Social Security Actuarial Status

The 2017 Annual Report of the Board of Trustees of the OASI and 

DI Trust Funds

Key Results under Intermediate Assumptions

Presented by Stephen C. Goss, Chief Actuary, SSA

American Enterprise Institute

July 19, 2017
What Is the Legislative Mandate for the Annual Report?

1) Trust Fund operations of the past year and the 

next five years

2) Actuarial status of the trust funds

– This means the ability to meet the cost of scheduled 

benefits with scheduled revenue and trust fund 

reserves

– And the extent to which scheduled revenue will fall 

short, forcing cuts or delays in benefits in the absence 

of legislative change

2
SOLVENCY: OASDI Trust Fund Reserve Depletion 2034 (same as last year)

o Reserve depletion date varied from 2029 to 2042 in reports over the past 25 years (1992-2017) 

o DI Trust Fund — reserve depletion in 2028, five years later than last year

o Due largely to lower recent and near-term disability applications and incidence rate 

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0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Social Security Trust Fund Ratios

Assets as Percent of Annual Cost

Trustees Report Intermediate Projections

OASDI 2017TR

OASI 2017TR

DI 2017TR

OASDI 2016TR

OASI 2016TR

DI 2016TR

Historical

Tax Rate

Reallocation

DI

OASDI

OASI
Applications for Disability Benefits Continue to Fall

At the peak of the last economic cycle in 2007, applications were low, but increased 

rapidly in the recession to over 2 million in 2010. In 2016, with the economy still below 

the sustainable full-employment level, applications have dropped below the 2007 level 

4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

(millions)

Total Social Security Disability Receipts by Calendar Year:

Historical and Intermediate Assumptions for 2012 through 2017 Trustees Reports 

2012TR

2017TR

2016TR

2015TR

2014TR

2013TR
5

Employment Remains below Full Employment

Despite the low unemployment rate (4.8 percent in 2016), 

employment is estimated to be about 2 percent below full employment level

0.95

0.96

0.97

0.98

0.99

1

1.01

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Ratio of Current Employment to Full Employment 

2017 TR 2016 TR
Disability Incidence Rate Falls to Historic Lows

DI disabled worker incidence rate rose sharply in the recession, and has 

declined since the peak in 2010 to an extraordinarily low level for 2016

6

4

4.5

5

5.5

6

6.5

1990 1995 2000 2005 2010 2015 2020 2025 2030

DI Age-Sex-Adjusted Incidence Rates:

Historical and Intermediate Assumptions for 2012 through 2017 Trustees Reports

2012TR

2017TR

2016TR

2015TR

2014TR

2013TR

Average 1990-2016 5.27

Ultimate Assumption 5.40
Fewer Disabled Worker Beneficiaries 

Fewer now and in near term based on recent applications and incidence rates

7

6,000

7,000

8,000

9,000

10,000

11,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Disabled Worker Beneficiaries

In Current Payment Status at End of Year (in thousands)

2008 TR (no recession)

2017 TR

2016 TR
8

DI Annual Cost and Non-Interest Income as Percent of Taxable Payroll 

93% of scheduled benefits still payable at trust fund reserve depletion

Annual deficit in 2091: 0.38 percent of payroll — 0.01 percent smaller than last year

0%

1%

2%

3%

4%

5%

2005 2015 2025 2035 2045 2055 2065 2075 2085 2095

Calendar year

Cost: Scheduled and 

payable benefits

Non-interest

Income

Payable benefits as percent

of scheduled benefits:

2016-27: 100%

2028: 93%

2091: 82%

Cost: Scheduled but not 

fully payable benefits

Expenditures: Payable benefits = income 

after trust fund depletion in 2028
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OASDI Annual Cost and Non-Interest Income as Percent of Taxable Payroll 

Persistent Negative Annual Cash-Flow Balance Starting in 2010 

77% of scheduled benefits still payable at trust fund reserve depletion

Annual deficit in 2091: 4.48 percent of payroll — 0.13 percent larger than last year

0%

5%

10%

15%

20%

25%

2005 2015 2025 2035 2045 2055 2065 2075 2085 2095

Calendar year

Cost: Scheduled and 

payable benefits

Non-interest Income

Payable benefits as percent

of scheduled benefits:

2016-33: 100%

2034: 77%

2091: 73%

Cost: Scheduled but not 

fully payable benefits

Expenditures: Payable benefits = income 

after trust fund depletion in 2034
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SUSTAINABILITY: OASDI Cost as Percent of GDP 

Rises from a 4.2-percent average in 1990-2008, to about 6.1% by 2037, then 

declines to under 5.9% by 2050, and generally increases to 6.1% by 2091

0%

2%

4%

6%

8%

10%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Non-interest Income

Historical Estimated

Cost
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OASDI Beneficiaries per 100 Workers

0

10

20

30

40

50

60

70

80

90

100

1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Historical Estimated
Aging (change in age distribution)

mainly due to drop in birth rates

12

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Aged Dependency Ratio 2017 TR

Population 65+/(20-64) 

Actual and TR Intermediate

TFR remains at 3.0 after 1964

TFR remains at 3.3 after 1964
DI Cost as Percent of GDP Has Peaked, 

but Scheduled Income Is Too Low

13

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1975198019851990199520002005201020152020202520302035204020452050205520602065207020752080208520902095

DI Cost and Income as Percent of GDP 1975-2095

2017 Trustees Report Intermediate Assumptions

Baby Boomers 

reach ages 45-64 

in 2010

Baby Boomers 

reach ages 25-44 

in 1990

Note: 

Recession raised

DI Cost/GDP by 

15% for 2010

DI Cost

DI Income

Tax-Rate Reallocation
Changing Adult Age Distribution: 

From 1990-2010, boomers increase share at prime disability ages (45-64)

From 2010-2030, boomers will increase share at retirement ages (65+) as they are replaced at working ages

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Percent of Population at Ages 25+

Age Distribution of the Population Age 25+, 1940 to 2100 (2017TR)

25-44

45-64

65-84

85+

Boomers 

become 

25-44

Boomers 

become 

45-64

Boomers 

become 

65-84
Mortality Experience: All Ages

Reductions continue to fall short of expectations

15

700

750

800

850

900

950

1,000

1,050

1,100

1990 1995 2000 2005 2010 2015 2020

Age-Sex-Adjusted Death Rates

(Total, All Ages)

2015TR 2016TR 2017TR Actual
Mortality Experience: Ages 65 and Older

Reductions since 2009 continue to fall short of expectations

16

4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

5,600

5,800

6,000

1990 1995 2000 2005 2010 2015 2020

Age-Sex-Adjusted Death Rates

(Ages 65 and Older)

2015TR 2016TR 2017TR Actual
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Actuarial Balance—Net Change of -0.17 percent of payroll

• Valuation Period -0.05 percent

• Higher recent mortality +0.04 percent

• Lower recent fertility, immigration and other data updates -0.07 percent

• Lower level of productivity & GDP (down by about 1 percent) -0.02 percent

• Lower avg real wage differential in near- and long-term -0.03 percent

• Starting values and other near-term economic assumptions -0.03 percent

• Lower recent and near-term disability applications and 

incidence rate +0.03 percent

• Other new data and methods improvements -0.04 percent

Principal Reasons for Change in 2017 Report
Uncertainty Illustrations

Unrealistically narrow stochastic results due to lack of central tendency variation

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10%

15%

20%

25%

30%

2017 2032 2047 2062 2077 2092

Projection year

2017 TR OASDI Annual Cost Rate

Low-Cost

Intermediate

High-Cost

Stochastic 2.5%

Stochastic 50%

Stochastic 97.5%
Replacement Rates Based on the 2017TR

Source: Annual Recurring Actuarial Note #9 at www.ssa.gov/oact/NOTES/ran9/index.html

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0

10

20

30

40

50

60

70

1940 1960 1980 2000 2020 2040 2060 2080

Scheduled Monthly Benefit Levels as Percent of Career-Average Earnings 

by Year of Retirement at age 65

Low Earner ($23,091 for 2017; 25th percentile)

Medium Earner ($51,314 for 2017; 57th percentile)

High Earner ($82,103 for 2017; 82nd percentile)

Max Earner ($127,200 for 2017; 100th percentile)
How About at Age 62, Where Most Start Benefits?

Source: Annual Recurring Actuarial Note #9 at www.ssa.gov/oact/NOTES/ran9/index.html

20

0

10

20

30

40

50

60

70

1960 1980 2000 2020 2040 2060 2080

Scheduled Monthly Benefit Levels as Percent of Career-Average Earnings 

by Year of Retirement at age 62

Low Earner ($23,091 in 2017; 25th percentile)

Medium Earner ($51,314 in 2017; 57th percentile)

High Earner ($82,103 in 2017; 82nd percentile)

Max Earner ($127,200 in 2017; 100th percentile)
Payable Benefits Under the Law, After Trust 

Fund Reserves Are Depleted, Are Even Lower

Source: Annual Recurring Actuarial Note #9 at www.ssa.gov/oact/NOTES/ran9/index.html

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0

10

20

30

40

50

60

70

1960 1980 2000 2020 2040 2060 2080

PAYABLE Monthly Benefit Levels as Percent of Career-Average Earnings by Year 

of Retirement at age 62

Low Earner ($23,091 in 2017; 25th percentile)

Medium Earner ($51,314 in 2017; 57th percentile)

High Earner ($82,103 in 2017; 82nd percentile)

Max Earner ($127,200 in 2017; 100th percentile)
How About Interaction Between Social Security 

Trust Funds and the Federal Budget?

• See Actuarial Opinion in the 2017 TR (also 2014, 2015, and 

2016 TR)

1) After reserves deplete, $12.5 trillion unfunded obligation through 

2091 cannot be paid under the law.

 Budget deems these “expenditures” creating publicly held debt

2) Reserve redemptions spend excess “earmarked” revenues 

invested in an earlier year.

 Budget deems these “a draw on other Federal resources”

3) Trust Fund operations have NO direct effect on total Federal 

debt subject to ceiling in any year—and no net effect on publicly 

held debt.

 Budget says redemptions increase Federal debt held by the public 

and often gives no credit for reserve accumulation

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The Bottom Line

• Long-term projections provide information to assess 

solvency and changes needed to eliminate shortfalls

• If trust fund reserves were to deplete:

– Full benefits cannot be paid timely

– NO pressure on the Budget or Federal Debt

– So Congress must and WILL act, as always

• Straightforward solutions:

– Add revenue and/or lower cost for OASDI

• Comprehensive changes implemented by 2034
How to Fix Social Security Long-Term

Make choices addressing OASDI deficits 2034-2091:

• Raise scheduled revenue after 2033 by about 

33%: increase revenue from 4.6 to 6.1% of GDP

• Reduce scheduled benefits after 2033 by about 

25%: lower benefits from 6.1 to 4.6% of GDP

• Or some combination of the two

• Invest trust funds for higher return? 

– Limited help—it is a PAYGO world

–So invest in coming generations of workers

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Ways to Lower Cost

• Lower benefits for retirees—not disabled?

– Increase normal retirement age (lowers OASDI cost, but 

increases DI cost)

– Can exempt long-career low earners

• Lower benefits mainly for high earners?

– Reduce PIA above some level

– Often combined with increasing PIA below some level, subject to 

work year requirements

• Lower benefits mainly for the oldest old?

– Reduce the COLA

– Some say increase it with the CPI-E (based on purchases of 

consumers over age 62

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Ways to Increase Revenue

• Raise tax on highest earners?

– Increase taxable maximum amount

– Some tax on all earnings above the maximum

• Tax employer group health insurance premiums?

– Affects only middle class if taxable maximum remains

• Maintain larger trust fund reserves?

– Added interest can lower needed taxes

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For More Information Go To

http://www.ssa.gov/oact/

• There you will find:

– This and all prior OASDI Trustees Reports

– Detailed single-year tables for recent reports

– Our estimates for comprehensive proposals

– Our estimates for the individual provisions

– Actuarial notes; including replacement rates

– Actuarial studies; including stochastic

– Extensive databases

– Congressional testimonies

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