Social Security Actuarial Status

Recent Experience and Prospects for the Future

Presented by Stephen C. Goss, Chief Actuary, 

Social Security Administration

Association of Government Accountants

Baltimore Chapter

April 27, 2022
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Three-Legged Stool: Basis for Retirement Planning

Common Wisdom: Aim for 75-80 Percent Replacement Rate

Retirement Income

Social 

Security
Defined Benefit Plans Replaced by DC Plans

And Lump Sum Options Increasing for DB Plans

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0%

10%

20%

30%

40%

50%

60%

197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014

Private-Sector Workers Participating in Employment-Based Retirement 

Plans, by Plan Type, 1979-2014

Defined Benefit Total Defined Contribution Total

Both Either

Source: U.S. Department of Labor Form 5500 Summaries 1979-1998, Pension Benefit Guaranty Corporation,

Current Population Survey 1999-2013, EBRI estimates 1999-2014.
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Social Security: What Does It Provide?

• Retirement and survivor monthly benefits started in 1940

– Never missed a payment!

• Eligible age lowered from 65 to 62 in 1957 for women, 1962 for 

men

• Full retirement age rises from 65 to 67 by 2022

• Disability benefits started in 1957

• Benefits rise with average wage across generations, but with 

just with CPI after eligibility

• Payroll taxes are roughly pay-as-you go

– Rose from 2% to 12.4% as system matured
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Social Security Financing

• Basically “Pay-As-You-Go” 

– Current workers provide for current beneficiaries

– Trust Funds are a “contingency reserve” because cannot borrow

– Total spending to date cannot exceed income to date

• Current OASDI reserves (excess income) are $2.9 trillion

– Available to augment tax income as needed

• Reserves projected to deplete in 2034 under current law

– But 78 percent of scheduled benefits will still then be payable 

• Expect Congress to act—as it always has
What We Do—Office of the Chief Actuary

• Baseline projections of OASDI cost and revenue under current 

law

– For the Trustees Reports 

– For the President’s Budget (including SSI as well)

– SSA and Governmentwide Financial Statements

• Estimates for proposals to change law, regulations, and policy

– For Congress, the Administration, and others

• Actuarial notes and studies

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What We Do—Annual Trustees Reports

• Trust Fund operations of the past year and the next five years

• Actuarial status of the trust funds

– This means the ability to meet the cost of scheduled benefits with 

scheduled revenue and trust fund reserves

• The extent to which scheduled revenue will fall short, forcing cuts or delays 

in benefits in the absence of legislative change

• And the magnitude of legislative changes needed

• Results used for Statement of Social Insurance (SOSI) in 

Financial Statements

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Full Scope Audit of the 75-year Projections

• Statement of Social Insurance (SOSI) and Statement of Changes 

in Social Insurance Amounts (SCSIA), in the Agency Financial 

Report and in the consolidated Financial Statement of the U.S. 

Government

• Mandated by the FASAB

– For the 2021 audit, GT and GAO actuaries, economists AND accountants!

– We received a clean opinion—again! CEAR award 24!

• Audit starts after Trustees Report release through October

– Huge learning experience for all

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Full Scope Audit of the 75-year Projections

• Audit covers all aspects of the financial statement

• We review all assumptions and methods, and all changes

• Auditors review more than replicate due to complexities

• Extensive review of internal controls

• Reasonableness of assumptions—as per attestation of the Chief 

Actuary

• Sensitivity analysis

• Subsequent events—where applicable—as in 2020

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COVID-19 Current and Long-Term Implications

• Raised death rates in US roughly 16% in 2020 and 18% in 2021

• Reduced life expectancy for affected cohorts

– Many died earlier, disproportionately those with other conditions

– Most survived infection, but will carry some residual compromise

– Thus, possibly no net implication for “trend rate” in mortality 

• However, this is the second coronavirus in 20 years

– Expect periodically in a now mobile world population?

• If deaths are raised by 16% in 2 of every 20 years:

– Average level of mortality will be 1.6% above “trend”

10
Excess Weekly Deaths for US—Estimated Complete

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Will There Be More Waves?

Trends in reported tests and new cases through April 15, 2022 

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Polling Question #1

What do you expect the future to hold for COVID-19?

a) It’s over 

b) It will be endemic at a low level 

c) There will be continuing significant waves into 2023 

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Current Actuarial Status

• Projections from the 2021 Trustees Report

• Fully reflecting expectations for COVID-19 and the economic 

recession/recovery

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Changes in 2021 TR Due to Pandemic/Recession

The projections in the 2021 Trustees Report include the Trustees’ best 

estimates of the effects of the COVID-19 pandemic and ensuing recession, 

which were not reflected in the 2020 report.

1. Lower employment and earnings in the near term, through 2023

Projected average wage index increase of 2.7% for 2020; actual was 2.8%

2. Increased deaths in 2020 through 2023

3. Delays in births and immigration

4. Lower applications for benefits, particularly disability

5. A permanent loss in the level of worker productivity, as in other 

recessions

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Polling Question #2

What do you expect the future to hold for “Long COVID” (postCOVID conditions?

a) A significant increase in disability incidence

b) A significant increase in old-age mortality later

c) Both

d) Neither

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Primary Changes in the 2021 TR: Longer Term

1. Birth rates: change to projecting by “cohort” rather than by year

a) Reflects the continuing trend for women having children at older ages

b) Lower annual birth rates through 2036, reaching ultimate 2.0 in 2056

2. Employment: updated labor force model to include latest economic cycle

a) Lower labor force and unemployment rate with little net effect

3. Death rates: added dementia as a category and reduced rates of 

improvement for cardiovascular disease

4. Lower revenue from taxation of benefits per recent experience (Treasury 

Office of Tax Analysis)

5. Methods changes, primarily for average benefit levels

6. Note: Change in Actuarial Balance since 1983: 

62% Valuation period, 33% Economic experience/assumptions, 5% all other

https://www.ssa.gov/oact/NOTES/ran8/an2021-8.pdf

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Comparison of Effects for the 2021 TR: 

Including OCACT Update After the 2020 TR

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On November 24, 2020, we published a memo with our preliminary estimates of the effects of the COVID-19 

pandemic and ensuing recession. See https://www.ssa.gov/OACT/solvency/UpdatedBaseline_20201124.pdf.
Solvency: OASI+DI 

Trust Fund 

Reserve Depletion 

in 2034 

(one year earlier than last year)

Reserve depletion date 

varied from 2029 to 2042 in 

reports over the past 30 

years (1992-2021).

DI Trust Fund: reserve 

depletion in 2057, eight 

years earlier than last year. 

Very sensitive to changes in 

cash flow.

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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 2045 2050 2055 2060 2065

Calendar Year

Social Security Trust Fund Ratios

Assets as a Percent of Annual Cost

Trustees Report Intermediate Projections

2021 TR DI

2020 TR DI

2021 TR OASI

2020 TR OASI

2021 TR OASDI

2020 TR OASDI

Historical Projected

Tax Rate

Reallocation
OASDI Annual Cost 

and Non-Interest 

Income as Percent 

of Taxable Payroll

Persistent negative annual 

cash-flow balance starting in 

2010.

78 percent of scheduled 

benefits still payable at trust 

fund reserve depletion.

Annual deficit in 2095: 4.34 

percent of payroll: 0.21 

percent smaller than last 

year.

20

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 2034

Payable benefits as percent 

of scheduled benefits:

2020-33: 100%

2034: 78%

2095: 74%

Historical Projected
SUSTAINABILITY: 

Cost and Income 

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 2095.

21

0%

1%

2%

3%

4%

5%

6%

7%

8%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar Year

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

Historical Projected

Cost

Non-interest Income
Why Does Cost Rise 

Between 2008 and 

2035 as Percent of 

Payroll and GDP? 

Aging: Change in 

Age Distribution

Mainly due to drop in 

birth rates.

22

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 2021 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
The Changing Age 

Distribution as the 

Baby Boomers Age 

and Are Replaced 

by Lower-BirthRate Generations:

Macro Aging

23

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 (2021 TR)

25-44

45-64

65-84

85+

Boomers 

become 

25-44

Boomers 

become 

45-64

Boomers 

become 

65-84
Open Group Unfunded Obligation 

Through the 75-Year Projection Period 

As provided in SOSI

2020 Report Change valuation date only 2021 Report

$16.8 trillion PV $17.5 trillion PV $19.8 trillion PV

1.04% of GDP 1.06% of GDP 1.17% of GDP

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Is the Unfunded 

Obligation in 

Present Value 

Dollars (PV$) the 

Best Measure?

25

PV level increases by 

nominal interest rate 

each year.
What If We Focus 

on Shortfall Over a 

Fixed Period?

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Changes needed to 

maintain adequate 

financing until at least 

2085, as shares of GDP 

and taxable payroll over 

the 60 years 2025-84, 

have not increased over 

the last 10 Trustees 

Reports.
Polling Question #3

What is the best way to convey the unfunded obligation?

a) In present value dollars

b) As a percent of taxable payroll

c) As a percent of GDP

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But, Wait –

How About 

Budget Scoring?

Don’t entitlements just keep 

borrowing after reserve 

depletion? 

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Source: Congressional Budget Office, June 2019

Federal Debt, Spending, and Revenues

Percentage of GDP
Actually, No. Budget Scoring Is Inconsistent 

With the Law, and All Past Experience.

See Actuarial Opinion in the 2020 TR (also 2014-2019 TRs)

1) After reserves deplete, $19.8 trillion unfunded obligation through 2095 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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What If We Project Federal Debt Consistent With the Law?

CBO Projections through 2090 in 2015 CBO Projections through 2049 in 2019

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0

20

40

60

80

100

120

140

160

2005 2010 2015 2020 2025 2030 2035 2040 2045

Debt as Percent of GDP

Projected Federal Debt Held by the Public: CBO Baseline (Assuming OASDI & HI 

Unfunded Obligations Are Paid by Borrowing From the Public) vs. Assuming Current Law 

CBO Baseline June 2019

Less OASDI Unfunded Obligations (2019 Trustees Projections)

Less OASDI&HI Unfunded Obligations (2019 Trustees Projections)

0

20

40

60

80

100

120

140

160

180

200

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Debt as Percent of GDP

Projected Federal Debt Held by the Public: CBO Baseline (assuming OASDI & HI 

unfunded obligations are paid by borrowing from the public) vs. Assuming Current Law 

CBO Baseline July 2015

Less OASDI Unfunded Obligations (2015 Trustees Projections)

Less OASDI&HI Unfunded Obligations (2015 Trustees Projections)
Polling Question #4

Federal budget scoring should reflect which of the following 

(GF = general fund of the Treasury)?

a) Current law

b) An unstated assumption that GF will cover shortfalls

c) A clearly stated assumption that GF will cover shortfalls

d) Both a) and c)

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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 become depleted:

• Full benefits could not be paid timely

• 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 2034

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Some 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 (Simpson Bowles 2010)

• Lower benefits mainly for high earners?

• Reduce PIA above some level

• Noting that higher earners generally live longer

• Lower benefits mainly for the oldest old?

• Reduce the COLA

• Others say increase it with the CPI-E (based on purchases of consumers over 

age 62)
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Payable Benefits 

Under the Law, 

After Trust Fund 

Reserves Are 

Depleted, Are 

Effectively 

Lowered in the 

Absence of a 

Change in Law

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

0

10

20

30

40

50

60

70

1940 1960 1980 2000 2020 2040 2060 2080

Calendar Year

PAYABLE Monthly Benefit Levels as Percent of Career-Average Earnings 

by Year of Retirement at age 65

Low Earner ($26,579 for 2021; 24th percentile)

Medium Earner ($59,065 for 2021; 56th percentile)

High Earner ($94,503 for 2021; 81st percentile)

Max Earner ($142,800 for 2021; 100th percentile)

Historical Projected
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Some Ways to Increase Revenue

• Raise the 12.4 percent OASDI payroll tax rate?

• Raise tax on highest earners?

• Increase taxable maximum amount

• Some tax on all earnings above the maximum

• Provide additional benefit credit?

• Tax employer group health insurance premiums?

• Affects only middle class if taxable maximum remains

• Tax investment income?

• Or potentially a wealth tax?
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Finally, Timing for Changes

• Historically, Congress has waited until reserve depletion is 

imminent 

• Given uncertainties, 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 2034

• One year sooner in update due to COVID-19

• The date has varied between 2029 and 2042 over the past 30 years
Polling Question #5

When do you think the next major improvements to OASDI 

actuarial status will be enacted?

a) In the next 5 years

b) Between 2027 and 2033

c) After 2033

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For More Information: http://www.ssa.gov/oact/

There you will find:

• Current and all prior OASDI Trustees Reports

• Detailed single-year tables for recent reports

• Our estimates for comprehensive proposals

• Actuarial notes; including replacement rates

• Actuarial studies; including stochastic

• Extensive databases

• Congressional testimonies

• Presentations by OCACT employees

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