6 percent, 

from 5.80 percent of GDP to 5.45 percent. As a result, 

the projected 75-year summarized deficit has decreased 

from 0.65 percent of GDP to 0.38 percent. 

In CBO’s new projections, the reductions in projected 

outlays as a share of GDP (compared with the 2007 estimates) grow steadily larger over the 2008–2082 projection period. In 2020, projected outlays as a share of GDP 

are 1 percent lower than in the 2007 projections; in 

2025, they are 5 percent lower; and in 2050, they are 

9 percent lower. CBO now estimates that by the end of 

the projection period, in 2082, Social Security outlays 

will equal 5.8 percent of GDP—11 percent lower than 

last year’s projection of 6.4 percent of GDP.

A major reason for the change is a difference in CBO’s 

long-term projections of GDP. CBO’s new estimate of 

GDP over the 2008–2082 period is substantially higher 

than its 2007 projection, thus reducing the ratio of both 

revenues and outlays to GDP. The most important reason 

for the projection of higher GDP is the substantial alterations in the Social Security trustees’ projections of immigration.1 (As discussed in the main text, CBO adopts the 

trustees’ assumptions to project overall trends in demographics and disability.) The trustees changed their 

assumption about future immigrants, boosting the net 

number; more important, they shifted their assumption 

about the number of people of different ages among that 

population to reflect more younger immigrants. (A 

younger immigrant population results in both more 

immigrant workers and additional births.)

Thus, the trustees’ projection of the number of prime-age 

workers (ages 20 to 64) in 2060 is 8 percent higher than 

the projection published in their 2007 report on the 

Social Security system, whereas their projection of the 

number of people aged 65 and older is unchanged. By 

2082, the number of people aged 65 and older in the 

trustees’ new projections is 4 percent greater than in the 

2007 projections, but the number of prime-age workers is 

11 percent greater.

The changes in the estimated number of people of different ages in the immigrant population have implications 

for CBO’s projection of GDP. Its new estimate of GDP 

over the 2008–2082 period is substantially higher than its 

2007 projection, but CBO’s estimate of total outlays for 

the Social Security program is almost unchanged—which 

accounts for much of the decline projected in outlays as a 

share of GDP.

Other factors also contribute to the increase in CBO’s 

current projection of GDP. A small portion of that 

increase is attributable to a change in CBO’s assumption 

about the average annual rate of growth of real (inflationadjusted) wages. CBO now projects a growth rate of 

about 1.4 percent, compared with its estimate of 1.2 percent in December 2007. 

1. See Social Security Administration, The 2008 Annual Report of the 

Board of Trustees of the Federal Old-Age and Survivors Insurance and 

Federal Disability Insurance Trust Funds (March 25, 2008).
32 UPDATED LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

CBO

The decline in revenues as a percentage of GDP is smaller 

than the decline in outlays in part because of a conceptual 

shift. CBO’s current projections of revenues from income 

taxes on Social Security benefits are consistent with the 

assumptions embodied in the extended-baseline scenario 

discussed in Box 1 on page 3. That change in the 

assumption about income tax receipts results in revenues 

from income taxes on benefits that are greater than 

those estimated under the assumptions used for earlier 

projections.2

Two additional changes in modeling since CBO last published its long-term Social Security projections affect estimates of revenues and outlays. First, CBO has improved 

its modeling of immigration and emigration to incorporate some differences between the projected educational 

attainment of native-born citizens and that of immigrants. As a result, the projected taxable earnings of 

immigrants are lower, on average, than those of nativeborn citizens. (Future work will introduce other differences between citizens and immigrants into the model, 

such as those directly related to labor force participation 

and earnings.) Second, CBO has improved its modeling 

of differential mortality (that is, the lower mortality rates 

experienced by people who have higher household earnings as compared with the rates of those who have lower 

earnings). Differential mortality leads to increased Social 

Security outlays because high earners tend to live longer; 

if there were no differential mortality, total outlays would 

be about 1 percent lower.

2. For details, see Congressional Budget Office, The Outlook for 

Social Security (June 2004), Box 3-1.
APPENDIX

B

Differences Between CBO’s Long-Term Projections of 

Social Security’s Finances and Those of the 

Social Security Trustees

Each year, the Social Security trustees (in formal 

terms, the Board of Trustees of the Federal Old-Age and 

Survivors Insurance and Disability Insurance Trust 

Funds) publish long-term projections for the Social Security program.1

 The trustees’ projections differ somewhat 

from the Congressional Budget Office’s (CBO’s), but 

both organizations conclude that under current law, the 

program’s scheduled outlays will exceed its scheduled revenues during the next 75 years and the program’s annual 

deficits will be large and growing over the long term. 

Both groups of estimators project that the program’s outlays will rise to 5.8 percent of gross domestic product 

(GDP) in 2082. CBO’s projection of revenues for that 

year is 4.7 percent of GDP; the trustees’ projection of revenues equals 4.4 percent of GDP. 

On a summarized basis, CBO’s and the trustees’ estimates 

are quite similar. The trustees project that summarized 

75-year outlays will be 5.63 percent of GDP—or 3 percent greater than CBO’s projection of 5.45 percent. The 

trustees’ projection of summarized 75-year revenues is 

5.02 percent of GDP—1 percent lower than CBO’s projection of 5.07 percent. Yet despite the similarities, such 

small differences in CBO’s and the trustees’ projections of 

outlays and revenues can result in relatively large differences in their projections of long-term deficits. Thus, 

CBO estimates that the summarized 75-year shortfall will 

be 0.38 percent of GDP, and the trustees project that the 

deficit will be 0.61 percent. As a percentage of taxable 

payroll, those figures are equivalent to projected deficits 

of 1.06 percent by CBO’s calculations and 1.70 percent 

by the calculations of the trustees.

Those differences result in part from different assumptions about future tax and interest rates and the pace of 

growth of wages. CBO assumes that current income tax 

law will remain unchanged and that therefore, with the 

scheduled expiration of the tax reductions enacted in 

2001 and 2003, effective income tax rates—and revenues 

to the Social Security trust funds from the taxation of 

benefits—will increase. The trustees, in contrast, assume 

that effective income tax rates during the 75-year projection period will be similar to current levels.

Another divergence between the two sets of assumptions 

is CBO’s assumed real (inflation-adjusted) interest rate of 

3.0 percent, which is slightly higher than the trustees’ 

assumed rate of 2.9 percent. In calculations of present 

value, CBO’s higher rate places less weight on the large 

deficits that occur in later years and results in smaller 

summarized deficits. CBO’s projection of a faster rate of 

growth of wages—1.4 percent rather than the trustees’ 

1.1 percent—also leads to smaller summarized deficits.

A number of small differences in modeling further distinguish CBO’s and the trustees’ projections. The result is 

that CBO projects somewhat smaller average benefits, 

even after accounting for differences between its economic assumptions and those of the trustees.

1. The latest report (Social Security Administration, The 2008 

Annual Report of the Board of Trustees of the Federal Old-Age and 

Survivors Insurance and Federal Disability Insurance Trust Funds) 

was published on March 25, 2008.