CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

CBO’s Long-Term Projections for

Social Security: 2009 Update

AUGUST 2009

1985 1992 1999 2006 2013 2020 2027 2034 2041 2048 2050 2062 2069 2076 2083

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Potential Range of Scheduled 

Social Security Outlays and Revenues

Percentage of Gross Domestic Product

Actual Projected

Outlays

Revenues
Pub. No. 4004
The Congress of the United States O Congressional Budget Office

A

PAPER

CBO

CBO’s Long-Term Projections for 

Social Security: 2009 Update

August 2009
Notes

Unless otherwise noted, 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.

Supplementary data are posted along with this report at CBO’s Web site (www.cbo.gov).
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 2009 to 2083. The paper was prepared by Noah Meyerson, Charles 

Pineles-Mark, Jonathan Schwabish, Michael Simpson, and Julie Topoleski of CBO’s LongTerm Modeling Group under the supervision of Joyce Manchester. Kenichiro Kashiwase provided valuable assistance.

Christian Howlett edited the paper, and Leah Mazade 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 (www.cbo.gov).

Douglas W. Elmendorf

Director

August 2009

Contents

CBO

The Finances of the Social Security Program 2

Projected Outlays and Revenues Over the Next 75 Years 2

The Uncertainty of Projections of Social Security’s Finances 4

Summarized Outlays and Revenues 4

The Trust Fund Ratio 5

The Distribution of Social Security Taxes and Benefits 5

First-Year Benefits 5

First-Year Replacement Rates 6

Lifetime Benefits 7

Lifetime Payroll Taxes and Lifetime Benefits for Workers, Dependents, and 

Survivors 7

Demographic and Economic Assumptions Used in CBO’s Analysis 8

Assumptions About Interest, Inflation, and Unemployment for 2020 and Later 9

Assumptions Underlying Projections of Gross Domestic Product and Earnings 9

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

Since August 2008 31

Appendix B: Differences Between CBO’s Long-Term Social Security Projections and 

Those of the Social Security Trustees 33

Tables

1. Social Security Revenues and Outlays in Selected Years Under the 

Scheduled Benefits Scenario 23

2. Summarized Social Security Revenues and Outlays for Selected Periods 

Under the Scheduled Benefits Scenario 24

3. Probability That Social Security Outlays Will Exceed Revenues by 

Specified Percentages in Selected Years Under the Scheduled 

Benefits Scenario 25

4. Social Security Benefits Received by Retired Workers Under the 

Scheduled and Payable Benefits Scenarios, by 10-Year Birth Cohort, 

Lifetime Earnings Level, and Sex 26
VI CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

5. Social Security Benefits Received by Disabled Workers Under the 

Scheduled and Payable Benefits Scenarios, by 10-Year Birth Cohort and 

Age of Onset of Disability 29

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

Pay Specified Percentages of Scheduled Benefits, by 10-Year 

Birth Cohort 30

Figures

1. Potential Ranges of Social Security Outlays and Revenues Under the 

Scheduled Benefits Scenario, 1985 to 2083 11

2. Social Security Outlays Under the Scheduled Benefits and Payable 

Benefits Scenarios, 1985 to 2083 12

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

Scheduled Benefits Scenario, 1985 to 2083 13

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

by Year, 2009 to 2083 14

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

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year 

Birth Cohort 15

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

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year 

Birth Cohort 16

7. Median Replacement Rates for Recipients of Retired-Worker Benefits 

Under the Scheduled Benefits and Payable Benefits Scenarios, by 

10-Year Birth Cohort 17

8. Median Replacement Rates for Recipients of Disabled-Worker Benefits 

Under the Scheduled Benefits and Payable Benefits Scenarios, by 

10-Year Birth Cohort 18

9. Median Lifetime Social Security Retirement Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year

Birth Cohort 19

10. Median Lifetime Social Security Disability Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year 

Birth Cohort 20

Tables (Continued)
CONTENTS CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE VII

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11. Potential Range of Lifetime Social Security Payroll Taxes, by 10-Year 

Birth Cohort and Lifetime Earnings 21

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

Benefits and Payable Benefits Scenarios, by 10-Year Birth Cohort and 

Lifetime Earnings 22

Box

1. Comparing Revenues from Income Taxes on Benefits Under Two 

Long-Term Fiscal Scenarios 3

Figures (Continued)

CBO

CBO’s Long-Term Projections for 

Social Security: 2009 Update

Today, Social Security’s annual revenues exceed its 

annual 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 pick 

up, and outlays will increase much faster than revenues. 

The Congressional Budget Office (CBO) projects that 

the Social Security trust funds will be exhausted in 2043.1

(Unless otherwise stated, the years referred to in this 

report are calendar years.) Thus, if the law remains 

unchanged, CBO projects that 34 years from now, the 

Social Security Administration (SSA) will not have the 

legal authority to pay full benefits. Such long-term projections are necessarily uncertain; nevertheless, the general conclusions presented here hold true under a wide 

range of assumptions.

CBO regularly prepares long-term projections of revenues and outlays for the Social Security program.2

 This 

latest report presents projections for the 75-year period 

from 2009 through 2083; those estimates are consistent 

with CBO’s March 2009 10-year baseline.3

 The projections differ 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.4

For this analysis, CBO projected future Social Security 

benefits under two scenarios. In the “payable benefits” 

scenario, outlays include only those benefits that SSA will 

have the legal authority to pay under current law. That 

scenario assumes that once the Social Security trust funds 

are exhausted, SSA will reduce all benefits—those paid to 

both existing and new beneficiaries—by whatever percentage is necessary to make the program’s total annual 

outlays equal its total available revenues. That percentage 

would vary each year. In the other scenario, the “scheduled benefits” scenario, outlays include the full benefits as 

calculated under current law, regardless of the amounts 

available in the trust funds. When presenting projections 

of Social Security’s overall finances, CBO generally 

focuses on the scheduled benefits scenario. (Those scenarios are distinct from the extended-baseline scenario and 

the alternative fiscal scenario presented in CBO’s The 

Long-Term Budget Outlook. In this report, the assumptions about income-tax revenues in both scenarios are 

consistent with those underlying the extended-baseline 

scenario, which adheres closely to current law.)

CBO’s projections indicate that future Social Security 

beneficiaries will receive larger benefits during retire1. The results presented here differ from the long-term Social Security projections presented in Chapter 3 of Congressional Budget 

Office, The Long-Term Budget Outlook (June 2009), because of 

minor adjustments in methodology. 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 all past revenues, including interest, minus all 

past outlays. The funds’ balance also represents the total amount 

that the government is legally authorized to spend on Social Security at a point in time. For more details, see Congressional Budget 

Office, Federal Debt and the Commitments of Federal Trust Funds,

Issue Brief (October 24, 2002; revised May 6, 2003). 

2. CBO first released long-term Social Security projections in The 

Outlook for Social Security (June 2004). It published updated projections in March 2005, June 2006, and August 2008. Differences 

between the current projections and those published in August 

2008 are described in Appendix A.

3. See Congressional Budget Office, A Preliminary Analysis of the 

President’s Budget and an Update of CBO’s Budget and Economic 

Outlook (March 2009).

4. For a description of CBO’s projection methodology, see Congressional Budget Office, CBO’s Long-Term Model: An Overview (June 

2009).
2 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

ment—and will have paid higher payroll taxes—than 

current beneficiaries do, even after accounting for inflation and even if scheduled payments are reduced because 

the trust funds are exhausted. However, under both scenarios, those benefits will equal a smaller percentage of 

beneficiaries’ preretirement earnings than they do now, 

CBO estimates. 

The Finances of the Social Security 

Program 

CBO examines the financial status of Social Security in 

several ways. The fullest perspective is given by projected 

streams of annual outlays and revenues; CBO also presents the uncertainty around those projections. A more 

succinct analysis is given by measures that summarize 

those annual streams in a single number. Finally, trust 

fund ratios show the relationship between total scheduled 

benefits and the resources available to pay those benefits.

Projected Outlays and Revenues 

Over the Next 75 Years

Currently, the revenues coming in to the Social Security 

program each year exceed the program’s outlays. Total 

outlays (benefits plus administrative costs) equaled 

4.4 percent of gross domestic product (GDP) in 2008, 

whereas the program’s dedicated revenues equaled 

4.8 percent of GDP. Dedicated revenues come primarily 

from Social Security payroll taxes, but a small portion 

comes from those income taxes levied on the benefits of 

higher-income beneficiaries and credited to the Social 

Security trust funds. The trust funds are also credited 

with interest on their balances; however, those transactions are intragovernmental and do not represent federal 

revenues. In 2008, such interest equaled 0.8 percent of 

GDP. 

As the baby boomers age, the number of Social Security 

beneficiaries will grow considerably. In the absence of legislative changes, spending for the program will climb to 

6.1 percent of GDP in 2033, CBO projects. Over the 

following 20 years, scheduled spending will decline 

slightly relative to the size of the economy, to about 

5.7 percent of GDP, as more baby boomers die. However, 

demographers generally expect life expectancy to continue rising and birth rates to remain at current levels. As 

a result, scheduled Social Security outlays are projected to 

resume their upward trajectory after 2054, reaching 

6.2 percent of GDP in 2083.

The amount of dedicated revenues credited to the Social 

Security trust funds is likely to stay almost constant as a 

share of GDP over the next 75 years, edging up from 

4.8 percent of GDP last year to 4.9 percent in 2083. 

CBO projects that although total earnings of individuals 

will remain nearly constant as a percentage of GDP, taxable earnings will decline relative to GDP because a growing share of compensation will be paid in the form of 

nontaxable health benefits.5

 Thus, in the absence of 

changes to the program, revenues from Social Security 

payroll taxes will edge down as a share of GDP over the 

75-year projection period: from 4.7 percent last year to 

4.4 percent in 2083.

In contrast, revenues credited to the Social Security trust 

funds from income taxes on the program’s benefits are 

projected to grow in coming decades. Under current law, 

receipts from income taxes rise over time as a percentage 

of GDP for several reasons: a larger number of Social 

Security beneficiaries become subject to taxes on benefits, 

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.6

 As a result, under current law, the revenues credited to the Social Security trust funds from 

taxes on benefits are projected to increase from 0.1 percent of GDP today to 0.5 percent in 2083. (For projections under an alternative assumption about future revenues from income taxes on benefits, see Box 1.) Despite 

that increase, total revenues credited to the trust funds are 

projected to remain almost constant as a percentage of 

GDP.

5. Because CBO projects that the annual growth of health care 

spending will gradually slow down (as reported in The Long-Term 

Budget Outlook), the annual decline in taxable earnings as a share 

of compensation is projected to slow from about -0.25 percent in 

2020 to about -0.05 percent in 2083, averaging -0.12 percent over 

that period.

6. For details, see Congressional Budget Office, The Long-Term 

Budget Outlook, Chapter 5.
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 3

CBO

CBO projects that as outlays rise as a share of GDP, 

Social Security’s annual spending will roughly equal its 

revenues over the next decade (see Figure 1 on page 11).7

But by the end of the decade, a gap between the program’s income and outlays is likely to develop and then 

persist for the indefinite future, even if spending ends up 

being lower and revenues higher than expected.8

That gap will ultimately eliminate the balance 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 12); thereafter, they will 

equal the Social Security program’s annual revenues. In 

2043—CBO’s projected date for the exhaustion of the 

trust funds—revenues will equal only 83 percent of 

scheduled outlays. Thus, payable benefits will be 17 percent lower than scheduled benefits. The gap between 

scheduled and payable benefits will begin to widen in 

about 2055, CBO projects, and by 2083, payable benefits 

will be 21 percent smaller than scheduled benefits. 

The current recession is resulting in lower earnings for 

workers and therefore in lower Social Security revenues 

than would otherwise have occurred, but it is not having 

Box 1.

Comparing Revenues from Income Taxes on Benefits Under Two 

Long-Term Fiscal Scenarios

In The Long-Term Budget Outlook, published in June 

2009, the Congressional Budget Office (CBO) made 

long-term projections of Social Security’s finances 

under two scenarios that incorporated different 

assumptions about future income tax receipts. The 

first scenario, called the extended-baseline scenario, 

continued CBO’s 10-year baseline concept over the 

long term. CBO’s baseline is a benchmark for measuring the budgetary effects of proposed changes in 

federal revenues or spending. As such, it largely 

reflects current law. That extended-baseline scenario 

forms the basis for the projections in this report.

The second scenario in The Long-Term Budget Outlook, called the alternative fiscal scenario, deviated 

from the baseline even during the next 10 years by 

incorporating some policy changes that are widely 

expected to occur and that policymakers have regularly made in the past. Under that scenario, certain 

changes to tax law that are currently scheduled to 

occur (such as next year’s expiration of tax changes 

enacted in 2001 and 2003) would not take effect, 

and the alternative minimum tax would be indexed 

for inflation.

CBO’s long-term projections of Social Security 

spending and of revenues from Social Security payroll 

taxes are identical under those two scenarios. However, revenues for Social Security from income taxes 

on benefits would be lower under the alternative fiscal scenario than under the extended-baseline scenario. As a result, projections of Social Security’s 

finances would be a bit less favorable under the tax 

assumptions of the alternative fiscal scenario. Specifically, revenues from taxing benefits would equal 

0.4 percent of gross domestic product (GDP) in 

2083 rather than the 0.5 percent projected under the 

extended-baseline scenario, CBO estimates. And 75-

year summarized revenues would equal 5.2 percent of 

GDP or 14.1 percent of taxable payroll (another 

commonly used measure), instead of 5.3 percent of 

GDP or 14.3 percent of taxable payroll. The 75-year 

summarized Social Security deficit would be 0.6 percent of GDP or 1.5 percent of taxable payroll under 

the alternative fiscal scenario, rather than 0.5 percent 

of GDP or 1.3 percent of taxable payroll under the 

extended-baseline concept.

7. 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).

8. For long-term analyses, CBO generally presents outlays and revenues as a percentage of GDP, but another common practice is to 

show them relative to taxable payroll. Those projections are presented in Table W-1 of the supplementary data file.
4 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

as large an effect on benefit payments. Consequently, for 

the next few years, surpluses in the Social Security trust 

funds will be noticeably smaller or deficits larger than 

they would have been if economic growth had remained 

steady. In the long term, the recession will have little 

effect on revenues and outlays as a percentage of GDP, 

but the trust funds’ balances will be permanently lower.

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. Thus, 

a full exposition of projected finances includes both the 

expected outcomes and the inherent uncertainty surrounding such projections. 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, such as fertility and mortality rates, 

interest rates, and the rate of growth of economic 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.9 Uncertainty about 

fertility rates and productivity growth causes the most 

variation in long-term Social Security projections.

In this report, CBO displays the distribution of outcomes 

with an 80 percent range of uncertainty—meaning that, 

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 6.1 percent of GDP in 2033, its uncertainty 

analysis indicates a 10 percent chance that outlays will be 

less than 5.4 percent of GDP in that year and a 10 percent chance that outlays will exceed 6.8 percent of GDP 

(see Table 1 on page 23). In any case, outlays in 2033 

are almost certain to be much higher than their current 

4.4 percent share of GDP. There is less uncertainty about 

revenues as a percentage of GDP than about outlays 

because payroll tax revenues are a fixed share of taxable 

earnings, which in turn are a relatively constant share of 

GDP. CBO anticipates that, with payments of scheduled 

benefits, Social Security outlays will exceed revenues by 

about 1 percent of GDP in each of the years shown in 

Table 1 (2033, 2058, and 2083) and there is only a small 

chance that revenues will exceed outlays.

Summarized Outlays and Revenues

Long-term projections of annual outlays and revenues 

show the 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 covering 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 account for the fact that people 

place less value on a dollar in the future than they do on 

one in the present. As a result, even after adjustments for 

inflation, a dollar today is more valuable than a dollar in 

the future. Analysts thus summarize 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.10 In calculating the summarized measures, analysts make two other adjustments: They add the trust 

funds’ current balance to summarized revenues, and they 

add 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. 

Under the scheduled benefits scenario, Social Security’s 

75-year summarized outlays equal 5.7 percent of GDP, 

and its summarized revenues equal 5.3 percent, CBO 

projects. The result is a summarized deficit of 0.5 percent 

of GDP—or 1.3 percent of taxable payroll (see Table 2 

on page 24). In other words, CBO projects that if the 

Social Security payroll tax rate was increased immediately 

and permanently by 1.3 percentage points—from the 

current rate of 12.4 percent to 13.7 percent—then the 

9. For more details, see Congressional Budget Office, Quantifying 

Uncertainty in the Analysis of Long-Term Social Security Projections, 

Background Paper (November 2005), especially pp. 29 and 34.

10. 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. To calculate the present value 

of a sum paid or received in a future year, an annual discount 

rate is applied. For example, at a discount rate of 3 percent, the 

present value of $105 payable a year from today is about $102. 

For the calculations in this report, CBO used a discount rate of 

3.0 percent. 
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 5

CBO

trust funds’ balance at the end of 2083 would equal projected outlays for 2084.

Much uncertainty, however, surrounds many of CBO’s 

assumptions about economic and demographic conditions in the future. That uncertainty implies that the 75-

year summarized deficit may be much larger or smaller 

than 0.5 percent of GDP. In CBO’s estimation, there is a 

10 percent chance that the summarized deficit will be 

greater than 1.0 percent of GDP and a 10 percent chance 

that it will be less than 0.1 percent of GDP.

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 25). The likelihood that outlays 

will exceed revenues in 2030 is about 99 percent, CBO 

projects. There is almost a 60 percent chance that the gap 

will be larger than 1 percentage point of GDP and a 

5 percent chance that it will be larger than 2 percentage 

points. The probability that outlays will exceed revenues 

is slightly lower after 2035, as many members of the 

baby-boom generation die, but it still remains above 

90 percent. As the uncertainty about outlays grows, as 

shown in Figure 1, the probability that the gap between 

outlays and revenues will be at least 2 percentage points 

of GDP grows in later years, reaching 28 percent by 

2080.

The Trust Fund Ratio

Another common measure of Social Security’s finances is 

the ratio of the trust funds’ balance 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 2009—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 3.5, CBO estimates. The ratio is projected to 

peak in the next few years and then decline quickly 

(see Figure 3 on page 13). 

CBO has projected that the balance in the trust funds, 

and thus the trust fund ratio, will fall to zero in 2043. 

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 10 percent chance that they will remain solvent 

through at least 2072. The negative balances shown in 

Figure 3 after 2043 represent CBO’s estimates of the 

cumulative amount of scheduled benefits that cannot be 

paid from the program’s current-law 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 Administration does not 

have the legal authority to borrow money to pay 

benefits.)

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 14). 

According to CBO’s calculations, there is a 20 percent 

chance that the funds will be exhausted before 2035, a 

75 percent chance that they will be exhausted by 2050, 

and a 94 percent chance that they will be exhausted by 

2083.

The Distribution of Social Security 

Taxes and Benefits

Grouping Social Security participants by age or other 

characteristics and examining how taxes and benefits are 

distributed among them can illuminate the program’s 

effects on people and the economy. Specifically, CBO 

groups individuals by their 10-year birth cohort—for 

example, people born in the 1940s—and by the quintile 

of their lifetime household earnings.11 (The top one-fifth 

of earners, for instance, compose the highest earnings 

quintile.) Focusing on benefits net of the income taxes on 

benefits that higher-income beneficiaries pay and that are 

credited to the Social Security trust funds, CBO analyzed 

the first-year annual benefit received, the ratio of that 

benefit to average lifetime earnings, lifetime benefits 

received, and lifetime taxes paid.

First-Year Benefits

CBO’s analysis indicates that, on average, future Social 

Security beneficiaries are likely to receive higher first-year 

annual benefits than today’s beneficiaries receive, even 

under the payable benefits scenario and even after an 

adjustment for the effects of inflation. (The first-year 

annual benefit that a beneficiary receives calculated in 

real, or inflation-adjusted, dollars is a measure of the pur11. Projecting earnings for individuals who are in different cohorts 

and at different points in the earnings distribution is even more 

challenging than projecting aggregate earnings. CBO is continually working to improve its projections of Social Security’s effects 

among different population groups, and the estimates presented 

in this section should be viewed with some caution. 
6 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

chasing power of his or her Social Security benefit in 

today’s dollars.)12 Furthermore, in any given calendar 

year, each birth cohort is projected to receive higher real 

benefits than the preceding one will receive.

The first-year benefit amount depends partly 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 first-year benefits. To 

ensure that the data are comparable over time, CBO considered a hypothetical benefit amount in this analysis: the 

median benefit that a worker would receive if everyone 

claimed benefits at age 65. CBO has projected those benefits for both retired workers (beneficiaries age 62 or older 

who receive benefits on the basis of their own work history) and disabled workers (disabled beneficiaries who 

receive benefits on the basis of their work histories).

Besides the age at which benefits are claimed, the firstyear 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 the person’s history of 

earnings. By itself, growth in average earnings over time 

leads to higher scheduled first-year benefits. However, 

under current law, the growth of first-year benefits for 

retired workers in a number of birth cohorts will be 

approximately offset by the scheduled increase in the normal retirement age, which is gradually rising from 65 for 

people born before 1938 to 67 for those born after 1959. 

That increase is effectively equivalent to a reduction in 

benefits for any age at which benefits are claimed. Once 

the scheduled increase in the normal retirement age is 

fully phased in, median first-year benefits will grow (see 

Figure 5 on page 15 and Table 4 on page 26). In the year 

that the trust funds are exhausted, payable benefits will 

fall by 17 percent, CBO projects, but after that they will 

again increase as earnings grow. In real terms, the scheduled first-year benefits for people born in the first decade 

of the 21st century will be about 70 percent more than 

the benefits received by those born in the 1940s; the payable first-year benefits will increase by less than 40 percent.

The trends for first-year benefits for disabled workers are 

similar to those for retired workers. However, the scheduled increase in the normal retirement age will have no 

direct effect on benefits for people with disabilities. Thus, 

CBO projects that real first-year disability benefits will 

increase steadily over time under both the payable benefits and scheduled benefits scenarios (see Figure 6 on 

page 16 and Table 5 on page 29).

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.13 The scheduled increase in the normal 

retirement age will lower the replacement rate for future 

beneficiaries (for any chosen age of claiming 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 (about 42 percent) will be slightly lower than the 

rate for beneficiaries born in the 1940s (about 45 percent), CBO estimates (see Table 4 on page 26). Under 

the payable benefits scenario, the replacement rate will 

drop noticeably at all earnings levels for cohorts who first 

receive benefits after the trust funds are exhausted and 

Social Security has to rely only on its annual revenues (see 

Figure 7 on page 17).

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

who have lower earnings. For example, for men born in 

the 1940s, the median replacement rate is 64 percent for 

those in the lowest household earnings quintile and 

24 percent for those in the highest earnings quintile. 

Because disabled workers tend to have lower earnings 

than retired workers do, replacement rates tend to be 

12. 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. 

(CBO projects that there will be no such adjustments in 2010 

through 2012; see Congressional Budget Office, A Preliminary 

Analysis of the President’s Budget and an Update of CBO’s Budget 

and Economic Outlook.) 

13. Retired-worker beneficiaries are retirees who receive benefits on 

the basis of their own work histories, as opposed to dependents or 

survivors, who may receive benefits on the basis of another person’s work history. In these calculations, “average career earnings” 

are the average of a retired worker’s highest 35 years of covered 

earnings, 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.)
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 7

CBO

higher for disabled workers than for retired workers (see 

Figure 8 on page 18 and Table 5 on page 29).14

Lifetime Benefits

Another way to measure the income that retired-worker 

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

that a worker gets from the program. CBO estimates that 

each birth cohort will receive greater average lifetime benefits than the preceding cohort, even under the payable 

benefits scenario. For example, median scheduled lifetime 

benefits for people born in the 1990s are about 80 percent greater than those for people born in the 1940s; payable benefits for the 1990s cohort are more than 45 percent greater. 

The trend in median lifetime retirement benefits (shown 

in Figure 9 on page 19) differs from the trend in median 

first-year benefits (shown in Figure 5 on page 15) for two 

reasons. First, as life expectancy increases, people will collect benefits for longer periods, and scheduled lifetime 

benefits will grow faster than scheduled first-year benefits. Second, cohorts who begin receiving benefits before 

the trust funds are exhausted will collect the full amount 

of their scheduled first-year benefits. However, some 

members of those cohorts will still be receiving benefits 

when the trust funds become exhausted. At that point 

payable benefits will decline, and as a result, the payable 

lifetime benefits of those cohort members will be lower 

than their scheduled lifetime benefits (see Table 4 on 

page 26).

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 because they generally claim benefits earlier in their lifetime, which 

increases the benefits’ present value (see Figure 10 on 

page 20 and Table 5 on page 29). 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 that each participant pays over his or her lifetime and the present value of the total Social Security 

benefits—including payments to dependents and survivors—received over a lifetime. (Measures of taxes comprise all Social Security payroll taxes levied on individual 

earnings, including the shares paid by both employers 

and employees.) CBO has estimated ranges of uncertainty for lifetime measures of taxes and benefits to reflect 

the inherent uncertainty in the demographic and economic assumptions that CBO used for its projections. 

(Those assumptions are discussed in the next section.)

CBO projected measures of lifetime payroll taxes and lifetime benefits by 10-year birth cohorts. Those projections 

indicate that:

B Projected increases in real taxable earnings over time 

result in proportional increases in lifetime payments of 

payroll taxes. In dollar terms, the uncertainty is greatest for workers in the highest quintile of lifetime earners. However, when the uncertainty range for lifetime 

taxes paid is measured as a percentage of median lifetime taxes paid for each quintile and cohort, the range 

is approximately equal for all quintiles. (See Figure 11 

on page 21, which shows the 80 percent range of 

uncertainty—the range within which 80 percent of 

possible values are likely to fall—for the projected lifetime payroll taxes that individuals within a particular 

birth cohort will pay.)

B Projected increases in both real earnings and life 

expectancy lead to increases in lifetime Social Security 

benefits over time. Lifetime benefits are higher under 

the scheduled benefits scenario but follow a similar 

pattern under the payable benefits scenario. (See Figure 12 on page 22, which presents projections of average lifetime benefits received by an individual within a 

birth cohort—including retired-worker, disabledworker, 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.) 

14. 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, if a worker became disabled at age 50, his or her average earnings would be calculated 

over the highest 23 years of earnings.
8 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

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 individuals in various earnings quintiles indicates how their lifetime benefits compare with 

the taxes they and their employers pay. A benefit-to-tax 

ratio of 150 percent, for example, means that benefits are 

50 percent greater than taxes. Scheduled taxes are not sufficient to pay full scheduled benefits, however, so those 

ratios are unrealistically high. The ratio is higher for people with lower earnings and lower for those with higher 

earnings, partly because Social Security’s benefit formula 

is progressive and partly because people with low household earnings are more likely to receive disability or 

dependent benefits, or both.15 For people in the lowest 

earnings quintile, the ratio is above 150 percent; for those 

in the middle quintile, it is about 90 percent; and for 

people in the highest earnings quintile, it averages 60 percent. The effects of the progressive formula are partially 

offset by the longer average life expectancy of higher earners.16

Uncertainty about future benefits can be presented in 

another way: by showing the likelihood that a cohort will 

receive a specified percentage of scheduled benefits. For 

example, according to CBO’s projections, the 1940s 

cohort is virtually certain to receive all of its scheduled 

first-year benefits (see Table 6 on page 30). The 1990s 

cohort, however, has only a 16 percent chance of receiving all of its scheduled first-year benefits under the payable benefits scenario, although it has an 85 percent 

chance of receiving at least 70 percent of those benefits. 

The exhaustion of the trust funds may occur after a group 

has begun collecting benefits, so the odds that a beneficiary will collect all or most of his or her scheduled lifetime benefits are generally lower than the odds of collecting the same proportion of first-year benefits. For 

instance, although the 1940s cohort has a 100 percent 

chance of collecting virtually all of its first-year benefits, it 

has an 83 percent chance of receiving all of its scheduled 

lifetime benefits under the payable benefits scenario. Still, 

the cohort has a 99 percent chance of receiving at least 

95 percent of its scheduled benefits. The 1990s cohort, in 

comparison, has only a 6 percent chance of receiving all 

of its scheduled lifetime benefits, a 13 percent chance of 

receiving at least 95 percent of them, and a 45 percent 

chance of receiving at least 85 percent of them under the 

payable benefits scenario.

Demographic and Economic 

Assumptions Used in CBO’s Analysis

CBO develops its long-term Social Security projections 

using a microsimulation model of the U.S. population, 

economy, and federal budget. A microsimulation model 

starts with individual-level data from a representative 

sample of the population and projects demographic and 

economic outcomes for that sample through time. CBO 

then sums the output from the microsimulation model to 

obtain totals for demographic and economic variables.17

Projecting the financial outlook for Social Security over 

75 years requires making a host of assumptions about 

demographic and economic variables. This analysis uses 

the same assumptions as The Long-Term Budget Outlook

of June 2009. Specifically, for overall trends in demographics and disability, CBO uses the intermediate 

assumptions in the 2009 report of the Social Security 

trustees on the aggregate fertility rate in the United 

States, the rate of decline in mortality, levels of immigration and emigration, and incidence and termination rates 

in the Social Security Disability Insurance program.18

Long-term assumptions about the economy are based on 

the assumptions that CBO used in developing its baseline 

budget projections and on historical economic trends. 

For fiscal years 2009 through 2019, the economic 

assumptions are consistent with the ones in CBO’s March 

2009 economic forecast, which were used for CBO’s 

baseline budget projections for that period.19 The 

15. Both annual earnings and the number of years of earnings affect 

lifetime earnings. Earlier claiming of Social Security benefits is 

often associated with having fewer years of earnings and, in many 

cases, lower lifetime earnings. Currently, the timing of the claiming of benefits in CBO’s model does not vary with earnings. 

16. See Congressional Budget Office, Is Social Security Progressive? 

(December 2006).

17. For details, see Congressional Budget Office, CBO’s Long-Term 

Model: An Overview. 

18. See Social Security Administration, The 2009 Annual Report of the 

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

Federal Disability Insurance Trust Funds (May 12, 2009). For a discussion of the differences between CBO’s long-term projections 

and those of the trustees, see Appendix B. 

19. See Congressional Budget Office, A Preliminary Analysis of the 

President’s Budget and an Update of CBO’s Budget and Economic 

Outlook.
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 9

CBO

assumptions for 2019 provide the jumping-off point in 

making assumptions about the values of economic variables for the rest of the 75-year projection period. CBO 

directly assumed values for interest rates, inflation, and 

unemployment. In contrast, CBO did not make specific 

assumptions about the growth of GDP and the rate of 

growth of earnings. CBO derived those values by using 

other economic and demographic assumptions. (Annual 

values for selected economic variables can be found in the 

supplementary data for this report on CBO’s Web site, 

www.cbo.gov.)

Assumptions About Interest, Inflation, and 

Unemployment for 2020 and Later

For its projections after the 10-year baseline period, CBO 

assumed that the real interest rate on federal debt held by 

the public would eventually stabilize at 3.0 percent a year, 

about equal to the average rate observed over the past 

50 years. CBO used that same value for the discount rate 

in its present-value calculations. CBO also assumed that 

annual inflation—as measured by growth in the consumer price index for urban wage earners and clerical 

workers (CPI-W)—would be 2.0 percent over the 

long run and that the unemployment rate would be 

4.8 percent.

Assumptions Underlying Projections of Gross 

Domestic Product and Earnings

CBO projected that from 2020 to 2083, real GDP would 

grow at an average annual rate of 2.2 percent and real 

earnings would grow at an average annual rate of 1.4 percent. Those estimates were based on CBO’s demographic 

assumptions, as noted above, and on four underlying economic assumptions:

B Growth of Productivity. CBO assumed that over the 

long term, total factor productivity (average real output per unit of combined labor and capital services) 

would increase by 1.3 percent a year, on average. CBO 

used that assumption in an economic model that 

included projections of growth in the supply of labor 

and capital to compute the resulting growth in labor 

productivity (measured as growth in output per hour 

worked). Projected growth of labor productivity averages 1.9 percent a year. Growth in labor productivity 

does not translate directly into growth in earnings. 

B Changes in the Ratio of Taxable Earnings to Total 

Compensation. CBO assumed that over the 75-year 

projection period, the share of compensation that 

workers received as nontaxable health benefits would 

increase at the same rate as non-Medicare, nonMedicaid health care spending. That increase would 

reduce the average growth rate of taxable earnings.20

Specifically, because CBO projects that growth in 

health care spending will gradually slow down, it projects that the annual change in taxable earnings as a 

share of compensation will slow from about -0.25 percent in 2020 to about -0.05 percent in 2083, averaging -0.12 percent over that period. Such a decline 

would increase the projected annual growth of real 

wages by the same amount (relative to earnings that 

stayed constant as a share of compensation).

B Average Hours Worked. CBO assumed that the average number of hours worked by people in each demographic group would remain constant, reflecting the 

fact that different segments of the population work 

different numbers of hours, on average. 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, CBO’s projection of total 

average hours worked varies slightly over time because 

of projected changes in the composition of the labor 

force.

B Difference Between Inflation Measured by the GDP 

Deflator and the CPI-W. The GDP deflator measures 

the level of prices of all final goods and services produced; the CPI-W is an index of consumer prices 

based on the typical market basket of goods and services consumed by urban wage earners and clerical 

workers. CBO uses the CPI-W to translate nominal 

earnings growth into real earnings growth. When the 

GDP deflator grows more slowly than the CPI-W, the 

projected growth of real earnings is reduced. CBO 

assumed that the gap, and thus the reduction in real 

earnings growth, would average 0.3 percentage points 

a year.

20. For further details, see Congressional Budget Office, The LongTerm Budget Outlook, Chapter 2. The share of compensation 

made up of other nontaxable benefits was assumed to remain 

constant.
10 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Long-term budget projections require a stable economic 

backdrop. For these projections, CBO assumed that even 

a large increase in federal debt would not affect economic 

growth or real interest rates after the first 10 years. However, CBO projects that under current law, federal debt 

will increase substantially, resulting in higher interest 

rates and slower economic growth than are assumed in 

this report. If that occurred, the actual shortfall in Social 

Security’s finances would be greater than that projected in 

this report.21

21. See Congressional Budget Office, The Long-Term Budget Outlook,

pp. 16–18.
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 11

CBO

Figure 1.

Potential Ranges of Social Security Outlays and Revenues Under the 

Scheduled Benefits Scenario, 1985 to 2083

(Percentage of gross domestic product)

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 receive full benefits each year as calculated under current law. In the payable benefits 

scenario, workers receive full benefits until the trust funds are exhausted in 2043. Then benefits are subjected to an across-the-board 

cut each year so that total projected benefits equal projected revenues.

a. Includes scheduled benefits and administrative costs.

b. Includes payroll taxes and revenues from income taxes on benefits.

1985 1992 1999 2006 2020 2013 2027 2034 2041 2048 2055 2062 2069 2076 2083

0

4

3

5

6

7

8

Actual Projected

Outlaysa

Revenuesb
12 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Figure 2.

Social Security Outlays Under the Scheduled Benefits and Payable Benefits 

Scenarios, 1985 to 2083

(Percentage of gross domestic product)

Source: Congressional Budget Office.

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. Then benefits are subjected to an across-the-board 

cut each year so that total projected benefits equal projected revenues.

1985 1992 1999 2006 2013 2020 2027 2034 2041 2048 2055 2062 2069 2076 2083

0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

Payable Benefits Scenario

Actual Projected Scheduled Benefits Scenario
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 13

CBO

Figure 3.

Potential Range of the Social Security Trust Fund Ratio Under the 

Scheduled Benefits Scenario, 1985 to 2083

Source: Congressional Budget Office.

Notes: The trust fund ratio is the ratio of the total balance in the Social Security 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 receive full benefits each year as calculated under current law.

-10

-5

-20

-15

0

5

10

Actual Projected

1985 1992 1999 2006 2020 2013 2027 2034 2041 2048 2055 2062 2069 2076 2083
14 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Figure 4.

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

by Year, 2009 to 2083

(Percent)

Source: Congressional Budget Office.

2009 2015 2021 2027 2033 2039 2045 2051 2057 2063 2069 2075 2081

0

10

20

30

40

50

60

70

80

90

100
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 15

CBO

Figure 5.

Median First-Year Social Security Retirement Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year Birth Cohort

(Thousands of 2009 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.

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. Then benefits are subjected to an across-the-board 

cut each year so that total projected benefits equal projected revenues. The reduction attributable to trust-fund exhaustion shown in 

this figure is less dramatic than the reduction in total annual outlays shown in Figure 2 because this figure shows average benefits for 

10-year cohorts.

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
16 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Figure 6.

Median First-Year Social Security Disability Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year Birth Cohort

(Thousands of 2009 dollars)

Source: Congressional Budget Office.

Notes: Values are net of income taxes paid on benefits and credited to the Social Security trust funds.

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. 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
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 17

CBO

Figure 7.

Median Replacement Rates for Recipients of Retired-Worker Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year 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.) 

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. Then benefits are subjected to an across-the-board 

cut each year so that total projected benefits equal projected revenues. The reduction attributable to trust-fund exhaustion shown in 

this figure is less dramatic than the reduction in total annual outlays shown in Figure 2 because this figure shows average replacement 

rates for 10-year cohorts.

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
18 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Figure 8.

Median Replacement Rates for Recipients of Disabled-Worker Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year 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.)

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. 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
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 19

CBO

Figure 9.

Median Lifetime Social Security Retirement Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year Birth Cohort

(Thousands of 2009 dollars)

Source: Congressional Budget Office.

Notes: This figure shows the present value of lifetime retirement benefits. To calculate that 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.

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. 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
20 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Figure 10.

Median Lifetime Social Security Disability Benefits Under the 

Scheduled Benefits and Payable Benefits Scenarios, by 10-Year Birth Cohort

(Thousands of 2009 dollars)

Source: Congressional Budget Office.

Notes: This figure shows the present value of all disability benefits received over a lifetime plus retired-worker benefits paid to disabled 

workers who have reached the normal retirement age designated by law. To calculate that 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.

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. 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
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 21

CBO

Figure 11.

Potential Range of Lifetime Social Security Payroll Taxes, by 10-Year Birth 

Cohort and Lifetime Earnings

(Thousands of 2009 dollars)

Source: Congressional Budget Office.

Notes: 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.)

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. 

The distribution of lifetime household earners includes only people 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
22 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Figure 12.

Potential Range of Lifetime Social Security Benefits Under the Scheduled 

Benefits and Payable Benefits Scenarios, by 10-Year Birth Cohort and 

Lifetime Earnings

(Thousands of 2009 dollars)

Source: Congressional Budget Office.

Notes: 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.)

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. To calculate their present value, net benefits have been adjusted 

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

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. Then benefits are subjected to an across-the-board 

cut each year so that total projected benefits equal projected revenues.

The distribution of lifetime household earners includes only people 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
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 23

CBO

Table 1.

Social Security Revenues and Outlays in Selected Years Under the 

Scheduled Benefits Scenario

(Percentage of gross domestic product)

Source: Congressional Budget Office.

Notes: Revenues include payroll taxes and income taxes on benefits in the specified year, and outlays equal scheduled benefits and administrative costs.

In the scheduled benefits scenario, workers receive full benefits each year 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). Surpluses or deficits do not equal 

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

Revenues 4.82 4.86 4.90 4.95

Outlays 4.37 6.06 5.80 6.23

Annual Surplus or Deficit (-) 0.45 -1.19 -0.89 -1.29

Revenues 4.82

Outlays 4.37

Annual Surplus or Deficit (-) 0.45

Actual

2083

CBO's Projections

2008 2033 2058

5.4 to 6.8 4.9 to 7.1 5.1 to 7.9

80 Percent Range of Uncertainty for CBO's Projectionsa

4.6 to 5.1 4.5 to 5.2 4.5 to 5.3

-2.0 to -0.6 -2.2 to -0.1 -3.2 to -0.3
24 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Table 2.

Summarized Social Security Revenues and Outlays 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 funds’ 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 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 receive full benefits each year 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). Surpluses or deficits generally do 

not equal the difference between the outlays and revenues shown because each value is drawn from a different simulation.

Period

25 Years (2009–2033) 5.74 5.55 0.19

50 Years (2009–2058) 5.37 5.66 -0.29

75 Years (2009–2083) 5.26 5.74 -0.48

25 Years (2009–2033)

50 Years (2009–2058)

75 Years (2009–2083)

25 Years (2009–2033) 15.22 14.71 0.51

50 Years (2009–2058) 14.49 15.28 -0.79

75 Years (2009–2083) 14.33 15.64 -1.31

25 Years (2009–2033)

50 Years (2009–2058)

75 Years (2009–2083)

14.2 to 14.8 14.2 to 16.7 -2.0 to 0.1

14.1 to 14.6 14.5 to 17.3 -2.9 to -0.4

As a Percentage of Taxable Payroll

CBO's Projections

80 Percent Range of Uncertainty for CBO's Projectionsa

15.0 to 15.5 13.7 to 15.8 -0.5 to 1.3

5.2 to 5.5 5.3 to 6.1 -0.7 to 0.0

5.0 to 5.5 5.3 to 6.3 -1.0 to -0.1

As a Percentage of Gross Domestic Product

CBO's Projections

80 Percent Range of Uncertainty for CBO's Projectionsa

5.6 to 5.9 5.2 to 5.9 -0.2 to 0.5

Revenues Outlays Surplus or Deficit (-)
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 25

CBO

Table 3.

Probability That Social Security Outlays Will Exceed Revenues by Specified 

Percentages in Selected Years Under the Scheduled Benefits Scenario

(Percent)

Source: Congressional Budget Office. 

Notes: Revenues include payroll taxes and income taxes on benefits in the specified year, and outlays equal scheduled benefits and administrative costs.

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

2010 48 0 0 0 0 0

2020 86 9 0 0 0 0

2030 99 59 5 0 0 0

2040 97 59 12 1 0 0

2050 92 45 12 2 0 0

2060 91 52 16 4 0 0

2070 93 58 23 6 1 0

2080 94 67 28 10 4 1

or More or More or More or More or More or More

Probability, by Percentage of GDP by Which Outlays Exceed Revenues

By 0 Percent By 1 Percent By 2 Percent By 3 Percent By 4 Percent By 5 Percent
26 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Table 4.

Social Security Benefits Received by Retired Workers Under the Scheduled and 

Payable Benefits Scenarios, by 10-Year Birth Cohort, Lifetime Earnings Level, and Sex

Continued

10-Year

Birth Cohort

Starting in Year

1940 16,000 16,000 45 45 154,000 154,000

1950 16,000 16,000 43 43 174,000 172,000

1960 17,000 17,000 43 43 183,000 175,000

1970 18,000 17,000 45 43 197,000 174,000

1980 21,000 17,000 43 36 236,000 196,000

1990 24,000 20,000 42 36 278,000 226,000

2000 27,000 22,000 42 35 329,000 259,000

1940 9,000 9,000 74 74 78,000 78,000

1950 9,000 9,000 70 70 90,000 89,000

1960 10,000 10,000 68 68 99,000 96,000

1970 11,000 11,000 72 68 107,000 96,000

1980 12,000 10,000 71 60 119,000 100,000

1990 14,000 12,000 70 58 144,000 117,000

2000 17,000 14,000 69 56 174,000 138,000

1940 18,000 18,000 43 43 170,000 170,000

1950 18,000 18,000 42 42 193,000 191,000

1960 18,000 18,000 41 41 205,000 197,000

1970 19,000 19,000 43 42 219,000 193,000

1980 22,000 19,000 42 35 263,000 220,000

1990 26,000 22,000 41 34 311,000 252,000

2000 30,000 24,000 41 33 368,000 291,000

1940 24,000 24,000 31 31 269,000 269,000

1950 26,000 26,000 29 29 309,000 307,000

1960 27,000 27,000 27 27 339,000 322,000

1970 30,000 30,000 28 27 382,000 332,000

1980 35,000 30,000 26 22 448,000 376,000

1990 40,000 34,000 26 22 525,000 426,000

2000 46,000 38,000 26 21 615,000 489,000

Median for Those in the Highest Household Earnings Quintile

Median for Those in the Middle Household Earnings Quintile

Median for Those in the Lowest Household Earnings Quintile

Scheduled Payable Scheduled Payable

Median for All Workers

All Retired Workers

Scheduled Payable

Benefits (2009 Dollars)b Rate (Percent)a (2009 Dollars)

First-Year Benefits First-Year Replacement Present Value of Lifetime
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 27

CBO

Table 4. Continued

Social Security Benefits Received by Retired Workers Under the Scheduled and 

Payable Benefits Scenarios, by 10-Year Birth Cohort, Lifetime Earnings Level, and Sex

Continued

10-Year

Birth Cohort

Starting in Year

1940 21,000 21,000 40 40 188,000 188,000

1950 20,000 20,000 39 39 200,000 200,000

1960 20,000 20,000 40 40 206,000 198,000

1970 20,000 20,000 41 40 216,000 190,000

1980 24,000 20,000 40 34 260,000 216,000

1990 28,000 23,000 39 33 307,000 249,000

2000 31,000 26,000 39 32 359,000 282,000

1940 10,000 10,000 64 64 84,000 84,000

1950 10,000 10,000 63 63 92,000 92,000

1960 11,000 11,000 63 63 101,000 98,000

1970 12,000 11,000 69 66 107,000 96,000

1980 13,000 11,000 68 58 121,000 101,000

1990 15,000 13,000 66 56 147,000 119,000

2000 17,000 14,000 66 54 173,000 135,000

1940 21,000 21,000 39 39 213,000 213,000

1950 21,000 21,000 39 39 227,000 226,000

1960 21,000 21,000 39 39 231,000 222,000

1970 21,000 21,000 40 39 242,000 212,000

1980 25,000 21,000 39 33 291,000 245,000

1990 29,000 24,000 39 32 343,000 282,000

2000 33,000 27,000 38 31 403,000 316,000

1940 26,000 26,000 24 24 310,000 310,000

1950 27,000 27,000 24 24 352,000 350,000

1960 29,000 29,000 22 22 385,000 364,000

1970 32,000 32,000 23 22 438,000 383,000

1980 37,000 32,000 21 18 509,000 426,000

1990 43,000 36,000 21 17 590,000 479,000

2000 49,000 40,000 21 17 681,000 543,000

Median for the Middle Household Earnings Quintile of Men

Median for the Highest Household Earnings Quintile of Men

Payable

Median for the Lowest Household Earnings Quintile of Men

Median for All Male Workers

Benefits (2009 Dollars)b Rate (Percent)a (2009 Dollars)

Male Retired Workers

Scheduled Payable Scheduled

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

Payable Scheduled
28 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Table 4. Continued

Social Security Benefits Received by Retired Workers Under the Scheduled and 

Payable Benefits Scenarios, by 10-Year Birth Cohort, Lifetime Earnings Level, and Sex

Source: Congressional Budget Office.

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. 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 (fifths) 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.

10-Year

Birth Cohort

Starting in Year

1940 13,000 13,000 52 52 131,000 131,000

1950 14,000 14,000 48 48 155,000 154,000

1960 14,000 14,000 47 47 166,000 158,000

1970 16,000 15,000 48 47 184,000 162,000

1980 18,000 15,000 47 40 217,000 181,000

1990 21,000 18,000 46 38 258,000 208,000

2000 25,000 20,000 45 37 307,000 242,000

1940 8,000 8,000 79 79 72,000 72,000

1950 9,000 9,000 76 76 87,000 87,000

1960 10,000 10,000 72 72 98,000 95,000

1970 10,000 10,000 73 70 107,000 95,000

1980 12,000 10,000 73 61 119,000 99,000

1990 13,000 11,000 72 60 142,000 114,000

2000 16,000 13,000 71 57 176,000 139,000

1940 14,000 14,000 50 50 142,000 142,000

1950 14,000 15,000 46 47 168,000 166,000

1960 16,000 16,000 45 45 186,000 177,000

1970 17,000 17,000 46 45 201,000 177,000

1980 20,000 17,000 44 37 239,000 200,000

1990 24,000 20,000 43 36 282,000 228,000

2000 27,000 22,000 43 35 341,000 269,000

1940 19,000 19,000 41 41 209,000 209,000

1950 21,000 21,000 37 37 251,000 249,000

1960 23,000 23,000 35 35 270,000 257,000

1970 25,000 24,000 36 35 297,000 259,000

1980 30,000 25,000 34 29 359,000 299,000

1990 34,000 29,000 34 28 434,000 350,000

2000 40,000 33,000 33 27 503,000 397,000

Median for the Middle Household Earnings Quintile of Women

Median for the Lowest Household Earnings Quintile of Women

Median for All Female Workers

Female Retired Workers

Payable Payable

Median for the Highest Household Earnings Quintile of Women

First-Year Benefits

Scheduled Scheduled Scheduled Payable

Present Value of Lifetime

Benefits (2009 Dollars)b Rate (Percent)a (2009 Dollars)

First-Year Replacement 
CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE 29

CBO

Table 5.

Social Security Benefits Received by Disabled Workers Under the Scheduled and 

Payable Benefits Scenarios, by 10-Year Birth Cohort and Age of Onset of Disability

Source: Congressional Budget Office.

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

scenario, workers receive full benefits until the trust funds are exhausted in 2043. 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 Disability Insurance benefits. All 

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

* = no results presented (because data are not available for people who died before 1984).

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

b. The present value of all disability benefits received plus 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. 

10-Year

Birth Cohort

Starting in Year

1940 13,000 13,000 47 47 157,000 157,000

1950 15,000 15,000 49 49 186,000 186,000

1960 16,000 16,000 52 52 198,000 196,000

1970 17,000 17,000 53 53 231,000 221,000

1980 19,000 18,000 54 50 287,000 257,000

1990 23,000 20,000 52 46 359,000 305,000

2000 26,000 22,000 52 44 430,000 351,000

1940 * * * * * *

1950 * * * * * *

1960 9,000 9,000 57 57 199,000 199,000

1970 11,000 11,000 58 58 362,000 362,000

1980 12,000 12,000 60 60 434,000 427,000

1990 14,000 14,000 58 58 521,000 500,000

2000 17,000 16,000 56 55 639,000 567,000

1940 * * * * * *

1950 13,000 13,000 50 50 199,000 199,000

1960 14,000 14,000 53 53 227,000 225,000

1970 15,000 15,000 55 55 223,000 221,000

1980 17,000 17,000 55 55 273,000 259,000

1990 21,000 19,000 53 49 351,000 301,000

2000 24,000 20,000 54 46 424,000 354,000

1940 15,000 15,000 46 46 171,000 171,000

1950 16,000 16,000 49 49 188,000 188,000

1960 18,000 18,000 50 50 179,000 176,000

1970 20,000 20,000 51 51 213,000 199,000

1980 23,000 20,000 51 45 266,000 227,000

1990 27,000 23,000 50 42 334,000 277,000

2000 31,000 26,000 50 41 397,000 313,000

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

Median for Disabled Workers with Disability Onset from Age 55 to the Normal Retirement Age

Scheduled

First-Year Benefits

(2009 Dollars)

Payable

Median for All Disabled Workers

Median for Disabled Workers with Disability Onset Before Age 40

Payable Scheduled

First-Year Replacement Present Value of Lifetime

Payable

Benefits (2009 Dollars)b Rate (Percent)a

Scheduled
30 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Table 6.

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

Specified Percentages of Scheduled Benefits, by 10-Year Birth Cohort

(Percent)

Source: Congressional Budget Office.

a. The sum of all payable benefits for all individuals in a 10-year birth cohort divided by the sum of scheduled benefits for that cohort. 

10-Year

Birth Cohort

Starting in Year

1940 100 100 100 100 100 100 100 100 100 100

1950 100 100 100 100 100 100 100 100 100 100

1960 89 94 98 99 99 100 100 100 100 100

1970 43 51 61 71 80 91 97 99 100 100

1980 22 31 43 55 68 82 90 96 99 100

1990 16 21 31 46 58 73 85 93 97 99

2000 12 19 28 40 49 62 76 86 93 97

1940 83 99 100 100 100 100 100 100 100 100

1950 43 81 98 100 100 100 100 100 100 100

1960 22 48 71 90 98 99 100 100 100 100

1970 13 28 49 68 84 94 99 100 100 100

1980 9 19 37 58 76 90 97 100 100 100

1990 6 13 28 45 61 78 90 97 99 100

2000 4 9 19 32 49 67 84 93 97 99

Probability, by Percentage of Payable Benefitsa

First-Year Benefits

Lifetime Benefits

65

or More

70

or More

55

or More

90 60

or More or More or More

80

or More

75

or More

99 85

or More

95

or More
APPENDIX

CBO

A

Changes in CBO’s Long-Term Social Security 

Projections Since August 2008

Since the Congressional Budget Office (CBO) 

released the last update of its long-term projections for 

Social Security in August 2008, the long-term financial 

outlook for the program has worsened slightly, but the 

short-term outlook has deteriorated substantially because 

of the current recession.1

CBO’s latest short-term projections assume much lower 

levels of gross domestic product (GDP) than last year’s 

projections did. Lower GDP reduces Social Security’s revenues by a roughly proportional amount, so revenues are 

just a bit smaller as a share of GDP. However, lower GDP 

has relatively little effect on benefit amounts, so Social 

Security’s outlays are substantially higher as a share of 

GDP. For example, CBO’s current projection of outlays 

for 2010 is 11 percent higher than its projection from 

last year—4.9 percent of GDP rather than 4.4 percent—

even as its projection of revenues is just 1.5 percent lower. 

Moreover, CBO expects that in the years immediately following the recession, economic growth will be slower 

than was projected in last year’s report. As a result, CBO’s 

projections of annual deficits in the Social Security trust 

funds are significantly larger or surpluses smaller over the 

next decade—by 0.3 percent of GDP, on average—than 

its previous projections. 

The difference between the annual deficits or surpluses 

that CBO projected in 2008 and those it projects this 

year declines over time. For 2025 and later, CBO’s projections of outlays and revenues are quite similar to those 

it made in 2008; annual deficits are just 0.1 percent of 

GDP larger, on average, than in last year’s projections.

Primarily because of the worsened short-term outlook, 

CBO’s estimate of the 75-year summarized deficit has 

grown from 1.1 percent of taxable payroll to 1.3 percent. 

Specifically, projected summarized outlays have grown 

by 3 percent (from 15.2 percent of taxable payroll to 

15.6 percent), whereas projected summarized revenues 

have increased by only 1 percent (from 14.2 percent of 

taxable payroll to 14.3 percent).

CBO’s current projections generally assume that taxable 

payroll will make up a larger share of GDP than in the 

2008 projections. As a result, the growth in Social Security’s outlays and revenues as a share of GDP is faster than 

the growth in those measures as a share of taxable payroll. 

CBO’s projection of summarized 75-year outlays has 

risen from 5.5 percent of GDP to 5.7 percent, and its 

projection of summarized 75-year revenues has grown 

from 5.1 percent of GDP to 5.3 percent. CBO now estimates that the 75-year summarized deficit is 0.5 percent 

of GDP compared with the deficit of 0.4 percent that it 

projected last year. 

The slight worsening in the long-term outlook stems in 

part from new demographic assumptions by the Social 

Security trustees, who now foresee greater improvement 

in mortality rates than they did in 2008. (Lower mortality results in longer life spans and therefore more Social 

Security beneficiaries.) Some minor modifications to 

CBO’s long-term model over the past year also contribute 

to the change in the 75-year outlook for Social Security.

1. See Congressional Budget Office, Updated Long-Term Projections 

for Social Security (August 2008). 

APPENDIX

CBO

B

Differences Between CBO’s Long-Term Social Security 

Projections and Those of the Social Security Trustees

Each year, the Social Security trustees publish 

long-term financial projections for the Social Security 

program.1

 The trustees’ projections differ somewhat from 

the Congressional Budget Office’s (CBO’s) projections. 

But both groups conclude that under current law, Social 

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

deficits will grow ever larger. Both groups project that 

Social Security’s outlays will rise from 4.8 percent of gross 

domestic product (GDP) this year to about 6 percent in 

2030 and will stabilize thereafter. 

CBO’s and the trustees’ summarized estimates of future 

outlays and revenues are quite similar. The trustees project that summarized 75-year outlays will equal 16.0 percent of taxable payroll—just 2 percent greater than 

CBO’s projection of 15.6 percent. The trustees’ projection of summarized 75-year revenues is 14.0 percent of 

taxable payroll—2 percent lower than CBO’s projection 

of 14.3 percent. Such small differences between CBO’s 

and the trustees’ projections of outlays and revenues can 

produce relatively large differences in projections of longterm deficits. Thus, CBO estimates that the summarized 

75-year shortfall is 1.3 percent of taxable payroll, whereas 

the trustees project that it is 2.0 percent. 

Measures of Social Security’s finances as a share of GDP 

present a different perspective. Both CBO and the trustees project that taxable payroll will account for a declining share of GDP, primarily because the percentage of 

compensation paid in the form of nontaxable health benefits will increase. However, CBO projects that taxable 

payroll will fall from its current level of 38 percent of 

GDP to 35 percent over the next 75 years, whereas the 

trustees project that it will decline to 33 percent. CBO’s 

higher projection of taxable payroll as a share of GDP offsets its lower projection of outlays as a share of taxable 

payroll. As a result, CBO’s projection of 75-year summarized outlays—5.7 percent—is essentially the same as the 

trustees’ estimate. CBO’s projection of summarized revenues, at 5.3 percent of GDP, is higher than the trustees’ 

estimate of 5.0 percent. Consequently, CBO’s projected 

75-year summarized deficit as a share of GDP is smaller: 

0.5 percent versus the trustees’ 0.7 percent.

Those differences result partly from different assumptions about income tax law. CBO’s long-term projections 

assume that current income tax law will remain 

unchanged. With next year’s scheduled expiration of the 

tax cuts enacted in 2001 and 2003, effective income tax 

rates will rise, boosting revenues from the taxation of 

Social Security benefits. The trustees, by contrast, assume 

that effective income tax rates will remain similar to current levels over the 75-year projection period. (As 

explained in Box 1 on page 3, CBO projects that if none 

of the currently scheduled changes in tax law took effect, 

the 75-year summarized deficit would be 1.5 percent of 

taxable payroll, rather than the 1.3 percent projected 

under current law.)

1. Their most recent projections are contained in Social Security 

Administration, The 2009 Annual Report of the Board of Trustees of 

the Federal Old-Age and Survivors Insurance and Federal Disability 

Insurance Trust Funds (May 12, 2009).
34 CBO’S LONG-TERM PROJECTIONS FOR SOCIAL SECURITY: 2009 UPDATE

CBO

Another difference between the two sets of assumptions 

involves interest rates. CBO assumes a real (inflationadjusted) interest rate of 3.0 percent, slightly higher than 

the trustees’ assumed rate of 2.9 percent. In calculating 

present values, CBO’s higher rate places less weight on 

the large deficits that occur in later years and thus results 

in smaller summarized deficits. In addition, CBO projects faster growth of wages than the trustees do—1.4 percent a year rather than the trustees’ 1.1 percent—which 

also leads to smaller summarized deficits.

A number of minor differences in modeling further separate CBO’s and the trustees’ projections. The result is that 

CBO still projects somewhat smaller average benefits, 

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