SOCIAL SECURITY

MEMORANDUM

Date: November 18, 2003 Refer To: TCA

To: Stephen C. Goss, Chief Actuary 

From: Chris Chaplain, Actuary 

Alice H. Wade, Deputy Chief Actuary

Subject: Estimated OASDI Financial Effects of “Social Security Solvency and Modernization Act of 

2003” introduced by Senator Lindsey Graham--INFORMATION

This memorandum provides long-range estimates of the financial effects on the Social Security 

(OASDI) program assuming enactment of “Social Security Solvency and Modernization Act of 

2003”, introduced on November 18, 2003. Specifications of the provisions in the bill were 

provided by Jen Olson of Senator Lindsey Graham’s staff. A description of these specifications, 

reflecting our understanding of the intent of this bill, is given below. All estimates are based on 

the intermediate assumptions of the 2003 Trustees Report, as well as additional assumptions 

described below. 

Proposal Summary

The proposal would allow workers who have attained age 25 to choose one of three options for 

program participation. One of these options involves the establishment of a personal account. 

Current retirees and workers aged 55 or older as of the beginning of 2004 would remain in the 

current-law program and would not participate in the personal account program. Brief 

summaries of the three options are listed below. More details concerning the proposed 

provisions of the bill are given in the following sections of this memorandum. 

Option 1 (Default option): Beginning in 2006, workers would redirect 4 percentage points of 

their OASDI payroll contributions, up to $1,300 annually (in 2006, with this limit being wageindexed in future years), to personal accounts (also referred to as individual accounts (IA) in the 

memo). The personal accounts would be invested in pooled funds similar to those of the Federal 

Thrift Savings Plan (TSP), with a default portfolio set at 60 percent stocks and 40 percent longterm government bonds. After the account balance reaches $10,000 (in 2006, with this threshold 

being wage-indexed in future years), workers could then choose to invest in specific privatemarket, centrally-managed, SEC-approved retirement funds. In exchange for the personal 

account contributions, OASI benefits would be offset by a hypothetical annuity based on the 

worker’s account contributions compounded at an interest rate of 0.3 percent below the realized 

or expected market yield on long-term Treasury bonds. The proposal would also include a 
2

number of specific changes to scheduled OASI benefits (the defined benefit portion). These 

changes include:

• Reducing the PIA benefit formula factors (90, 32, and 15) in determining retirement and 

survivor benefits by the difference between CPI and average wage growth; 

• Providing a variable minimum PIA of up to 120 percent of the poverty level; and

• Increasing the benefits, of those widows and widowers with benefits that are generally lower 

than average, to as much as 75 percent of the benefit that the couple would have been 

receiving if both were still alive.

Option 2: Workers would not have a personal account. However, workers would still be subject 

to the three specific changes to scheduled OASDI benefits that are bulleted under Option 1. 

Option 3: Workers would not have a personal account and would maintain current-law 

scheduled Social Security benefits by paying additional payroll contributions to the Trust Funds. 

Initially, the payroll tax rate would be set at 14.4 percent. This rate is 2 percentage points higher 

than under current law and approximates the long-range actuarial deficit of 1.92 percent 

projected under the 2003 Trustees Report. Each year thereafter, the long-range actuarial balance 

would be calculated as if all individuals had selected this option. Whenever the long-range 

actuarial deficit under this calculation becomes higher than 0.25 percent of payroll, then an 

automatic 0.25 percent increase in payroll tax would take effect. 

The proposal also includes the following changes to the OASDI program for all individuals, 

regardless of the option they select: 

• Starting in 2006, revenues from taxation of Social Security benefits that currently go to the 

HI Trust Fund, would be redirected to the OASDI Trust Funds; and

• Starting in 2006, 1.25 percent of taxable payroll would be transferred from the General Fund 

of the Treasury to the OASDI Trust Funds.

Even though participation in personal accounts would be voluntary upon attainment of age 25, 

universal participation in Option 1 (personal accounts) is assumed for these estimates. Option 1 

and Option 2 would result in approximately equal monthly benefit levels (OASDI and IA 

benefits combined) if the personal account under Option 1 were invested in long-term 

government bonds and annuitized upon retirement. Monthly benefits under Option 1 will be 

larger than benefits under Option 2 if the yield on personal accounts is generally above the 

interest rate on long-term government bonds. In addition, even if monthly benefits are the same 

under Options 1 and 2, the potential availability of some of the IA accumulations in a form other 

than a monthly annuity (provided that the remaining IA balance plus the monthly Social Security 

benefit payment is at least 100 percent of the poverty level, as detailed in the “Account 

Distributions” section) makes Option 1 attractive. 

It should be further noted that in the later years of the projection period, even if the yield on 

personal accounts were somewhat lower than the government bond yield, Option 1 could still 

generate a higher monthly benefit than would Option 2. This is because the benefit provisions of 

the proposal generally decrease the Social Security “defined” benefit over time so that offsets to 
3

benefits due to the personal accounts, which are limited to the size of the Social Security defined 

benefit, become increasingly likely to be smaller than the value of the IA distributions.

Compared to Options 1 and 2, Option 3 might provide a higher monthly benefit through the 

guarantee of present-law benefits. However, it is anticipated that very few individuals would 

choose to have their combined payroll tax rate (employer plus employee) increased by a 

minimum of 2 percentage points with later increases that could be much larger and are unknown. 

A preliminary estimate of the total increase in the combined payroll tax rate needed in 2040 is 

about 3.2 percentage points. 

The proposal would require the Social Security Trustees to recommend specific program changes 

to the Congress if projected trust fund balances fall below a critical level at any time in the 

future. These recommendations, or similar measures, would be required to be implemented 

quickly. Conversely, if the trust fund ratio were at least 200 percent as of the initial year of the 

75-year projection period and were expected to rise steadily thereafter, the Trustees would be 

required to recommend program changes to Congress. These changes could include increasing

the “defined” Social Security benefit, increasing payroll tax contributions to personal accounts, 

reducing total payroll taxes, or other changes.

Enactment of this proposal, assuming universal participation in Option 1, is expected to 

eliminate the estimated long-range OASDI actuarial deficit (1.92 percent of taxable payroll 

under present law) based on “intermediate” assumptions described below and to result in 

sustainable solvency for the foreseeable future. 

The Proposal: Personal Accounts

Contributions and Investment Up To Benefit Entitlement

Personal accounts would be available to all Social Security covered workers who have not 

attained age 55 at the beginning of 2004 (that is, to workers born in 1949 or later). Current 

workers aged 25-54 at the beginning of 2004 would be initially placed in the default option 

(Option 1 above). Workers then have one year to switch to one of the other two options. All 

future workers are placed in default Option 1 until age 25. At age 25, workers can then choose 

to change to one of the other options, but are locked into their preferred option upon attaining 

age 26. If Option 2 or 3 is selected, then the personal account balance as of age 26 is required to 

be rolled over to an IRA. 

Starting in 2006, SSA would redirect, from the OASDI Trust Funds to individual personal 

accounts, 4 percent of the OASDI taxable earnings (up to a specified dollar limit), for those 

covered workers who choose Option 1. The dollar limit for 2006 would be $1,300. For 

subsequent years, the dollar limit would be increased by the growth in the average wage indexing 

series. 

The proposal allows voluntary contributions to personal accounts (for those who have selected 

Option 1), above and beyond the payroll tax redirections, with government matching 
4

contributions for specified lower earners. Workers who choose to participate in personal 

accounts and have earnings of less than $27,500 in 2006 would each receive a $100 contribution 

to their accounts from the Federal government if they voluntarily contribute $1 extra to their 

accounts (both contribution amounts would also be indexed in future years by average wages). 

The government would then match 50 percent of any additional voluntary contributions, up to a 

total government subsidy of $500 per year. This government subsidy would be phased out for 

workers earning $32,500 in 2006. The General Fund of the Treasury would fund this subsidy for 

low-income workers. The voluntary contributions from low-income workers can be “funded” 

from any earned income tax credit they have on their individual tax returns. The estimates in this 

memorandum assume that, on average, such low-income workers will contribute $101 per year, 

thereby receiving a matching government subsidy of $150 ($100 for the first $1 of worker 

contributions, plus $50 for the additional $100 in contributions). In addition, all workers, 

regardless of income level, can voluntarily contribute up to $5,000 per year to their personal 

accounts. 

Disabled workers (who select option 1) may contribute to their personal accounts during their 

period of disability and may benefit from the government matching subsidy described above. 

Neither voluntary additional contributions nor the Federal matching subsidy would be included 

for the purpose of calculating benefit offsets under Option 1. All amounts—the contribution 

limits, the earnings threshold, and contribution amounts from both workers and the matching 

government subsidy—would be indexed in years after 2006 by average wage growth. 

Accounts would be established as soon as practicable. For the purpose of these estimates, it is 

assumed that accounts would be established by the end of 2006. Account contributions would be 

collected using the existing structure for collecting OASDI payroll tax contributions. In 

addition, account contributions would be managed by a central authority in a manner similar to 

that of the Federal Employee Thrift Savings Plan. Initially, available investment choices would 

be limited to a first tier of options that would include several broad index funds (equity, 

government bonds, and corporate and other bonds) plus several balanced funds. 

After a worker’s account balance reaches $10,000 (wage-indexed after 2006), the worker would 

have the option of investing in a second tier of funds. The second tier, still managed centrally, 

would offer a range of funds provided by approved private investment firms. The worker would 

select an investment firm and the funds offered by that firm. For both tiers, the central authority 

would maintain individual account records and would combine account transactions in aggregate 

amounts when dealing with the private investment firms. 

A default portfolio allocation of 60 percent stock and 40 percent long-term government bonds 

would apply to all workers, unless they opted to change the allocation. Switching among 

investment funds would be allowed once per year. Withdrawals prior to benefit entitlement to 

retired worker, aged spouse, or aged survivor benefits would be permitted only if one could 

purchase an annuity from the personal account equal to 100% of the monthly poverty level.
5

Personal Account Accumulations

IA portfolios are to be invested, both prior to retirement benefit entitlement and after benefit 

entitlement, in approved funds with individual account records and transactions being centrally 

managed. We assume that the aggregate investment portfolio of all IAs will on average be 

distributed at about 60 percent in equities and 40 percent in long-term government bonds. An 

annual average administrative expense charge of 30 basis points is assumed. 

The long-term ultimate average real yield on stock investments made in the future is assumed to 

be 6.5 percent, the same as used for other proposals over the last couple of years. This assumed 

equity yield is somewhat less than the 7-percent real yield that was assumed for the analysis of 

the plans proposed by the 1994-96 Advisory Council. This reduction in expected average yield 

is consistent with both (1) a growing consensus among economists that the market may value 

equities at somewhat higher average price-to-earnings ratios in the future based on broader 

access and a reduction in the perceived level of risk, and (2) the Trustees’ increase in the 

assumed real yield on Treasury bonds from the level assumed in 1995. The expected ultimate 

average real portfolio yield for the base projection would thus be 4.8 percent, net of 

administrative expense, 

(0.6*6.5% + 0.4*3.0% - 0.3%) = 4.8%.

Account Distributions

Under Option 1 of the proposal, workers could have some flexibility in the nature of account 

distributions. Life annuities are required to be purchased from the personal accounts, if needed, 

so that monthly annuity payments, when added to the Social Security benefit, provide for total 

payments that are not less than 100 percent of the monthly poverty level amount for the 

applicable year and family size. Any remaining balances may be used at the discretion of the 

account holder. 

The proposal does not allow for withdrawal from the personal accounts in the event of disability. 

If a worker dies before OASI benefit entitlement, the proceeds of the worker’s personal account 

is transferred to the account of the spouse. If there is no spouse, then account proceeds go to the 

worker's estate.

For workers who participate in Option 1, Social Security retirement and aged survivor benefits 

payable, as revised under the proposal, will be reduced according to a hypothetical account 

accumulation and annuity computation using a specified "offset yield rate." The offset yield rate 

for each year for this plan is the actual realized yield from long-term U.S. bonds (the 

intermediate assumptions of the OASDI Trustees Report would be used for future years) minus 

0.3 percent. 

The hypothetical account accumulation at retirement would be equal to the worker's redirected 

payroll taxes (but not including voluntary additional contributions by the worker or government 
6

subsidies to the account for low-income workers discussed in the previous section) accumulated 

using the specified offset yield rate for each past year. The retirement (retired worker, aged 

spouse, and aged survivor) benefit offset would be the computed amount of a CPI-indexed life 

annuity purchased with this hypothetical accumulation, and based on the expected future 

mortality, inflation, and real interest rates used for the intermediate assumptions of the most 

recent OASDI Trustees Report. Offset annuities would be based on expected unisex mortality 

for workers who are not married at retirement. Joint and two-thirds survivor life annuities would 

be computed for workers who are married at retirement, reflecting the actual ages of each spouse 

and sex distinct expected mortality. 

If this hypothetical offset annuity exceeds the OASI benefit, then no Social Security benefits are 

paid. It should be emphasized that no benefit offset is computed or applied to benefits from the 

DI Trust Fund. 

This provision provides a financial gain, relative to the Social Security defined benefit under the 

proposal, for workers who realize an average actual net annual return on their personal accounts

that is higher than the accumulated offset rate. On the other hand, workers who realize an 

average net return that is lower than the offset rate can be disadvantaged by this provision, 

especially if the present value of expected OASI benefits exceeds the hypothetical accumulation 

of the personal accounts. In this scenario, a worker's combined personal account and Social 

Security proceeds would be less than the Social Security benefit that would be payable without 

personal account participation. However, because the offset yield rate is set at the long-term 

government bond yield rate minus 0.3 percent (assumed to ultimately be 2.7 percent real), 

workers investing in the default portfolio would be “worse off” through personal account 

participation only if accumulated returns on investments in equities (assumed to be 6.5 percent 

real) actually turn out to be less than the offset yield rate on average throughout their working 

lifetime. 

Taxation of Personal Accounts and Distributions

Funds accumulate in the personal accounts on a tax-deferred basis, including additional 

voluntary contributions. Voluntary additional cash contributions to personal accounts are 

allowed up to $5,000 yearly, in after-tax dollars. 

The taxation treatment of distributions from the personal accounts differs depending upon the 

source of the contribution. Distributions related to redirected Social Security payroll taxes 

(whether annuitized or not) receive the same taxation treatment as Social Security benefits do 

under current law. Revenue from persona l income tax on these distributions would be 

transferred to the OASI and HI Trust Funds in the same manner as for revenue taxed on OASDI 

benefits under current law. 

Distributions related to additional voluntary contributions would be tax-free, though the 

contributions would come out of after-tax dollars (similar to the tax treatment of Roth IRAs). 

Contributions and distributions from the government matching subsidy for low-income earners 

would be completely tax-free. 
7

For workers who die before OASI entitlement and have no surviving spouse, personal account 

balances that go to the estate of the deceased worker are not taxed. 

The Proposal: Additional Changes to OASDI Benefits

1) CPI-Index the Benefit Formula Factors (applies to all except those in Option 3)

For OASI beneficiaries becoming newly eligible for benefits in 2009 and later, this provision 

would modify the primary insurance amount (PIA) formula factors (90, 32, and 15), reducing 

them successively by the measured real wage growth in the second prior year. This provision 

does not apply to DI beneficiaries but would apply to young survivors (surviving spouses under 

62 with a child in care). The provision would result in benefit levels for individuals with 

equivalent relative lifetime earnings across generations (relative to the average wage level) that 

would increase at the rate of price growth (CPI), rather than at the rate of growth in the average 

wage level as in current law. Calculation of the average indexed monthly earnings (AIME) and 

the PIA bend points used in computing the benefit would be unaffected by this provision. 

For disabled workers who reach disability conversion age, the reduction in the retirement benefit 

due to this provision would be limited as shown below: 

1.The following formula would be used to prorate the conversion benefit between DI and 

the OASI levels:

DI benefit level (present-law scheduled DI benefit) times (years receiving 

DI benefits in the elapsed year period1/ 40) 

plus

OASI benefit level times (years not receiving DI benefits in the elapsed 

year period / 40).

2.In determining the OASI benefit level, a PIA would be computed using the formula 

applicable for newly eligible retired workers in the year the converting worker reached age 

62. The disability freeze years would apply in computing the AIME. 

For example, a worker who becomes disabled at age 32 and is thereafter continuously receiving 

disability benefits would receive no reduction in his/her benefit level due to this provision until 

disability conversion age (ultimately, age 67). At conversion, monthly benefits would be paid 

from the individual account, and a portion of the reduction due to the change in benefit formula 

factors would begin to apply to the PIA. Of the 40 potential working years, 10 years (ages 22 

though 31) were years that the worker did not receive a disability-worker benefit. Thus, for this 

worker, only one-fourth of the reduction due to CPI-indexing the benefit formula factors would 

apply to his/her PIA level. 

 

1

 Elapsed year period includes years from age 22 through age 61.
8

This provision alone would increase the long-range OASDI actuarial balance (reduce the 

actuarial deficit) by an estimated 2.10 percent of taxable payroll. 

2) Variable Minimum PIA for Retired Workers, for Retired Workers Converted from DI, and for 

Survivors (applies to all except those in Option 3)

This provision would set a minimum retired worker PIA at 120% of the Monthly Applicable 

Poverty Level (see below for definition) for workers newly eligible in 2011 with 35 years of 

work (quarters of coverage equal to 3.5 times the number of elapsed years), decreasing to no 

minimum with 10 years of work (quarters of coverage equal to the number of elapsed years). The

variable minimum PIA is phased in during the years 2007 through 2010. For workers newly

eligible in 2007, the percentage of the Monthly Applicable Poverty Level is one-fifth of the fully 

phased-in percentage in 2011. This fraction increases by an additional one-fifth for each year 

during the phase-in period, reaching four-fifths in 2010. 

The Annual Applicable Poverty Level for 2002 is set equal to $8,628 (the poverty level for an 

individual aged 65 or older in 2002). The Monthly Applicable Poverty Level would equal onetwelfth of this amount. The Annual Applicable Poverty Level that applies to an individual in 

his/her year of initial eligibility is determined by increasing the 2002 level by the COLA for 

2002 through the year prior to the year of initial benefit eligibility.

This provision does not apply to DI beneficiaries. For the purpose of computing a benefit at 

disability conversion age, the minimum PIA, when applicable, would augment only the OASI 

benefit level, as detailed in the prior description of CPI-indexing the benefit formula factors for 

DI conversions. In doing so, the year-of-work requirements for the minimum PIA would be 

“scaled” to the proportion of elapsed years for which the worker was not entitled to a disabled 

worker benefit.2 Such “scaling” of year-of-work requirements, for calculating the minimum 

PIA, would also apply for survivor cases where the worker died before attaining age 62.

The incremental effect of this provision after applying provision 1 would be to reduce the longrange OASDI actuarial balance (increase the actuarial deficit) by an estimated 0.03 percent of 

taxable payroll. 

3) Increased Benefits for Widow(er)s (applies to all except those in Option 3)

Under this provision, starting in 2006, all aged surviving spouses (aged 62 or older) would 

receive 75 percent of the benefit that would be received by the couple if both were still alive 

(including all applicable actuarial reductions and delayed retirement credits), if this is higher than 

 

2

 For example, an individual who becomes disabled at age 32 and stays disabled until normal retirement age would 

need to have quarters of coverage equal to 140 (35 years) X 10 years of work / 40 total elapsed years for retired 

worker with no disability, or 35 quarters of coverage, to qualify for a minimum PIA of 120 percent of the Monthly 

Applicable Poverty Level. 
9

their current benefit. The benefit provided by this option would be limited to what the survivor 

would receive as a retired worker beneficiary with a PIA equal to the average PIA of all retired 

worker beneficiaries for December of the year prior to becoming eligible for this option. 

Actuarial reduction for this limitation would be computed as if the survivor had begun receiving 

a retired worker benefit on the earliest of the actual ages upon which benefits began as an aged 

spouse, an aged surviving spouse, or a retired worker beneficiary, but not before 62. This 

provision alone would reduce the long-range OASDI actuarial balance (increase the actuarial 

deficit) by an estimated 0.08 percent of taxable payroll. 

4) Redirect Taxation of Benefits Revenue from the HI Fund to the OASDI Trust Funds

Currently, revenue collected by the IRS from Federal income taxes payable on OASDI benefits, 

in excess of the tax on 50 percent of such benefits, gets transferred to the Medicare HI Trust 

Fund. Under this provision, this revenue would be redirected to the OASDI Trust Funds. The 

provision would redirect 10 percent of this revenue for 2006, 20 percent for 2007, ..., and 100 

percent for 2015 and later. This provision alone would increase (improve) the long-range 

OASDI actuarial balance by an estimated 0.43 percent of taxable payroll. 

5) Transfers from the General Fund of the Treasury

This provision would require specified transfers from the General Fund to the OASDI Trust 

Funds equaling 1.25 percent of payroll, starting in 2006. Under this provision, a commission 

would be appointed to recommend cuts in corporate welfare programs to offset the cost of these 

transfers. However, these transfers would be made whether or not the cuts in corporate welfare 

programs were achieved. This provision alone would increase (improve) the long-range OASDI 

actuarial balance by an estimated 1.18 percent of taxable payroll. 

Annual Estimates of Trust Fund Operations, Estimated Effects on the Unified Budget 

Balance, and Cash Flow between the Trust Funds and the General Fund of the Treasury

Provided below are summarized descriptions of the attached tables, some of which have been 

referenced throughout this memorandum. For a more detailed description of tables 1 through 1c, 

please see our January 31, 2002 memorandum (pp. 21-26) on financial effects of the three 

models developed by the President's Commission to Strengthen Social Security. This 

memorandum is available on the Internet at 

http://www.ssa.gov/OACT/solvency/PresComm_20020131.pdf. 

As stated earlier, we assume that all workers will participate in the individual account option 

(Option 1). Tables 1 through 1c reflect this assumption. 

OASDI Trust Fund Operations
10

Table A provides a brief description of the plan provisions and provides estimates of the effect of 

each provision, as well as the effect of all provisions combined, on the long-range OASDI 

actuarial balance assuming that all workers choose Option 1. The table also shows that, for the 

basic provisions only, without increased payroll taxes (i.e., the same as universal participation in 

Option 2), the estimated effect on the long-range OASDI actuarial balance would be an increase 

of 3.53 percent of taxable payroll. In addition, table A shows that, assuming 100-percent worker 

participation in Option 1 of the proposal, the estimated effect on the long-range OASDI actuarial 

balance would be an increase of 2.55 percent of taxable payroll. 

Table 1 shows estimated annual and summarized income rates, cost rates, and balances under the 

proposal. In addition, the table shows the trust fund ratio for each year, as well as changes in 

contribution rates to the OASDI Trust Funds under the proposal. As shown in the table, 

sustainable solvency is indicated for the foreseeable future, because the Trust Fund ratio is 

steadily rising at the end of the projection period. 

Additional Aggregate Values for Trust Funds and Personal Accounts

Table 1a shows estimated trust fund balances at the end of each year under current law and under 

the proposal. In addition, the "IA/Annuity Assets EOY" column shows the total IA and annuity 

account assets at the end of each year, excluding transfers made to a worker's estate for death 

before benefit entitlement where there is no spouse, assuming that the accounts accumulate at the 

assumed average net yield rate (4.8 percent real). The next two columns show aggregate IA 

contributions and disbursements for each year. All of these amounts appear on a present value 

basis as of January 1, 2003.

The estimates of annual dollar flows and accumulations of the personal accounts are based on 

very specific assumptions that all personal account assets are converted to CPI-indexed life 

annuities at retirement (see description in the section on assumptions above). In practice, many 

individuals would likely annuitize only part of their personal account accumulation so estimated 

annuity assets are overstated to some degree. Total personal account and annuity assets (referred 

to as "IA/Annuity Assets EOY" in the tables) include both the assets of personal accounts held 

prior to retirement, and the assets held by the annuity provider after retirement. If the personal 

accounts are considered as a part of “Social Security”, it is reasonable to combine the amounts of 

trust fund assets and personal accounts for a representation of total system assets. 

Furthermore, the individual account estimates that are shown in table 1a are used in determining 

estimates of income from taxation of benefits. For the accumulation phase of the individual 

accounts, workers are assumed to maintain individual accounts that would have an average 

distribution of 60 percent in equities and 40 percent in long-term U.S. Treasury bonds. Based on 

the rates of return assumed for stocks and bonds, this implies an average annual real yield rate of 

4.8 percent, after deducting 0.3 percent assumed for administrative expense. During the 

distribution or annuity phase, the net real yield is assumed to be the same as long-term U.S. 

Treasury bonds (3 percent).
11

The last two columns in table 1a provide, under the proposal, the present value of (1) net cash 

flow from the General Fund of the Treasury to the OASDI Trust Funds, and (2) the change in 

annual unified budget cash flows. Both sets of information appear in constant dollars—the 

former in table 1c and the latter in table 1b. 

Effects on Annual Federal Unified Budget Balances

Table 1b provides a rough estimate of the effects of the proposal on the annual Federal unified 

budget balance for each calendar year through 2078. All amounts in this table appear in constant 

2003 dollars (that is, dollar amounts that are indexed back to 2003 based on the consumer price 

index (CPI)). The first three columns in these tables include sources of changes to the unified 

budget balance, as follows:

• Annual aggregate OASDI payroll taxes that are redirected to IAs (including government 

subsidies to the accounts for lower earners)--these amounts result in a reduction to the 

unified budget balance because the monies go into personal accounts;

• Estimated annual amounts of OASDI benefit offset based on hypothetical accumulations of 

earlier deposits to personal accounts--an increase to the unified budget balance because 

these proceeds reduce Social Security benefit payments; and

• Other changes in OASDI cash flow (as compared to present law) from the other benefit 

provisions (but not from transfers between the General Fund and the Trust Fund, which 

have no unified budget effect).

The last three columns present the aggregate effects on the unified budget:

• Change in the annual unified budget cash flow, which is simply the sum of the sources of 

unified budget balance changes identified above;

• Change in debt held by the public, as of the end of each year, which represents the 

cumulative change in the unified budget cash flows, with interest (at the assumed rates 

earned by the Trust Funds); and

• Change in annual unified budget balance, which includes changes in both unified budget 

cash flow and in interest on the publicly held debt.

These unified-budget estimates are based on the intermediate assumptions of the 2003 Trustees 

Report, including the trust-fund interest assumption, and thus are not consistent with projections 

made by CBO and OMB (which use different assumptions). However, differences in payroll and 

benefit estimates are not large during the first 10 projection years so these values can be viewed 

as very rough approximations of the magnitude of effects on the unified budget balances through 

this period. 

Annual Cash Flows from the General Fund of the Treasury to the OASDI Trust Fund

Table 1c provides the estimated annual net cash flow from the General Fund of the Treasury to 

the OASDI Trust Funds. All values in these tables are expressed in constant 2003 dollars (i.e., 

dollar amounts that are indexed back to 2003 based on the CPI). 

For comparison purposes, cash flow estimates are provided in table 1c for three different cases:
12

• The proposal described in this memorandum, assuming the 1.25 percent General Fund 

transfers starting in 2006; 

• Present Law OASDI modified to allow borrowing from the General Fund to pay scheduled 

benefits; and 

• Present Law OASDI where only benefits payable with current financing provisions are paid 

(no General Fund borrowing).

For each of these cases, three columns are provided. The first column shows estimates of the 

specified amount of transfers from the General Fund under the plan. The second column is the 

estimated total net cash flow from the General Fund to the Trust Funds under the plan, including 

transfers and borrowing. The third column is the total net cash flow for years starting with 2003 

through the end of the given year, including accumulated interest cash flows for the period. 

/s/

Chris Chaplain

/s/

Alice H. Wade

Attachments: 5
Table A--Estimated Long-Range OASDI Financial Effect of a Proposal Developed by 

Senator Lindsey Graham

(Assumes universal participation in personal accounts—Option 1 of plan) 

Provision

Estimated Change in

 Long-Range OASDI 

Actuarial Balance 1/

(as a percent of payroll)

Starting in 2009, successively reduce the PIA benefit formula factors by the measured real 

wage growth for the second prior year. 

Provide a minimum PIA for retiree and survivor benefits. Set the minimum PIA at 120 

percent of the Monthly Applicable Poverty Level in 2011 for a 35-year worker (140 quarters 

of coverage). Grade the minimum PIA as a percentage of the Monthly Applicable Poverty 

Level down linearly until it reaches 0 percent of the poverty level for a 10-year worker 

(40QCs). The variable minimum PIA is phased in during 2007 through 2010 at 1/5, 2/5, 

3/5, and 4/5 the fully phased in poverty level percentage. For survivors or workers dying 

before age 62, prorate the work years used in determining the percentage poverty level by 

multiplying by elapsed years/40. At conversion to retirement for disabled workers, provide 

a weighted average retirement benefit, using the current-law DI benefit and the proposal 

retirement benefit ............................................................................................................................................ 2.06

Starting in 2006, provide widow(er)s a benefit option equal to 75 percent of the combined 

benefit that would be payable if both members of the couple were still alive. Limit amount 

payable based on the average PIA for retired workers in December of the previous year.................. -0.08

Credit all revenue from taxation of OASDI benefits to the OASDI Trust Funds by 2015

(phase in revenue redirection from HI to OASDI during the period 2006-2015)................................ 0.43

Starting in 2006, transfer 1.25 percent of payroll from the General Fund of the Treasury to 

the OASDI Trust Funds................................................................................................................................... 1.18

Subtotal, basic provisions (including interaction)..................................................................................... 3.53

Establish a Social Security program that presents three choices for workers younger than 55 

at the beginning of 2004 (all are assumed to choose Option 1):

• Option 1: Invest 4 percent of redirected Social Security payroll taxes into personal 

accounts starting in 2006, up to $1,300 (wage-indexed for future years). In exchange for 

the personal account, OASI benefits would be offset by an annuity based on the worker’s 

account contributions compounded at an interest rate of 0.3 percent below the realized or 

expected market yield on long-term Treasury bonds. 

• Option 2: Worker chooses not to invest in personal accounts, but is subject to basic 

benefit changes under the proposal 

• Option 3: Present-law benefit levels would remain the same, but worker pays additional 

payroll taxes--calculated as the 75-year actuarial deficit as calculated based on the prior year 

Trustees Report and assuming all remained in the old system. Initially the payroll tax rate 

would be set as 14.4%, 2 percentage points higher than the current law rate. An automatic 

provision would raise the payroll tax further (by 0.25 percentage point increments) based on 

the 75-year actuarial deficit. This automatic increase would apply to everyone choosing this 

option plus those who have already chosen this option -0.98

Total for proposal 2.55

Note: All estimates are based on the intermediate assumptions of the 2003 OASDI Trustees Report. 

1/ Totals for individual provisions exclude interaction.

Social Security Administration

Office of the Chief Actuary

November 18, 2003
Table 1--Financial Effects of the Senator Lindsey Graham Proposal Assuming a 100% Participation Rate

IA proceeds go to surviving spouse's individual account if worker dies before entitlement

Ultimate Real Trust Fund Interest Rate 3.00

Ultimate Real IA Rate for Offset 2.70 Assumed IA Participation Rate 1/ 100%

Marginal Changes in

OASDI Contribution Rate Net IA Contribution Rate 4/

OASDI General OASDI Low-Income Total IA

Cost Income Annual TFR From IA Fund Contribution From Subsidy from Contribution

Year Rate 2/ Rate 3/ Balance 1-1-yr Contributions Transfers Rate Trust Funds General Fund Rate

2003 10.89 12.70 1.81 288 12.40

2004 10.82 12.69 1.88 309 12.40

2005 10.73 12.70 1.97 330 12.40

2006 10.73 11.59 0.85 349 -2.39 1.25 11.26 2.39 0.21 2.60

2007 10.74 11.59 0.84 359 -0.04 11.22 2.43 0.21 2.64

2008 10.81 11.59 0.79 368 -0.03 11.19 2.46 0.21 2.67

2009 10.92 11.60 0.68 375 -0.03 11.16 2.49 0.21 2.70

2010 11.05 11.62 0.57 380 -0.03 11.13 2.52 0.21 2.73

2011 11.21 11.68 0.47 384 -0.02 11.11 2.54 0.21 2.76

2012 11.39 11.72 0.33 388 -0.02 11.09 2.56 0.21 2.78

2013 11.60 11.76 0.16 388 -0.02 11.07 2.58 0.21 2.80

2014 11.82 11.80 -0.02 388 -0.02 11.05 2.60 0.21 2.81

2015 12.04 11.84 -0.20 386 -0.01 11.04 2.61 0.21 2.83

2016 12.29 11.86 -0.43 382 -0.01 11.03 2.62 0.21 2.84

2017 12.55 11.88 -0.67 377 -0.01 11.02 2.63 0.21 2.85

2018 12.81 11.91 -0.90 370 -0.01 11.01 2.64 0.21 2.86

2019 13.06 11.93 -1.13 361 -0.01 11.00 2.65 0.21 2.86

2020 13.31 11.96 -1.35 351 -0.01 10.99 2.66 0.21 2.87

2021 13.57 11.98 -1.58 340 -0.01 10.99 2.66 0.21 2.88

2022 13.79 12.01 -1.79 329 -0.01 10.98 2.67 0.21 2.88

2023 13.98 12.03 -1.95 317 0.00 10.98 2.67 0.21 2.89

2024 14.15 12.05 -2.10 304 0.00 10.97 2.68 0.21 2.89

2025 14.30 12.07 -2.23 291 10.97 2.68 0.21 2.89

2026 14.43 12.09 -2.33 278 10.97 2.68 0.21 2.89

2027 14.53 12.12 -2.42 265 10.97 2.68 0.21 2.89

2028 14.61 12.14 -2.48 251 10.97 2.68 0.21 2.89

2029 14.66 12.16 -2.51 237 10.97 2.68 0.21 2.89

2030 14.68 12.17 -2.51 224 10.97 2.68 0.21 2.89

2031 14.67 12.19 -2.48 211 10.97 2.68 0.21 2.89

2032 14.63 12.20 -2.43 198 10.97 2.68 0.21 2.89

2033 14.56 12.21 -2.35 185 10.97 2.68 0.21 2.89

2034 14.47 12.21 -2.26 173 10.97 2.68 0.21 2.89

2035 14.36 12.22 -2.14 162 10.97 2.68 0.21 2.89

2036 14.23 12.22 -2.00 151 10.97 2.68 0.21 2.89

2037 14.08 12.22 -1.85 141 10.97 2.68 0.21 2.89

2038 13.91 12.23 -1.68 132 10.97 2.68 0.21 2.89

2039 13.73 12.23 -1.51 124 10.97 2.68 0.21 2.89

2040 13.55 12.23 -1.32 116 10.97 2.68 0.21 2.89

2041 13.36 12.22 -1.13 110 10.97 2.68 0.21 2.89

2042 13.16 12.22 -0.94 105 10.97 2.68 0.21 2.89

2043 12.97 12.22 -0.75 101 10.97 2.68 0.21 2.89

2044 12.78 12.22 -0.56 98 10.97 2.68 0.21 2.89

2045 12.59 12.22 -0.37 97 10.97 2.68 0.21 2.89

2046 12.40 12.23 -0.18 97 10.97 2.68 0.21 2.89

2047 12.22 12.23 0.01 99 10.97 2.68 0.21 2.89

2048 12.04 12.23 0.19 102 10.97 2.68 0.21 2.89

2049 11.84 12.23 0.39 107 10.97 2.68 0.21 2.89

2050 11.66 12.24 0.58 114 10.97 2.68 0.21 2.89

2051 11.49 12.24 0.75 123 10.97 2.68 0.21 2.89

2052 11.34 12.25 0.91 133 10.97 2.68 0.21 2.89

2053 11.19 12.26 1.07 145 10.97 2.68 0.21 2.89

2054 11.05 12.26 1.22 159 10.97 2.68 0.21 2.89

2055 10.90 12.26 1.36 175 10.97 2.68 0.21 2.89

2056 10.76 12.27 1.50 192 10.97 2.68 0.21 2.89

2057 10.62 12.27 1.65 212 10.97 2.68 0.21 2.89

2058 10.48 12.27 1.79 234 10.97 2.68 0.21 2.89

2059 10.35 12.27 1.93 258 10.97 2.68 0.21 2.89

2060 10.21 12.28 2.06 284 10.97 2.68 0.21 2.89

2061 10.08 12.28 2.19 313 10.97 2.68 0.21 2.89

2062 9.96 12.28 2.32 344 10.97 2.68 0.21 2.89

2063 9.84 12.28 2.44 377 10.97 2.68 0.21 2.89

2064 9.73 12.28 2.55 412 10.97 2.68 0.21 2.89

2065 9.62 12.28 2.66 450 10.97 2.68 0.21 2.89

2066 9.52 12.28 2.76 490 10.97 2.68 0.21 2.89

2067 9.42 12.28 2.86 532 10.97 2.68 0.21 2.89

2068 9.33 12.28 2.95 577 10.97 2.68 0.21 2.89

2069 9.24 12.28 3.04 624 10.97 2.68 0.21 2.89

2070 9.15 12.28 3.13 673 10.97 2.68 0.21 2.89

2071 9.06 12.28 3.21 725 10.97 2.68 0.21 2.89

2072 8.98 12.27 3.29 780 10.97 2.68 0.21 2.89

2073 8.90 12.27 3.37 837 10.97 2.68 0.21 2.89

2074 8.82 12.27 3.45 896 10.97 2.68 0.21 2.89

2075 8.75 12.27 3.52 958 10.97 2.68 0.21 2.89

2076 8.67 12.26 3.59 1023 10.97 2.68 0.21 2.89

2077 8.60 12.26 3.66 1091 10.97 2.68 0.21 2.89

2078 8.52 12.26 3.73 1162 10.97 2.68 0.21 2.89

 Summarized

Cost Income Actuarial Change in

2003 Rate Rate Balance Actuarial Balance

-2077 12.15 12.79 0.63 2.55

Based on Intermediate Assumptions of the 2003 Trustees Report.

1/ Assumes that all workers will invest 4% in IAs up to $1,300 (amount wage-indexed after 2006).

2/ Net of Benefit Cost Reductions from IA offsets. Office of the Chief Actuary

3/ Includes specified transfers from the General Fund of the Treasury. Social Security Administration

4/ Excludes any voluntary worker contributions. November 18, 2003
Table 1a--Trust Fund Asset Comparison, IA Information, and Cash Flow Data for the Senator Lindsey Graham Proposal

IA proceeds go to surviving spouse's individual account if worker dies before entitlement

Ultimate Real Trust Fund Interest Rate 3.00

Ultimate Real IA Rate for Offset 2.70 Assumed IA Participation Rate 100%

Trust Fund Asset Comparison IA Information Cash Flow Data

Present Law Proposal Net Cash Flow Change in

Trust Fund Trust Fund IA/Annuity IA IA from General Annual

Assets, Assets, Assets, Contributions Disbursements Fund to Unified Budget

Year End of Year End of Year End of Year in Year 1/ in Year Trust Funds Cash Flow

(All Amounts are In Billions of Present Value Dollars as of 1/1/2003)

2003 1,453 1,453 0 0.0 0.0 -77 0

2004 1,529 1,529 0 0.0 0.0 -79 0

2005 1,611 1,611 0 0.0 0.0 -83 0

2006 1,695 1,645 109 108.6 0.0 17 -112

2007 1,779 1,680 221 109.3 0.0 19 -113

2008 1,861 1,711 335 109.7 0.0 22 -113

2009 1,937 1,738 451 109.8 0.0 27 -113

2010 2,007 1,760 568 109.6 0.0 33 -112

2011 2,071 1,778 687 109.2 0.6 38 -111

2012 2,128 1,790 805 108.5 1.2 44 -109

2013 2,174 1,796 924 107.8 1.9 52 -107

2014 2,211 1,795 1,043 106.9 2.8 59 -104

2015 2,237 1,787 1,162 105.9 3.7 67 -101

2016 2,251 1,771 1,280 104.7 4.8 75 -97

2017 2,254 1,747 1,397 103.6 5.9 83 -93

2018 2,245 1,714 1,514 102.3 7.2 90 -89

2019 2,224 1,675 1,629 101.0 8.6 97 -84

2020 2,191 1,627 1,743 99.7 10.1 104 -79

2021 2,147 1,573 1,856 98.4 11.7 111 -74

2022 2,092 1,513 1,967 97.1 13.4 117 -69

2023 2,027 1,448 2,077 95.7 15.2 121 -63

2024 1,954 1,379 2,184 94.4 17.1 124 -58

2025 1,873 1,307 2,289 92.9 19.1 126 -52

2026 1,785 1,233 2,392 91.4 21.2 128 -46

2027 1,690 1,158 2,493 90.0 23.4 129 -40

2028 1,589 1,082 2,591 88.6 25.7 129 -34

2029 1,483 1,007 2,686 87.2 28.1 128 -28

2030 1,372 932 2,779 85.9 30.6 126 -22

2031 1,259 859 2,868 84.6 33.1 124 -17

2032 1,144 789 2,955 83.3 35.8 120 -11

2033 1,026 722 3,038 82.0 38.5 117 -5

2034 908 659 3,118 80.8 41.3 112 0

2035 789 601 3,195 79.6 44.2 107 6

2036 671 546 3,268 78.3 47.1 102 11

2037 552 497 3,338 77.2 50.1 96 16

2038 435 452 3,404 76.0 53.1 90 21

2039 319 413 3,466 74.8 56.2 84 26

2040 204 380 3,524 73.6 59.4 78 31

2041 91 351 3,579 72.5 62.6 72 36

2042 ---- 328 3,629 71.4 65.8 67 41

2043 ---- 310 3,675 70.2 69.1 61 45

2044 ---- 296 3,716 69.1 72.4 55 50

2045 ---- 288 3,753 68.0 75.7 50 54

2046 ---- 284 3,786 66.9 79.1 45 59

2047 ---- 284 3,814 65.8 82.3 40 63

2048 ---- 288 3,838 64.8 85.5 35 68

2049 ---- 297 3,857 63.7 89.2 30 72

2050 ---- 309 3,871 62.7 92.5 26 76

2051 ---- 325 3,881 61.6 95.5 21 80

2052 ---- 344 3,887 60.6 97.8 18 83

2053 ---- 366 3,890 59.6 100.0 14 87

2054 ---- 391 3,890 58.6 102.0 11 90

2055 ---- 418 3,886 57.7 103.9 8 93

2056 ---- 448 3,880 56.7 105.5 5 95

2057 ---- 480 3,871 55.8 107.0 2 98

2058 ---- 513 3,859 54.9 108.3 0 100

2059 ---- 549 3,845 54.0 109.4 -3 102

2060 ---- 587 3,829 53.1 110.4 -5 103

2061 ---- 627 3,811 52.3 111.2 -8 105

2062 ---- 668 3,791 51.4 111.8 -10 106

2063 ---- 711 3,770 50.6 112.2 -12 108

2064 ---- 755 3,747 49.7 112.5 -13 109

2065 ---- 800 3,726 48.9 112.6 -15 110

2066 ---- 845 3,704 48.1 112.6 -16 111

2067 ---- 892 3,681 47.3 112.4 -18 111

2068 ---- 940 3,657 46.5 112.1 -19 112

2069 ---- 988 3,633 45.8 111.6 -20 112

2070 ---- 1,037 3,608 45.0 111.1 -21 113

2071 ---- 1,086 3,583 44.2 110.4 -22 113

2072 ---- 1,135 3,558 43.5 109.5 -23 114

2073 ---- 1,185 3,532 42.8 108.6 -24 114

2074 ---- 1,235 3,507 42.1 107.6 -24 114

2075 ---- 1,286 3,482 41.4 106.5 -25 114

2076 ---- 1,336 3,457 40.7 105.4 -26 114

2077 ---- 1,387 3,433 40.0 104.1 -26 114

3,086 1,439

Based on Intermediate Assumptions of the 2003 Trustees Report. Office of the Chief Actuary

1/ Includes matching low-income subsidy from the General Fund of the Treasury Social Security Administration

 but excludes the effect of any voluntary worker contributions. November 18, 2003
Table 1b--IA Contributions, Offsets to OASDI Trust Funds from IAs, and Budget Effects

IA proceeds go to surviving spouse's individual account if worker dies before entitlement

Ultimate Real Trust Fund Interest Rate 3.00

Ultimate Real IA Rate for Offset 2.70 Assumed IA Participation Rate 100%

Change Change in Change in 

Contributions to Offset to Other Changes in Annual Debt Held Annual

IA by Federal OASI Benefits in OASDI Unified Budget by Public Unified Budget

Year Government 1/ from IAs 2/ Cash Flow Cash Flow (end of year) Balance

(In Billions of Constant 2003 Dollars)

2004 0.0 0.0 0.0 0.0 0.0 0.0

2005 0.0 0.0 0.0 0.0 0.0 0.0

2006 123.7 0.0 -3.7 -127.4 131.2 -131.3

2007 128.4 0.0 -3.8 -132.1 271.5 -144.1

2008 132.9 0.0 -3.8 -136.7 420.9 -157.3

2009 137.2 0.0 -3.8 -141.0 579.4 -170.7

2010 141.2 0.0 -3.7 -144.8 746.7 -184.1

2011 145.0 0.8 -3.3 -147.5 921.7 -196.8

2012 148.5 1.8 -2.7 -149.5 1,104.1 -209.2

2013 152.1 2.9 -1.8 -151.0 1,293.3 -221.4

2014 155.4 4.3 -0.4 -151.6 1,488.8 -233.2

2015 158.6 5.8 1.4 -151.3 1,689.8 -244.3

2016 161.6 7.6 3.8 -150.2 1,895.5 -254.9

2017 164.6 9.6 6.7 -148.3 2,105.1 -264.8

2018 167.5 11.9 10.1 -145.6 2,318.2 -274.4

2019 170.4 14.4 14.0 -142.1 2,534.1 -283.4

2020 173.3 17.1 18.4 -137.7 2,752.0 -291.7

2021 176.1 20.1 23.4 -132.6 2,971.2 -299.3

2022 178.9 23.4 28.7 -126.8 3,190.9 -306.3

2023 181.7 27.0 34.4 -120.3 3,410.5 -312.6

2024 184.5 30.9 40.6 -113.0 3,629.3 -318.1

2025 187.0 35.0 47.2 -104.8 3,846.1 -322.5

2026 189.6 39.5 54.2 -95.9 4,060.2 -326.2

2027 192.2 44.3 61.8 -86.1 4,270.7 -328.8

2028 194.9 49.4 70.1 -75.4 4,476.6 -330.2

2029 197.7 54.9 78.6 -64.2 4,677.0 -330.8

2030 200.5 60.7 87.5 -52.3 4,871.2 -330.4

2031 203.4 66.8 96.7 -39.9 5,058.4 -329.1

2032 206.3 73.3 106.1 -26.9 5,237.9 -326.8

2033 209.3 80.1 115.8 -13.3 5,408.7 -323.4

2034 212.3 87.3 125.7 0.8 5,570.2 -319.0

2035 215.3 94.9 135.9 15.5 5,721.4 -313.4

2036 218.4 102.8 146.3 30.7 5,861.4 -306.7

2037 221.5 111.1 156.9 46.4 5,989.4 -298.7

2038 224.7 119.7 167.8 62.8 6,104.4 -289.5

2039 227.9 128.7 178.9 79.7 6,205.4 -278.8

2040 231.1 138.1 190.3 97.4 6,291.3 -266.6

2041 234.3 147.9 202.2 115.8 6,360.8 -252.7

2042 237.5 158.1 214.4 135.0 6,412.5 -237.0

2043 240.8 168.6 227.2 155.0 6,445.2 -219.5

2044 244.1 179.6 240.5 176.0 6,457.3 -199.8

2045 247.4 191.0 254.3 197.9 6,447.2 -178.0

2046 250.7 202.8 268.7 220.8 6,413.3 -153.8

2047 254.0 214.5 283.6 244.1 6,354.2 -127.7

2048 257.4 226.7 299.1 268.4 6,268.4 -99.2

2049 260.8 240.2 315.1 294.5 6,153.1 -67.3

2050 264.2 253.4 331.6 320.8 6,007.2 -33.4

2051 267.7 266.1 348.8 347.2 5,829.8 2.5

2052 271.2 277.9 366.4 373.2 5,620.3 39.7

2053 274.7 289.7 384.3 399.3 5,377.7 79.0

2054 278.3 301.4 402.6 425.7 5,100.5 120.5

2055 281.9 313.0 421.3 452.3 4,787.6 164.3

2056 285.6 324.5 440.3 479.2 4,437.7 210.5

2057 289.4 336.0 459.6 506.2 4,049.4 259.0

2058 293.2 347.3 479.0 533.1 3,621.8 309.6

2059 297.1 358.5 498.4 559.8 3,153.9 362.5

2060 301.0 369.5 517.9 586.5 2,644.4 417.6

2061 305.0 380.5 537.5 613.0 2,092.4 475.1

2062 309.0 391.2 557.5 639.7 1,496.2 535.2

2063 313.1 401.8 577.9 666.6 854.5 598.2

2064 317.2 412.2 598.5 693.5 165.8 663.8

2065 321.3 422.4 619.4 720.6 -571.5 732.4

2066 325.5 432.5 640.8 747.8 -1,358.8 804.0

2067 329.7 442.3 662.8 775.4 -2,198.3 879.0

2068 334.0 452.0 685.4 803.4 -3,091.7 957.5

2069 338.3 461.5 708.3 831.5 -4,040.9 1,039.2

2070 342.7 470.8 731.7 859.8 -5,047.8 1,124.6

2071 347.1 480.0 755.5 888.4 -6,114.3 1,213.5

2072 351.5 489.0 779.8 917.2 -7,242.4 1,306.2

2073 356.0 497.8 804.5 946.2 -8,434.3 1,402.8

2074 360.6 506.5 829.6 975.5 -9,692.1 1,503.4

2075 365.2 515.0 855.2 1,005.0 -11,018.0 1,608.2

2076 369.8 523.5 881.2 1,034.9 -12,414.5 1,717.4

2077 374.5 531.8 907.6 1,064.9 -13,883.8 1,830.9

2078 379.3 540.1 934.4 1,095.3 -15,428.4 1,949.0

1/ Includes low-income worker subsidies from the General Fund of the Treasury as well as redirection of payroll tax revenues. Office of the Chief Actuary

2/ Represents reductions to OASDI benefit payments based on hypothetical accumulation of IAs at 2.7 percent real. Social Security Administration

Based on Intermediate Assumptions of the 2003 Trustees Report. November 18, 2003
Table 1c--Cash Flow from the General Fund of the Treasury to the OASDI Trust Funds--Constant 2003 Dollars 

IA proceeds go to surviving spouse's individual account if worker dies before entitlement

Ultimate Real Trust Fund Interest Rate 3.00

Ultimate Real IA Rate for Offset 2.70 Assumed IA Participation Rate 100%

Estimate for Modified Present Law Estimate for Present Law

Estimate for Lindsey Graham Proposal with Borrowing to Pay Scheduled Benefits with Only Payable Benefits

Specified Net Cash Flow Net Annual Net Annual

Transfers from General Total to Borrowing Cash Flow Total to Borrowing Cash Flow Total to

to Trust Fund to End Of Year Needed from General End Of Year Needed from General End Of Year

Funds 1/ Trust Funds with Interest In Year 2/ Fund with Interest In Year 2/ Fund with Interest

Year (billions of Constant 2003$) (billions of Constant 2003$) (billions of Constant 2003$)

2003 0 -79 -82 0 -79 -82 0 -79 -82

2004 0 -84 -172 0 -84 -172 0 -84 -172

2005 0 -91 -271 0 -91 -271 0 -91 -271

2006 60 19 -261 0 -97 -380 0 -97 -380

2007 63 20 -249 0 -100 -494 0 -100 -494

2008 65 23 -233 0 -99 -612 0 -99 -612

2009 68 29 -210 0 -96 -731 0 -96 -731

2010 71 36 -180 0 -92 -848 0 -92 -848

2011 75 41 -143 0 -86 -963 0 -86 -963

2012 78 50 -96 0 -77 -1,072 0 -77 -1,072

2013 81 60 -38 0 -66 -1,173 0 -66 -1,173

2014 85 70 33 0 -54 -1,264 0 -54 -1,264

2015 89 82 118 0 -39 -1,343 0 -39 -1,343

2016 91 96 221 0 -23 -1,406 0 -23 -1,406

2017 93 111 342 0 -5 -1,453 0 -5 -1,453

2018 95 126 482 0 15 -1,482 0 15 -1,482

2019 97 142 642 0 35 -1,490 0 35 -1,490

2020 99 157 824 0 56 -1,477 0 56 -1,477

2021 101 174 1,027 0 79 -1,440 0 79 -1,440

2022 104 189 1,253 0 101 -1,379 0 101 -1,379

2023 106 202 1,498 0 122 -1,295 0 122 -1,295

2024 108 214 1,764 0 142 -1,187 0 142 -1,187

2025 110 225 2,049 0 163 -1,055 0 163 -1,055

2026 112 235 2,353 0 183 -899 0 183 -899

2027 114 244 2,675 0 203 -717 0 203 -717

2028 116 251 3,014 0 222 -510 0 222 -510

2029 118 257 3,369 0 240 -279 0 240 -279

2030 121 261 3,739 0 256 -23 0 256 -23

2031 123 263 4,122 0 272 256 0 272 256

2032 125 263 4,516 0 286 558 0 286 558

2033 127 261 4,920 0 298 882 0 298 882

2034 129 258 5,333 0 310 1,228 0 310 1,228

2035 131 253 5,754 0 320 1,595 0 320 1,595

2036 133 246 6,180 0 330 1,982 0 330 1,982

2037 135 238 6,610 0 338 2,390 0 338 2,390

2038 137 228 7,043 0 346 2,818 0 346 2,818

2039 139 218 7,479 0 353 3,265 0 353 3,265

2040 141 206 7,915 0 359 3,733 0 359 3,733

2041 143 193 8,352 0 366 4,222 0 366 4,222

2042 145 180 8,788 74 373 4,732 0 298 4,656

2043 147 167 9,223 380 380 5,265 0 0 4,796

2044 149 153 9,657 387 387 5,822 0 0 4,940

2045 151 139 10,090 396 396 6,405 0 0 5,088

2046 153 124 10,520 405 405 7,014 0 0 5,240

2047 155 109 10,948 414 414 7,651 0 0 5,398

2048 157 94 11,374 424 424 8,317 0 0 5,560

2049 159 78 11,795 435 435 9,015 0 0 5,726

2050 162 62 12,213 446 446 9,744 0 0 5,898

2051 164 46 12,627 458 458 10,508 0 0 6,075

2052 166 32 13,039 471 471 11,308 0 0 6,257

2053 168 18 13,448 484 484 12,146 0 0 6,445

2054 171 4 13,855 497 497 13,022 0 0 6,638

2055 173 -11 14,260 510 510 13,938 0 0 6,838

2056 176 -25 14,662 524 524 14,895 0 0 7,043

2057 178 -39 15,061 537 537 15,895 0 0 7,254

2058 181 -54 15,457 550 550 16,938 0 0 7,472

2059 183 -69 15,850 563 563 18,026 0 0 7,696

2060 186 -84 16,239 575 575 19,159 0 0 7,927

2061 188 -99 16,624 588 588 20,339 0 0 8,164

2062 191 -114 17,005 601 601 21,568 0 0 8,409

2063 193 -128 17,383 614 614 22,848 0 0 8,662

2064 196 -142 17,758 628 628 24,180 0 0 8,921

2065 198 -156 18,130 642 642 25,566 0 0 9,189

2066 201 -170 18,500 657 657 27,009 0 0 9,465

2067 204 -183 18,866 672 672 28,512 0 0 9,749

2068 206 -196 19,230 687 687 30,075 0 0 10,041

2069 209 -209 19,591 703 703 31,701 0 0 10,342

2070 212 -222 19,950 719 719 33,393 0 0 10,653

2071 214 -235 20,306 736 736 35,153 0 0 10,972

2072 217 -248 20,659 753 753 36,983 0 0 11,301

2073 220 -261 21,010 770 770 38,885 0 0 11,640

2074 222 -274 21,359 787 787 40,863 0 0 11,990

2075 225 -287 21,704 805 805 42,918 0 0 12,349

2076 228 -299 22,047 823 823 45,052 0 0 12,720

2077 230 -312 22,387 840 840 47,270 0 0 13,101

1/ Includes the General Fund transfer of 1.25% of taxable payroll beginning in 2006 and Office of the Chief Actuary

 redirection of taxation of benefit revenues from the HI Trust Fund to the OASDI Trust Funds. Social Security Administration

2/ Trust Funds are assumed to borrow from the General Fund of the Treasury. November 18, 2003