© 2022 American Academy of Actuaries. All rights reserved.

May not be reproduced without express permission.

Social Security and Medicare Trustees Reports— A Deep-Dive Discussion With the Programs’ Chief Actuaries

Capitol Forum Webinar June 17, 2022
© 2022 American Academy of Actuaries. All rights reserved.

May not be reproduced without express permission.

14 14

Assumptions for the Social Security and 

Medicare Reports 

(and a Bit More Background...)
What is the Legislative Mandate for the 

Annual Reports?

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 would fall short under 

current law, indicating the size of legislative changes that will be 

needed

15
Why Do These Actuarial Projections 

Matter? Particularly OASI/DI/HI

• Long-term projections provide information to assess solvency and changes needed to eliminate shortfalls

• If trust fund reserves were to become depleted:

◦ Full scheduled benefits could not be paid timely under current law

◦ NO pressure on the budget or federal debt

◦ So Congress must act, as it always has

• Straightforward solutions:

◦ Add revenue and/or lower cost for OASDI

◦ Comprehensive changes implemented by 2035

16
The Common Driving Force Is Aging: 

Change in Age Distribution Mainly due to Drop in Birth Rates

17

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 (2022 TR)

25-44

45-64

65-84

85+

Boomers 

become 

25-44

Boomers 

become 

45-64

Boomers 

become 

65-84

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 2022 TR

Population 65+/(20-64) 

Actual and TR Intermediate

TFR remains at 3.0 after 1964

TFR remains at 3.3 after 1964

Historical Projected
Timing of Setting Assumptions

• Assumptions for the 2022 Trustees Reports were set in 

mid-February 2022

• Much has changed since then

• Inflation, instability in Europe, etc.

• COVID continues, with relatively high case counts

18
Birth Rates by 

Cohort

Has been rising for 

women born since 

1951. 

Projected to dip below 

2.0 for women born 

between 1990 and 

2006, based on low 

rates since 2008.

19

Chart 1.4: Historical and Projected Total Fertility Rates by Birth Cohort

https://www.ssa.gov/oact/TR/2022/2022_Long-Range_Demographic_Assumptions.pdf
Mortality 

Experience: 

All Ages

Increased mortality in 

the near term to reflect 

the effects of the 

COVID-19 pandemic.

20

700

750

800

850

900

950

1,000

1,050

1,100

1990 1995 2000 2005 2010 2015 2020 2025

Age-Sex-Adjusted Death Rates (per 100,000)

Total, All Ages

2014TR

2017TR

2020TR

2021TR

2022TR

Actual
Ratio of 

Employment to 

Population

Recovered more strongly 

from the brief but steep 

recession than did LFPRs. 

Projected to exceed the 

level seen at the peak of the 

last economic cycle by 2022 

for women and by 2023 for 

men.

21

0.45

0.50

0.55

0.60

0.65

0.70

0.75

1981 1991 2001 2011 2021 2031 2041 2051 2061 2071 2081 2091

Ratio of Employment to Population 

(16 and older, age-sex-adjusted to 2011 population)

2021 TR

2022 TR

Age-sex-adjusted

Men (age-adjusted)

Women (age-adjusted)

Historical Projected
Higher Potential 

GDP Trajectory in 

2022 TR 

Compared to 

2021 TR

Stronger-than-expected 

recovery from the 2020 

recession led us to reassess 

the likelihood of permanent 

scarring for potential GDP.

The trajectory of potential 

GDP for the 2022 TR is very 

close to the trajectory for 

the 2020 TR.

22

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031

Potential GDP

(billions of 2012 dollars, intermediate assumptions)

2010 TR

2020 TR

2021 TR

2022 TR

Historical Projected
Disability 

Incidence Rate 

Remains 

Historically Low

DI disabled worker 

incidence rate rose sharply 

in the 2008 recession, and 

has declined since the peak 

in 2010 to extraordinarily 

low levels in 2016 through 

2021.

What will be the NET effect 

of COVID and post-COVID 

conditions? 

23

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

1990 1995 2000 2005 2010 2015 2020 2025 2030

DI Age-Sex-Adjusted Incidence Rates:

Historical and Intermediate Assumptions for 2012 through 2022 Trustees Report

2012TR

2013TR

2014TR

2015TR

2016TR

2017TR

Average 1990-2021 5.04

Ultimate Assumption 4.80

2018TR

2019TR

2020TR

2021TR

2022TR
Age of Starting Social Security Retirement Benefits

Note significant shift in recent years

24

0

10

20

30

40

50

60

70

80

90

100

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Male Retired Worker Beneficiaries In Current Payment Status 

as Percent of Insured Population 

(excluding those receiving only some other OASDI benefit)

62.5 63.5 64.5 65.5 66.5 67.5 68.5 69.5 70.5

Recession

Eliminate Earnings 

Test Over NRA

NRA starts

increase 

over 66

0

10

20

30

40

50

60

70

80

90

100

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Female Retired Worker Beneficiaries In Current Payment Status 

as Percent of Insured Population 

(excluding those receiving only some other OASDI benefit)

62.5 63.5 64.5 65.5 66.5 67.5 68.5 69.5 70.5

Recession

Eliminate Earnings 

Test Over NRA

Deemed Filing 

applies to all 

Retired Workers
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May not be reproduced without express permission.

27

2022 Trustees Report Results: Social Security
Changes in OASDI Actuarial Balance

in 2022 Report

•Valuation Period - 0.06 percent

•Legislation (1-year delay in resuming approval of new DACA applications) 0.00 percent

•Demographic data, assumptions and methods - 0.04 percent • Lower recent birth data and lower assumed near-term total fertility rate

• Immigration and other data updates

•Economic data, assumptions and methods +0.13 percent • Higher near-term real interest rates • Higher level of productivity and GDP

•Disability data, assumptions and methods +0.07 percent • New data, near-term disability assumptions and lower ultimate disability incidence rate

• Disability incidence rate assumptions incorporated into labor force/employment model

•Other new data and methods improvements +0.01 percent • Higher level of revenue from taxation of benefits

Net Changes for All Reasons +0.12 percent

28
Solvency: OASI+DI 

Trust Fund 

Reserve Depletion 

in 2035 (one year later 

than last year)

Reserve depletion date varied 

from 2029 to 2042 in reports 

over the past 30 years (1993-

2022).

DI Trust Fund: reserves do not 

deplete.

Due largely to continued low 

recent and near-term disability 

applications and awards, and a 

lower assumed ultimate 

disability incidence rate.

29

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Calendar Year

Social Security Trust Fund Ratios

Assets as a Percent of Annual Cost

Trustees Report Intermediate Projections

2022 TR DI

2021 TR DI

2022 TR OASI

2021 TR OASI

2022 TR OASDI

2021 TR OASDI

Historical Projected

Tax Rate

Reallocation
OASDI Annual 

Cost and NonInterest Income as 

Percent of Taxable 

Payroll

Persistent negative annual 

cash-flow balance starting in 

2010.

80 percent of scheduled 

benefits still payable at trust 

fund reserve depletion.

Annual deficit in 2096: 4.25 

percent of payroll: 0.09 

percent smaller than last 

year

30

0%

5%

10%

15%

20%

25%

2005 2015 2025 2035 2045 2055 2065 2075 2085 2095

Calendar Year

OASDI Non-Interest Income, Cost and Expenditures 

as Percentages of Taxable Payroll

Cost: Scheduled and 

payable benefits

Cost: Scheduled but not 

fully payable benefits

Non-interest Income Expenditures: Payable benefits = income 

after trust fund depletion in 2035

Payable benefits as percent 

of scheduled benefits:

2022-34: 100%

2035: 80%

2096: 74%

Historical Projected
SUSTAINABILITY: 

Cost as percent 

of GDP

Rises from a 4.2 percent 

average in 1990-2008, to a 

peak of about 6.2 percent 

for 2077, and then 

declines to 5.9 percent by 

2096.

31

0%

1%

2%

3%

4%

5%

6%

7%

8%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Calendar Year

OASDI Cost and Non-Interest Income as a Percentage of GDP

Historical Projected

Cost

Non-interest Income
Primary Reasons for OASDI Cost Rising Faster than Revenue 

Change in age distribution; drop in birth rates and dispersion of earnings

32

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 2022 TR

Population 65+/(20-64) 

Actual and TR Intermediate

TFR remains at 3.0 after 1964

TFR remains at 3.3 after 1964

Historical Projected
Disabled Worker 

Prevalence 

Rates

Cease declining, and rise 

to level above that before 

the 2007-09 recession?

33

DI Disability Prevalence Rates, 1970-2100
Retired Worker Benefit Replacement Rates: 

Scheduled and Payable under Current Law

34
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May not be reproduced without express permission.

43

In Conclusion...
• Historically, Congress has waited until reserve depletion is imminent 

◦ Difficult to lower benefits or raise taxes until necessary

• Enacting sooner allows more options, more gradual phase in, and more 

advance notice

◦ Best example: 17-year delay in implementing NRA increase in 1983 

amendments

• OASDI reserve depletion now projected for 2035

◦ One year sooner due to COVID-19

◦ The date has varied between 2029 and 2042 over the past 30 years

Timing for Changes

44
For More Information About Social 

Security 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 and individual provisions

• Actuarial notes; including replacement rates

• Actuarial studies; including stochastic

• Extensive databases

• Congressional testimonies

• Presentations by OCACT employees

45