1

Appendix A reviews the changes since the March 2005 update.

2

In the June 2004 report, this scenario was described as the “trust fund financed” scenario.

Updated Long-Term Projections for Social Security

June 2006

The Congressional Budget Office (CBO) first released long-term (100-year) Social Security

projections in The Outlook for Social Security (June 2004). Those projections were updated in

March 2005 (see Updated Long-Term Projections for Social Security). This report and the

attached tables and figures present the agency’s latest long-term Social Security projections,

which differ slightly from the earlier results because of newly available data, updated

assumptions, and improved modeling.1 Such long-term projections are necessarily uncertain, but

the general conclusions presented in this report hold true under a wide range of assumptions

about future demographic and economic trends.

In this analysis, CBO presents future Social Security benefits under two scenarios. In the

“payable benefits” scenario, outlays include only those benefits that the Social Security

Administration (SSA) has legal authority to pay under current law. That scenario assumes all

benefits will be reduced once the trust funds are exhausted so that total outlays equal available

revenues.2

 In the other scenario, termed the “scheduled benefits” scenario, outlays include the

full benefits as currently calculated.

At the present time, Social Security revenues are greater than outlays, but as the baby-boom

generation continues to age, outlays will grow substantially faster than revenues. CBO projects

that outlays will begin to exceed revenues in 2019 and that the Social Security trust funds will be

exhausted in 2046. (All years referred to in this report are calendar years.) SSA would then no

longer have the legal authority to pay full benefits. In the years following trust fund exhaustion,

payable benefits would be substantially lower than scheduled benefits because annual outlays

would be constrained to equal annual revenues.

CBO’s projections of benefit levels indicate that future beneficiaries will receive higher

retirement benefits—and pay higher Social Security taxes—than current beneficiaries do, even

after adjustments for inflation and for the reductions that occur after the trust funds are

exhausted. However, those benefits will represent a smaller percentage of their preretirement

earnings than is the case now.

Social Security Finances

Social Security is currently running an annual surplus, which, on net, offsets a portion of the

deficit in the rest of the budget and thus reduces the total federal budget deficit. In 2005, total

outlays (benefits and administrative costs) equaled 4.24 percent of gross domestic product

(GDP), whereas dedicated revenues (Social Security payroll taxes and income taxes on benefits
2

that are credited to the Social Security trust funds, but not interest credited to the trust funds)

equaled 4.87 percent of GDP. As members of the baby-boom generation retire, the number of

Social Security beneficiaries will rise considerably. Absent legislative changes, spending for the

program will rise to more than 6 percent of GDP in 2030, CBO projects. With life expectancy

continuing to increase, outlays in later years will grow steadily as a share of GDP, though at a

slower pace.

Benefits are funded primarily through payroll taxes, with a small portion of revenues derived

from income taxes on the benefits of higher-income beneficiaries. Because earnings are

projected to be a relatively constant share of GDP, and payroll taxes are a relatively constant

share of earnings, Social Security revenues will remain close to their current level—about 5

percent of GDP—in the absence of changes to the program.

Beginning in 2019, annual outlays for Social Security are projected to exceed revenues. At that

time, the Social Security system will no longer, on net, offset a portion of the deficit in the rest of

the budget but instead will increase the total deficit (or reduce the total surplus, if one

materializes). Even if spending ends up being lower than expected and revenues are higher than

expected, a gap between the two is likely to remain for the indefinite future.

According to CBO’s estimates, in the years after 2035, paying Social Security benefits as

currently scheduled would require economic resources totaling more than 6.5 percent of GDP.

(Note that scheduled benefits can be paid in full only if sufficient balances are available in the

Social Security trust funds. As previously stated, CBO projects that the trust funds will be

exhausted in 2046, after which scheduled benefits cannot be paid in full.) Table 1-1 shows

annual scheduled outlays and revenues for selected years. Figure 1-1 shows annual scheduled

outlays and revenues from 1985 through 2105. 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.

CBO generally presents outlays and revenues relative to GDP, but another common practice is to

compare outlays and revenues relative to taxable payroll. Projections of annual outlays and

revenues as a share of taxable payroll are presented in Table W-2 of the supplementary data file.

The Uncertainty of Social Security Projections

The uncertainty that surrounds Social Security poses an important economic and policy

consideration for both individuals and policymakers. To display the uncertainty inherent in

long-term projections, CBO calculates ranges of possible outcomes associated with its basic

projections for Social Security. To do that, CBO uses standard statistical techniques to analyze

patterns of past variation in most of the demographic and economic factors—such as fertility and

mortality rates, interest rates, and the rate of productivity growth—that underlie the analysis. The

agency then runs 500 projections, each time with random variations in the assumed values for

those factors that reflect the variation observed historically. Individually, those simulations have
3

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

Social Security Projections (November 2005).

4

Another commonly referenced measure of Social Security finances is the 75-year summarized deficit as a

share of taxable payroll, which CBO projects to be 1.54 percent.

3

little meaning, but together they compose a distribution of possible outcomes.3

That distribution is shown in this analysis with an 80 percent range of uncertainty—the range

within which there is an 80 percent chance that the actual value will fall. For example, although

Social Security outlays are projected to equal about 5.7 percent of GDP in 2025, CBO’s

uncertainty analysis indicates that there is a 10 percent chance that outlays will be less than 4.9

percent of GDP in that year and a 10 percent chance that they will exceed 6.6 percent of GDP

(see Table 1-1). In any case, they are virtually certain to be notably higher than current outlays of

roughly 4.2 percent of GDP. 

Summarized Outlays and Revenues

Long-term projections of annual outlays and revenues provide a comprehensive presentation of

the overall magnitude and timing of the economic and budgetary implications of the Social

Security program as governed by current law. For narrower purposes, analysts frequently

summarize the program’s scheduled outlay and revenue data in a single number for a given

period (for example, total outlays over 50 or 100 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 adjustment for

inflation, a dollar today is more valuable than a dollar in the future. Thus, the data are

summarized 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. Calculating the summarized measures involves making two other adjustments as well.

First, the current trust fund balance is added to summarized revenues to reflect Social Security’s

financial history (incorporating the net effect of past annual Social Security surpluses and

deficits). Second, an additional year’s worth of projected outlays is added to summarized outlays

to reflect the goal of having a “cushion” in the trust funds at the end of the period being

considered. 

CBO projects Social Security’s summarized outlays under the scheduled benefits scenario over

100 years at 6.04 percent of GDP and summarized revenues at 5.26 percent, resulting in a

summarized deficit of 0.78 percent of GDP; as a share of taxable payroll, the 100-year

summarized deficit is 2.06 percent (see Table 1-2).4

 There is a greater than 99 percent probability

that total outlays over 100 years will exceed total revenues (that is, the summarized balance will

be less than zero), CBO projects. In addition, the 100-year summarized deficit may be much

greater than 0.78 percent of GDP; there is a 10 percent chance that it will exceed 1.46 percent of

GDP.
4

Trust Fund Ratios

Another common measure of Social Security’s finances is the ratio of the trust fund balance to

annual outlays, which indicates how many years’ worth of benefits could be funded with a given

balance. The trust fund balance summarizes the cumulative accounting history of the Social

Security program in a single number, because it equals the present value of all past revenues

minus the present value of all past outlays. That measure is also important from a policy

perspective, because the program’s spending authority under current law is limited to the balance

of the trust funds. 

Trust fund holdings are invested in Treasury bonds. In effect, the Social Security trust funds

make loans to the federal government’s general fund, which will need to pay for the bonds when

they are redeemed. Thus, such holdings are not assets of the government as a whole. 

The 2006 trust fund ratio—the balance at the beginning of the year divided by projected outlays

for that year—equals 3.3, according to CBO’s estimates. That ratio is projected to rise to 4.4 in

2017 and then decline quickly (see Figure 1-2). 

As previously stated, the expected trust fund exhaustion date—the year in which the trust fund

balance and thus the trust fund ratio fall to zero—is 2046 in CBO’s projection. But there is a 10

percent chance that the exhaustion date will be 2035 or earlier and a 10 percent chance that it

will be after 2074 (as the uncertainty range in Figure 1-2 shows). Although the figure shows

negative trust fund ratios after the exhaustion date, the trust fund balances cannot be negative

because the Social Security program does not have the legal authority to borrow money. Thus,

those negative balances represent the cumulative amount of scheduled benefits that cannot be

paid out of current-law Social Security revenues. 

Alternative Measures of Outlays

To reflect the fact that the Social Security Administration does not have the legal authority to

pay full benefits after the trust funds are exhausted, CBO generally specifies two scenarios in

long-term Social Security analyses. In the scheduled benefits scenario, outlays are assumed to

represent the full benefits as currently calculated, even after the trust funds are exhausted. In the

payable benefits scenario, outlays include only those benefits that SSA is authorized to pay

under current law. Thus, the second scenario assumes that once the trust funds are exhausted, all

benefits—those paid both to existing beneficiaries as well as to new beneficiaries—are reduced

so that total outlays equal available revenues. The analysis assumes that all scheduled benefit

payments are reduced by a fixed percentage that changes each year.

Payable benefits equal scheduled benefits until the trust funds are exhausted and equal Social

Security revenues thereafter. In 2047, revenues will equal only 79 percent of scheduled outlays,

so payable benefits will be 21 percent lower than scheduled benefits (see Figure 1-3). The

difference continues to grow: by 2100, payable benefits will be only 69 percent of scheduled

benefits, CBO projects. 
5

That level depends in part on when the retiree decides to claim benefits—the later the claiming age, the

higher the benefits. Thus, changes in claiming age over time would result in apparent changes in benefit levels. To

ensure that the data are comparable over time, this analysis considers a hypothetical benefit amount: the median

benefit that workers would receive if everyone claimed benefits at age 65.

6

Distributional results for disabled beneficiaries are shown in Table 2-1a and Figures 2-1a, 2-2a, and 2-3a.

Those data were not included in The Outlook for Social Security or the March 2005 update.

7

In that calculation, “average career earnings” refers to the average of a retired worker’s highest 35 years of

covered earnings, indexed to compensate both for past inflation and for real growth in average earnings nationwide.

(Covered earnings may be higher than taxable earnings because they incorporate all earnings, including amounts

above the maximum level of earnings subject to the Social Security payroll tax.)

5

The Distribution of Taxes and Benefits

An important part of understanding the Social Security’s effects on the economy is examining

the distribution of taxes and benefits among groups of participants. This analysis provides

several measures of projected Social Security taxes paid and benefits received by people in

various age and income groups. 

First-Year Benefits

The initial level of benefits that a retired worker receives in real (inflation adjusted) dollars is a

measure of his or her purchasing power.5 A worker’s scheduled benefit level depends both on the

program’s benefit structure, which is specified by Social Security law, and on the worker’s

earnings history. Growth in average earnings will generally cause scheduled benefits to increase

over time. However, benefit growth will be partially offset by the scheduled increase in the

normal retirement age, which is rising from 65 for people born in 1937 and earlier to 67 for those

born after 1959. That increase is effectively equivalent to a benefit reduction (see Figure 2-1 and

the first column of Table 2-1). Payable benefits are projected to fall by 21 percent in the year the

trust funds are exhausted but then resume their increase from that lower level as earnings grow.

Even with that drop, CBO projects that future retirees will earn higher real median benefits than

today’s retirees. 

The trends are similar for first-year disability benefits. However, because the scheduled increase

in the normal retirement age will have no effect on those benefits, CBO projects that first-year

disability benefits will increase steadily over time (see Figure 2-1a and the first column of Table

2-1a6).

First-Year Replacement Rates

A different perspective on benefit levels is given by the replacement rate—the ratio of first-year

benefits to average career earnings.7 The scheduled increase in the normal retirement age lowers

the replacement rate for future retirees compared with the rate for people retiring now. If benefits

are paid as scheduled, the median replacement rate for retirees born in the 1990s will be 2

percentage points lower than the rate for retirees born in the 1940s (see the third column in Table

2-1). In the case of payable benefits, the replacement rate will drop dramatically after the trust

funds are exhausted (see Figure 2-2).
8

For disabled-worker beneficiaries, average career earnings are calculated not over 35 years but over the

same number of years that are used in calculating benefits. For example, in the case of workers who became disabled

at age 50, average earnings would be calculated over the highest 23 years of earnings.

6

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

higher for workers with lower earnings. And because disabled workers tend to have lower

earnings than retired workers do, their replacement rates tend to be higher (see the third column

in Table 2-1a and Figure 2-2a.)8

Lifetime Benefits

Another way to measure the income that retirees receive from Social Security is to look at

lifetime retirement benefits—the present value of all of the benefits that a worker gets from the

program during retirement. The trend in lifetime retirement benefits (shown in Figure 2-3)

differs from the trend in first-year benefits (shown in Figure 2-1). Two factors explain that

difference. First, as life expectancy increases, retirees will collect benefits for a longer period,

and scheduled lifetime benefits will rise faster than scheduled first-year benefits. Second, cohorts

who retire before the trust funds are exhausted will collect the full amount of their scheduled

first-year benefits, but some will still be receiving benefits when the trust funds become

exhausted. As a result, their payable lifetime benefits will be lower than their scheduled lifetime

benefits (see the last two columns of Table 2-1). However, even payable lifetime benefits will

increase for every cohort.

The present value of median lifetime benefits paid to disabled workers, including the retirement

benefits they receive after reaching the normal retirement age, is much higher. They receive

higher benefits than retired workers both because they tend to receive benefits for a greater

number of years and because those benefits are paid earlier in their lifetime, which increases the

present value (see Figure 2-3a and the last two columns of Table 2-1a).

Total Lifetime Social Security Payroll Taxes and Benefits

For simplicity, the three measures discussed above include only worker benefits. A more

comprehensive perspective comes from considering the present value of total Social Security

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

payments to retired workers, disabled workers, dependents, and survivors—received by

individuals over a lifetime. 

Recipients prefer higher benefits, of course, but they also prefer more certainty. To reflect both

factors, CBO presents ranges of uncertainty for lifetime measures of taxes and benefits. 

Figure 2-4 shows the 80 percent range of uncertainty for the projected lifetime payroll taxes that

individuals will pay under current law, broken down by 10-year birth cohort and quintile of

lifetime household earnings. Those taxes comprise all Social Security payroll taxes levied on

individual earnings (both the employer and employee shares).

Figure 2-5 presents equivalent projections for average lifetime benefits, which comprise all
9

For a more detailed explanation of these assumptions, see Chapter 3 of The Outlook for Social Security.

10Social Security Administration, The 2006 Annual Report of the Board of Trustees of the Federal Old-Age

and Survivors Insurance and Disability Insurance Trust Funds (May 1, 2006), Section V.A., pp.70-82 and 113-120.

11CBO does not make a specific assumption about the growth of labor productivity but instead assumes that

total factor productivity will grow at 1.25 percent annually. On that basis, CBO then computes the effective growth

rate of real earnings, which varies but averages 1.16 percent annually after 2020.

7

benefits received by individuals within a birth cohort (including retired-worker, disabled-worker,

dependent, and survivor benefits) minus 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.

Finally, Figure 2-6 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. 

Assumptions

A number of basic assumptions underlie all long-term Social Security projections.9

 CBO adopts

the assumptions of the Social Security trustees to project overall demographic and disability

trends.10 Specifically, the assumptions for the aggregate fertility rate, the rate of decline in

mortality, the level of immigration, and the rates of disability incidence and disability

termination are the same as those used in the trustees’ 2006 report.

For Social Security projections, the two most important economic variables are the rate of

earnings growth and the interest rate on Treasury bonds held in the trust funds. Under CBO’s

assumptions, real earnings grow by an average of 1.16 percent annually.11 CBO assumes a real

interest rate of 3.0 percent a year. That rate also serves as the discount rate used in present-value

calculations.

In addition, CBO assumes that annual inflation—as measured by the growth in the consumer

price index for urban wage earners and clerical workers, or CPI-W—will be 2.2 percent and that

the unemployment rate will be 5.2 percent.

Note that there are no specific assumptions for growth in GDP or taxable payroll. CBO computes

projected levels of GDP and taxable payroll on the basis of the assumptions described above.
1

CBO’s March 2005 projections were released before the release of the Social Security trustees 2005 report,

so it relied on historical data underlying their 2004 report. The current projections incorporate historical data

underlying their 2006 report.

2

See Social Security Administration, The 2006 Annual Report of the Board of Trustees of the Federal

Old-Age and Survivors Insurance and Disability Insurance Trust Funds (May 1, 2006), p.65.

8

Appendix A

Changes in Projections Since the March 2005 Update

The Congressional Budget Office’s long-term Social Security projections have changed slightly

since the March 2005 update. The changes stem from newly available data, updated

assumptions, and improved modeling. Projections of the summarized 100-year revenues have

increased by 1 percent, from 5.20 percent of gross domestic product (GDP) to 5.26 percent,

while projections of the summarized 100-year outlays have increased by about 5 percent, from

5.77 percent of GDP to 6.04 percent. As a result, the projected 100-year summarized deficit has

increased from 0.57 percent of GDP to 0.78 percent. 

About a quarter of the increase in the summarized deficit is attributable simply to the shift in the

100-year period being considered. The current projections consider the period through 2105,

which adds the relatively larger deficits in 2104 and 2105 to the computations.

Of the remainder of the increase, about half is attributable to a decrease in the assumption for the

long-term interest rate—which is also the discount rate—from 3.3 percent to 3.0 percent. In the

computation of the summarized measures, that decrease puts relatively greater weight on later

years, when the system will be running larger deficits.

Two methodological improvements account for the remainder of the increase in the summarized

deficit. First, CBO has increased estimates of the difference between expected mortality rates of

retirees with high earnings and those with low earnings. As a result, average retiree benefits for a

given cohort grow more quickly over time (though projections of benefit levels at retirement are

unchanged). Second, CBO adjusted its modeling of individual earnings patterns; as a result, the

projected portion of earnings that is taxable and thus total revenues have decreased.

Other changes—including two additional years of historical data,1

 an increase in the assumed

fertility rate,2 improvements in the modeling of auxiliary beneficiaries, and improvements in the

modeling of labor force participation—resulted on net in a lower summarized deficit, slightly

offsetting the factors described above.
Table 1-1.

Actual

2005 2025 2050 2075 2100

Revenues 4.87 5.09 5.10 5.01 4.90

Outlays 4.24 5.68 6.50 6.85 7.09

Annual Balance 0.62 -0.59 -1.40 -1.84 -2.19

Revenues 4.87 4.91 to 5.29 4.70 to 5.40 4.56 to 5.41 4.30 to 5.46

Outlays 4.24 4.91 to 6.57 5.16 to 8.48 5.46 to 9.42 5.55 to 10.01

Annual Balance 0.62 -1.54 to 0.04 -3.53 to -0.21 -4.44 to -0.78 -5.14 to -0.86

Source: Congressional Budget Office.

Notes: Revenues equal payroll taxes and income taxes on benefits as a share of gross domestic product (GDP)

 in the specified year.

 Outlays equal scheduled Social Security benefits and administrative costs as a share of GDP in the specified year.

 The balance is the difference between revenues and outlays as a share of GDP in the specified year and may not

 equal the difference betweeen the preceding two rows because of rounding.

 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). The balances shown do not equal the difference between the outlays and revenues displayed because 

 each value is obtained from a different simulation.

Social Security Revenues and Outlays as a Percentage of Gross Domestic Product 

in Selected Years Under the Scheduled Benefits Scenario, 2005 to 2100

80 Percent Range of Uncertaintya
Figure 1-1.

Potential Range of Social Security Revenues and Outlays 

Under the Scheduled Benefits Scenario, 1985 to 2105

(Percentage of gross domestic product)

Source: Congressional Budget Office.

Note: Revenues include payroll taxes and income taxes on benefits; outlays include scheduled 

Social Security benefits and administrative costs. Under current law, CBO projects that outlays begin to exceed revenues in 2019 and that starting in 2047 scheduled benefits cannot be 

paid in full.

1985 1995 2005 2015 2025 2035 2045 2055 2065 2075 2085 2095 2105

12

10

8

6

4

2

0

Actual Projected

Outlays

Revenues
Table 1-2.

Revenues Outlays Balance

As a Percentage of Gross Domestic Product

50 years 

 (2006-2055) 5.39 5.68 -0.29

100 years 

 (2006-2105) 5.26 6.04 -0.78

80 Percent Range

of Uncertaintya

50 years 

 (2006-2055) 5.20 to 5.55 5.19 to 6.27 -0.89 to 0.13

100 years 

 (2006-2105) 5.04 to 5.47 5.57 to 6.73 -1.46 to -0.41

As a Percentage of Taxable Payroll

50 years 

 (2006-2055) 14.03 14.80 -0.76

100 years 

 (2006-2105) 13.84 15.90 -2.06

80 Percent Range

of Uncertaintya

50 years 

 (2006-2055) 13.82 to 14.25 13.50 to 16.38 -2.38 to 0.33

100 years 

 (2006-2105) 13.66 to 14.07 14.68 to 17.72 -3.88 to -1.07

Source: Congressional Budget Office.

Note: Summarized revenues and outlays are the present values of annual revenues 

 and outlays over the relevant time period divided by the present value of 

 gross domestic product or taxable payroll over that period. The summarized 

 balance is the present value of revenues minus the present value of outlays,

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

 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). The balances displayed do not equal the difference between the 

 outlays and revenues displayed because each value is obtained from a 

 different simulation.

Summarized Social Security Revenues, Outlays, and

Balances Under the Scheduled Benefits Scenario
Figure 1-2.

Potential Range of the OASDI Trust Fund Ratio Under the 

Scheduled Benefits Scenario, 1985 to 2105

Source: Congressional Budget Office.

Notes:OASDI = Old-Age, Survivors, and Disability Insurance.

The trust fund ratio is the ratio of the total trust fund balance at the beginning of a calendar 

year to total Social Security outlays in that year.

1985 1995 2005 2015 2025 2035 2045 2055 2065 2075 2085 2095 2105

10

5

-5

-10

-15

-20

0

Actual Projected
0

12345678

1985 1995 2005 2015 2025 2035 2045 2055 2065 2075 20

Percentage of Gross Domestic Product

Outlays Under the Scheduled Benefits and Payable Benefits Scenarios, 1985 to 2105

Figure 1-3.

Source: Congressional Budget Office.Note: Outlays under the payable benefits scenario (those financed by legal spending authority) are projected to fall below scheduled outlays in have been exhausted. Thereafter, outlays equal annual Social Security revenues.

Total Sched

Total Payable Outlays

Actual Projected
0

5,000

10,00015,00020,00025,00030,000

1940 1950 1960 1970 1980 1990 

10-Year Birth Cohort Beginning in Specified Year

2006 Dollars

Payable

First-Year Benefits

Scheduled First-Year Benefits

Median First-Year Retirement Benefits, by Birth Cohort

Figure 2-1.

Source: Congressional Budget Office.Notes: First-year benefits are projected assuming that all workers claim benefits at age 65. Values are net of income taxes paid on benefSocial Security trust funds. Payable benefits fall below scheduled benefits beginning in 2047, following trust fund exhaustion. Thereafter, benefits are projected by asboard cut in benefits each year so that total annual benefits are limited to total annual revenues. The reduction attributable to trust fund exis less dramatic than the reduction for annual outlays (as shown in Figure 1-3) because this figure shows average benefits for 10-year coh
0

5

101520253035404550

1940 1950 1960 1970 1980 1990 

10-Year Birth Cohort Beginning in Specified Year

Percent

Replacement Rate Under the

Payable Benefits Scenario

Replacement Rate Under the

Scheduled Benefits Scenario

Median Replacement Rates for Retired-Worker Beneficiaries, by Birth Cohort

Figure 2-2.

Source: Congressional Budget Office.Notes: Replacement rates are first-year benefits (net of income taxes paid on benefits and credited to the Social Security trust funds) as a career earnings. Payable benefits fall below scheduled benefits beginning in 2047, following trust fund exhaustion. Thereafter, benefits are projected by ascut in benefits each year so that total annual benefits are limited to total annual revenues. The reduction attributable to trust-fund exhaustiodramatic than the reduction for annual outlays (as shown in Figure 1-3) because this figure shows average replacement rates for 10-year c
0

50,000

100,000150,000200,000250,000300,000350,000

1940 1950 1960 1970 1980 1990 

10-Year Birth Cohort Beginning in Specified Year

Present Value in 2006 Dollars

Payable Lifetime 

Retirement Benefits

Scheduled Lifetime 

Retirement Benefits 

Median Lifetime Retirement Benefits, by Birth Cohort

Figure 2-3.

Source: Congressional Budget Office.Notes: Lifetime retirement benefits have been adjusted for inflation (to put them in constant dollars) and discounted to age 60. Values apaid on benefits and credited to the Social Security trust funds. Payable benefits fall below scheduled benefits beginning in 2047, following trust fund exhaustion. Thereafter, benefits are projected by aboard cut in benefits each year so that total annual benefits are limited to total annual revenues.
0

5,000

10,00015,00020,00025,00030,000

1940 1950 1960 1970 1980 1990 

10-Year Birth Cohort Beginning in Specified Year

2006 Dollars

Payable

First-Year Benefits

Scheduled First-Year Benefits

Median First-Year Disability Benefits, by Birth Cohort

Figure 2-1a.

Source: Congressional Budget Office.Notes: Values are net of income taxes paid on benefits and credited to the Social Security trust funds. Payable benefits fall below scheduled benefits beginning in 2047, following trust fund exhaustion. Thereafter, benefits are projected by asboard cut in benefits each year so that total annual benefits are limited to total annual revenues.
0

10203040506070

1940 1950 1960 1970 1980 1990 

10-Year Birth Cohort Beginning in Specified Year

Percent

Replacement Rate Under the

Payable Benefits Scenario

Replacement Rate Unde

Scheduled Benefits Sce

Median Replacement Rates for Disabled-Worker Beneficiaries, by Birth Cohort

Figure 2-2a.

Source: Congressional Budget Office.Notes: Replacement rates are first-year benefits (net of income taxes paid on benefits and credited to the Social Security trust funds) as a career earnings.Payable benefits fall below scheduled benefits beginning in 2047, following trust fund exhaustion. Thereafter, benefits are projected by ascut in benefits each year so that total annual benefits are limited to total annual revenues.
0

100,000200,000300,000400,000500,000600,000700,000

1940 1950 1960 1970 1980 1990 

10-Year Birth Cohort Beginning in Specified Year

Present Value in 2006 Dollars

Payable Lifetime Benefits

for Disabled-Worker Beneficiarie

Scheduled Lifetime Benefits 

for Disabled-Worker Beneficiaries

Median Lifetime Benefits for Disabled-Worker Beneficiaries, by Birth Cohort

Figure 2-3a.

Source: Congressional Budget Office.Notes: Lifetime benefits include both disability benefits and retirement benefits paid to disabled workers who have reached the normal rehave been adjusted for inflation (to put them in constant dollars) and discounted to age 60. Values are net of income taxes paid on beneSocial Security trust funds. Payable benefits fall below scheduled benefits beginning in 2047, following trust fund exhaustion. Thereafter, benefits are projected by aboard cut in benefits each year so that total annual benefits are limited to total annual revenues.
Table 2-1.

Measures of the Benefits Received by the Median Retired Worker,

by Birth Cohort and Lifetime Earnings Level

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

10-Year (2006 Dollars) Rate (Percent)a Benefits (2006 Dollars)b

Birth Cohort

Starting in Year Scheduled Payable Scheduled Payable Scheduled Payable

1940 14,800 14,800 44.5 44.5 150,900 150,900

1950 15,600 15,600 44.1 44.1 168,300 167,800

1960 16,200 16,200 42.2 42.2 181,700 176,400

1970 17,600 17,600 42.9 42.9 201,900 178,100

1980 19,600 16,400 43.0 36.0 229,300 178,500

1990 22,900 17,700 42.2 32.6 271,200 201,700

2000 26,100 19,300 41.8 31.0 318,800 227,900

Median in Lowest Household Earnings Quintile

1940 8,400 8,400 70.4 70.4 78,300 78,300

1950 9,200 9,200 69.4 69.4 88,500 88,400

1960 10,200 10,200 62.7 62.7 100,600 99,300

1970 11,000 11,000 66.2 66.2 107,400 97,800

1980 12,000 10,000 68.9 57.1 119,000 93,700

1990 13,800 10,700 66.3 51.2 140,300 104,900

2000 15,600 11,500 66.4 49.6 161,600 115,200

Median in Middle Household Earnings Quintile

1940 16,500 16,500 42.9 42.9 169,400 169,400

1950 17,000 17,000 42.6 42.6 186,600 186,000

1960 17,500 17,500 40.8 40.8 199,600 194,500

1970 19,300 19,300 41.3 41.3 223,800 196,500

1980 21,500 17,800 41.4 34.5 255,800 198,900

1990 25,000 19,300 40.7 31.4 300,400 224,100

2000 28,400 21,100 40.4 29.9 350,900 249,800

Median in Highest Household Earnings Quintile

1940 22,000 22,000 29.8 29.8 255,300 255,300

1950 24,300 24,300 28.6 28.6 293,200 292,200

1960 25,600 25,600 26.9 26.9 320,800 309,600

1970 28,200 28,200 27.7 27.7 359,600 310,600

1980 32,200 26,800 26.3 22.0 429,100 332,200

1990 36,400 28,400 25.6 19.8 492,700 367,500

2000 41,000 30,700 25.8 19.2 558,600 401,800

Source: Congressional Budget Office.

Notes: First-year annual benefits and replacement rates are computed for all individuals eligible to claim Old-Age

 Insurance benefits at age 62 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 payable benefits scenario subjects all beneficiaries to an across-the-board

 cut in benefits each year so that total projected benefits equal projected revenues once the Social Security

 trust funds have been exhausted. 

 The overall median values differ from the median values in the middle quintile because individuals are 

 sorted into quintiles on the basis of household earnings rather than benefit levels.

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

 b. The present value of all retired-worker benefits received.

Median for All Retired Workers
Table 2-1a.

Measures of the Benefits Received by the Median Disabled Worker,

by Birth Cohort and Age at Claim

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

10-Year (2006 Dollars) Rate (Percent)a Benefits (2006 Dollars)b

Birth Cohort

Starting in Year Scheduled Payable Scheduled Payable Scheduled Payable

1940 12,600 12,600 47.4 47.4 219,600 219,600

1950 13,400 13,400 49.9 49.9 224,400 224,100

1960 14,700 14,700 51.7 51.7 230,100 227,700

1970 16,400 16,400 52.2 52.2 265,100 250,100

1980 18,500 17,700 51.9 50.4 314,900 272,300

1990 21,400 18,200 51.1 44.0 378,500 299,400

2000 24,100 19,200 50.7 40.3 449,300 333,400

1940 — — — — — —

1950 — — — — — —

1960 9,100 9,100 59.0 59.0 346,600 346,500

1970 10,100 10,100 61.0 61.0 358,300 356,600

1980 11,600 11,600 60.2 60.2 411,000 406,400

1990 13,900 13,900 56.8 56.8 494,600 469,500

2000 16,000 15,800 55.5 54.8 627,500 541,400

1940 — — — — — —

1950 12,100 12,100 51.2 51.2 237,200 236,700

1960 13,200 13,200 53.2 53.2 242,000 241,500

1970 14,800 14,800 53.7 53.7 273,900 268,400

1980 16,600 16,600 53.7 53.7 321,700 298,600

1990 19,300 17,900 52.7 49.8 385,000 321,300

2000 21,700 17,400 52.6 42.2 467,300 353,700

1940 14,600 14,600 46.8 46.8 193,400 193,400

1950 15,800 15,800 48.6 48.6 202,200 202,000

1960 17,100 17,100 49.7 49.7 207,400 203,900

1970 19,300 19,300 49.8 49.8 244,100 227,300

1980 22,200 20,700 49.2 46.3 294,400 240,100

1990 25,800 20,100 48.7 37.8 358,100 271,100

2000 28,900 21,800 48.6 36.5 413,400 299,300

Source: Congressional Budget Office.

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

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

 Security trust funds. The payable benefits scenario subjects all beneficiaries to an across-the-board

 cut in benefits each year so that total projected benefits equal projected revenues once the Social Security

 trust funds have been exhausted. 

 The overall median values differ from the median values in the middle quintile because individuals are 

 sorted into quintiles on the basis of household earnings rather than benefit levels. Results are not 

 presented for some groups because data are not available for people who died before 1984.

 NRA = normal retirement age

 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.

Median Disabled Worker with Disability Onset at Ages 55 to NRA

Median for All Disabled Workers

Median Disabled Worker with Disability Onset at Ages Through 39

Median Disabled Worker with Disability Onset at Ages 40 to 54
Lowest Quintile of Lifetime Household Earners

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1940 1950 1960 1970 1980 1990 2000

2006 Dollars

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Middle Quintile of Lifetime Household Earners

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1940 1950 1960 1970 1980 1990 2000

2006 Dollars

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Highest Quintile of Lifetime Household Earners

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1940 1950 1960 1970 1980 1990 2000

10-Year Birth Cohort Beginning in Specified Year

2006 Dollars

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Source: Congressional Budget Office.

Note: Based on 500 simulations. Includes only individuals who live to at least age 45. The 80 percent range of uncertainty 

reflects the range in which the actual outcomes have an 80 percent chance of falling. Taxes include employer and employee 

Social Security payroll taxes. Values are adjusted for inflation and discounted to age 60. 

Figure 2-4.

Potential Range of Lifetime Social Security Payroll Taxes Under Current Law,

by Birth Cohort and Lifetime Earnings Level
Lowest Quintile of Lifetime Household Earners

0

200,000

400,000

600,000

800,000

1,000,000

1940 1950 1960 1970 1980 1990 2000

2006 Dollars

0

200,000

400,000

600,000

800,000

1,000,000

Middle Quintile of Lifetime Household Earners

0

200,000

400,000

600,000

800,000

1,000,000

1940 1950 1960 1970 1980 1990 2000

2006 Dollars

0

200,000

400,000

600,000

800,000

1,000,000

Highest Quintile of Lifetime Household Earners

0

200,000

400,000

600,000

800,000

1,000,000

1940 1950 1960 1970 1980 1990 2000

10-Year Birth Cohort Beginning in Specified Year

2006 Dollars

0

200,000

400,000

600,000

800,000

1,000,000

Source: Congressional Budget Office.

Note: Based on 500 simulations. Includes only individuals who live to at least age 45. The 80 percent range of uncertainty 

reflects the range in which the actual outcomes have an 80 percent chance of falling. Benefits include 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. Values are adjusted for inflation and discounted to age 60.

Scheduled Benefits, 80 percent range of uncertainty

Payable Benefits, 80 percent range

of uncertainty

Figure 2-5.

Potential Range of Lifetime Social Security Benefits Under the Payable Benefits

Scenario and Under the Scheduled Benefits Scenario, by Birth Cohort and 

Lifetime Earnings Level
Lowest Quintile of Lifetime Household Earners

0%

50%

100%

150%

200%

250%

1940 1950 1960 1970 1980 1990 2000

Benefit-to-Tax Ratio

0%

50%

100%

150%

200%

250%

Middle Quintile of Lifetime Household Earners

0%

50%

100%

150%

200%

250%

1940 1950 1960 1970 1980 1990 2000

Benefit-to-Tax Ratio

0%

50%

100%

150%

200%

250%

Highest Quintile of Lifetime Household Earners

0%

50%

100%

150%

200%

250%

1940 1950 1960 1970 1980 1990 2000

10-Year Birth Cohort Beginning in Specified Year

Benefit-to-Tax Ratio

0%

50%

100%

150%

200%

250%

Source: Congressional Budget Office.

Scheduled Benefits, 80 percent range of uncertainty

Payable Benefits, 80 percent range of uncertainty

Figure 2-6.

Potential Range of the Ratio of Lifetime Social Security Benefits to

Lifetime Taxes Under the Payable Benefits Scenario and Under the Scheduled 

Benefits Scenario, by Birth Cohort and Lifetime Earnings Level
Table B-1.

Measures of the Benefits Received by the Median Retired Worker,

by Birth Cohort and Lifetime Earnings Level

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

10-Year (2006 Dollars) Rate (Percent)a Benefits (2006 Dollars)b

Birth Cohort

Starting in Year Scheduled Payable Scheduled Payable Scheduled Payable

Males

1940 18,800 18,800 39.4 39.4 176,800 176,800

1950 18,900 18,900 40.0 40.0 189,500 188,900

1960 19,300 19,300 38.6 38.6 202,300 197,600

1970 20,500 20,500 39.7 39.7 221,500 196,000

1980 23,100 19,400 39.5 32.7 254,700 198,000

1990 26,400 20,400 39.0 30.2 294,500 219,100

2000 30,200 22,500 38.6 28.8 349,600 249,000

Median in Lowest Household Earnings Quintile

1940 9,800 9,800 59.8 59.8 92,100 92,100

1950 10,200 10,200 61.2 61.2 95,700 95,700

1960 10,900 10,900 57.4 57.4 106,700 105,200

1970 11,500 11,500 62.3 62.3 111,500 101,700

1980 12,700 10,600 64.2 54.4 126,300 98,800

1990 14,300 11,100 63.8 49.4 142,900 107,000

2000 16,400 12,100 62.6 46.8 168,500 119,500

Median in Middle Household Earnings Quintile

1940 19,500 19,500 38.6 38.6 200,200 200,200

1950 19,800 19,800 39.4 39.4 211,400 210,900

1960 20,100 20,100 38.1 38.1 224,300 218,800

1970 21,700 21,700 39.1 39.1 243,200 213,300

1980 24,400 20,300 38.7 31.8 280,300 219,400

1990 27,700 21,500 38.5 29.7 329,700 242,100

2000 31,600 23,500 38.0 28.3 383,200 272,000

Median in Highest Household Earnings Quintile

1940 23,400 23,400 22.5 22.5 284,000 284,000

1950 25,800 25,800 23.1 23.1 319,000 318,100

1960 27,200 27,200 21.7 21.7 348,800 336,100

1970 30,000 30,000 22.8 22.8 391,500 335,900

1980 34,300 28,500 21.1 17.5 465,000 359,000

1990 38,700 30,200 20.6 16.0 533,100 397,800

2000 43,500 32,500 20.9 15.7 603,200 432,800

(Continued)

Median for All Retired Workers
First-Year Benefits First-Year Replacement Present Value of Lifetime

10-Year (2006 Dollars) Rate (Percent)a Benefits (2006 Dollars)b

Birth Cohort

Starting in Year Scheduled Payable Scheduled Payable Scheduled Payable

Females

1940 11,700 11,700 51.0 51.0 131,200 131,100

1950 13,000 13,000 49.2 49.2 149,300 148,900

1960 13,800 13,800 46.6 46.6 163,400 158,200

1970 15,300 15,300 46.6 46.6 186,000 164,200

1980 16,900 14,200 46.9 39.5 209,800 163,100

1990 20,000 15,500 45.4 35.0 251,200 186,800

2000 22,900 17,000 44.8 33.2 292,200 209,700

Median in Lowest Household Earnings Quintile

1940 7,700 7,700 80.0 80.0 69,100 69,100

1950 8,500 8,500 76.6 76.6 81,300 81,300

1960 9,500 9,500 68.1 68.1 95,800 94,300

1970 10,500 10,500 70.1 70.2 103,900 94,800

1980 11,400 9,500 72.0 59.5 112,900 88,400

1990 13,400 10,400 68.9 53.0 138,000 102,900

2000 14,900 11,100 70.1 52.0 154,300 110,400

Median in Middle Household Earnings Quintile

1940 12,400 12,400 49.1 49.1 143,900 143,900

1950 14,000 14,000 47.0 47.0 163,200 162,600

1960 14,900 14,900 44.4 44.4 178,700 174,000

1970 16,800 16,800 44.2 44.1 206,900 183,200

1980 18,600 15,500 44.2 37.7 231,500 181,100

1990 22,100 17,200 43.0 33.1 276,000 205,700

2000 25,200 18,700 42.9 31.7 322,500 229,200

Median in Highest Household Earnings Quintile

1940 16,900 16,900 40.2 40.2 215,300 215,300

1950 20,100 20,100 37.3 37.3 257,000 255,800

1960 21,100 21,100 35.5 35.5 274,800 263,300

1970 23,400 23,400 35.2 35.2 307,900 267,400

1980 27,000 22,400 34.6 28.8 367,300 283,900

1990 30,900 24,000 33.9 26.2 429,600 321,900

2000 35,400 26,400 33.5 25.0 496,000 356,300

Source: Congressional Budget Office.

Notes: First-year annual benefits and replacement rates are computed for all individuals eligible to claim Old-Age

 Insurance benefits at age 62 and 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 payable benefits scenario subjects all beneficiaries to an across-the-board

 cut in benefits each year so that total projected benefits equal projected revenues once the Social Security

 trust funds have been exhausted. 

 The overall median values differ from the median values in the middle quintile because individuals are 

 sorted into quintiles on the basis of household earnings rather than benefit levels.

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

 b. The present value of all retired-worker benefits received.

Median for All Retired Workers