114th Congress, 1st Session – – – – – – – – – – – – – – House Document 114-51

THE 2015 ANNUAL REPORT OF THE BOARD OF 

TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS 

INSURANCE AND FEDERAL DISABILITY INSURANCE 

TRUST FUNDS

COMMUNICATION

FROM

THE BOARD OF TRUSTEES, FEDERAL OLD-AGE AND 

SURVIVORS INSURANCE AND FEDERAL DISABILITY 

INSURANCE TRUST FUNDS

TRANSMITTING

THE 2015 ANNUAL REPORT OF THE BOARD OF TRUSTEES OF THE 

FEDERAL OLD-AGE AND SURVIVORS INSURANCE AND FEDERAL 

DISABILITY INSURANCE TRUST FUNDS

July 22, 2015.—Referred to the Committee on Ways and Means

 and ordered to be printed

U.S. GOVERNMENT PUBLISHING OFFICE

95-586 WASHINGTON: 2015
.
(iii)

CONTENTS

(V)

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

A. HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

B. TRUST FUND FINANCIAL OPERATIONS IN 2014 . . . . . . . 7

C. ASSUMPTIONS ABOUT THE FUTURE . . . . . . . . . . . . . . . . 9

D. PROJECTIONS OF FUTURE FINANCIAL STATUS . . . . . . . 10

E. CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

III. FINANCIAL OPERATIONS OF THE TRUST FUNDS AND

LEGISLATIVE CHANGES IN THE LAST YEAR . . . . . . . . . . 27

A. OPERATIONS OF THE OLD-AGE AND SURVIVORS 

INSURANCE (OASI) AND DISABILITY INSURANCE (DI) 

TRUST FUNDS, IN CALENDAR YEAR 2014 . . . . . . . . . . . . 27

1. OASI Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

2. DI Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

3. OASI and DI Trust Funds, Combined . . . . . . . . . . . . . . . . . . 34

B. SOCIAL SECURITY AMENDMENTS SINCE THE 

2014 REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

IV. ACTUARIAL ESTIMATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

A. SHORT-RANGE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . 40

1. Operations of the OASI Trust Fund. . . . . . . . . . . . . . . . . . . . 41

2. Operations of the DI Trust Fund . . . . . . . . . . . . . . . . . . . . . . 44

3. Operations of the Combined OASI and DI Trust Funds . . . . . 47

4. Factors Underlying Changes in 10-Year Trust Fund Ratio 

Estimates From the 2014 Report . . . . . . . . . . . . . . . . . . . . . . 48

B. LONG-RANGE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . 51

1. Annual Income Rates, Cost Rates, and Balances . . . . . . . . . . 52

2. Comparison of Workers to Beneficiaries. . . . . . . . . . . . . . . . 60

3. Trust Fund Ratios and Test of Long-Range 

Close Actuarial Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

4. Summarized Income Rates, Summarized Cost Rates, 

and Actuarial Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

5. Additional Measures of OASDI Unfunded Obligations . . . . . 72

6. Reasons for Change in Actuarial Balance From Last Report . . 74
(VI)

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

A. DEMOGRAPHIC ASSUMPTIONS AND METHODS . . . . . . . 81

1. Fertility Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

2. Mortality Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

3. Immigration Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 85

4. Total Population Estimates. . . . . . . . . . . . . . . . . . . . . . . . . . 91

5. Life Expectancy Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . 93

B. ECONOMIC ASSUMPTIONS AND METHODS . . . . . . . . . . . 97

1. Productivity Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 98

2. Price Inflation Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . 98

3. Average Earnings Assumptions . . . . . . . . . . . . . . . . . . . . . . 100

4. Assumed Real-Wage Differential . . . . . . . . . . . . . . . . . . . . . 103

5. Labor Force and Unemployment Projections . . . . . . . . . . . . . 105

6. Gross Domestic Product Projections . . . . . . . . . . . . . . . . . . . 108

7. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

C. PROGRAM-SPECIFIC ASSUMPTIONS AND METHODS . . . 113

1. Automatically Adjusted Program Parameters. . . . . . . . . . . . . 113

2. Covered Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

3. Insured Population. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

4. Old-Age and Survivors Insurance Beneficiaries. . . . . . . . . . . 124

5. Disability Insurance Beneficiaries. . . . . . . . . . . . . . . . . . . . . 130

6. Covered and Taxable Earnings, Taxable Payroll, and 

Payroll Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 141

7. Income From Taxation of Benefits . . . . . . . . . . . . . . . . . . . . 145

8. Average Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

9. Scheduled Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

10. Illustrative Scheduled Benefit Amounts . . . . . . . . . . . . . . . . 147

11. Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

12. Railroad Retirement Financial Interchange . . . . . . . . . . . . . . 149

13. Military Service Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . 150
(VII)

VI. APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

A. HISTORY OF OASI AND DI TRUST FUND OPERATIONS. . 151

B. HISTORY OF ACTUARIAL STATUS ESTIMATES . . . . . . . . 162

C. FISCAL YEAR HISTORICAL AND PROJECTED 

TRUST FUND OPERATIONS THROUGH 2024 . . . . . . . . . . . 168

D. LONG-RANGE SENSITIVITY ANALYSIS . . . . . . . . . . . . . . 175

1. Total Fertility Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

2. Death Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

3. Immigration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

4. Real-Wage Differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

5. Consumer Price Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

6. Real Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

7. Disability Incidence Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 183

8. Disability Termination Rates . . . . . . . . . . . . . . . . . . . . . . . . 183

E. STOCHASTIC PROJECTIONS AND UNCERTAINTY . . . . . . 186

1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

2. Stochastic Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

3. Stochastic Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

4. Comparison of Results: Stochastic to Low-Cost, 

Intermediate, and High-Cost Alternatives . . . . . . . . . . . . . . . 189

F. INFINITE HORIZON PROJECTIONS . . . . . . . . . . . . . . . . . . 196

G. ESTIMATES FOR OASDI AND HI, SEPARATE AND 

COMBINED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

1. Estimates as a Percentage of Taxable Payroll. . . . . . . . . . . . . 200

2. Estimates as a Percentage of Gross Domestic Product . . . . . . 206

3. Estimates in Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211

H. ANALYSIS OF BENEFIT DISBURSEMENTS FROM THE 

OASI TRUST FUND WITH RESPECT TO DISABLED 

BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223

I. GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227

LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244

LIST OF FIGURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

STATEMENT OF ACTUARIAL OPINION. . . . . . . . . . . . . . . 256

THE 2015 ANNUAL REPORT OF THE BOARD OF

TRUSTEES OF THE FEDERAL OLD-AGE AND

SURVIVORS INSURANCE AND FEDERAL DISABILITY

INSURANCE TRUST FUNDS

I. INTRODUCTION

The Old-Age, Survivors, and Disability Insurance (OASDI) program makes

monthly income available to insured workers and their families at retirement,

death, or disability. The OASDI program consists of two parts. Retired workers, their families, and survivors of deceased workers receive monthly benefits under the Old-Age and Survivors Insurance (OASI) program. Disabled

workers and their families receive monthly benefits under the Disability

Insurance (DI) program.

The Social Security Act established the Board of Trustees to oversee the

financial operations of the OASI and DI Trust Funds. The Board is composed of six members. Four members serve by virtue of their positions in the

Federal Government: the Secretary of the Treasury, who is the Managing

Trustee; the Secretary of Labor; the Secretary of Health and Human Services; and the Commissioner of Social Security. The President appoints and

the Senate confirms the other two members to serve as public representatives. The Deputy Commissioner of the Social Security Administration

serves as Secretary of the Board.

The Social Security Act requires that the Board, among other duties, report

annually to the Congress on the actuarial status and financial operations of

the OASI and DI Trust Funds. The 2015 report is the 75th such report.
Overview

2

II. OVERVIEW

A. HIGHLIGHTS

This section summarizes the report’s major findings.

In 2014

At the end of 2014, the OASDI program was providing benefit payments1 to

about 59 million people: 42 million retired workers and dependents of retired

workers, 6 million survivors of deceased workers, and 11 million disabled

workers and dependents of disabled workers. During the year, an estimated

166 million people had earnings covered by Social Security and paid payroll

taxes on those earnings. Total expenditures in 2014 were $859 billion. Total

income was $884 billion, which consisted of $786 billion in non-interest

income and $98 billion in interest earnings. Asset reserves held in special

issue U.S. Treasury securities grew from $2,764 billion at the beginning of

the year to $2,789 billion at the end of the year.

Short-Range Results

Social Security’s cost exceeded its tax income in 2014, and also exceeded its

non-interest income, as it has since 2010. This relationship is projected to

continue throughout the short-range period (2015 through 2024) and beyond.

The 2014 deficit of tax income relative to cost was $74 billion and the deficit

of non-interest income relative to cost was $73 billion. In recent years,

OASDI tax income and non-interest income have differed as a result of a

temporary reduction in the Social Security payroll tax for 2011 and 2012,

offset by reimbursements from the General Fund of the Treasury to the

Social Security trust funds. These reimbursements were less than $1 billion

in 2014. For 2015, the deficit of tax income (and non-interest income) is projected to be approximately $84 billion.

The Trustees project that the asset reserves of the OASI Trust Fund, together

with continuing program income, will be adequate to cover program costs

over the next 10 years under the intermediate assumptions. However, the

projected reserves of the DI Trust Fund decline steadily from 40 percent of

annual cost at the beginning of 2015 until the trust fund reserves are depleted

in the fourth quarter of 2016. At the time reserves are depleted, continuing

income to the DI Trust Fund would be sufficient to pay 81 percent of scheduled DI benefits. The DI Trust Fund does not satisfy the short-range test of

 1 The definitions of “benefit payment” and other terms appear in the Glossary.
3

Highlights

financial adequacy. Figure II.D3 illustrates the implications of reserve depletion for the DI Trust Fund.

To illustrate the actuarial status of the program as a whole, the fund operations are often combined on a theoretical basis. However, if the DI Trust

Fund reserves were to be depleted as currently projected, the values shown

here on a “theoretical combined” basis would not reflect the aggregated

operation of the OASI and DI Trust Funds under current law. This is because

the OASI and DI Trust Funds are distinct legal entities which operate independently. In addition, the projections presented here for the theoretical combined trust funds assume full scheduled DI benefits would be paid, while

under current law only the portion of the benefits that could be financed from

DI Trust Fund income would be paid after DI Trust Fund reserve depletion.

Implicitly, the values shown for the theoretical combined trust funds assume

the law will have been changed to permit the payment of scheduled DI benefits after DI’s current-law projected reserve depletion date of 2016.

The projected reserves of the theoretical combined OASI and DI Trust Funds

are adequate over the next 10 years under the intermediate assumptions. The

ratio of reserves to cost remains above 100 percent through 2024, declining

from 308 percent of annual cost at the beginning of 2015 to 173 percent at

the beginning of 2024. For last year’s report, the Trustees projected that combined reserves would be 306 percent of annual cost at the beginning of 2015

and 171 percent at the beginning of 2024. 

The theoretical combined reserves are projected to increase from

$2,789 billion at the beginning of 2015 to $2,855 billion at the beginning of

2020. Reserves increase through 2019 because annual cost is less than total

income for 2015 through 2019. At the same time, however, the ratio of

reserves to cost declines, from 308 percent of annual cost for 2015 to

233 percent for 2020. Beginning in 2020, annual cost exceeds total income,

and therefore the combined reserves begin to decline, reaching $2,611 billion

at the end of 2024. 

Long-Range Results

The projected annual OASDI cost exceeds non-interest income throughout

the long-range period (2015 through 2089) under the intermediate assumptions. The dollar level of the theoretical combined trust fund reserves

declines beginning in 2020 until reserves become depleted in 2034.

Figure II.D2 shows the implications of reserve depletion for the theoretical

combined OASDI Trust Funds. Considered separately, the DI Trust Fund

reserves become depleted in the fourth quarter of 2016 and the OASI Trust

Fund reserves become depleted in 2035. The projected reserve depletion
Overview

4

years were 2033 for OASDI, 2016 for DI, and 2034 for OASI in last year’s

report.

Projected OASDI cost generally increases more rapidly than projected noninterest income through 2037 primarily because the retirement of the babyboom generation will increase the number of beneficiaries much faster than

the number of workers increases, as subsequent lower-birth-rate generations

replace the baby-boom generation at working ages. From 2038 to 2050, the

cost rate (the ratio of program cost to taxable payroll) generally declines

because the aging baby-boom generation is gradually replaced at retirement

ages by historically low-birth-rate generations, causing the beneficiary-toworker ratio to decline. Thereafter, increases in life expectancy cause

OASDI cost to increase generally relative to non-interest income, but more

slowly than between 2010 and 2038.

The projected OASDI annual cost rate increases from 14.13 percent of taxable payroll for 2015 to 16.73 percent for 2038 and to 17.97 percent for

2089, a level that is 4.65 percent of taxable payroll more than the projected

income rate (the ratio of non-interest income to taxable payroll) for 2089.

For last year’s report, the Trustees estimated the OASDI cost for 2089 at

18.24 percent, or 4.95 percent of payroll more than the annual income rate

for that year. Expressed in relation to the projected gross domestic product

(GDP), OASDI cost generally rises from 5.0 percent of GDP for 2015 to

about 6.0 percent by 2035, then declines to 5.9 percent by 2050, and then

generally increases to 6.2 percent by 2089.

For the 75-year projection period, the actuarial deficit is 2.68 percent of taxable payroll, 0.20 percentage point smaller than in last year’s report. The

open group unfunded obligation for OASDI over the 75-year period is

$10.7 trillion in present value and is $0.1 trillion more than the measured

level of $10.6 trillion a year ago. If the assumptions, methods, starting values, and the law had all remained unchanged, the actuarial deficit would

have increased to 2.94 percent of taxable payroll and the unfunded obligation

would have risen to about $11.1 trillion due to the change in the valuation

date. The offsetting decreases in the actuarial deficit and the unfunded obligation are primarily due to changes in methods, starting values, and economic assumptions. 

Conclusion

Under the intermediate assumptions, the Trustees project that annual cost for

the OASDI program will exceed non-interest income in 2015 and remain

higher throughout the remainder of the long-range period. The DI Trust Fund

reserves become depleted in the fourth quarter of 2016, at which time con-
5

Highlights

tinuing income to the DI Trust Fund would be sufficient to pay 81 percent of

DI benefits. Therefore, legislative action is needed as soon as possible to

address the DI program’s financial imbalance. 

Assuming as previously mentioned that the law were changed to permit the

payment of currently scheduled benefits after DI’s current-law projected

reserve depletion date of 2016 while leaving scheduled OASI benefits and

combined OASDI scheduled revenues unchanged, then the projected theoretical combined OASI and DI Trust Fund asset reserves would increase

through 2019, begin to decline in 2020, and become depleted and unable to

pay scheduled benefits in full on a timely basis in 2034. At the time of depletion of these theoretical combined reserves, continuing income to the combined trust funds would be sufficient to pay 79 percent of scheduled benefits.

In 1994, when the DI Trust Fund reserves last came this close to depletion,

the Trustees recommended a “reallocation of contribution rates between the

OASI and DI Trust Funds”, and that “the Advisory Council on Social Security conduct an extensive review of Social Security financing issues and

develop recommendations for restoring the long-range balance of the OASDI

program.” Lawmakers responded later in 1994 to part of these recommendations by reallocating the payroll tax rate between OASI and DI. After this

legislation and the subsequent release of the 1994-96 Advisory Council’s

report of recommendations, the Trustees stated in their 1997 annual report,

“we again urge that the long-range deficits of both the OASI and DI Trust

Funds be addressed in a timely way” with particular attention to DI because

“the DI Trust Fund is expected to be depleted several years earlier than the

OASI Trust Fund, and because DI program growth has fluctuated widely in

the past.” Twenty years after the tax reallocation that was intended to create

the time and opportunity for such reforms, the Trustees reiterate the call for

legislation to achieve long-range financial stability, though there are fewer

reform options available now than there were in the 1990s, when the projected date of reserve depletion was more distant. Given the short time now

remaining before projected DI Trust Fund reserve depletion, such legislation

may now need to include some reallocation of resources between the two

trust funds. Reallocation of resources in the absence of substantive reforms

might, on the other hand, serve to delay DI reforms and much needed corrections for OASDI as a whole.

For the combined OASI and DI Trust Funds to remain solvent throughout the

75-year projection period: (1) revenues would have to increase by an amount
Overview

6

equivalent to an immediate and permanent payroll tax rate increase of

2.62 percentage points1 (from its current level of 12.40 percent to

15.02 percent, a relative increase of 21.1 percent); (2) scheduled benefits

during the period would have to be reduced by an amount equivalent to an

immediate and permanent reduction of 16.4 percent applied to all current and

future beneficiaries, or 19.6 percent if the reductions were applied only to

those who become initially eligible for benefits in 2015 or later; or (3) some

combination of these approaches would have to be adopted.

The Trustees recommend that lawmakers address the projected trust fund

shortfalls in a timely way in order to phase in necessary changes gradually

and give workers and beneficiaries time to adjust to them. Implementing

changes soon would allow more generations to share in the needed revenue

increases or reductions in scheduled benefits. Social Security will play a critical role in the lives of 60 million beneficiaries and 168 million covered

workers and their families in 2015. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect

future generations.

 1 The necessary tax rate of 2.62 percent differs from the 2.68 percent actuarial deficit for two reasons. First,

the necessary tax rate is the rate required to maintain solvency throughout the period that does not result in

any trust fund reserve at the end of the period, whereas the actuarial deficit incorporates an ending trust fund

reserve equal to 1 year’s cost. Second, the necessary tax rate reflects a behavioral response to tax rate

changes, whereas the actuarial deficit does not. In particular, the calculation of the necessary tax rate

assumes that an increase in payroll taxes results in a small shift of wages and salaries to forms of employee

compensation that are not subject to the payroll tax.
7

Calendar Year 2014 Operations

B. TRUST FUND FINANCIAL OPERATIONS IN 2014

Table II.B1 shows the income, expenditures, and asset reserves for the OASI,

the DI, and the theoretical combined OASI and DI Trust Funds in calendar

year 2014.

Note: Totals do not necessarily equal the sums of rounded components.

In 2014, net payroll tax contributions accounted for 85 percent of total trust

fund income. Net payroll tax contributions consist of taxes paid by employees, employers, and the self-employed on earnings covered by Social Security. These taxes are paid on covered earnings up to a specified maximum

annual amount, which was $117,000 in 2014. Table II.B2 shows the tax rates

for 2014.

In 2014, approximately 0.1 percent of OASI and DI combined Trust Fund

income came from reimbursements from the General Fund of the Treasury.

Public Laws 111-312, 112-78, and 112-96 account for most of the reimbursement for the year. These acts specified general fund reimbursement for temporary reductions in revenue due to reduced payroll tax rates for employees

and for self-employed workers.

Three percent of OASI and DI combined Trust Fund income in 2014 came

from subjecting up to 50 percent of Social Security benefits to Federal personal income taxation for beneficiaries with income (including half of benefits and all non-taxable interest) exceeding specified levels. Interest earned

on investment of trust fund asset reserves accounted for 11 percent of

Table II.B1.—Summary of 2014 Trust Fund Financial Operations

[In billions]

OASI DI OASDI

Asset reserves at the end of 2013. . . . . . . . . . . . . . . . . . . . $2,674.0 $90.4 $2,764.4

Total income in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769.4 114.9 884.3

Net payroll tax contributions . . . . . . . . . . . . . . . . . . . . . 646.2 109.7 756.0

Reimbursement from General Fund of the Treasury . . . .4 .1 .5

Taxation of benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.0 1.7 29.6

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.8 3.4 98.2

Total expenditures in 2014. . . . . . . . . . . . . . . . . . . . . . . . . 714.2 145.1 859.2

Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 706.8 141.7 848.5

Railroad Retirement financial interchange . . . . . . . . . . 4.3 .4 4.7

Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . 3.1 2.9 6.1

Net increase in asset reserves in 2014 . . . . . . . . . . . . . . . . 55.2 -30.2 25.0

Asset reserves at the end of 2014. . . . . . . . . . . . . . . . . . . . 2,729.2 60.2 2,789.5
Overview

8

OASDI income. The Department of the Treasury invests trust fund reserves

in interest-bearing securities issued by the U.S. Government. In 2014, the

combined trust fund reserves earned interest at an effective annual rate of

3.6 percent. 

Almost 99 percent of expenditures from the combined OASI and DI Trust

Funds in 2014 were retirement, survivor, and disability benefits totaling

$848.5 billion. The financial interchange with the Railroad Retirement program was the source of a net payment of $4.7 billion from the combined

OASI and DI Trust Funds, which was about 0.5 percent of total expenditures.

The administrative expenses of the Social Security program were $6.1 billion, which was about 0.7 percent of total expenditures. 

The trust fund investments provide a reserve to pay benefits whenever total

program cost exceeds income. Trust fund reserves increased by $25.0 billion

in 2014 because total income to the combined funds, including interest

earned on trust fund reserves, exceeded total expenditures. At the end of

2014, the combined reserves of the OASI and the DI Trust Funds were

308 percent of estimated expenditures1 for 2015. In comparison, the combined reserves at the end of 2013 were 322 percent of expenditures for 2014.

 1 Estimated expenditures are based on the intermediate set of assumptions.

Table II.B2.—Payroll Tax Contribution Rates for 2014

[In percent]

OASI DI OASDI

Payroll tax contribution rate for employees. . . . . . . . . . . . . . . . . . . . . . . 5.30 0.90 6.20

Payroll tax contribution rate for employers . . . . . . . . . . . . . . . . . . . . . . . 5.30 .90 6.20

Payroll tax contribution rate for self-employed persons . . . . . . . . . . . . . 10.60 1.80 12.40
9

Future Assumptions

C. ASSUMPTIONS ABOUT THE FUTURE

The future income and expenditures of the OASI and DI Trust Funds will

depend on many factors, including the size and characteristics of the population receiving benefits, the level of monthly benefit amounts, the size of the

workforce, and the level of covered workers’ earnings. These factors will

depend in turn on future birth rates, death rates, immigration, marriage and

divorce rates, retirement-age patterns, disability incidence and termination

rates, employment rates, productivity gains, wage increases, inflation, interest rates, and many other demographic, economic, and program-specific factors.

Table II.C1 presents key demographic and economic assumptions for three

alternative scenarios. The intermediate assumptions reflect the Trustees’ best

estimates of future experience. Therefore, most of the figures in this overview present only the outcomes under the intermediate assumptions. Any

projection of the future is, of course, uncertain. For this reason, the Trustees

also present results under low-cost and high-cost alternatives to provide a

range of possible future experience. The actual future costs are unlikely to be

as extreme as those portrayed by the low-cost or high-cost projections. A

separate section on the uncertainty of the projections, beginning on page 19,

highlights the implications of these alternative scenarios.

The Trustees reexamine the assumptions each year in light of recent experience and new information. This annual review helps to ensure that the Trustees’ assumptions provide the best estimate of future possibilities.

Table II.C1.—Long-Range Valuesa of Key Assumptions for the 75-year Projection Period

a See chapter V for details, including historical and projected values.

Long-range assumptions Intermediate Low-cost High-cost

Demographic:

Total fertility rate (children per woman), for 2032 and later . . . . 2.0 2.2 1.8

Average annual percentage reduction in total age-sex-adjusted 

death rates from 2014 to 2089. . . . . . . . . . . . . . . . . . . . . . . . . . .78 .41 1.18

Average annual net immigration (in thousands) for 2015 

to 2089. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,155 1,465 850

Economic:

Average annual percentage change in:

Productivity (total U.S. economy), for 2025 and later . . . . . . . 1.68 1.98 1.38

Average wage in covered employment from 2025 to 2089 . . . 3.87 5.20 2.55

Consumer Price Index (CPI-W), for 2018 and later. . . . . . . . . 2.70 3.40 2.00

Average annual real-wage differential (percent) for 2025 

to 2089. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17 1.80 .55

Unemployment rate (percent, age-sex-adjusted), for 2024 and 

later . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 4.5 6.5

Annual trust fund real interest rate (percent), for 2025 and later. 2.9 3.4 2.4

Programmatic:

Disability incidence rate (per 1,000 exposed, age-sex-adjusted) 

in 2089. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 4.3 6.5

Disability recovery rate (per 1,000 beneficiaries, age-sexadjusted) in 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 12.6 8.3
Overview

10

D. PROJECTIONS OF FUTURE FINANCIAL STATUS

Short-Range Actuarial Estimates

For the short-range period (2015 through 2024), the Trustees measure financial adequacy by comparing projected asset reserves at the beginning of each

year to projected program cost for that year under the intermediate set of

assumptions. Maintaining a trust fund ratio of 100 percent or more—that is,

reserves at the beginning of each year at least equal to projected cost for the

year—is a good indication that the trust fund can cover most short-term contingencies. The projected trust fund ratios under the intermediate assumptions for OASI alone, and for OASI and DI combined, exceed 100 percent

throughout the short-range period. Therefore, OASI and OASDI satisfy the

Trustees’ short-term test of financial adequacy. However, the DI Trust Fund

fails the Trustees’ short-term test of financial adequacy. The Trustees estimate that the DI trust fund ratio was at 40 percent at the beginning of 2015.

The projected DI trust fund ratio then declines until the trust fund reserves

become depleted in the fourth quarter of 2016. Figure II.D1 shows that the

trust fund ratios for the theoretical combined OASI and DI Trust Funds

decline consistently after 2010. Figure II.D3 illustrates the implications of

reserve depletion for the DI Trust Fund alone.

As it has since 2010, projected OASDI cost exceeds non-interest income

throughout the short-range period. Cost is less than total income until 2020,

when cost begins to exceed total income. While trust fund reserves continue

to grow through 2019, they grow more slowly than cost, causing the trust

fund ratio to decline, as shown in figure II.D1.
11

Future Financial Status

Long-Range Actuarial Estimates

The Trustees use three types of measures to assess the actuarial status of the

program over the next 75 years: (1) annual cash-flow measures, including

income rates, cost rates, and balances; (2) trust fund ratios; and (3) summary

measures such as actuarial balances and open group unfunded obligations.

The Trustees express these measures as percentages of taxable payroll, as

percentages of gross domestic product (GDP), or in dollars. The Trustees

also present summary measures over the infinite horizon in Appendix F. The

infinite horizon values, which are subject to much greater uncertainty, provide an additional indication of Social Security’s very-long-run financial

condition.

The Trustees also apply a test of long-range close actuarial balance each

year. To satisfy the test, a trust fund must meet two conditions: (1) the trust

fund satisfies the short-range test of financial adequacy, and (2) the trust fund

ratio stays above zero throughout the 75-year projection period, such that

benefits would be payable in a timely manner throughout the period. The

OASI, DI, and theoretical combined OASI and DI Trust Funds all fail the

 Figure II.D1.—Short-Range OASI and DI Combined Trust Fund Ratio

[Asset reserves as a percentage of annual cost]

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Calendar year 

Historical Estimated 

"Minimum" level for short-term financial adequacy 
Overview

12

test of long-range close actuarial balance under the intermediate assumptions.

Annual Income Rates, Cost Rates, and Balances

Figure II.D2 illustrates the year-by-year relationship among OASDI income

(excluding interest), cost (including scheduled benefits), and expenditures

(including payable benefits) for the full 75-year period (2015 through 2089).

The figure shows all values as percentages of taxable payroll. Under the

intermediate assumptions, demographic factors would by themselves cause

the projected cost rate to rise rapidly for the next two decades before leveling

off in about 2035. However, the recent recession led to lower taxable earnings than expected and more beneficiaries than expected, which in turn

sharply increased the cost rate. This recession effect obscures the underlying

rising trend in the cost rate for the next few years. The projected income rate

is stable at about 13 percent throughout the 75-year period.

Annual OASDI cost exceeded non-interest income in 2010 for the first time

since 1983. The Trustees project that cost will continue to exceed non-interest income throughout the 75-year valuation period. Nevertheless, total trust

fund income, including interest income, is more than is necessary to cover

costs through 2019, so trust fund asset reserves continue to grow. Beginning

in 2020, cost exceeds total income, and theoretical combined OASI and DI

Trust Fund reserves diminish until they become depleted in 2034. After trust

fund reserve depletion, continuing income is sufficient to support expenditures at a level of 79 percent of program cost for the rest of 2034, declining

to 73 percent for 2089. Figure II.D2 depicts OASDI operations as a theoretical combined whole. However, under current law, the differences between

scheduled and payable benefits would begin at different times for the program’s two trust funds: in 2016 for DI and in 2035 for OASI.
13

Future Financial Status

To illustrate the more immediate challenges specific to the DI program, figure II.D3 presents the year-by-year relationship among income, cost, and

expenditures for the 75-year projection period. The DI Trust Fund reserves

are expected to deplete in the fourth quarter of 2016 if no legislative action is

taken before then. After DI Trust Fund reserve depletion, continuing income

is sufficient to support expenditures at a level of 81 percent of program cost

for the rest of 2016, rising to a somewhat higher level for 2020 through 2040,

then declining to 81 percent by 2089. 

 Figure II.D2.—OASDI Income, Cost, and Expenditures as Percentages of Taxable Payroll

[Under Intermediate Assumptions]

0%

5%

10%

15%

20%

25%

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Cost: Scheduled and 

payable benefits

Income

Payable benefits as percent

of scheduled benefits:

2014-33: 100%

2034: 79%

2089: 73%

Cost: Scheduled but not 

fully payable benefits

Expenditures: Payable benefits = income 

after trust fund depletion in 2034
Overview

14

Figure II.D4 shows the estimated number of workers per beneficiary.

Figures II.D2 and II.D4 illustrate the inverse relationship between cost rates

and the number of workers per beneficiary. In particular, the projected future

increase in the cost rate reflects a projected decline in the number of covered

workers per beneficiary. There were about 2.8 workers for every OASDI

beneficiary in 2014. This ratio had been extremely stable, remaining between

3.2 and 3.4 from 1974 through 2008, and has declined since then due to the

economic recession and the beginning of the demographic shift that will

drive this ratio down over the next 20 years. The Trustees project that the

ratio of workers to beneficiaries will continue to decline, even as the economy recovers, due to this demographic shift—as workers of lower-birth-rate

generations replace workers of the baby-boom generation. The ratio of workers to beneficiaries reaches 2.1 by 2035 when the baby-boom generation will

have largely retired, with a further gradual decline thereafter due to increasing longevity.

 Figure II.D3.—DI Income, Cost, and Expenditures as Percentages of Taxable Payroll

[Under Intermediate Assumptions]

0%

1%

2%

3%

4%

5%

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Cost: Scheduled and 

payable benefits

Income

Payable benefits as percent

of scheduled benefits:

2014-15: 100%

2016: 81%

2089: 81%

Cost: Scheduled but not 

fully payable benefits

Expenditures: Payable benefits = income 

after trust fund depletion in 2016
15

Future Financial Status

Another important way to look at Social Security’s future is to view its

annual cost and non-interest income as a share of U.S. economic output

(GDP). As shown in figure II.D5, the Trustees project that Social Security’s

cost as a percent of GDP will grow from 4.4 percent in 2008 to about

6.0 percent by 2035, then decline to 5.9 percent by 2050, and generally

increase to 6.2 percent by 2089. As the economy recovers, Social Security’s

non-interest income, which reflects scheduled tax rates, increases from its

current level of about 4.5 percent of GDP to about 4.8 percent of GDP for

2025. Thereafter, non-interest income as a percent of GDP declines gradually, to about 4.6 percent by 2089, because the Trustees expect the share of

employee compensation provided as noncovered fringe benefits to increase

gradually.

 Figure II.D4.—Number of Covered Workers Per OASDI Beneficiary

0

1

2

3

4

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

Calendar year

Historical Estimated
Overview

16

Trust Fund Ratios

The trust fund ratio is defined as the asset reserves at the beginning of a year

expressed as a percentage of the cost during the year. The trust fund ratio

thus represents the proportion of a year’s cost which could be paid solely

with the reserves at the beginning of the year. Table II.D1 displays the projected maximum trust fund ratios during the long-range period for the OASI,

DI, and combined OASI and DI funds. The table also shows the year of maximum projected trust fund ratio during the long-range projection period

(2015-89) and the year of trust fund reserve depletion. Each trust fund ratio

has been generally declining in recent years. OASI reached a peak level of

402 in 2011, DI reached a peak level of 219 in 2003, and OASDI reached a

peak level of 358 in 2008.

 Figure II.D5.—OASDI Cost and Non-interest Income as a Percentage of GDP

Table II.D1.—Projected Maximum Trust Fund Ratios During the Long-Range Period

and Trust Fund Reserve Depletion Dates

[Under the Intermediate Assumptions]

OASI DI OASDI

Maximum trust fund ratio (percent). . . . . . . . . . . . . . 362 40 308

Year attained. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 2015 2015

Year of trust fund reserve depletion. . . . . . . . . . . . . . 2035 2016 2034

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
17

Future Financial Status

Summary Measures

The actuarial balance is a summary measure of the program’s financial status

through the end of the 75-year valuation period. The actuarial balance measure includes the trust fund asset reserves at the beginning of the period, all

cost and income during the valuation period, and the cost of reaching a target

trust fund reserve of one year’s cost by the end of the period. Therefore, the

actuarial balance is essentially the difference between the present values of

income and cost from 1937 through the end of the valuation period. The

Trustees express actuarial balance as a percentage of the taxable payroll for

the 75-year valuation period, and refer to a negative actuarial balance as an

actuarial deficit. The actuarial deficit represents the average amount of

change in income or cost that is needed throughout the valuation period in

order to achieve actuarial balance. 

In this report, the actuarial deficit for the combined OASI and DI Trust

Funds under the intermediate assumptions is 2.68 percent of taxable payroll.

The actuarial deficit was 2.88 percent in the 2014 report. If the assumptions,

methods, starting values, and the law had all remained unchanged from last

year, the actuarial deficit would have increased to 2.94 percent of payroll

solely due to advancing the valuation period by 1 year. Changes in methods,

starting values, and economic assumptions combined to account for most of

the remaining change in the actuarial deficit.

Another way to illustrate the projected financial shortfall of the OASDI program is to examine the cumulative present value of scheduled income less

cost. Figure II.D6 shows the present value of cumulative OASDI income less

cost from the inception of the program through each of the years from 2014

to 2089. A positive value represents the present value of trust fund reserves

at the end of the selected year. A negative value is the unfunded obligation

through the selected year. The asset reserves of the combined trust funds

were $2.8 trillion at the end of 2014. The trust fund reserves decline on a

present value basis after 2014, but remain positive through 2033. However,

after 2033 this cumulative amount becomes negative, which means that the

combined OASI and DI Trust Funds have a net unfunded obligation through

each year after 2033. Through the end of 2089, the combined funds have a

present-value unfunded obligation of $10.7 trillion. If the assumptions, methods, starting values, and the law had all remained unchanged from last year,

the unfunded obligation would have risen to about $11.1 trillion due to the

change in the valuation date. The remaining change in the unfunded obligation is primarily due to changes in methods, starting values, and economic

assumptions.
Overview

18

This unfunded obligation represents 2.53 percent of taxable payroll and

0.9 percent of GDP for the 75-year valuation period. The unfunded obligation as a share of taxable payroll (2.53 percent) and the actuarial deficit

(2.68 percent) are similar measures, but differ because the actuarial deficit

includes the cost of having an ending trust fund reserve equal to 1 year’s

cost.

Figures II.D2, II.D5, and II.D6 show that the program’s financial condition is

worsening at the end of the projection period. Trends in annual balances and

cumulative values toward the end of the 75-year period provide an indication

of the program’s ability to maintain solvency beyond 75 years. Consideration

of summary measures alone for a 75-year period can lead to incorrect perceptions and to policy prescriptions that do not achieve sustainable solvency.1

 1 Sustainable solvency for the financing of the program under a specified set of assumptions has been

achieved when the projected trust fund ratio is positive throughout the 75-year projection period and is either

stable or rising at the end of the period.

 Figure II.D6.—Cumulative Scheduled OASDI Income Less Cost,

From Program Inception Through Years 2014-89

[Present value as of January 1, 2015, in trillions]

-$11

-$10

-$9

-$8

-$7

-$6

-$5

-$4

-$3

-$2

-$1

$0

$1

$2

$3

2014 2029 2044 2059 2074 2089

Ending year of accumulation

Unfunded 

obligation

(negative)

Trust fund 

reserves

(positive)

2034
19

Future Financial Status

Appendix F presents summary measures over the infinite horizon. The

infinite horizon values provide an additional indication of Social Security’s

financial condition for the period beginning with the inception of the program and extending indefinitely into the future, but results are subject to

much greater uncertainty. Extending the horizon beyond 75 years increases

the measured unfunded obligation. Through the infinite horizon, the

unfunded obligation, or shortfall, is equivalent to 3.9 percent of future taxable payroll or 1.3 percent of future GDP.

Uncertainty of the Projections

Significant uncertainty surrounds the intermediate assumptions. The Trustees

use several methods to help illustrate that uncertainty.

A first approach uses alternative scenarios reflecting low-cost (alternative I)

and high-cost (alternative III) sets of assumptions. Figure II.D7 shows the

projected trust fund ratios for the combined OASI and DI Trust Funds under

the intermediate, low-cost, and high-cost assumptions. The low-cost alternative includes a higher ultimate total fertility rate, slower improvement in

mortality, a higher real-wage differential, a higher ultimate real interest rate,

a higher ultimate annual change in the CPI, and a lower unemployment rate.

The high-cost alternative, in contrast, includes a lower ultimate total fertility

rate, more rapid improvement in mortality, a lower real-wage differential, a

lower ultimate real interest rate, a lower ultimate annual change in the CPI,

and a higher unemployment rate. These alternatives are not intended to suggest that all parameters would be likely to differ from the intermediate values

in the specified directions, but are intended to illustrate the effect of clearly

defined scenarios that are, on balance, very favorable or unfavorable for the

program’s financial status. Actual future costs are unlikely to be as extreme

as those portrayed by the low-cost or high-cost projections. The method for

constructing the low-cost and high-cost projections does not lend itself to

estimating the probability that actual experience will lie within or outside the

range they define.
Overview

20

Appendix D of this report presents long-range sensitivity analysis for the

OASDI program. By varying one parameter at a time, sensitivity analysis

provides a second approach for illustrating the uncertainty surrounding projections into the future.

A third approach uses stochastic simulations that reflect randomly assigned

annual values for each parameter. These simulations produce a distribution

of projections and corresponding probabilities that future outcomes will fall

within or outside a given range. The results of the stochastic simulations, discussed in more detail in appendix E, suggest that trust fund reserve depletion

(i.e., the point at which the trust fund ratio reaches zero) is very likely by

mid-century. In particular, figure II.D8 suggests that based on these stochastic simulations, trust fund asset reserves will deplete between 2029 and 2046

with a 95-percent probability.

The stochastic results suggest that trust fund ratios as high as the low-cost

alternative are very unlikely. However, the relationship between the stochastic results and the low-cost and high-cost alternatives may change as the

methodology for the stochastic simulations is further developed. As noted in

 Figure II.D7.—Long-Range OASI and DI Combined Trust Fund Ratios Under 

Alternative Scenarios

[Asset reserves as a percentage of annual cost]

0%

100%

200%

300%

400%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Historical Estimated

III

II

I
21

Future Financial Status

appendix E, future improvements and refinements are expected to be more

likely to expand rather than reduce the indicated range of uncertainty.

Changes From Last Year’s Report

The projected long-range OASDI actuarial deficit decreased from

2.88 percent of taxable payroll for last year’s report to 2.68 percent of taxable payroll for this year’s report. The change in the 75-year projection

period alone would have increased the actuarial deficit to 2.94 percent.

Changes in methods, starting values, and economic assumptions combined to

account for most of the remaining change in the actuarial deficit. For a

detailed description of the specific changes identified in table II.D2, see

section IV.B.6.

 Figure II.D8.—Long-Range OASI and DI Combined Trust Fund Ratios 

From Stochastic Modeling

0%

100%

200%

300%

400%

2015 2030 2045 2060 2075 2090

Projection year

50%

97.5%

2.5%

90%

10%
Overview

22

Note: Totals do not necessarily equal the sums of rounded components.

Figure II.D9 compares this year’s projections of annual balances (non-interest income minus cost) to those in last year’s report. The annual balances in

this year’s report are significantly higher throughout the projection period.

See page 78 for details.

Table II.D2.—Reasons for Change in the 75-Year Actuarial Balance,

Based on Intermediate Assumptions

[As a percentage of taxable payroll]

Item OASI DI OASDI

Shown in last year’s report:

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.02 1.87 13.89

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.57 2.20 16.77

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.55 -.33 -2.88

Changes in actuarial balance due to changes in:

Legislation / Regulation . . . . . . . . . . . . . . . . . . . . . . . .01 .00 .02

Valuation perioda . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a The change in the 75-year valuation period from last year’s report to this report means that the 75-year

actuarial balance now includes the relatively large negative annual balance for 2089. This change in the valuation period results in a larger long-range actuarial deficit. The actuarial deficit includes the trust fund

reserve at the beginning of the projection period.

-.05 -.01 -.06

Demographic data and assumptions. . . . . . . . . . . . . . -.03 .00 -.03

Economic data and assumptions. . . . . . . . . . . . . . . . . .10 .00 .10

Disability data and assumptions. . . . . . . . . . . . . . . . . .00 .00 .00

Methods and programmatic data . . . . . . . . . . . . . . . . .15 .02 .17

Total change in actuarial balance . . . . . . . . . . . . . . . . . . .18 .02 .20

Shown in this report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.37 -.31 -2.68

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.00 1.86 13.86

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.37 2.17 16.55
23

Future Financial Status

 Figure II.D9.—OASDI Annual Balances: 2014 and 2015 Trustees Reports

[As a percentage of taxable payroll, under the intermediate assumptions]

-6%

-4%

-2%

0%

2%

2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

2014 Report

2015 Report
Overview

24

E. CONCLUSION

Under current law, the projected cost of Social Security increases faster than

projected income through 2037 primarily because of the aging of the babyboom generation and relatively low fertility since the baby-boom period.

Cost will continue to grow faster than income after 2037, but to a lesser

degree, due to increasing life expectancy. Based on the Trustees’ intermediate assumptions, program cost exceeds non-interest income for 2015, as it

has since 2010, and remains higher than non-interest income throughout the

remainder of the 75-year projection period. 

If there were a change in law permitting the payment of currently scheduled

benefits after DI’s current-law projected reserve depletion date of 2016 while

leaving scheduled OASI benefits and combined OASDI scheduled revenues

unchanged, then the projected theoretical combined OASI and DI Trust Fund

asset reserves would increase through 2019, begin to decline in 2020, and

become depleted and unable to pay scheduled benefits in full on a timely

basis in 2034. At the time of depletion of these theoretical combined

reserves, continuing income to the combined trust funds would be sufficient

to pay 79 percent of scheduled benefits. By 2089, continuing income equals

about 73 percent of program cost.

The OASI Trust Fund and the DI Trust Fund are projected to have sufficient

reserves to pay full benefits on time until 2035 and 2016, respectively. Legislative action is needed as soon as possible to prevent depletion of the DI

Trust Fund reserves in 2016, at which time continuing income to the DI Trust

Fund would be sufficient to pay 81 percent of DI benefits. In 1994, lawmakers reallocated the payroll tax rate between OASI and DI, as recommended

by the Trustees, to create the time and opportunity for reforms to slow the

growth of costs and lead to financial stability. The Trustees reiterate the call

for such legislation. However, given the short time remaining before projected DI Trust Fund reserve depletion, such legislation may now need to

include some reallocation of resources between the two trust funds. Reallocation of resources in the absence of substantive reforms might, on the other

hand, serve to delay DI reforms and much needed corrections for OASDI as

a whole.

The 75-year actuarial deficit for the combined trust funds under the intermediate assumptions is 2.68 percent of taxable payroll—0.20 percentage point

smaller than the 2.88 percent deficit in last year’s report. For the combined

OASI and DI Trust Funds to remain fully solvent throughout the 75-year

projection period: (1) revenues would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.62 percent-
25

Conclusion

age points (from its current level of 12.40 percent to 15.02 percent, a relative

increase of 21.1 percent); (2) scheduled benefits would have to be reduced

by an amount equivalent to an immediate and permanent reduction of

16.4 percent applied to all current and future beneficiaries, or 19.6 percent if

the reductions were applied only to those who become initially eligible for

benefits in 2015 or later; or (3) some combination of these approaches would

have to be adopted. 

If substantial actions are deferred for several years, the changes necessary to

maintain Social Security solvency would be concentrated on fewer years and

fewer generations. Much larger changes would be necessary if action is

deferred until the theoretical combined trust fund reserves become depleted

in 2034. In order to maintain solvency throughout the 75-year projection

period and finance scheduled benefits fully in every year starting in 2034, it

would be necessary to increase revenues by an amount equivalent to a payroll tax rate increase of about 3.7 percentage points (yielding a total payroll

tax rate of about 16.1 percent) at the point of trust fund reserve depletion,

with the total rate reaching about 17.4 percent in 2089. Alternatively, solvency could be maintained if benefits were reduced to the level that would be

payable with scheduled tax rates and earnings subject to tax in each year

beginning in 2034. At the point of theoretical combined trust fund reserve

depletion in 2034, this would be equivalent to a reduction in all scheduled

benefits of 21 percent, with reductions reaching 27 percent in 2089. Of

course, there is a continuum of policies combining tax increases with benefit

reductions that would maintain solvency at the point of trust fund depletion. 

Some strategies for achieving solvency would not be feasible if delayed until

trust fund reserve depletion in 2034. For example, even a temporary 100-percent benefit reduction for those newly eligible for benefits in 2034 would not

by itself make it possible to pay all benefits scheduled for payment in that

year to those already receiving benefits and to those eligible to receive benefits who have delayed the start of their benefit payments.

It is important to note that a policy closing the 75-year actuarial deficit that

relies on some combination of a fixed percentage increase in non-interest

income and a fixed percentage reduction in benefits would result in noninterest income initially being substantially greater than expenditures, and

trust fund reserves accumulating rapidly. Subsequently, however, non-interest income alone would be inadequate, and reserves would be drawn down to

cover the differences. This illustrates that if lawmakers were to design legislative solutions only to eliminate the overall actuarial deficit without consideration of year-by-year patterns, then a substantial financial imbalance could

remain at the end of the period, and the long-range sustainability of program
Overview

26

financing could still be in doubt. This is especially true if life expectancy of

the population continues to improve after the end of the 75-year period, as

this would very likely cause Social Security’s annual cost to continue growing faster than non-interest income after 2089. Making changes now that

achieve sustainable solvency (that is, result in a trust fund ratio that is positive throughout the long-range period and is either level or increasing at the

end of the period) could avoid the need for later legislative changes.

The Trustees recommend that lawmakers address the projected trust fund

shortfalls in a timely way in order to phase in necessary changes gradually

and give workers and beneficiaries time to adjust to them. Implementing

changes soon would allow more generations to share in the needed revenue

increases or reductions in scheduled benefits. Social Security will play a critical role in the lives of 60 million beneficiaries and 168 million covered

workers and their families in 2015. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect

future generations.

For further information related to the contents of this report, see the following websites:

• www.socialsecurity.gov/oact/tr/2015/index.html

• www.cms.gov/Research-Statistics-Data-and-Systems/StatisticsTrends-and-Reports/ReportsTrustFunds/index.html

• www.treasury.gov/resource-center/economic-policy/ssmedicare/Pages/Soc-Sec-and-Medicare.aspx
27

Calendar Year 2014 Operations

III. FINANCIAL OPERATIONS OF THE TRUST FUNDS AND

LEGISLATIVE CHANGES IN THE LAST YEAR

A. OPERATIONS OF THE OLD-AGE AND SURVIVORS 

INSURANCE (OASI) AND DISABILITY INSURANCE (DI) TRUST 

FUNDS, IN CALENDAR YEAR 2014

This section presents detailed information on the operations of the OASI and

DI Trust Funds1 during calendar year 2014. Chapter IV provides projections

for calendar years 2015 through 2090.

1. OASI Trust Fund

Table III.A1 presents a statement of the income and disbursements of the

Federal Old-Age and Survivors Insurance Trust Fund in calendar year 2014,

and of the asset reserves in the fund at the beginning and end of the calendar

year. As shown in this table, total trust fund receipts in 2014 amounted to

$769.4 billion, while disbursements totaled $714.2 billion, an increase in

trust fund reserves during 2014 of $55.2 billion.

Total receipts during calendar year 2014 included $648.4 billion in payroll

tax contributions. These contributions include initial appropriations of payroll taxes, made on an estimated basis, and adjustments to appropriations for

prior years to reflect actual tax receipts. The OASI fund paid the general

fund $2.2 billion for the estimated amount of employee payroll-tax refunds,

partially offsetting these gross contributions. Employees who work for more

than one employer during a year and pay contributions on total earnings in

excess of the contribution and benefit base are eligible for such refunds. Net

payroll tax contributions were therefore $646.2 billion in 2014.

Net reimbursements from the General Fund of the Treasury amounted to

$0.4 billion in 2014. As shown in the table, adjustments to prior year receipts

based on Public Law 111-312, the Tax Relief, Unemployment Insurance

Reauthorization, and Job Creation Act of 2010, Public Law 112-78, the Temporary Payroll Tax Cut Continuation Act of 2011, and Public Law 112-96,

the Middle Class Tax Relief and Job Creation Act of 2012, account for

almost all of the reimbursement for the year. These acts specified general

fund reimbursement for temporary reductions in employee and self-employment payroll taxes for earnings in 2011 and 2012.

The General Fund of the Treasury reimbursed the OASI Trust Fund approximately $25 million in 2014 based on adjustments to prior years’ reimburse-

 1 See www.socialsecurity.gov/oact/ProgData/fundsQuery.html.
Financial Operations and Legislative Changes

28

ments for earnings in 2010 under the provisions of Public Law 111-147, the

Hiring Incentives to Restore Employment (HIRE) Act. The General Fund

reimbursed the OASI Trust Fund about $7 million in 2014 under the provisions of Public Law 110-246, the Food, Conservation, and Energy Act of

2008.

Income based on taxation of OASI benefits amounted to $28.0 billion in

2014. About 99 percent of this income represents amounts credited to the

trust funds, generally in advance of the actual receipt of taxes by the Treasury. These credited amounts represent the net amount of initial estimated

taxes transferred for tax liabilities in 2014. The remaining one percent of the

total income from taxation of benefits represents amounts withheld from the

benefits paid to nonresident aliens.

In 2014, the OASI Trust Fund earned $94.8 billion in net interest, which consisted of: (1) interest earned on the investments held by the trust fund,

(2) interest on adjustments in the allocation of administrative expenses

between the trust fund and the general fund account for the Supplemental

Security Income program, (3) interest arising from the revised allocation of

administrative expenses among the trust funds, and (4) interest on certain

reimbursements to the trust fund.

The remaining receipts, about $5 thousand, consisted of gifts received under

the provisions authorizing the deposit of money gifts or bequests to the trust

funds.
29

Calendar Year 2014 Operations

Note: Totals do not necessarily equal the sums of rounded components.

Of the $714.2 billion in total OASI disbursements in 2014, $706.8 billion

was for net benefit payments, including recovered overpayments, reimburseTable III.A1.—Operations of the OASI Trust Fund, Calendar Year 2014

[In millions]

Total asset reserves, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,673,985

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior calendar years.

$648,390

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,158

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646,232

Reimbursements from the general fund:

Reduction in payroll tax contributions due to P.L. 111-312, P.L. 112-78, 

and P.L. 112-96a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363

Reduction in payroll tax contributions due to P.L. 111-147a . . . . . . . . . . . . . . . . . . 25

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net general fund reimbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 184

All other, not subject to withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,773

Total income from taxation of benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,957

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,832

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust fund and

the general fund account for the Supplemental Security Income program, (2) interest arising from the revised

allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the

trust fund.

1

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 94,833

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769,417

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

706,821

Reimbursement from the general fund for unnegotiated checks . . . . . . . . . . . . . . . -43

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 2

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 706,780

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,257

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,911

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504

Adjustments for prior year administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . -271

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6

Miscellaneous reimbursements from the general fund e . . . . . . . . . . . . . . . . . . . . .

e Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the OASI program.

-5

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,133

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714,170

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,247

Total asset reserves, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,729,233
Financial Operations and Legislative Changes

30

ments from the general fund for unnegotiated checks, and the reimbursable

costs of vocational rehabilitation services1. Net benefit payments increased

by 5.2 percent from calendar year 2013 to calendar year 2014. This increase

is due primarily to: (1) an increase in the total number of beneficiaries and

(2) an increase in the average benefit amount. The increase in the average

benefit amount in 2014 was due in large part to the automatic cost-of-living

benefit increase of 1.5 percent which became effective for December 2013

under the automatic-adjustment provisions in section 215(i) of the Social

Security Act. In addition, new beneficiaries tend to have higher benefits than

previous cohorts.

The Railroad Retirement Act requires an annual financial interchange

between the Railroad Retirement program and the OASDI program. The purpose of the interchange is to put the OASI and DI Trust Funds in the same

financial position they would have been in had railroad employment always

been covered directly by Social Security. The Railroad Retirement Board and

the Social Security Administration calculated an interchange of $4.3 billion

from the OASI Trust Fund to the Social Security Equivalent Benefit Account

for June 2014.

The remaining $3.1 billion of disbursements from the OASI Trust Fund represents net administrative expenses. The Social Security Administration

charges administrative expenses incurred to administer the OASI program

directly to the trust fund on an estimated basis. Periodically, as actual

expenses are recorded, they adjust the allocations of administrative expenses

for prior periods. These adjustments affect the OASI Trust Fund, the DI

Trust Fund, the HI Trust Fund, the SMI Trust Fund, and the general fund

account for the Supplemental Security Income program, and include appropriate interest adjustments. As described earlier, the trust fund accounting

records such interest adjustments under investment income.

For 2014, the cost incurred by the Social Security Administration to administer the OASI program was 86 percent of OASI net administrative expenses.

The Social Security Administration charges such costs to the trust fund

($2.9 billion in 2014). In addition, the Department of the Treasury charges to

the trust fund expenses ($0.5 billion in 2014) for services provided in administering the OASI program. A relatively small offset ($6 million in 2014) to

administrative expenses represents income from miscellaneous receipts due

 1 Vocational rehabilitation services are furnished to disabled widow(er) beneficiaries and to those children

of retired or deceased workers who receive benefits based on disabilities that began before age 22. The trust

funds reimburse the providers of such services only in those cases where the services contributed to the successful rehabilitation of the beneficiary.
31

Calendar Year 2014 Operations

to the trust fund, which may include refunds, penalties, fees, and other

receipts.

Finally, the General Fund of the Treasury makes net reimbursements for

administrative costs incurred by the Social Security Administration in performing legislatively mandated activities that are not directly related to the

OASI program. These reimbursements include the costs associated with

union activities related to administering the OASI program ($4 million in

2014) and with the provision of information to participants in certain pension

plans ($971 thousand in 2014). These miscellaneous reimbursements totaled

$5 million in 2014.

The asset reserves in the OASI Trust Fund at the end of calendar year 2014

totaled $2,729.2 billion, consisting of $2,729.3 billion in U.S. Government

obligations and, as an offset, an extension of credit of $38 million against

securities to be redeemed within the following days. The effective annual

rate of interest earned by the reserves in the OASI Trust Fund during calendar year 2014 was 3.6 percent, slightly lower than the 3.8 percent earned

during calendar year 2013. Table VI.A4, presented in appendix A, shows a

detailed listing of OASI Trust Fund holdings by type of security, interest rate,

and year of maturity at the end of calendar years 2013 and 2014.

By law, the Department of the Treasury must invest trust fund reserves in

interest-bearing securities backed by the full faith and credit of the United

States Government. Those securities currently held by the OASI Trust Fund

are special issues, that is, securities sold only to the trust funds. These special

issues are of two types: short-term certificates of indebtedness and longerterm bonds. Daily receipts are invested in the short-term certificates of

indebtedness which mature on the next June 30 following the date of issue.

The trust fund normally acquires long-term special-issue bonds when special

issues of either type mature on June 30 and must be reinvested. The amount

of long-term bonds acquired on June 30 is equal to the amount of special

issues maturing (including accrued interest earnings), plus tax receipts for

that day, less amounts required to meet expenditures on that day.

Section 201(d) of the Social Security Act provides that the obligations issued

for purchase by the OASI and DI Trust Funds shall have maturities fixed

with due regard for the needs of the funds. The usual practice has been to

reinvest the maturing special issues, as of each June 30, so that the value of

the securities maturing in each of the next 15 years are approximately equal.

Accordingly, the Department of the Treasury, in consultation with the Chief

Actuary of the Social Security Administration, selected the amounts and

maturity dates of the special-issue bonds purchased on June 30, 2014, so that
Financial Operations and Legislative Changes

32

the maturity dates of the total portfolio of special issues were spread evenly

over the 15-year period 2015-29. The bonds purchased on that date have an

interest rate of 2.250 percent, reflecting the average market yield, as of the

last business day of the prior month, on all of the outstanding marketable

U.S. obligations that are due or callable more than 4 years in the future.

Table III.A7 shows additional details on the investment transactions during

2014, including the amounts of bonds purchased on June 30, 2014.

2. DI Trust Fund

Table III.A2 presents a statement of the income and disbursements of the

Federal Disability Insurance Trust Fund in calendar year 2014, and of the

asset reserves in the fund at the beginning and end of the calendar year.

Line entries in the DI statement are similar to those in the OASI statement.

The explanations of the OASI entries generally apply to DI as well.

Of the $114.9 billion in total receipts, $109.7 billion was net payroll tax contributions.

Of the $145.1 billion of total disbursements, $141.7 billion was net benefit

payments. Net benefit payments increased by 1.1 percent from calendar year

2013 to calendar year 2014. This increase in DI benefit payments was due to

the same factors described earlier for OASI benefit payments. Total DI disbursements exceeded non-interest income in years 2005 through 2014 and

exceeded total income in years 2009 through 2014.

During 2014, the reserves in the DI Trust Fund decreased by $30.2 billion,

from $90.4 billion at the end of 2013 to $60.2 billion at the end of 2014. The

$60.2 billion reserves in the DI Trust Fund at the end of calendar year 2014

consisted of $60.3 billion in U.S. Government obligations and, as an offset,

an extension of credit of $67 million against securities to be redeemed within

the following few days. The effective annual rate of interest earned by the

asset reserves in the DI Trust Fund during calendar year 2014 was

4.5 percent, about the same as the 4.5 percent earned during calendar year

2013. Table VI.A5, presented in appendix A, shows a detailed listing of DI

Trust Fund holdings by type of security, interest rate, and year of maturity at

the end of calendar years 2013 and 2014.
33

Calendar Year 2014 Operations

Note: Totals do not necessarily equal the sums of rounded components.

Section 201(d) of the Social Security Act provides that the Treasury securities issued for purchase by the OASI and DI Trust Funds shall have maturities fixed with due regard for the needs of the funds. The usual practice has

Table III.A2.—Operations of the DI Trust Fund, Calendar Year 2014

[In millions]

Total asset reserves, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $90,445

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior calendar years.

$110,103

Payments from the General Fund of the Treasury for payroll tax contributions 

subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -366

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,737

Reimbursements from the general fund:

Reduction in payroll tax contributions due to P.L. 111-312, P.L. 112-78, 

and P.L. 112-96a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Reduction in payroll tax contributions due to P.L. 111-147a . . . . . . . . . . . . . . . . . . 4

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net general fund reimbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 4

All other, not subject to withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,676

Total income from taxation of benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,680

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,369

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust fund and

the general fund account for the Supplemental Security Income program, (2) interest arising from the revised

allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to

the trust fund.

1

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 3,371

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,858

Disbursements:

Benefit payments:

Monthly benefitsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

141,622

Reimbursement from the general fund for unnegotiated checks . . . . . . . . . . . . . . . -21

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 83

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,683

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,715

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Adjustments for prior year administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 109

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Miscellaneous reimbursements from the general funde. . . . . . . . . . . . . . . . . . . . . .

e Reimbursements for costs incurred in performing legislatively mandated activities not directly related to

administering the DI program.

-4

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,933

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,060

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30,201

Total asset reserves, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,244
Financial Operations and Legislative Changes

34

been to reinvest the maturing special issues, as of each June 30, so that the

values of the securities maturing in each of the next 15 years are approximately equal. However, as of June 2014, the Trustees projected that the

reserves in the DI Trust Fund would be depleted within 15 years. Therefore,

the Department of the Treasury, in consultation with the Chief Actuary of the

Social Security Administration, selected the amounts and maturity dates of

the DI special-issue bonds purchased on June 30, 2014, so that equal

amounts of special issues would mature over the two-year period 2015-16.

The bonds purchased have an interest rate of 2.250 percent, reflecting the

average market yield, as of the last business day of the prior month, on all of

the outstanding marketable U.S. obligations that are due or callable more

than 4 years in the future. As of June 30, 2014, the DI Trust Fund had already

redeemed all of the bonds coming due on June 30, 2015 and on

June 30, 2016, so this investment approach required that all bond purchases

on June 30, 2014 be split evenly over maturity dates of June 30, 2015 and

June 30, 2016. Table III.A7 shows additional details on the investment transactions during 2014.

3. OASI and DI Trust Funds, Combined

Table III.A3 presents a statement of the operations of the OASI and DI Trust

Funds on a theoretical combined basis1. The entries in this table represent

the sums of the corresponding values from tables III.A1 and III.A2. The two

preceding subsections that cover OASI and DI provide a description of the

nature of these income and expenditure transactions.

 1 The OASI and DI Trust Funds are distinct legal entities which operate independently. To illustrate the

actuarial status of the program as a whole, the fund operations are often combined on a theoretical basis.
35

Calendar Year 2014 Operations

Note: Totals do not necessarily equal the sums of rounded components.

Table III.A3.—Operations of the Combined OASI and DI Trust Funds, 

Calendar Year 2014

[In millions]

Total asset reserves, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,764,431

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior calendar years.

$758,494

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,524

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755,969

Reimbursements from the general fund:

Reduction in payroll tax contributions due to P.L. 111-312, P.L. 112-78, 

and P.L. 112-96a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428

Reduction in payroll tax contributions due to P.L. 111-147a . . . . . . . . . . . . . . . . . . 29

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net general fund reimbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 188

All other, not subject to withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,449

Total income from taxation of benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,637

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,201

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust funds

and the general fund account for the Supplemental Security Income program, (2) interest arising from the

revised allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the trust funds.

3

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 98,204

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 884,276

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

848,443

Reimbursement from the general fund for unnegotiated checks . . . . . . . . . . . . . . . -64

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 85

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 848,463

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,701

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,626

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600

Adjustments for prior year administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . -163

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Miscellaneous reimbursements from the general funde. . . . . . . . . . . . . . . . . . . . . .

e Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the OASI and DI programs.

-8

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,066

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 859,230

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,046

Total asset reserves, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,789,476
Financial Operations and Legislative Changes

36

Table III.A4 compares estimates of total income and total expenditures for

calendar year 2014 from the 2010-14 Trustees Reports to the corresponding

actual amounts for 2014.

Note: Totals do not necessarily equal the sums of rounded components.

A number of factors contribute to differences between estimates and subsequent actual amounts, including: (1) actual values for key demographic, economic, and other variables that differ from earlier assumed levels; and

(2) legislation that was enacted or other administrative initiatives that were

finalized after the Trustees completed their estimates.

At the end of calendar year 2014, the OASDI program was providing

monthly benefits to about 59.1 million people. The OASI Trust Fund was

providing benefits to about 48.1 million people and the DI Trust Fund was

providing benefits to about 10.9 million people. The number of people

receiving benefits from the OASI Trust Fund grew by 2.3 percent while the

number of people receiving DI benefits fell by 0.5 percent during calendar

Table III.A4.—Comparison of Actual Calendar Year 2014 Trust Fund Operations

With Estimates Made in Prior Reports, Based on Intermediate Assumptionsa

[Amounts in billions]

a Percentage differences are calculated prior to rounding.

Total income b

b “Actual” income for 2014 reflects adjustments to payroll tax contributions for prior calendar years (see

appendix A for description of these adjustments). “Estimated” income also includes such adjustments, but on

an estimated basis.

Total expenditures

Amount

Difference

from actual

(percent) Amount

Difference

from actual

(percent)

OASI Trust Fund:

Estimate in 2010 report . . . . . . . . . . . . . . $902.4 17.3 $728.1 2.0

Estimate in 2011 report . . . . . . . . . . . . . . 845.7 9.9 711.7 -.3

Estimate in 2012 report . . . . . . . . . . . . . . 803.8 4.5 727.2 1.8

Estimate in 2013 report . . . . . . . . . . . . . . 781.0 1.5 724.7 1.5

Estimate in 2014 report . . . . . . . . . . . . . . 768.0 -.2 716.4 .3

Actual amount . . . . . . . . . . . . . . . . . . . . . 769.4 — 714.2 —

DI Trust Fund:

Estimate in 2010 report . . . . . . . . . . . . . . 130.7 13.8 153.2 5.6

Estimate in 2011 report . . . . . . . . . . . . . . 124.2 8.1 148.8 2.6

Estimate in 2012 report . . . . . . . . . . . . . . 119.1 3.7 153.2 5.6

Estimate in 2013 report . . . . . . . . . . . . . . 117.1 2.0 150.2 3.6

Estimate in 2014 report . . . . . . . . . . . . . . 114.4 -.4 146.7 1.1

Actual amount . . . . . . . . . . . . . . . . . . . . . 114.9 — 145.1 —

OASI and DI Trust Funds, combined:

Estimate in 2010 report . . . . . . . . . . . . . . 1,033.0 16.8 881.3 2.6

Estimate in 2011 report . . . . . . . . . . . . . . 969.9 9.7 860.5 .2

Estimate in 2012 report . . . . . . . . . . . . . . 922.9 4.4 880.5 2.5

Estimate in 2013 report . . . . . . . . . . . . . . 898.2 1.6 875.0 1.8

Estimate in 2014 report . . . . . . . . . . . . . . 882.4 -.2 863.1 .4

Actual amount . . . . . . . . . . . . . . . . . . . . . 884.3 — 859.2 —
37

Calendar Year 2014 Operations

year 2014. These changes reflect the gradual aging of the population, with

the baby-boom generation moving above normal retirement age, where DI

benefits are no longer applicable. Table III.A5 shows the estimated distributions of benefit payments in calendar years 2013 and 2014, by type of beneficiary, for each trust fund separately.

Note: Benefits are monthly benefits and lump-sum death payments. Totals do not necessarily equal the sums

of rounded components.

Net administrative expenses of the OASI and DI Trust Funds in calendar

year 2014 totaled $6.1 billion. This amount is equal to 0.8 percent of noninterest income and 0.7 percent of total expenditures. Table III.A6 shows

corresponding percentages for each trust fund separately and for the OASDI

program as a whole for each of the last 5 years.

Table III.A5.—Distribution of Benefit Payments by Type of Beneficiary or Payment, 

Calendar Years 2013 and 2014

[Amounts in millions]

Calendar year 2013 Calendar year 2014

Amount

Percentage

of total Amount

Percentage

of total

Total OASDI benefit payments . . . . . . . . . . $812,247 100.0 $848,443 100.0

OASI benefit payments . . . . . . . . . . . . . . 672,175 82.8 706,821 83.3

DI benefit payments . . . . . . . . . . . . . . . . . 140,071 17.2 141,622 16.7

OASI benefit payments, total. . . . . . . . . . . . 672,175 100.0 706,821 100.0

Monthly benefits:

Retired workers and auxiliaries . . . . . . 559,942 83.3 592,578 83.8

Retired workers . . . . . . . . . . . . . . . . 528,862 78.7 560,120 79.2

Spouses . . . . . . . . . . . . . . . . . . . . . . . 26,300 3.9 27,484 3.9

Children . . . . . . . . . . . . . . . . . . . . . . 4,780 .7 4,974 .7

Survivors of deceased workers. . . . . . . 112,032 16.7 114,044 16.1

Aged widows and widowers. . . . . . . 89,126 13.3 90,862 12.9

Disabled widows and widowers . . . . 2,301 .3 2,330 .3

Parents . . . . . . . . . . . . . . . . . . . . . . . 22 a

a Less than 0.05 percent.

21 a

Children . . . . . . . . . . . . . . . . . . . . . . 18,923 2.8 19,192 2.7

Widowed mothers and fathers 

caring for child beneficiaries . . . . 1,660 .2 1,638 .2

Lump-sum death payments . . . . . . . . . . . 201 a 199 a

DI benefit payments, total . . . . . . . . . . . . . . 140,071 100.0 141,622 100.0

Disabled workers . . . . . . . . . . . . . . . . . 130,427 93.1 132,154 93.3

Spouses. . . . . . . . . . . . . . . . . . . . . . . . . 615 .4 598 .4

Children . . . . . . . . . . . . . . . . . . . . . . . . 9,028 6.4 8,870 6.3
Financial Operations and Legislative Changes

38

The acquisition and disposition of securities during calendar year 2014

changed the invested reserves of the OASI Trust Fund and the DI Trust

Fund. Table III.A7 presents these investment transactions for each trust fund

separately and for the trust funds combined.

Note: All investments are shown at par value. Totals do not necessarily equal the sums of rounded components.

Table III.A6.—Administrative Expenses as a Percentage of Non-interest Income and of 

Total Expenditures, Calendar Years 2010-14

Calendar year 

OASI Trust Fund DI Trust Fund

OASI and DI

Trust Funds,

combined

Non-interest

income

Total

expenditures

Non-interest

income

Total

expenditures

Non-interest

income

Total

expenditures

2010 . . . . . . . . . . . 0.6 0.6 3.1 2.3 1.0 0.9

2011 . . . . . . . . . . . .6 .6 3.0 2.2 .9 .9

2012 . . . . . . . . . . . .5 .5 2.8 2.1 .9 .8

2013 . . . . . . . . . . . .5 .5 2.6 1.9 .8 .7

2014 . . . . . . . . . . . .5 .4 2.6 2.0 .8 .7

Table III.A7.—Trust Fund Investment Transactions, Calendar Year 2014

[In millions]

OASI

Trust Fund

DI

Trust Fund

OASI and DI

Trust Funds,

combined

Invested asset reserves, 

December 31, 2013a . . . . . . . . . . . . . . . . . .

a Invested asset reserves differ from total asset reserves by the amount of undisbursed balances. See tables

VI.A4 and VI.A5 for details.

$2,674,490 $90,723 $2,765,213

Acquisitions:

Special issues:

Certificates of indebtedness . . . . . . . . . . . 726,926 114,021 840,947

Bondsb . . . . . . . . . . . . . . . . . . . . . . . . . . .

b Purchased on June 30, 2014. The interest rate on these purchases was 2.25 percent.

237,945 5,010 242,955

Total acquisitions . . . . . . . . . . . . . . . . . . . 964,871 119,031 1,083,902

Dispositions:

Special issues:

Certificates of indebtedness . . . . . . . . . . . 730,010 114,798 844,808

Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,080 34,645 214,725

Total dispositions . . . . . . . . . . . . . . . . . . . 910,090 149,443 1,059,533

Net increase in invested asset reserves . . . . . . 54,781 -30,412 24,369

Invested asset reserves, 

December 31, 2014a . . . . . . . . . . . . . . . . . . 2,729,270 60,311 2,789,582
39

Social Security Amendments in 2014

B. SOCIAL SECURITY AMENDMENTS SINCE THE 2014 REPORT

Since the Trustees submitted the 2014 report to Congress, there have been

several legislative and executive actions that are expected to have notable

effects on the OASDI program.

On November 20, 2014, the President announced a series of executive

actions on immigration. These actions include enhancing security at our

nation’s borders, expanding the existing program for certain undocumented

children, creating a new program for certain undocumented parents that provides them with protection from deportation and the opportunity to work

legally, and allowing additional entrepreneurs to enter the country as legal

permanent residents. Due to a federal court order in February 2015, implementation of the actions affecting undocumented children and parents was on

hold when the projections presented in this report were developed. The estimates in this report assume this court order will be temporary and that the

actions will proceed by the end of 2015. These executive actions are projected to have a small but significant net positive impact on the financial status of the OASDI program over both the short-range and long-range

projection periods.

On December 18, 2014, the President signed into law Public Law 113-270,

the No Social Security for Nazis Act. The law amends the Social Security

Act “to provide for the termination of Social Security benefits for individuals

who participated in Nazi persecution, and for other purposes.” Due to the

very small number of individuals affected, this law is projected to have a

negligible financial impact over both the short-range and long-range projection periods.

On December 19, 2014, the President signed into law Public Law 113-295.

Division B of the law is the Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act of 2014. This act contains one provision related directly

to the DI program. Currently, DI benefits are offset for DI beneficiaries who

receive both workers’ compensation payments and DI benefits. The ABLE

Act changes the age at which the workers’ compensation offset ends from

age 65 to the normal retirement age (currently age 66). This law is projected

to have a negligible financial impact on the DI program over both the shortrange and long-range projection periods.

Sections IV.A.4 and IV.B.6 of this report provide further description of the

magnitude of the effects of the executive actions on the financial status of the

OASDI program.
Actuarial Estimates

40

IV. ACTUARIAL ESTIMATES

This chapter presents actuarial estimates of the future financial condition of

the Social Security program. These estimates show the income, cost, and

asset reserves or unfunded obligation of the OASI and DI Trust Funds: (1) in

dollars over the 10-year short-range period; and (2) as a percentage of taxable payroll, as a percentage of gross domestic product, and in present-value

dollars over the 75-year long-range period. In addition, the chapter discusses

a variety of measures of the adequacy of current program financing. This

report distinguishes between: (1) the cost (obligations) of the program, which

includes all future benefits scheduled under current law; and (2) expenditures

(disbursements), which include actual payments for the past plus only the

portion of projected program cost that would be payable with the financing

provisions in current law.

This chapter presents the estimates and measures of trust fund financial adequacy for the short-range period (2015-24) first, followed by estimates and

measures of actuarial status for the long-range period (2015-89). Summary

measures are also provided for trust fund status over the infinite horizon. As

described in chapter II of this report, these estimates depend upon a broad set

of demographic, economic, and programmatic factors. This chapter presents

estimates under three sets of assumptions to show a wide range of possible

outcomes, because assumptions related to these factors are subject to uncertainty. The intermediate set of assumptions, designated as alternative II,

reflects the Trustees’ best estimate of future experience; the low-cost alternative I is significantly more optimistic and the high-cost alternative III is significantly more pessimistic for the trust funds’ future financial outlook. The

tables of this report show the intermediate estimates first, followed by the

low-cost and high-cost estimates. Chapter V describes these three sets of

assumptions, along with the actuarial methods used to produce the estimates.

Appendix D and appendix E present two additional methods to illustrate the

uncertainty of the projections. Appendix D presents sensitivity analyses of

the effects of variation in individual factors and appendix E presents probability distributions generated by a stochastic model.

A. SHORT-RANGE ESTIMATES

The Trustees consider the trust funds to be fully solvent if the funds can pay

scheduled benefits in full on a timely basis. A standard method of assessing

solvency is the “trust fund ratio,” which is the reserves in a fund at the beginning of a year (which do not include advance tax transfers) expressed as a

percentage of the cost during the year. The trust fund ratio represents the proportion of a year’s cost which the reserves available at the beginning of that

year can cover. The Trustees assume that a trust fund ratio of 100 percent of
41

Short-Range Estimates

annual program cost provides a reasonable “contingency reserve.” Maintaining a reasonable contingency reserve is important because the trust funds do

not have borrowing authority. After reserves are depleted, the trust funds

would be unable to pay benefits in full on a timely basis if annual revenue

were less than annual cost. Unexpected events, such as severe economic

recessions, can quickly deplete reserves. In such cases, a reasonable contingency reserve can maintain the ability to pay scheduled benefits while giving

lawmakers time to address possible changes to the program.

The short-range test of financial adequacy applies to the OASI and DI Trust

Funds individually and combined on a theoretical basis. If the estimated trust

fund ratio is at least 100 percent at the beginning of the projection period, the

test requires that it remain at or above 100 percent throughout the 10-year

period. If the ratio is initially less than 100 percent, then it must reach at least

100 percent within 5 years (without reserve depletion at any time during this

period) and then remain at or above 100 percent throughout the remainder of

the 10-year period. This test is applied using the estimates based on the intermediate assumptions. If either trust fund fails this test, then program solvency in the next 10 years is in question, and lawmakers should take prompt

action to improve short-range financial adequacy.

1. Operations of the OASI Trust Fund

This subsection presents estimates, based on the assumptions described in

chapter V, of the operations and financial status of the OASI Trust Fund for

the period 2015-24. These estimates assume that there are no changes in the

statutory provisions and regulations under which the OASDI program currently operates.1

Table IV.A1 shows these estimates, which indicate that the asset reserves of

the OASI Trust Fund continue to increase through 2021 under the intermediate assumptions, throughout the next 10 years under the low-cost assumptions, and through 2016 under the high-cost assumptions. However, trust

fund ratios decline throughout the 10-year period under all three sets of

assumptions. Based on the intermediate assumptions, the reserves of the

OASI Trust Fund continue to exceed 100 percent of annual cost by a large

amount through the end of 2024. Consequently, the OASI Trust Fund satisfies the test of short-range financial adequacy by a wide margin. Table IV.A1

also indicates that the OASI Trust Fund would satisfy the short-range test

even under the high-cost assumptions. See figure IV.A1 for an illustration of

these results.

 1 The estimates shown in this subsection reflect 12 months of scheduled benefits in each year of the shortrange projection period. In practice, the actual payment dates have at times shifted over calendar year

boundaries as a result of the statutory requirement for early delivery of benefit checks when the normal

check delivery date is a Saturday, Sunday, or legal public holiday.
Actuarial Estimates

42

Table IV.A1.—Operations of the OASI Trust Fund, Calendar Years 2010-24a

[Dollar amounts in billions]

a Appendix A presents a detailed description of the components of income and cost, along with complete historical values.

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsb

b Includes reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of

noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984 and

self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain selfemployment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under

the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

Taxation of

benefitsc

c Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod

d The “Trust fund ratio” column represents reserves at the beginning of a year (which are identical to reserves

at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.

Historical data:

2010 . . . $677.1 $544.8 $2.0 $22.1 $108.2 $584.9 $577.4 $3.5 $3.9 $92.2 $2,429.0 400

2011 . . . 698.8 482.4 87.8 22.2 106.5 603.8 596.2 3.5 4.1 95.0 2,524.1 402

2012 . . . 731.1 503.9 97.7 26.7 102.8 645.5 637.9 3.4 4.1 85.6 2,609.7 391

2013 . . . 743.8 620.8 4.2 20.7 98.1 679.5 672.1 3.4 3.9 64.3 2,674.0 384

2014 . . . 769.4 646.2 .4 28.0 94.8 714.2 706.8 3.1 4.3 55.2 2,729.2 374

Intermediate:

2015 . . . 796.3 674.3 .3 30.6 91.1 754.7 747.3 3.2 4.3 41.5 2,770.8 362

2016 . . . 838.6 715.3 .1 34.0 89.1 788.5 780.8 3.3 4.4 50.1 2,820.9 351

2017 . . . 893.9 765.5 .1 37.8 90.5 848.2 840.7 3.4 4.1 45.7 2,866.6 333

2018 . . . 949.7 814.1 e

e Between -$50 million and $50 million.

Note: Totals do not necessarily equal the sums of rounded components.

41.2 94.3 909.8 901.7 3.5 4.6 39.9 2,906.5 315

2019 . . . 1,005.4 861.6 e 45.2 98.5 975.1 966.7 3.7 4.7 30.3 2,936.8 298

2020 . . . 1,061.0 909.4 e 49.3 102.3 1,044.0 1,035.5 3.8 4.7 17.0 2,953.8 281

2021 . . . 1,117.2 958.6 e 53.4 105.3 1,112.4 1,103.4 3.9 5.0 4.8 2,958.6 266

2022 . . . 1,174.1 1,008.0 e 58.0 108.1 1,186.5 1,177.3 4.1 5.2 -12.4 2,946.2 249

2023 . . . 1,231.0 1,057.2 e 62.8 111.0 1,265.8 1,256.3 4.2 5.3 -34.7 2,911.5 233

2024 . . . 1,289.5 1,107.8 e 68.1 113.6 1,350.4 1,340.8 4.3 5.3 -60.9 2,850.6 216

Low-cost:

2015 . . . 802.6 679.9 .3 30.5 91.8 754.4 747.0 3.2 4.3 48.2 2,777.4 362

2016 . . . 872.2 745.2 .1 34.0 92.8 789.1 781.4 3.3 4.3 83.1 2,860.5 352

2017 . . . 942.3 805.1 .1 38.0 99.2 851.3 843.8 3.4 4.1 91.1 2,951.6 336

2018 . . . 1,021.1 870.3 e 41.6 109.1 918.1 910.0 3.6 4.5 103.0 3,054.6 321

2019 . . . 1,101.6 935.7 e 45.9 119.9 989.3 980.9 3.8 4.7 112.2 3,166.8 309

2020 . . . 1,182.6 1,001.0 e 50.3 131.2 1,065.1 1,056.5 4.0 4.7 117.4 3,284.2 297

2021 . . . 1,266.4 1,068.4 e 54.8 143.2 1,141.5 1,132.3 4.2 5.0 124.8 3,409.1 288

2022 . . . 1,355.8 1,139.0 e 59.9 156.9 1,224.8 1,215.2 4.4 5.2 131.0 3,540.1 278

2023 . . . 1,450.7 1,212.9 e 65.3 172.6 1,314.7 1,304.8 4.6 5.3 136.0 3,676.1 269

2024 . . . 1,551.4 1,290.7 e 71.2 189.5 1,411.6 1,401.5 4.8 5.3 139.8 3,815.9 260

High-cost:

2015 . . . 788.4 667.2 .3 30.6 90.3 755.1 747.6 3.2 4.3 33.3 2,762.5 361

2016 . . . 803.9 684.4 .1 34.0 85.3 789.3 781.6 3.3 4.4 14.6 2,777.1 350

2017 . . . 842.5 722.0 .1 37.7 82.7 845.0 837.4 3.4 4.2 -2.5 2,774.6 329

2018 . . . 877.8 755.3 e 40.8 81.7 901.1 893.0 3.5 4.6 -23.3 2,751.4 308

2019 . . . 912.6 787.5 e 44.5 80.5 960.2 951.9 3.6 4.8 -47.6 2,703.8 287

2020 . . . 945.8 819.0 e 48.3 78.5 1,022.3 1,013.9 3.6 4.7 -76.5 2,627.3 264

2021 . . . 977.8 851.0 e 52.0 74.9 1,082.8 1,074.0 3.7 5.1 -105.0 2,522.3 243

2022 . . . 1,009.8 883.4 e 56.1 70.2 1,147.8 1,138.9 3.8 5.2 -138.1 2,384.2 220

2023 . . . 1,041.1 915.4 e 60.4 65.3 1,216.8 1,207.7 3.9 5.2 -175.7 2,208.5 196

2024 . . . 1,069.9 945.0 e 65.1 59.8 1,289.8 1,280.7 3.9 5.2 -219.9 1,988.5 171
43

Short-Range Estimates

The estimated income shown in table IV.A1 increases annually under each

set of assumptions throughout the short-range projection period. The estimated increases in income reflect increases in estimated OASDI taxable

earnings and growth in interest earnings on the invested reserves in the trust

fund. Employment increases in every year through 2024 for all three alternatives: the number of persons with taxable earnings increases on the basis of

alternatives I, II, and III from 166 million during calendar year 2014 to about

188 million, 184 million, and 179 million, respectively, in 2024. The total

annual amount of taxable earnings increases in every year through 2024 for

each alternative. Total earnings increase from $6,163 billion in 2014 to

$12,253 billion, $10,512 billion, and $8,962 billion in 2024, on the basis of

alternatives I, II, and III, respectively. These increases in taxable earnings are

due primarily to: (1) projected increases in employment levels as the working age population increases; (2) trend increases in average earnings in covered employment (reflecting both real growth and price inflation);

(3) increases in the contribution and benefit base under the automatic-adjustment provisions; and (4) growth in employment and average earnings, temporarily higher than trend, as the economy continues to recover from the

severe economic downturn that began in late 2007.

Interest earnings generally contribute to the overall projected increase in

trust fund income during this period. Despite the projected growth in OASI

 Figure IV.A1.—Short-Range OASI and DI Trust Fund Ratios

[Asset reserves as a percentage of annual cost]

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Calendar year

DI

OASI

Historical Estimated

"Minimum" levelfor short-term financial adequacy

I

II

III

I

II

III

I
Actuarial Estimates

44

Trust Fund reserves, annual interest earnings decline slightly in the early projection years under all three sets of assumptions due to historically low interest rates assumed for newly-issued bonds. Thereafter, interest income

increases under the intermediate and low-cost assumptions due to the net

effects of higher reserve levels and the patterns of projected interest rates.

Under the high-cost assumptions, declining reserves cause interest income to

continue to decrease throughout the short-range period. Although interest

earnings generally increase over the short-range period, interest declines as a

share of total OASI Trust Fund income. By 2024, OASI interest income is

about 9 percent of total trust fund income under the intermediate assumptions, as compared to 12 percent in 2014.

Rising OASI cost during 2015-24 reflects automatic benefit increases as well

as the upward trend in the number of beneficiaries and in the average

monthly earnings underlying benefits. The growth in the number of beneficiaries since 2009 and the expected future growth result both from the

increase in the aged population and from the increase in the proportion of the

population that is eligible for benefits.

The Treasury invests OASI income in financial securities, generally special

public-debt obligations of the U.S. Government. The revenue used to make

these purchases flows to the General Fund of the Treasury. The trust fund

earns interest on these securities, and the Treasury invests maturing securities

in new securities if not immediately needed to pay program costs. Program

expenditures require the redemption of trust fund securities, generally prior

to maturity, to cover the payments made by the General Fund of the Treasury

on behalf of the trust fund.

2. Operations of the DI Trust Fund

Table IV.A2 shows the estimated operations and financial status of the DI

Trust Fund during calendar years 2015-24 under the three sets of assumptions, together with values for actual experience during 2010-14. Non-interest income increases steadily after 2014 under each alternative, due to most

of the same factors described previously for the OASI Trust Fund. DI cost

grows at a slower rate than DI income, but remains greater than DI income.

As a result, after having reached a maximum in 2008, DI Trust Fund reserves

continue to decrease after 2014 under each alternative. Under the intermediate assumptions, reserves continue to decline until their projected depletion

in the fourth quarter of 2016. Under the high-cost assumptions, DI reserves

decline steadily until depletion in the third quarter of 2016. Under both the

intermediate and high-cost assumptions, reserves are projected to remain

depleted through 2024. 

Under the low-cost assumptions, reserves are projected to become depleted

in the fourth quarter of 2017, but this status would not be permanent. Following reserve depletion in 2017, scheduled DI benefits could not be paid in full
45

Short-Range Estimates

and on time for several years. However, non-interest income would become

higher than cost in 2021, and by mid-2023 all scheduled DI benefits could be

paid in full, including amounts that were not fully payable during the temporary period of reserve depletion. In this low-cost scenario, DI Trust Fund

reserves are projected to be positive by mid-2023 and increasing, reaching

5 percent of annual cost at the beginning of 2024.

Table IV.A2.—Operations of the DI Trust Fund, Calendar Years 2010-24a

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsb

Taxation of

benefitsc Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod

Historical data:

2010 . . $104.0 $92.5 $0.4 $1.9 $9.3 $127.7 $124.2 $3.0 $0.5 -$23.6 $179.9 159

2011 . . 106.3 81.9 14.9 1.6 7.9 132.3 128.9 2.9 .5 -26.1 153.9 136

2012 . . 109.1 85.6 16.5 .6 6.4 140.3 136.9 2.9 .5 -31.2 122.7 110

2013 . . 111.2 105.4 .7 .4 4.7 143.4 140.1 2.8 .6 -32.2 90.4 86

2014 . . 114.9 109.7 .1 1.7 3.4 145.1 141.7 2.9 .4 -30.2 60.2 62

Intermediate:

2015 . . 117.6 114.5 .1 1.1 2.0 149.9 146.6 3.0 .4 -32.3 27.9 40

2016 . . e 121.5 f 1.9 e 152.1 148.6 3.2 .3 e e 18

2017 . . e 130.0 f 2.1 e 158.6 155.0 3.2 .3 e ee

2018 . . e 138.2 f 2.3 e 165.7 161.8 3.6 .3 e ee

2019 . . e 146.3 f 2.5 e 173.3 169.1 3.9 .2 e ee

2020 . . e 154.4 f 2.7 e 180.5 176.1 4.2 .2 e ee

2021 . . e 162.8 f 2.9 e 188.7 184.1 4.5 .1 e ee

2022 . . e 171.2 f 3.1 e 197.5 192.6 4.8 .1 e ee

2023 . . e 179.5 f 3.4 e 206.5 201.3 5.0 .1 e ee

2024 . . e 188.1 f 3.6 e 215.5 210.1 5.3 .1 e ee

Low-cost:

2015 . . 118.6 115.5 .1 1.0 2.1 147.8 144.4 3.0 .4 -29.1 31.1 41

2016 . . 129.4 126.5 f 1.9 .9 148.3 144.7 3.2 .3 -18.9 12.2 21

2017 . . e 136.7 f 2.1 e 153.1 149.6 3.2 .3 e e 8

2018 . . e 147.8 f 2.2 e 159.0 155.1 3.7 .3 e ee

2019 . . e 158.9 f 2.4 e 165.4 161.2 4.1 .2 e ee

2020 . . e 170.0 f 2.6 e 171.7 167.1 4.4 .2 e ee

2021 . . e 181.4 f 2.8 e 179.3 174.3 4.8 .1 e ee

2022 . . e 193.4 f 3.0 e 187.4 182.1 5.2 .1 e ee

2023 . . e 206.0 f 3.2 e 195.9 190.2 5.5 .1 e 9.8 e

2024 . . 224.0 219.2 f 3.4 1.4 204.4 198.4 5.9 .1 19.6 29.4 5
Actuarial Estimates

46

Note: Totals do not necessarily equal the sums of rounded components.

In the future, DI cost increases in part due to increases in average benefit levels resulting from: (1) automatic benefit increases and (2) projected increases

in the amounts of average monthly earnings on which benefits are based. The

number of DI beneficiaries in current-payment status increases but at a

slower rate during the short-range projection period than over the past

20 years. 

At the beginning of calendar year 2014, the reserves of the DI Trust Fund

represented 62 percent of annual cost. During 2014, DI cost exceeded

income, and the trust fund ratio for the beginning of 2015 decreased to about

40 percent. Under the intermediate assumptions, cost exceeds total income

throughout the short-range projection period. The projected cost in excess of

income results in the estimated depletion of the DI Trust Fund reserves in the

fourth quarter of 2016.

Because the reserves of the DI Trust Fund at the beginning of 2015 were less

than the estimated annual cost for 2015, and they are projected to remain

High-cost:

2015 . . . 116.4 113.3 .1 1.1 1.9 152.2 148.8 3.0 .4 -35.8 24.4 40

2016 . . . e 116.2 f 2.0 e 156.5 153.0 3.2 .4 e e 16

2017 . . . e 122.6 f 2.2 e 164.4 160.9 3.2 .3 e ee

2018 . . . e 128.3 f 2.4 e 172.6 168.8 3.5 .3 e ee

2019 . . . e 133.7 f 2.6 e 181.0 177.0 3.8 .2 e ee

2020 . . . e 139.1 f 2.9 e 188.9 184.7 4.0 .2 e ee

2021 . . . e 144.5 f 3.1 e 197.5 193.1 4.2 .2 e ee

2022 . . . e 150.0 f 3.3 e 206.6 202.0 4.4 .1 e ee

2023 . . . e 155.4 f 3.5 e 215.6 210.8 4.6 .1 e ee

2024 . . . e 160.5 f 3.8 e 224.4 219.5 4.8 .1 e ee

a The DI Trust Fund becomes depleted in the fourth quarter of 2016 and the third quarter of 2016 under the

intermediate and high-cost assumptions, respectively, and remains so through 2024. Under the low-cost

assumptions, reserves would be depleted in the fourth quarter of 2017 through early 2023. For any period

during which reserves would be depleted, scheduled benefits could not be paid in full on a timely basis, income

from taxing benefits would be less than would apply to scheduled benefits, and interest on trust fund reserves

would be negligible. Appendix A presents a detailed description of the components of income and cost, along

with complete historical values.

b Includes reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of noncontributory wage credits for military service before 1957; (2) the cost of payroll tax credits provided to

employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; (3) the cost in 2009-17 of

excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (4) payroll tax

revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

c Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

d The “Trust fund ratio” column represents reserves at the beginning of a year (which are identical to reserves at

the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.

e While the fund is depleted, values under current law would reflect permissible expenditures only, which are

inconsistent with the cost of scheduled benefits shown in this table.

f Between -$50 million and $50 million.

Table IV.A2.—Operations of the DI Trust Fund, Calendar Years 2010-24a (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsb

Taxation of

benefitsc Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod
47

Short-Range Estimates

below annual cost throughout the short-range period, the DI Trust Fund fails

the Trustees’ short-range test of financial adequacy under all three alternatives.

3. Operations of the Combined OASI and DI Trust Funds

Table IV.A3 shows the estimated operations and status of the theoretical

combined OASI and DI Trust Funds for calendar years 2015-24 under the

three alternatives, together with actual experience in 2010-14. Income and

cost for the OASI Trust Fund represent over 80 percent of the corresponding

amounts for the combined OASI and DI Trust Funds. Therefore, based on

the relative strength of the OASI Trust Fund over the next 10 years, the combined OASI and DI Trust Funds would have sufficient financial resources to

pay all scheduled benefits through the end of the short-range period,

although it is important to note that under current law, one trust fund cannot

share financial resources with another trust fund. In addition, the combined

OASI and DI Trust Funds would satisfy the short-range test of financial adequacy under the intermediate and low-cost assumptions. However, under the

high-cost assumptions, reserves are projected to drop to about 95 percent of

annual cost by the end of 2024, and hence the combined funds would not satisfy the short-range test of financial adequacy. 

Table IV.A3.—Operations of the Combined OASI and DI Trust Funds,

Calendar Years 2010-24a

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsb

Taxation of

benefitsc Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod

Historical data:

2010 . . . $781.1 $637.3 $2.4 $23.9 $117.5 $712.5 $701.6 $6.5 $4.4 $68.6 $2,609.0 357

2011 . . . 805.1 564.2 102.7 23.8 114.4 736.1 725.1 6.4 4.6 69.0 2,677.9 354

2012 . . . 840.2 589.5 114.3 27.3 109.1 785.8 774.8 6.3 4.7 54.4 2,732.3 341

2013 . . . 855.0 726.2 4.9 21.1 102.8 822.9 812.3 6.2 4.5 32.1 2,764.4 332

2014 . . . 884.3 756.0 .5 29.6 98.2 859.2 848.5 6.1 4.7 25.0 2,789.5 322

Intermediate:

2015 . . . 913.9 788.8 .4 31.6 93.1 904.7 893.9 6.2 4.6 9.2 2,798.7 308

2016 . . . 962.6 836.8 .1 35.9 89.7 940.6 929.4 6.5 4.7 22.0 2,820.7 298

2017 . . . 1,025.5 895.5 .1 40.0 90.0 1,006.8 995.7 6.6 4.4 18.8 2,839.4 280

2018 . . . 1,088.4 952.3 e 43.5 92.5 1,075.5 1,063.5 7.1 4.8 12.9 2,852.3 264

2019 . . . 1,150.9 1,007.9 e 47.8 95.2 1,148.3 1,135.8 7.6 4.9 2.6 2,854.9 248

2020 . . . 1,213.3 1,063.8 e 52.0 97.5 1,224.5 1,211.6 8.0 4.9 -11.2 2,843.8 233

2021 . . . 1,276.6 1,121.3 e 56.3 98.9 1,301.1 1,287.5 8.4 5.2 -24.6 2,819.2 219

2022 . . . 1,340.3 1,179.1 e 61.1 100.1 1,383.9 1,369.8 8.8 5.3 -43.6 2,775.6 204

2023 . . . 1,404.1 1,236.8 e 66.2 101.2 1,472.3 1,457.7 9.2 5.4 -68.1 2,707.4 189

2024 . . . 1,469.5 1,295.9 e 71.7 101.9 1,566.0 1,550.9 9.6 5.4 -96.4 2,611.0 173
Actuarial Estimates

48

Note: Totals do not necessarily equal the sums of rounded components.

4. Factors Underlying Changes in 10-Year Trust Fund Ratio Estimates

From the 2014 Report

Table IV.A4 presents an analysis of the factors underlying the changes in the

intermediate estimates over the short-range projection period for the OASI,

DI, and the theoretical combined funds from last year’s report to this report.

In the 2014 report, the trust fund ratio for OASI reached 232 percent at the

beginning of 2023—the tenth projection year for that report. The change in

the short-range valuation period alone, from 2014-23 to 2015-24, lowered

the estimated trust fund ratio for the tenth year by 18 percentage points, to

214 percent. All other changes to reflect modifications in law and regulations

since last year’s report, the most recent data, adjustments to the assumptions

Low-cost:

2015 . . . 921.2 795.4 .4 31.6 93.9 902.1 891.3 6.2 4.6 19.1 2,808.5 309

2016 . . . 1,001.5 871.8 .1 35.9 93.7 937.4 926.2 6.5 4.7 64.2 2,872.7 300

2017 . . . 1,081.4 941.8 .1 40.0 99.5 1,004.4 993.3 6.6 4.4 77.0 2,949.7 286

2018 . . . 1,170.8 1,018.1 e 43.8 108.8 1,077.2 1,065.1 7.3 4.8 93.6 3,043.3 274

2019 . . . 1,262.1 1,094.6 e 48.3 119.1 1,154.8 1,142.0 7.9 4.9 107.3 3,150.6 264

2020 . . . 1,354.2 1,171.0 e 52.9 130.2 1,236.9 1,223.6 8.4 4.8 117.3 3,267.9 255

2021 . . . 1,449.7 1,249.8 e 57.6 142.3 1,320.8 1,306.7 9.0 5.2 128.9 3,396.8 247

2022 . . . 1,551.7 1,332.4 e 62.8 156.5 1,412.2 1,397.4 9.5 5.3 139.5 3,536.3 241

2023 . . . 1,660.2 1,418.8 e 68.5 172.9 1,510.6 1,495.1 10.1 5.4 149.6 3,685.9 234

2024 . . . 1,775.4 1,509.9 e 74.6 190.9 1,616.0 1,599.9 10.7 5.4 159.4 3,845.3 228

High-cost:

2015 . . . 904.7 780.5 .4 31.7 92.2 907.3 896.5 6.2 4.6 -2.5 2,786.9 307

2016 . . . 922.4 800.6 .1 36.0 85.6 945.8 934.6 6.5 4.7 -23.4 2,763.5 295

2017 . . . 966.3 844.7 .1 39.9 81.7 1,009.4 998.3 6.6 4.5 -43.0 2,720.5 274

2018 . . . 1,005.9 883.6 e 43.2 79.1 1,073.7 1,061.8 7.0 4.9 -67.8 2,652.7 253

2019 . . . 1,044.3 921.2 e 47.2 75.9 1,141.2 1,128.8 7.3 5.0 -96.8 2,555.9 232

2020 . . . 1,080.8 958.1 e 51.1 71.6 1,211.1 1,198.5 7.6 4.9 -130.3 2,425.6 211

2021 . . . 1,115.9 995.5 e 55.0 65.4 1,280.3 1,267.1 8.0 5.2 -164.4 2,261.2 189

2022 . . . 1,150.7 1,033.5 e 59.4 57.9 1,354.4 1,340.9 8.2 5.3 -203.7 2,057.5 167

2023 . . . 1,184.6 1,070.9 e 63.9 49.8 1,432.4 1,418.5 8.5 5.4 -247.8 1,809.7 144

2024 . . . 1,215.3 1,105.4 e 68.8 41.1 1,514.2 1,500.1 8.7 5.3 -298.9 1,510.8 120

a Appendix A presents a detailed description of the components of income and cost, along with complete historical values.

b Includes reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1) the

cost of noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in

1984 and self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain

self-employment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone

under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

c Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

d The “Trust fund ratio” column represents reserves at the beginning of a year (which are identical to reserves

at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.

e Between -$50 million and $50 million. 

Table IV.A3.—Operations of the Combined OASI and DI Trust Funds,

Calendar Years 2010-24a (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsb

Taxation of

benefitsc Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod
49

Short-Range Estimates

for future years, and changes in projection methods combined to increase the

ratio for the tenth projection year by 2 percentage points. Therefore, the total

change for this report is a reduction of 16 percentage points to 216 percent.

The executive actions on immigration policy announced in the fall of 2014

are projected to increase the tenth year trust fund ratio by 2 percentage

points, primarily due to estimated additional payroll tax collections over the

short-range period. Changes in demographic assumptions over the shortrange period increased the projected tenth-year trust fund ratio for OASI by

4 percentage points. Changes in economic data and assumptions, primarily

the combined effects of lower cost-of-living adjustments, lower interest

rates, and lower payroll tax revenues over the ten year period, caused a net

reduction in the OASI trust fund ratio of 5 percentage points by the beginning of 2024. Incorporating recent programmatic data, including the numbers

of beneficiaries and amount of benefit payments, resulted in no significant

net effect on the tenth year OASI trust fund ratio. Finally, there were no

changes in the short-range projection methodology that had a significant

effect on the ending trust fund ratio. 

Table IV.A4 also shows corresponding estimates of the factors underlying

the changes in the financial projections for the DI Trust Fund and for the

combined OASI and DI Trust Funds. The ratios at the beginning of 2023 for

the DI Trust Fund and the combined OASI and DI Trust Funds in last year’s

report, as well as the corresponding ratios for the beginning of 2024 in this

year’s report, are theoretical because the Trustees project that the DI Trust

Fund reserves will be depleted prior to the end of the short-range projection

period. The 10 percentage point decrease in the DI trust fund ratio is the net

effect of offsetting increases and decreases from the factors described in the

prior section for the OASI Trust Fund, the largest of which was the decrease

caused by changing the valuation period.
Actuarial Estimates

50

Note: Totals do not necessarily equal the sums of rounded components.

Table IV.A4.—Reasons for Change in Trust Fund (Unfunded Obligation) Ratios 

at the Beginning of the Tenth Year of Projection Under Intermediate Assumptions

[In percent]

Item

OASI

Trust Fund

DI

Trust Fund

OASI and DI

Trust Funds,

combined

Trust fund ratio shown in last year’s report for calendar year 2023a. 232 -85 188

Change in trust fund ratio due to changes in: 

Legislation and regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 2

Valuation period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18 -13 -16

Demographic data and assumptions. . . . . . . . . . . . . . . . . . . . . . . 4 b 4

Economic data and assumptions . . . . . . . . . . . . . . . . . . . . . . . . -5 b -4

Programmatic data and assumptions . . . . . . . . . . . . . . . . . . . . . . bb b

Projection methods and data . . . . . . . . . . . . . . . . . . . . . . . . . . . bb b

Total change in trust fund ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16 -10 -15

Trust fund ratio shown in this report for calendar year 2024a . . . . . . 216 -95 173

a Figures for DI, and OASI and DI combined, are theoretical because the DI Trust Fund reserves are depleted

before the beginning of the tenth year under the assumptions of each report. The magnitudes of the negative

values for DI represent the ratios of the unfunded obligation at the beginning of the tenth year to cost for that

year.

b Between -0.5 and 0.5 percent.
51

Long-Range Estimates

B. LONG-RANGE ESTIMATES

The Trustees use three types of financial measures to assess the actuarial status of the Social Security trust funds under the financing approach specified

in current law: (1) annual cash-flow measures, including income rates, cost

rates, and balances; (2) trust fund ratios; and (3) summary measures such as

actuarial balances and unfunded obligations.

The difference between the annual income rate and annual cost rate, both

expressed as percentages of taxable payroll, is the annual balance. The level

and trend of the annual balances at the end of the 75-year projection period

are factors that the Trustees use to assess the financial condition of the program.

The trust fund ratio for a year is the proportion of the year’s projected cost

that could be paid with funds available at the beginning of the year. Critical

factors considered by the Trustees in assessing actuarial status include:

(1) the level and year of maximum trust fund ratio, (2) the year of depletion

of the fund reserves and the percent of scheduled benefits that is still payable

after reserves are depleted, and (3) the stability of the trust fund ratio at the

end of the long-range period. 

Solvency at any point in time requires that sufficient financial resources are

available to pay all scheduled benefits at that time. Solvency is generally

indicated by a positive trust fund ratio. “Sustainable solvency” for the financing of the program under a specified set of assumptions has been achieved

when the projected trust fund ratio is positive throughout the 75-year projection period and is either stable or rising at the end of the period.

Summarized measures for any period indicate whether projected income is

sufficient, on average, for the whole period. Summarized measures can only

indicate the solvency status of a fund for the end of the period. The Trustees

summarize the total income and cost over valuation periods that extend

through 75 years and over the infinite horizon.1 This section presents two

summarized measures: the actuarial balance and the open group unfunded

obligation. The actuarial balance indicates the size of any surplus or shortfall

as a percentage of the taxable payroll over the period. The open group

unfunded obligation indicates the size of any shortfall in present-value dollars.

This section also includes additional information that the Trustees use to

assess the financial status of the Social Security program, including: (1) a

comparison of the number of beneficiaries to the number of covered workers,

 1 See Appendix F.
Actuarial Estimates

52

(2) the test of long-range close actuarial balance, and (3) the reasons for the

change in the actuarial balance from the last report.

1. Annual Income Rates, Cost Rates, and Balances

The concepts of income rate and cost rate, expressed as percentages of taxable payroll, are important in the consideration of the long-range actuarial

status of the trust funds. The annual income rate is the ratio of all non-interest income to the OASDI taxable payroll for the year. Non-interest income

includes payroll taxes, taxes on scheduled benefits, and any general fund

transfers or reimbursements. The OASDI taxable payroll consists of the total

earnings subject to OASDI taxes with some relatively small adjustments.1

The annual cost rate is the ratio of the cost of the program to the taxable payroll for the year. The cost includes scheduled benefits, administrative

expenses, net interchange with the Railroad Retirement program, and payments for vocational rehabilitation services for disabled beneficiaries. For

any year, the income rate minus the cost rate is the “balance” for the year.

Table IV.B1 presents a comparison of the estimated annual income rates and

cost rates by trust fund and alternative. Table IV.B2 shows the separate components of the annual income rates.

Under the intermediate assumptions, the Trustees project that the OASI

income rate will rise at a very gradual rate from 11.01 percent of taxable payroll for 2015 to 11.46 percent for 2089. Income from taxation of benefits

causes this increase for two main reasons: (1) total benefits are rising faster

than payroll; and (2) the benefit-taxation threshold amounts are fixed (not

indexed), and therefore an increasing share of total benefits will be subject to

tax as incomes and benefits rise. The pattern of the cost rate is much different. The OASI cost rate is projected to decrease from 2015 to 2016 primarily

because the projected percentage increase in average taxable earnings is

greater than the projected increase in the average benefit from 2015 to 2016.

From 2016 to 2035, the cost rate rises rapidly because the retirement of the

baby-boom generation will increase the number of beneficiaries much faster

than the number of workers increases, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. From 2038 to 2050,

the cost rate declines because the aging baby-boom generation is gradually

replaced at retirement ages by historically low-birth-rate generations born

between 1966 and 1989, causing the beneficiary-to-worker ratio to decline.

After 2050, the projected OASI cost rate generally rises slowly, reaching

 1 Adjustments include adding deemed wage credits based on military service for 1983-2001 and reflecting

the lower effective tax rates (as compared to the combined employee-employer rate) that apply to multipleemployer “excess wages.” Lower rates also applied to net earnings from self-employment before 1984 and

to income from tips before 1988.
53

Long-Range Estimates

15.70 percent of taxable payroll for 2089, primarily because of projected

reductions in death rates.

Projections of income rates under the low-cost and high-cost sets of assumptions are similar to those projected for the intermediate assumptions, because

income rates are largely a reflection of the payroll tax rates specified in the

law, with the gradual change from taxation of benefits noted above. In contrast, OASI cost rates for the low-cost and high-cost assumptions are significantly different from those projected for the intermediate assumptions. For

the low-cost assumptions, the OASI cost rate decreases through 2018, and

then rises until it peaks in 2034 at 12.40 percent of payroll. The cost rate then

declines to 11.56 percent for 2053, rises to 11.78 percent for 2071, and generally decreases to 11.52 percent for 2089, at which point the income rate

reaches 11.22 percent. For the high-cost assumptions, the OASI cost rate

rises throughout the 75-year period. It rises relatively rapidly through about

2035 because of the aging of the baby-boom generation. Thereafter, the cost

rate continues to rise and reaches 22.06 percent of payroll for 2089, at which

point the income rate reaches 11.82 percent.

The pattern of the projected OASI annual balance is important in the analysis

of the financial condition of the program. Under the intermediate assumptions, the annual balance is negative throughout the projection period. This

annual deficit declines from 0.77 percent of payroll for 2015 to 0.58 percent

of payroll for 2016 and then rises relatively rapidly to 3.30 percent for 2038.

The annual deficit then declines to 3.00 percent of payroll for 2050, and generally rises thereafter, reaching 4.24 percent of taxable payroll for 2089.

Under the low-cost assumptions, OASI annual deficits are smaller throughout the projection period relative to the intermediate assumptions. The

annual deficit declines to 0.07 percent of payroll for 2018, rises to

1.16 percent for 2034, and then declines for most years thereafter, reaching a

deficit of 0.31 percent of payroll for 2089. Under the high-cost assumptions,

the OASI balance worsens throughout the projection period. Annual deficits

rise to 2.00 percent for 2020, 6.45 percent for 2050, and 10.25 percent of

payroll for 2089.
Actuarial Estimates

54

Table IV.B1.—Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2090

[As a percentage of taxable payroll]

Calendar 

year

OASI DI OASDI

Income ratea Cost

rate Balance

Income ratea Cost

rate Balance

Income ratea Cost

rate Balance

Historical data:

1990. . . . . 11.47 9.66 1.82 1.18 1.09 0.10 12.66 10.74 1.91

1995. . . . . 10.64 10.22 .42 1.87 1.44 .43 12.51 11.67 .85

2000. . . . . 10.85 8.98 1.87 1.78 1.42 .36 12.62 10.40 2.23

2001. . . . . 10.90 9.08 1.82 1.82 1.48 .35 12.72 10.56 2.17

2002. . . . . 11.06 9.29 1.76 1.85 1.60 .24 12.90 10.89 2.01

2003. . . . . 10.79 9.35 1.44 1.80 1.68 .12 12.59 11.03 1.56

2004. . . . . 10.73 9.27 1.46 1.79 1.78 .02 12.53 11.05 1.48

2005. . . . . 10.96 9.31 1.65 1.84 1.85 -.02 12.80 11.16 1.63

2006. . . . . 10.96 9.18 1.78 1.83 1.88 -.05 12.79 11.06 1.73

2007. . . . . 11.01 9.44 1.57 1.84 1.88 -.04 12.85 11.32 1.53

2008. . . . . 10.90 9.54 1.37 1.83 2.01 -.19 12.73 11.55 1.18

2009. . . . . 11.23 10.74 .50 1.88 2.31 -.43 13.11 13.05 .06

2010. . . . . 10.75 11.06 -.30 1.79 2.41 -.62 12.55 13.47 -.92

2011 . . . . . 10.84 11.05 -.21 1.80 2.42 -.62 12.64 13.47 -.83

2012. . . . . 11.05 11.35 -.30 1.81 2.47 -.66 12.85 13.81 -.96

2013. . . . . 10.91 11.49 -.57 1.80 2.42 -.62 12.71 13.91 -1.20

2014. . . . . 10.99 11.63 -.64 1.82 2.36 -.55 12.80 13.99 -1.19

Intermediate:

2015. . . . . 11.01 11.79 -.77 1.81 2.34 -.54 12.82 14.13 -1.31

2016. . . . . 11.06 11.64 -.58 1.82 2.25 -.42 12.88 13.88 -1.00

2017. . . . . 11.09 11.71 -.62 1.82 2.19 -.37 12.91 13.89 -.98

2018. . . . . 11.11 11.82 -.71 1.83 2.15 -.33 12.94 13.97 -1.03

2019. . . . . 11.13 11.96 -.84 1.83 2.13 -.30 12.95 14.09 -1.14

2020. . . . . 11.14 12.13 -.99 1.83 2.10 -.27 12.96 14.23 -1.26

2021. . . . . 11.16 12.26 -1.11 1.83 2.08 -.25 12.98 14.35 -1.36

2022. . . . . 11.18 12.45 -1.26 1.83 2.07 -.24 13.01 14.52 -1.51

2023. . . . . 11.20 12.66 -1.46 1.83 2.07 -.24 13.03 14.72 -1.69

2024. . . . . 11.23 12.90 -1.67 1.83 2.06 -.23 13.06 14.96 -1.89

2025. . . . . 11.25 13.10 -1.85 1.83 2.07 -.24 13.08 15.16 -2.08

2030. . . . . 11.32 14.04 -2.73 1.84 2.05 -.21 13.15 16.10 -2.94

2035. . . . . 11.36 14.56 -3.20 1.84 2.06 -.22 13.20 16.62 -3.42

2040. . . . . 11.37 14.64 -3.27 1.84 2.07 -.23 13.21 16.71 -3.50

2045. . . . . 11.37 14.46 -3.09 1.85 2.14 -.29 13.22 16.60 -3.38

2050. . . . . 11.37 14.36 -3.00 1.85 2.18 -.33 13.22 16.54 -3.32

2055. . . . . 11.38 14.48 -3.10 1.85 2.21 -.36 13.23 16.69 -3.45

2060. . . . . 11.40 14.76 -3.36 1.85 2.20 -.34 13.25 16.95 -3.70

2065. . . . . 11.41 15.01 -3.59 1.86 2.21 -.36 13.27 17.22 -3.95

2070. . . . . 11.43 15.29 -3.85 1.86 2.22 -.36 13.29 17.50 -4.21

2075. . . . . 11.44 15.48 -4.04 1.86 2.20 -.34 13.30 17.68 -4.38

2080. . . . . 11.45 15.48 -4.03 1.86 2.23 -.38 13.30 17.71 -4.41

2085. . . . . 11.45 15.53 -4.08 1.86 2.28 -.42 13.31 17.81 -4.50

2090. . . . . 11.46 15.75 -4.28 1.86 2.27 -.41 13.32 18.01 -4.69

First year balance becomes

negative and remains negative

throughout the projection 

period. . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . 2005 . . . . . . . . . . . . . . . . 2010

Low-cost:

2015. . . . . 10.96 11.63 -.67 1.80 2.28 -.48 12.75 13.90 -1.15

2016. . . . . 11.07 11.21 -.14 1.83 2.11 -.28 12.90 13.32 -.42

2017. . . . . 11.06 11.17 -.11 1.82 2.01 -.19 12.88 13.18 -.30

2018. . . . . 11.07 11.15 -.07 1.82 1.93 -.11 12.89 13.08 -.18

2019. . . . . 11.08 11.17 -.09 1.82 1.87 -.05 12.90 13.04 -.13

2020. . . . . 11.09 11.24 -.15 1.82 1.81 .01 12.91 13.05 -.14

2021. . . . . 11.10 11.28 -.18 1.82 1.77 .05 12.92 13.06 -.13

2022. . . . . 11.12 11.36 -.24 1.82 1.74 .08 12.95 13.10 -.16

2023. . . . . 11.14 11.45 -.32 1.82 1.71 .12 12.96 13.16 -.20

2024. . . . . 11.16 11.56 -.41 1.82 1.67 .15 12.98 13.24 -.26
55

Long-Range Estimates

Notes:

1. The income rate excludes interest income.

2. Revisions of taxable payroll may change some historical values.

3. Totals do not necessarily equal the sums of rounded components.

The DI cost rate rose substantially from 1.09 percent of taxable payroll for

1990 to 1.88 percent of taxable payroll for 2007 as the baby boom generation

Low-cost (Cont.):

2025. . . . . 11.17 11.68 -0.51 1.83 1.66 0.16 13.00 13.35 -0.35

2030. . . . . 11.22 12.22 -1.00 1.83 1.57 .26 13.05 13.79 -.74

2035. . . . . 11.24 12.40 -1.16 1.83 1.52 .31 13.07 13.91 -.84

2040. . . . . 11.24 12.20 -.96 1.83 1.48 .35 13.07 13.68 -.61

2045. . . . . 11.22 11.83 -.61 1.83 1.50 .33 13.06 13.33 -.27

2050. . . . . 11.22 11.60 -.38 1.83 1.50 .33 13.05 13.10 -.05

2055. . . . . 11.22 11.58 -.37 1.84 1.51 .33 13.05 13.09 -.04

2060. . . . . 11.23 11.69 -.47 1.84 1.49 .35 13.06 13.18 -.12

2065. . . . . 11.23 11.75 -.52 1.84 1.48 .35 13.07 13.23 -.17

2070. . . . . 11.23 11.78 -.55 1.84 1.48 .36 13.07 13.26 -.20

2075. . . . . 11.23 11.72 -.49 1.84 1.47 .37 13.06 13.19 -.12

2080. . . . . 11.22 11.50 -.28 1.84 1.50 .34 13.05 12.99 .06

2085. . . . . 11.21 11.41 -.20 1.84 1.54 .30 13.05 12.95 .10

2090. . . . . 11.22 11.57 -.34 1.84 1.54 .30 13.06 13.10 -.05

First year balance becomes

negative and remains negative

throughout the projection 

period. . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . b . . . . . . . . . . . . . . . . 2089

High-cost:

2015. . . . . 11.08 11.99 -.90 1.82 2.42 -.60 12.90 14.41 -1.50

2016. . . . . 11.03 12.11 -1.09 1.81 2.40 -.59 12.84 14.52 -1.67

2017. . . . . 11.13 12.37 -1.25 1.83 2.41 -.58 12.95 14.78 -1.83

2018. . . . . 11.16 12.63 -1.47 1.83 2.42 -.59 12.99 15.04 -2.06

2019. . . . . 11.18 12.90 -1.72 1.83 2.43 -.60 13.01 15.33 -2.32

2020. . . . . 11.20 13.20 -2.00 1.83 2.44 -.61 13.03 15.64 -2.61

2021. . . . . 11.22 13.46 -2.24 1.83 2.46 -.62 13.06 15.91 -2.86

2022. . . . . 11.25 13.75 -2.49 1.84 2.47 -.64 13.09 16.22 -3.13

2023. . . . . 11.28 14.06 -2.79 1.84 2.49 -.65 13.12 16.56 -3.44

2024. . . . . 11.32 14.45 -3.13 1.84 2.51 -.67 13.16 16.97 -3.81

2025. . . . . 11.34 14.74 -3.40 1.84 2.55 -.71 13.18 17.29 -4.11

2030. . . . . 11.43 16.18 -4.76 1.85 2.63 -.78 13.28 18.82 -5.54

2035. . . . . 11.49 17.14 -5.65 1.85 2.72 -.87 13.34 19.87 -6.52

2040. . . . . 11.53 17.67 -6.14 1.86 2.80 -.94 13.39 20.47 -7.08

2045. . . . . 11.55 17.82 -6.28 1.86 2.94 -1.08 13.41 20.76 -7.35

2050. . . . . 11.56 18.01 -6.45 1.87 3.03 -1.16 13.43 21.04 -7.61

2055. . . . . 11.59 18.40 -6.81 1.87 3.11 -1.24 13.46 21.51 -8.05

2060. . . . . 11.63 18.97 -7.34 1.87 3.12 -1.25 13.50 22.09 -8.59

2065. . . . . 11.66 19.56 -7.89 1.88 3.17 -1.29 13.54 22.72 -9.18

2070. . . . . 11.71 20.25 -8.55 1.88 3.19 -1.31 13.59 23.45 -9.86

2075. . . . . 11.75 20.92 -9.17 1.88 3.17 -1.29 13.63 24.09 -10.46

2080. . . . . 11.77 21.35 -9.57 1.88 3.20 -1.32 13.65 24.54 -10.89

2085. . . . . 11.80 21.73 -9.93 1.88 3.23 -1.35 13.68 24.96 -11.28

2090. . . . . 11.82 22.14 -10.32 1.88 3.21 -1.32 13.70 25.35 -11.64

First year balance becomes

negative and remains negative

throughout the projection 

period. . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . 2005 . . . . . . . . . . . . . . . . 2010

a Income rates include certain reimbursements from the General Fund of the Treasury.

b The Trustees project the annual balance to be negative for a temporary period and return to positive levels

before the end of the projection period.

Table IV.B1.—Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2090 (Cont.)

[As a percentage of taxable payroll]

Calendar 

year

OASI DI OASDI

Income

ratea Costrate Balance

Income

ratea Costrate Balance

Income

ratea Costrate Balance
Actuarial Estimates

56

moved into prime disability ages, and further to a peak of 2.47 percent for

2012 due to the recent economic recession. Under the intermediate assumptions, the projected DI cost rate declines from 2.47 percent for 2012 to

2.06 percent for 2024. From 2024 to 2040, the DI cost rate stays relatively

stable and then generally increases to 2.27 percent for 2089. The income rate

increases only very slightly from 1.81 percent of taxable payroll for 2015 to

1.86 percent for 2089. The projected annual deficit generally declines from

0.54 percent for 2015 to a low of 0.21 percent for 2032, and then generally

increases to 0.41 percent for 2089.

Under the low-cost assumptions, the DI cost rate declines from 2.47 percent

of payroll for 2012 to 1.48 percent for 2039, and remains relatively stable

thereafter, reaching 1.54 percent for 2089. The annual balance is negative for

the first 5 years and is positive throughout the remainder of the long-range

period. Under the high-cost assumptions, the DI cost rate generally rises

from 2016 through the end of the projection period, reaching 3.21 percent for

2089. The annual deficit is 0.60 percent for 2015, 1.16 percent for 2050, and

1.33 percent for 2089.

Figure IV.B1 shows the patterns of the OASI and DI annual cost rates.

Annual DI cost rates rose substantially between 1990 and 2010 in large part

due to: (1) aging of the working population as the baby-boom generation

moved from ages 25-44 in 1990, where disability prevalence is low, to ages

45-64 in 2010, where disability prevalence is much higher; (2) a substantial

increase in the percentage of women insured for DI benefits as a result of

increased and more consistent rates of employment; and (3) increased disability incidence rates for women to a level similar to those for men by 2010.

After 2010, all of these factors stabilize, and therefore the DI cost rate stabilizes also. Annual OASI cost rates follow a similar pattern to that for DI, but

displaced 20 to 25 years later, because the baby-boom generation enters

retirement ages 20 to 25 years after entering prime disability ages.

Figure IV.B1 shows only the income rates for alternative II because the variation in income rates by alternative is very small. Income rates generally

increase slowly for each of the alternatives over the long-range period. Taxation of benefits, which is a relatively small portion of income, is the main

source of both the increases in the income rate and the variation among the

alternatives. Increases in income from taxation of benefits reflect: (1)

increases in the total amount of benefits paid and (2) the increasing share of

individual benefits that will be subject to taxation because benefit taxation

threshold amounts are not indexed.

Figure IV.B1 shows the patterns of the annual balances for OASI and DI. For

each alternative and for historical data, the magnitude of each of the positive

balances, as a percentage of taxable payroll, is the distance between the
57

Long-Range Estimates

appropriate cost-rate curve and the income-rate curve above it. The magnitude of each of the deficits is the distance between the appropriate cost-rate

curve and the income-rate curve below it. Annual balances follow closely the

pattern of annual cost rates after 1990 because the payroll tax rate does not

change for the OASDI program, with only small variations in the allocation

between DI and OASI. The pattern of the projected OASDI annual balances

is important to the analysis of the financial condition of the Social Security

program as a whole.

In the future, the costs of OASI, DI, and the theoretical combined OASDI

programs as a percentage of taxable payroll are unlikely to fall outside the

range encompassed by alternatives I and III because alternatives I and III

define a wide range of demographic and economic conditions.

Long-range OASDI cost and income are most often expressed as percentages

of taxable payroll. However, the Trustees also present cost and income as

shares of gross domestic product (GDP), the value of goods and services produced during the year in the United States. Under alternative II, the Trustees

project the OASDI cost to decrease from 4.98 percent of GDP for 2015 to

4.89 percent of GDP for 2016, and then increase to a peak of 6.05 percent for

2037. After 2037, OASDI cost as a percentage of GDP declines to a low of

5.93 percent for 2050 and thereafter generally increases slowly, reaching

 Figure IV.B1.—Long-Range OASI and DI Annual Income Rates and Cost Rates

[As a percentage of taxable payroll]

0%

5%

10%

15%

20%

25%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Alternative II Income rates

OASI cost rates

DI cost rates

Historical Estimated

OASI

DI III

II

I

II

I

III
Actuarial Estimates

58

6.19 percent by 2089. Appendix G presents full estimates of income and cost

relative to GDP. 

Table IV.B2 contains historical and projected annual income rates and their

components by trust fund and alternative. The annual income rates consist of

the scheduled payroll tax rates, the rates of income from taxation of benefits,

and the rates of income from general fund reimbursements. Projected income

from taxation of benefits increases over time for reasons discussed on

page 52. Historical general fund reimbursements include temporary reductions in revenue due to reduced payroll tax rates and certain other miscellaneous items.

Table IV.B2.—Components of Annual Income Rates, Calendar Years 1990-2090

[As a percentage of taxable payroll]

Calendar

year

OASI DI OASDI

Payroll tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll tax

Taxation of

benefits

General

Fund

Reimbursementsa Totalb

Historical:

1990 11.29 0.21 -0.03 11.47 1.21 0.01 -0.03 1.18 12.50 0.21 -0.06 12.66

1995 10.46 .19 -.01 10.64 1.87 .01 -.01 1.87 12.33 .20 -.01 12.51

2000 10.56 .29 c 10.85 1.78 .02 -.02 1.78 12.34 .31 -.02 12.62

2001 10.62 .29 c 10.90 1.80 .02 c 1.82 12.42 .31 c 12.72

2002 10.74 .30 .01 11.06 1.82 .02 c 1.85 12.56 .33 .01 12.90

2003 10.50 .29 c 10.79 1.78 .02 c 1.80 12.28 .31 c 12.59

2004 10.41 .32 c 10.73 1.77 .02 c 1.79 12.18 .35 c 12.53

2005 10.68 .29 -.01 10.96 1.81 .02 c 1.84 12.49 .31 -.01 12.80

2006 10.65 .31 c 10.96 1.81 .02 c 1.83 12.46 .34 c 12.79

2007 10.68 .33 c 11.01 1.81 .03 c 1.84 12.50 .35 c 12.85

2008 10.61 .29 c 10.90 1.80 .02 c 1.83 12.42 .31 c 12.73

2009 10.85 .38 c 11.23 1.84 .04 c 1.88 12.70 .42 c 13.11

2010 10.30 .42 .04 10.75 1.75 .04 .01 1.79 12.05 .45 .05 12.55

2011 8.82 .41 1.61 10.84 1.50 .03 .27 1.80 10.32 .44 1.88 12.64

2012 8.86 .47 1.72 11.05 1.51 .01 .29 1.81 10.36 .48 2.01 12.85

2013 10.49 .35 .07 10.91 1.78 .01 .01 1.80 12.28 .36 .08 12.71

2014 10.53 .46 .01 10.99 1.79 .03 c 1.82 12.31 .48 .01 12.80
59

Long-Range Estimates

Intermediate:

2015 10.53 0.48 c 11.01 1.79 0.02 c 1.81 12.32 0.49 0.01 12.82

2016 10.56 .50 c 11.06 1.79 .03 c 1.82 12.35 .53 c 12.88

2017 10.56 .52 c 11.09 1.79 .03 c 1.82 12.36 .55 c 12.91

2018 10.57 .54 c 11.11 1.80 .03 c 1.83 12.37 .57 c 12.94

2019 10.57 .56 c 11.13 1.79 .03 c 1.83 12.37 .59 c 12.95

2020 10.57 .57 c 11.14 1.79 .03 c 1.83 12.36 .60 c 12.96

2021 10.57 .59 c 11.16 1.79 .03 c 1.83 12.36 .62 c 12.98

2022 10.58 .61 c 11.18 1.80 .03 c 1.83 12.37 .64 c 13.01

2023 10.57 .63 c 11.20 1.80 .03 c 1.83 12.37 .66 c 13.03

2024 10.58 .65 c 11.23 1.80 .03 c 1.83 12.38 .69 c 13.06

2025 10.58 .67 c 11.25 1.80 .04 c 1.83 12.38 .70 c 13.08

2030 10.58 .73 c 11.32 1.80 .04 c 1.84 12.38 .78 c 13.15

2035 10.58 .77 c 11.36 1.80 .04 c 1.84 12.38 .82 c 13.20

2040 10.58 .79 c 11.37 1.80 .05 c 1.84 12.38 .84 c 13.21

2045 10.58 .79 c 11.37 1.80 .05 c 1.85 12.38 .84 c 13.22

2050 10.58 .79 c 11.37 1.80 .05 c 1.85 12.38 .84 c 13.22

2055 10.58 .80 c 11.38 1.80 .06 c 1.85 12.38 .85 c 13.23

2060 10.58 .82 c 11.40 1.80 .06 c 1.85 12.38 .87 c 13.25

2065 10.58 .83 c 11.41 1.80 .06 c 1.86 12.38 .89 c 13.27

2070 10.58 .85 c 11.43 1.80 .06 c 1.86 12.38 .91 c 13.29

2075 10.58 .86 c 11.44 1.80 .06 c 1.86 12.38 .92 c 13.30

2080 10.58 .86 c 11.45 1.80 .06 c 1.86 12.38 .92 c 13.30

2085 10.58 .87 c 11.45 1.80 .06 c 1.86 12.38 .93 c 13.31

2090 10.58 .88 c 11.46 1.80 .06 c 1.86 12.38 .94 c 13.32

Low-cost:

2015 10.48 .47 c 10.96 1.78 .02 c 1.80 12.26 .49 .01 12.75

2016 10.59 .48 c 11.07 1.80 .03 c 1.83 12.39 .51 c 12.90

2017 10.56 .50 c 11.06 1.79 .03 c 1.82 12.36 .53 c 12.88

2018 10.57 .51 c 11.07 1.79 .03 c 1.82 12.36 .53 c 12.89

2019 10.56 .52 c 11.08 1.79 .03 c 1.82 12.36 .55 c 12.90

2020 10.56 .53 c 11.09 1.79 .03 c 1.82 12.35 .56 c 12.91

2021 10.56 .54 c 11.10 1.79 .03 c 1.82 12.36 .57 c 12.92

2022 10.57 .56 c 11.12 1.79 .03 c 1.82 12.36 .58 c 12.95

2023 10.57 .57 c 11.14 1.79 .03 c 1.82 12.36 .60 c 12.96

2024 10.57 .58 c 11.16 1.80 .03 c 1.82 12.37 .61 c 12.98

2025 10.58 .60 c 11.17 1.80 .03 c 1.83 12.37 .63 c 13.00

2030 10.58 .64 c 11.22 1.80 .03 c 1.83 12.37 .68 c 13.05

2035 10.58 .67 c 11.24 1.80 .03 c 1.83 12.37 .70 c 13.07

2040 10.57 .66 c 11.24 1.80 .04 c 1.83 12.37 .70 c 13.07

2045 10.57 .65 c 11.22 1.80 .04 c 1.83 12.37 .69 c 13.06

2050 10.57 .64 c 11.22 1.80 .04 c 1.83 12.37 .68 c 13.05

2055 10.57 .64 c 11.22 1.80 .04 c 1.84 12.37 .68 c 13.05

2060 10.58 .65 c 11.23 1.80 .04 c 1.84 12.37 .69 c 13.06

2065 10.57 .65 c 11.23 1.80 .04 c 1.84 12.37 .69 c 13.07

2070 10.57 .66 c 11.23 1.80 .04 c 1.84 12.37 .70 c 13.07

2075 10.57 .65 c 11.23 1.80 .04 c 1.84 12.37 .69 c 13.06

2080 10.57 .64 c 11.22 1.80 .04 c 1.84 12.37 .68 c 13.05

2085 10.57 .64 c 11.21 1.80 .04 c 1.84 12.37 .68 c 13.05

2090 10.57 .65 c 11.22 1.80 .04 c 1.84 12.37 .69 c 13.06

Table IV.B2.—Components of Annual Income Rates, Calendar Years 1990-2090 (Cont.)

[As a percentage of taxable payroll]

Calendar

year

OASI DI OASDI

Payroll tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll tax

Taxation of

benefits

General

Fund

Reimbursementsa Totalb
Actuarial Estimates

60

Note: Totals do not necessarily equal the sums of rounded components.

2. Comparison of Workers to Beneficiaries

Under the intermediate assumptions, the Trustees project the OASDI cost

rate will remain relatively stable through 2017 as the economy continues to

recover. The cost rate then rises rapidly between 2018 and 2035, primarily

because the number of beneficiaries rises much more rapidly than the number of covered workers as the baby-boom generation retires. The ratio of

OASDI beneficiaries to workers is dominated by the OASI program because

all workers eventually die or retire, but only a small minority become disabled. The trends described below are primarily due to demographic changes

and thus affect the DI program roughly 20 years earlier than the OASI and

OASDI programs. The baby-boom generation had lower fertility rates than

their parents, and the Trustees expect that lower fertility rates will persist for

all future generations; therefore, the ratio of OASDI beneficiaries to workers

will rise rapidly and reach a permanently higher level after the baby-boom

High-cost:

2015 10.59 0.49 c 11.08 1.80 0.02 c 1.82 12.39 0.50 0.01 12.90

2016 10.50 .52 c 11.03 1.78 .03 c 1.81 12.29 .55 c 12.84

2017 10.57 .55 c 11.13 1.80 .03 c 1.83 12.37 .58 c 12.95

2018 10.58 .57 c 11.16 1.80 .03 c 1.83 12.38 .61 c 12.99

2019 10.58 .60 c 11.18 1.80 .04 c 1.83 12.37 .63 c 13.01

2020 10.57 .62 c 11.20 1.80 .04 c 1.83 12.37 .66 c 13.03

2021 10.58 .65 c 11.22 1.80 .04 c 1.83 12.37 .68 c 13.06

2022 10.58 .67 c 11.25 1.80 .04 c 1.84 12.38 .71 c 13.09

2023 10.58 .70 c 11.28 1.80 .04 c 1.84 12.38 .74 c 13.12

2024 10.59 .73 c 11.32 1.80 .04 c 1.84 12.39 .77 c 13.16

2025 10.59 .75 c 11.34 1.80 .04 c 1.84 12.39 .79 c 13.18

2030 10.59 .84 c 11.43 1.80 .05 c 1.85 12.39 .89 c 13.28

2035 10.59 .90 c 11.49 1.80 .06 c 1.85 12.39 .96 c 13.34

2040 10.59 .94 c 11.53 1.80 .06 c 1.86 12.39 1.00 c 13.39

2045 10.59 .96 c 11.55 1.80 .07 c 1.86 12.39 1.02 c 13.41

2050 10.59 .97 c 11.56 1.80 .07 c 1.87 12.39 1.04 c 13.43

2055 10.59 1.00 c 11.59 1.80 .07 c 1.87 12.39 1.08 c 13.46

2060 10.59 1.04 c 11.63 1.80 .08 c 1.87 12.39 1.11 c 13.50

2065 10.59 1.07 c 11.66 1.80 .08 c 1.88 12.39 1.15 c 13.54

2070 10.59 1.12 c 11.71 1.80 .08 c 1.88 12.39 1.20 c 13.59

2075 10.59 1.16 c 11.75 1.80 .08 c 1.88 12.39 1.24 c 13.63

2080 10.59 1.18 c 11.77 1.80 .08 c 1.88 12.39 1.27 c 13.65

2085 10.59 1.21 c 11.80 1.80 .09 c 1.88 12.39 1.29 c 13.68

2090 10.59 1.23 c 11.82 1.80 .09 c 1.88 12.39 1.32 c 13.70

a Includes payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and

112-96, and other miscellaneous reimbursements.

b Values exclude interest income.

c Between -0.005 and 0.005 percent of taxable payroll.

Table IV.B2.—Components of Annual Income Rates, Calendar Years 1990-2090 (Cont.)

[As a percentage of taxable payroll]

Calendar

year

OASI DI OASDI

Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation of

benefits

General

Fund

Reimbursementsa Totalb
61

Long-Range Estimates

generation retires. Due to increasing longevity, the ratio of beneficiaries to

workers will generally rise slowly thereafter. Table IV.B3 provides a comparison of the numbers of covered workers and beneficiaries.

Table IV.B3.—Covered Workers and Beneficiaries, Calendar Years 1945-2090

Calendar year

Covered

workersa

(in thousands)

Beneficiariesb (in thousands) Covered

workers per

OASDI

beneficiary

OASDI

beneficiaries

per 100

covered

OASI DI OASDI workers c

Historical data:

1945 . . . . . . . . . 46,390 1,106 - 1,106 41.9 2

1950 . . . . . . . . . 48,280 2,930 - 2,930 16.5 6

1955 . . . . . . . . . 65,066 7,564 - 7,564 8.6 12

1960 . . . . . . . . . 72,371 13,740 522 14,262 5.1 20

1965 . . . . . . . . . 80,539 18,509 1,648 20,157 4.0 25

1970 . . . . . . . . . 92,963 22,618 2,568 25,186 3.7 27

1975 . . . . . . . . . 100,193 26,998 4,125 31,123 3.2 31

1980 . . . . . . . . . 112,651 30,384 4,734 35,117 3.2 31

1985 . . . . . . . . . 120,405 32,763 3,874 36,636 3.3 30

1990 . . . . . . . . . 133,159 35,255 4,204 39,459 3.4 30

1995 . . . . . . . . . 140,997 37,364 5,731 43,096 3.3 31

2000 . . . . . . . . . 154,912 38,556 6,606 45,162 3.4 29

2001 . . . . . . . . . 155,313 38,888 6,780 45,668 3.4 29

2002 . . . . . . . . . 154,742 39,117 7,060 46,176 3.4 30

2003 . . . . . . . . . 154,957 39,315 7,438 46,753 3.3 30

2004 . . . . . . . . . 156,742 39,558 7,810 47,368 3.3 30

2005 . . . . . . . . . 159,184 39,961 8,172 48,133 3.3 30

2006 . . . . . . . . . 161,726 40,435 8,428 48,863 3.3 30

2007 . . . . . . . . . 163,489 40,863 8,739 49,603 3.3 30

2008 . . . . . . . . . 162,886 41,355 9,065 50,420 3.2 31

2009 . . . . . . . . . 157,877 42,385 9,475 51,860 3.0 33

2010 . . . . . . . . . 157,329 43,440 9,958 53,398 2.9 34

2011 . . . . . . . . . 158,956 44,388 10,428 54,816 2.9 34

2012 . . . . . . . . . 161,261 45,377 10,799 56,176 2.9 35

2013 . . . . . . . . . 163,355 46,517 10,954 57,471 2.8 35

2014 . . . . . . . . . 165,603 47,603 10,971 58,574 2.8 35

Intermediate:

2015 . . . . . . . . . 167,638 49,045 10,986 60,031 2.8 36

2020 . . . . . . . . . 178,641 57,636 11,510 69,146 2.6 39

2025 . . . . . . . . . 184,560 65,244 12,049 77,293 2.4 42

2030 . . . . . . . . . 188,384 72,439 12,232 84,672 2.2 45

2035 . . . . . . . . . 192,010 77,398 12,629 90,027 2.1 47

2040 . . . . . . . . . 196,985 79,983 13,076 93,059 2.1 47

2045 . . . . . . . . . 202,242 81,376 13,809 95,185 2.1 47

2050 . . . . . . . . . 207,170 83,194 14,342 97,536 2.1 47

2055 . . . . . . . . . 211,781 85,761 14,826 100,587 2.1 47

2060 . . . . . . . . . 216,212 88,998 15,087 104,085 2.1 48

2065 . . . . . . . . . 220,784 92,216 15,519 107,734 2.0 49

2070 . . . . . . . . . 225,721 95,771 15,928 111,699 2.0 49

2075 . . . . . . . . . 230,962 99,029 16,226 115,255 2.0 50

2080 . . . . . . . . . 236,193 101,158 16,816 117,974 2.0 50

2085 . . . . . . . . . 241,405 103,873 17,470 121,343 2.0 50

2090 . . . . . . . . . 246,472 107,557 17,822 125,379 2.0 51
Actuarial Estimates

62

Notes: 

1. The number of beneficiaries does not include uninsured individuals who receive benefits under Section

228 of the Social Security Act. The General Fund of the Treasury reimburses the trust funds for the costs of

most of these individuals.

2. Historical covered worker and beneficiary data are subject to revision.

3. Totals do not necessarily equal the sums of rounded components.

The effect of the demographic shift under the three alternatives on the

OASDI cost rates is clear when one considers the projected number of

OASDI beneficiaries per 100 covered workers. Compared to the 2014 level

of 35 beneficiaries per 100 covered workers, the Trustees project that this

ratio rises to 47 by 2035 under the intermediate assumptions because the

growth in beneficiaries greatly exceeds the growth in workers. By 2090, this

projected ratio rises further under the intermediate and high-cost assumptions, reaching 51 under the intermediate assumptions and 64 under the highLow-cost:

2015 . . . . . . . . . 168,572 49,039 10,927 59,966 2.8 36

2020 . . . . . . . . . 182,421 57,481 10,777 68,258 2.7 37

2025 . . . . . . . . . 188,767 64,794 10,787 75,580 2.5 40

2030 . . . . . . . . . 193,329 71,519 10,527 82,047 2.4 42

2035 . . . . . . . . . 198,016 75,897 10,528 86,425 2.3 44

2040 . . . . . . . . . 204,873 77,869 10,660 88,529 2.3 43

2045 . . . . . . . . . 212,767 78,766 11,111 89,877 2.4 42

2050 . . . . . . . . . 220,580 80,222 11,469 91,692 2.4 42

2055 . . . . . . . . . 228,146 82,590 11,849 94,439 2.4 41

2060 . . . . . . . . . 235,768 85,677 12,118 97,795 2.4 41

2065 . . . . . . . . . 243,993 88,747 12,572 101,320 2.4 42

2070 . . . . . . . . . 253,176 92,070 13,057 105,127 2.4 42

2075 . . . . . . . . . 263,238 94,987 13,518 108,505 2.4 41

2080 . . . . . . . . . 273,656 96,848 14,279 111,127 2.5 41

2085 . . . . . . . . . 284,091 99,828 15,149 114,977 2.5 40

2090 . . . . . . . . . 294,357 104,622 15,754 120,376 2.4 41

High-cost:

2015 . . . . . . . . . 166,997 49,049 11,044 60,093 2.8 36

2020 . . . . . . . . . 174,791 57,747 12,262 70,009 2.5 40

2025 . . . . . . . . . 179,921 65,697 13,313 79,010 2.3 44

2030 . . . . . . . . . 183,207 73,410 13,940 87,350 2.1 48

2035 . . . . . . . . . 186,078 79,007 14,727 93,734 2.0 50

2040 . . . . . . . . . 189,357 82,301 15,494 97,795 1.9 52

2045 . . . . . . . . . 192,533 84,321 16,504 100,825 1.9 52

2050 . . . . . . . . . 194,925 86,622 17,179 103,801 1.9 53

2055 . . . . . . . . . 196,717 89,471 17,742 107,213 1.8 55

2060 . . . . . . . . . 198,198 92,897 17,945 110,843 1.8 56

2065 . . . . . . . . . 199,493 96,262 18,287 114,549 1.7 57

2070 . . . . . . . . . 200,729 100,058 18,520 118,578 1.7 59

2075 . . . . . . . . . 201,908 103,661 18,515 122,175 1.7 61

2080 . . . . . . . . . 202,796 106,076 18,749 124,825 1.6 62

2085 . . . . . . . . . 203,582 108,474 18,987 127,461 1.6 63

2090 . . . . . . . . . 204,272 111,044 18,976 130,020 1.6 64

a Workers who are paid at some time during the year for employment on which OASDI taxes are due.

b Beneficiaries with monthly benefits in current-payment status as of June 30.

c This column is the sum of OASI and DI beneficiaries. A small number of beneficiaries receive benefits

from both funds.

Table IV.B3.—Covered Workers and Beneficiaries, Calendar Years 1945-2090 (Cont.)

Calendar year

Covered

workersa

(in thousands)

Beneficiariesb (in thousands) Covered

workers per

OASDI

beneficiary

OASDI

beneficiaries

per 100

covered

OASI DI OASDI workers c
63

Long-Range Estimates

cost assumptions. Under the low-cost assumptions, this ratio rises to 44 by

2035 and then declines, reaching 41 by 2090. Figure IV.B2 shows beneficiaries per 100 covered workers.

For each alternative, the curve in figure IV.B2 is strikingly similar to the corresponding cost-rate curve in figure IV.B1. This similarity emphasizes the

extent to which the cost rate is determined by the age distribution of the population. The cost rate is essentially the product of the number of beneficiaries

and their average benefit, divided by the product of the number of covered

workers and their average taxable earnings. For this reason, the pattern of the

annual cost rates is similar to that of the annual ratios of beneficiaries to

workers.

Table IV.B3 also shows the number of covered workers per OASDI beneficiary, which was about 2.8 for 2014. Under the low-cost assumptions, this

ratio declines to 2.3 for 2031, generally rises from 2031 through 2083, and

then declines to 2.4 for 2090. Under the intermediate assumptions, this ratio

declines generally throughout the long-range period, reaching 2.1 for 2035

and 2.0 by 2090. Under the high-cost assumptions, this ratio decreases

steadily to 1.6 by 2090.

 Figure IV.B2.—Number of OASDI Beneficiaries Per 100 Covered 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

III

II

I
Actuarial Estimates

64

3. Trust Fund Ratios and Test of Long-Range Close Actuarial Balance

Trust fund ratios are critical indicators of the adequacy of the financial

resources of the Social Security program. The trust fund ratio for a year is the

amount of asset reserves in a fund at the beginning of a year expressed as a

percentage of the cost for the year. Under present law, the OASI and DI Trust

Funds do not have the authority to borrow other than in the form of advance

tax transfers, which are limited to expected taxes for the current calendar

month. If reserves held in either trust fund become depleted during a year,

and continuing tax revenues fall short of the cost of scheduled benefits, then

full scheduled benefits would not be payable on a timely basis. For this reason, the trust fund ratio is a very critical financial measure.

The trust fund ratio serves an additional important purpose in assessing the

actuarial status of the program. If the projected trust fund ratio is positive

throughout the period and is either level or increasing at the end of the

period, then projected adequacy for the long-range period is likely to continue for subsequent reports. Under these conditions, the program has

achieved sustainable solvency.1

Table IV.B4 shows the Trustees’ projections of trust fund ratios by alternative, without regard to advance tax transfers that would be effected, for the

separate and theoretical combined OASI and DI Trust Funds. The table also

shows the years of trust fund reserve depletion and the percentage of scheduled benefits that would be payable thereafter, by alternative.

Under the intermediate assumptions, the OASI trust fund ratio has declined

since 2011 and continues to decline from 362 percent at the beginning of

2015 until the trust fund reserves become depleted in 2035 (one year later

than projected in last year’s report), at which time 77 percent of scheduled

benefits would be payable. The DI trust fund ratio has been declining

steadily since 2003 (at first slowly and then more rapidly due to the recent

recession), and continues to decline from 40 percent at the beginning of 2015

until the trust fund reserves become depleted in the fourth quarter of 2016, at

which time 81 percent of scheduled benefits would be payable.

Under the intermediate assumptions, the trust fund ratio for the combined

OASI and DI Trust Funds declines from 308 percent at the beginning of

2015 until the combined fund reserves become depleted in 2034 (one year

later than projected in last year’s report), at which time 79 percent of scheduled benefits would be payable.

 1 As noted in greater detail in the 2015 Medicare Trustees Report, “The trust fund perspective does not

encompass the interrelationship between the Medicare and Social Security trust funds and the overall Federal budget.” For an explanation of that relationship, see appendix F of the 2015 Medicare Trustees Report.
65

Long-Range Estimates

Under the low-cost assumptions, the trust fund ratio for the DI program

declines from 41 percent at the beginning of 2015 to 8 percent at the beginning of 2017. DI fund reserves become depleted in the fourth quarter of

2017. However, cumulative income would be sufficient to pay all benefit

obligations at the end of 2023. The DI trust fund ratio is positive again at the

beginning of 2024 and remains positive throughout the rest of the projection

period. After 2024, the trust fund ratio increases through the end of the longrange projection period, reaching the extremely high level of 1,821 percent

for 2090. For the OASI program, the trust fund ratio declines steadily, from

362 for 2015 to 13 for 2090. The expectation would be for the OASI Trust

Fund reserves to deplete shortly after the 75-year projection period. For the

theoretical combined OASDI program, the trust fund ratio declines from

309 percent for 2015 to a low of 163 percent in 2045, then rises thereafter

reaching 226 percent by 2090. Because the trust fund ratio is positive

throughout the projection period and increasing at the end of the period,

under the low-cost assumptions, only the theoretical combined OASDI program achieves sustainable solvency.

Under the high-cost assumptions, the OASI trust fund ratio declines continually until reserves become depleted in 2030, at which time 69 percent of

scheduled benefits would still be payable. The DI trust fund ratio declines

from 40 percent for 2015 until reserves become depleted in the third quarter

of 2016, at which time 75 percent of scheduled benefits would still be payable. The theoretical combined OASI and DI trust fund ratio declines from

307 percent for 2015 until reserves become depleted in 2028, at which time

71 percent of scheduled benefits would still be payable.

The Trustees project permanent trust fund reserve depletion for the 75-year

projection period with the exceptions of the theoretical combined OASDI

Trust Fund and the individual OASI and DI Trust Funds under the low-cost

assumptions. It is therefore very likely that lawmakers will need to increase

income, reduce program costs, or both, in order to maintain solvency for the

trust funds. The stochastic projections discussed in appendix E suggest that

trust fund reserve depletion is highly probable by mid-century.

Even under the high-cost assumptions, however, the theoretical combined

OASI and DI Trust Fund reserves on hand plus their estimated future income

are sufficient to fully cover their combined cost until 2028. Under the intermediate assumptions, the combined starting fund reserves plus estimated

future income are sufficient to fully cover cost until 2034. In the 2014 report,

the Trustees projected that the combined trust fund reserves would become

depleted in 2028 and 2033 under the high-cost and intermediate assumptions,

respectively, and would achieve sustainable solvency under the low-cost

assumptions.
Actuarial Estimates

66

Note: The definition of trust fund ratio appears in the Glossary. The ratios shown for the combined trust

funds for years after reserve depletion of either the DI or OASI Trust Fund are theoretical.

Since 2013, when the Trustees modified the test of long-range close actuarial

balance, the standard for each trust fund requires meeting two conditions: (1)

the short-range test of financial adequacy is satisfied; and (2) the trust fund

ratios stay above zero throughout the 75-year projection period, allowing

scheduled benefits to be paid in a timely manner throughout the period. As

discussed in section IV.A, the DI Trust Fund fails the short-range test of

financial adequacy under the intermediate assumptions because trust fund

reserves become depleted in the fourth quarter of 2016. Under the intermediate assumptions, the OASI Trust Fund reserves become depleted in 2035,

Table IV.B4.—Trust Fund Ratios, Calendar Years 2015-90

[In percent]

Calendar

year

Intermediate Low-cost High-cost

OASI DI OASDI OASI DI OASDI OASI DI OASDI

2015 . . . . . . . . . . . . . 362 40 308 362 41 309 361 40 307

2016 . . . . . . . . . . . . . 351 18 298 352 21 300 350 16 295

2017 . . . . . . . . . . . . . 333 a 280 336 8 286 329 a 274

2018 . . . . . . . . . . . . . 315 a 264 321 a 274 308 a 253

2019 . . . . . . . . . . . . . 298 a 248 309 a 264 287 a 232

2020 . . . . . . . . . . . . . 281 a 233 297 a 255 264 a 211

2021 . . . . . . . . . . . . . 266 a 219 288 a 247 243 a 189

2022 . . . . . . . . . . . . . 249 a

a Trust fund reserves would be depleted at the beginning of this year.

204 278 a 241 220 a 167

2023 . . . . . . . . . . . . . 233 a 189 269 a 234 196 a 144

2024 . . . . . . . . . . . . . 216 a 173 260 5 228 171 a 120

2025 . . . . . . . . . . . . . 199 a 157 253 14 223 147 a 95

2030 . . . . . . . . . . . . . 113 a 77 219 79 203 16 a a

2035 . . . . . . . . . . . . . 15 a a 184 180 184 aaa

2040 . . . . . . . . . . . . . aaa 152 305 168 aaa

2045 . . . . . . . . . . . . . aaa 130 427 163 aaa

2050 . . . . . . . . . . . . . aaa 118 555 168 aaa

2055 . . . . . . . . . . . . . aaa 109 689 175 aaa

2060 . . . . . . . . . . . . . aaa 96 846 181 aaa

2065 . . . . . . . . . . . . . aaa 81 1,006 185 aaa

2070 . . . . . . . . . . . . . aaa 63 1,176 187 aaa

2075 . . . . . . . . . . . . . aaa 44 1,361 190 aaa

2080 . . . . . . . . . . . . . aaa 30 1,517 201 aaa

2085 . . . . . . . . . . . . . aaa 22 1,650 215 aaa

2090 . . . . . . . . . . . . . aaa 13 1,821 226 aaa

Trust fund reserves 

permanently 

deplete in . . . . . . . 2035 2016 2034 b

b Trust fund reserves would not be depleted within the projection period.

c

c Trust fund reserves would be depleted for a temporary period, and return to positive levels before the end of

the period.

b 2030 2016 2028

Payable benefits as 

percent of scheduled benefits:

At the time of 

permanent 

reserve

depletion . . . . . 77 81 79 bcb 69 75 71

For 2089 . . . . . 71 81 73 bcb 51 57 52
67

Long-Range Estimates

and the theoretical combined OASI and DI Trust Fund reserves become

depleted in 2034. Therefore, the OASI, DI, and combined OASI and DI

Trust Funds all fail the long-range test of close actuarial balance.

Figure IV.B3 illustrates the trust fund ratios for the separate OASI and DI

Trust Funds for each of the alternative sets of assumptions. DI Trust Fund

status is more uncertain than OASI Trust Fund status because there is a high

degree of uncertainty associated with future disability prevalence. A graph of

the trust fund ratios for the combined trust funds appears in figure II.D7.

4. Summarized Income Rates, Summarized Cost Rates, and Actuarial

Balances

Summarized values for the full 75-year period are useful in analyzing the

program’s long-range financial adequacy over the period as a whole, both

under present law and under proposed modifications to the law. All annual

amounts included in a summarized value are present-value discounted to the

valuation date. It is important to note that the actuarial balance indicates the

solvency status of the fund only for the very end of the period.

Table IV.B5 presents summarized income rates, summarized cost rates, and

actuarial balances for 25-year, 50-year, and 75-year valuation periods. Sum-

 Figure IV.B3.—Long-Range OASI and DI Trust Fund Ratios

[Asset reserves as a percentage of annual cost]

0%

200%

400%

600%

800%

1,000%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

OASI

DI

Historical Estimated 

III 

II 

I 

I 

II III 
Actuarial Estimates

68

marized income rates are the sum of the present value of non-interest income

for a period (which includes scheduled payroll taxes, the projected income

from the taxation of scheduled benefits, and reimbursements from the General Fund of the Treasury) and the starting trust fund asset reserves,

expressed as a percentage of the present value of taxable payroll over the

period. Under current law, the total OASDI payroll tax rate will remain at

12.4 percent in the future. In contrast, the Trustees expect income from taxation of benefits, expressed as a percentage of taxable payroll, to increase in

most years of the long-range period for the two reasons discussed earlier on

page 52. Summarized cost rates are the sum of the present value of cost for a

period (which includes scheduled benefits, administrative expenses, net

interchange with the Railroad Retirement program, and payments for vocational rehabilitation services for disabled beneficiaries) and the present value

of the cost of reaching a target trust fund of 100 percent of annual cost at the

end of the period, expressed as a percentage of the present value of taxable

payroll over the period.

The actuarial balance for a valuation period is equal to the difference

between the summarized income rate and the summarized cost rate for the

period. An actuarial balance of zero for any period indicates that cost for the

period could be met for the period as a whole (but not necessarily at all

points within the period), with a remaining trust fund reserve at the end of

the period equal to 100 percent of the following year’s cost. A negative actuarial balance for a period indicates that the present value of income to the

program plus the existing trust fund is less than the present value of the cost

of the program plus the cost of reaching a target trust fund reserve of 1 year’s

cost by the end of the period. Generally, a trust fund is deemed to be adequately financed for a period if the actuarial balance is zero or positive,

meaning that the reserves at the end of the period are at least equal to annual

cost. Solvency is still possible with a small negative actuarial balance where

reserves are still positive.

Table IV.B5 contains summarized rates for the intermediate, low-cost, and

high-cost assumptions. The low-cost and high-cost assumptions define a

wide range of possibilities. Financial outcomes as good as the low-cost scenario or as bad as the high-cost scenario are unlikely to occur.

For the 25-year valuation period, the OASDI program has an actuarial balance of 0.37 percent of taxable payroll under the low-cost assumptions,

-1.39 percent under the intermediate assumptions, and -3.51 percent under

the high-cost assumptions. These balances indicate that the program is adequately financed for the 25-year valuation period under only the low-cost

assumptions.
69

Long-Range Estimates

For the 50-year valuation period, the OASDI program has actuarial balances

of 0.19 percent under the low-cost assumptions, -2.23 percent under the

intermediate assumptions, and -5.25 percent under the high-cost assumptions. These actuarial balances mean that the OASDI program is adequately

financed for the 50-year valuation period under only the low-cost assumptions.

For the entire 75-year valuation period, the combined OASDI program has

actuarial balances of 0.16 percent of taxable payroll under the low-cost

assumptions, -2.68 percent under the intermediate assumptions, and

-6.31 percent under the high-cost assumptions. These balances indicate that

the combined OASDI program is adequately financed for the 75-year valuation period under only the low-cost assumptions.

Assuming the intermediate assumptions accurately capture future demographic and economic trends, solvency for the program over the next

75 years could be restored using a variety of approaches. For example, revenues could be increased in a manner equivalent to an immediate and permanent increase in the combined Social Security payroll tax rate from

12.40 percent to 15.02 percent (a relative increase of 21.1 percent), cost

could be reduced in a manner equivalent to an immediate and permanent

reduction in scheduled benefits of 16.4 percent, or some combination of

approaches could be used.

However, eliminating the actuarial deficit for the next 75-year valuation

period requires raising payroll taxes or lowering benefits by more than is

required just to achieve solvency, because the actuarial deficit includes the

cost of attaining a target trust fund equal to 100 percent of annual program

cost by the end of the period. The actuarial deficit could be eliminated for the

75-year period by increasing revenues in a manner equivalent to an immediate and permanent increase in the combined payroll tax from 12.40 percent

to 15.18 percent (a relative increase of 22.4 percent),1 reducing cost in a

manner equivalent to an immediate reduction in scheduled benefits of

17.2 percent, or some combination of approaches could be used.

Under the intermediate assumptions, the OASDI program has large annual

deficits toward the end of the long-range period that are increasing and reach

4.65 percent of payroll for 2089 (see table IV.B1). These large deficits indicate that annual cost continues to exceed non-interest income after 2089, so

continued adequate financing would require larger changes than those

 1 The indicated increase in the payroll tax rate of 2.78 percent is somewhat larger than the 2.68 percent

75-year actuarial deficit because the indicated increase reflects a behavioral response to tax rate changes. In

particular, the calculation assumes that an increase in payroll taxes results in a small shift of wages and salaries to forms of employee compensation that are not subject to the payroll tax.
Actuarial Estimates

70

needed to maintain solvency for the 75-year period. Over the period extending through the infinite horizon, the actuarial deficit is 3.9 percent of payroll

under the intermediate assumptions.

The financial shortfall of the DI program is worse than that of the OASI program for the first 25 years when measured relative to the level of program

cost. Summarized over the full 75-year period, however, long-range deficits

for the OASI and DI programs under intermediate assumptions are more

similar measured relative to the level of program cost. Increases in longevity

after 2027, when the disability conversion age remains fixed, have a greater

effect on OASI cost than on DI cost. As a result of this greater effect on

OASI cost, the financial status of the OASI program in the later portion of

the 75-year projection period is worse than the financial status of the DI program.

Table IV.B5.—Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2015-89

[As a percentage of taxable payroll]

Valuation period

Summarized income rate Summarized cost rate

Actuarial

balance

Non-interest

income

Beginning

asset

reserves Total Cost

Ending

target

fund Total

OASI:

Intermediate:

2015-39. . . . . 11.26 1.54 12.80 13.34 0.55 13.89 -1.09

2015-64. . . . . 11.32 .86 12.18 13.87 .23 14.10 -1.93

2015-89. . . . . 11.35 .65 12.00 14.24 .13 14.37 -2.37

Low-cost:

2015-39. . . . . 11.18 1.39 12.58 11.85 .48 12.33 .25

2015-64. . . . . 11.21 .75 11.96 11.80 .20 12.00 -.04

2015-89. . . . . 11.22 .55 11.77 11.75 .11 11.87 -.10

High-cost:

2015-39. . . . . 11.35 1.68 13.03 15.09 .65 15.74 -2.71

2015-64. . . . . 11.45 .96 12.41 16.45 .27 16.72 -4.31

2015-89. . . . . 11.52 .75 12.27 17.42 .16 17.57 -5.30

DI:

Intermediate:

2015-39. . . . . 1.84 .03 1.87 2.09 .08 2.17 -.30

2015-64. . . . . 1.84 .02 1.86 2.13 .03 2.16 -.30

2015-89. . . . . 1.85 .01 1.86 2.15 .02 2.17 -.31

Low-cost:

2015-39. . . . . 1.83 .03 1.86 1.68 .06 1.74 .12

2015-64. . . . . 1.83 .02 1.85 1.60 .02 1.62 .23

2015-89. . . . . 1.83 .01 1.85 1.57 .02 1.59 .26

High-cost:

2015-39. . . . . 1.84 .04 1.88 2.58 .10 2.68 -.80

2015-64. . . . . 1.86 .02 1.88 2.77 .04 2.81 -.94

2015-89. . . . . 1.86 .02 1.88 2.86 .02 2.88 -1.01
71

Long-Range Estimates

Note: Totals do not necessarily equal the sums of rounded components.

Table IV.B6 presents the components and the calculation of the long-range

(75-year) actuarial balance under the intermediate assumptions. The present

value of future cost less future non-interest income over the long-range

period, minus the amount of trust fund asset reserves at the beginning of the

projection period, amounts to $10.7 trillion for the OASDI program. This

amount is the 75-year “open group unfunded obligation” (see row H). The

actuarial deficit (which is the negative of the actuarial balance) combines this

unfunded obligation with the present value of the ending target trust fund and

expresses the total as a percentage of the present value of the taxable payroll

for the period. The present value of future non-interest income minus cost,

plus starting trust fund reserves, minus the present value of the ending target

trust fund, is -$11.3 trillion for the OASDI program. The actuarial balance,

expressed as a percentage of taxable payroll for the period, is -2.68 percent.

OASDI:

Intermediate:

2015-39. . . . . 13.10 1.57 14.67 15.43 0.63 16.06 -1.39

2015-64. . . . . 13.16 .87 14.04 16.00 .26 16.26 -2.23

2015-89. . . . . 13.20 .66 13.86 16.39 .15 16.55 -2.68

Low-cost:

2015-39. . . . . 13.01 1.42 14.44 13.54 .53 14.07 .37

2015-64. . . . . 13.04 .77 13.81 13.40 .22 13.62 .19

2015-89. . . . . 13.05 .56 13.62 13.32 .13 13.45 .16

High-cost:

2015-39. . . . . 13.19 1.72 14.91 17.67 .75 18.42 -3.51

2015-64. . . . . 13.31 .98 14.29 19.22 .32 19.54 -5.25

2015-89. . . . . 13.38 .77 14.15 20.28 .18 20.46 -6.31

Table IV.B5.—Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2015-89 (Cont.)

[As a percentage of taxable payroll]

Valuation period

Summarized income rate Summarized cost rate

Actuarial

balance

Non-interest

income

Beginning

asset

reserves Total Cost

Ending

target

fund Total
Actuarial Estimates

72

Note: Totals do not necessarily equal the sums of rounded components.

The open group unfunded obligation (row H in the table above) increased

from $10.6 trillion shown in last year's report to $10.7 trillion in this report.

If there had been no changes in starting values, assumptions, laws, or methods for this report, then the open group unfunded obligation would have

increased to $11.1 trillion solely due to the change in the valuation period.

This expected increase in the unfunded obligation occurs because: (1) the

unfunded obligation is now discounted to January 1, 2015, rather than to January 1, 2014, which tends to increase the unfunded obligation by the annual

nominal interest rate; and (2) the unfunded obligation now includes an additional year (2089). However, changes in assumptions, methods, and starting

values resulted in a net $0.5 trillion decrease in the unfunded obligation. 

The change in the actuarial deficit can be explained in a similar way. The

actuarial deficit was 2.88 percent of payroll in last year’s report, and was

expected to increase to a deficit of 2.94 percent of payroll solely due to the

change in the valuation period. Changes in assumptions, methods, and starting values combined to account for the decrease in the actuarial deficit, down

to 2.68 percent of payroll. For additional details on these changes, see section IV.B.6.

5. Additional Measures of OASDI Unfunded Obligations

A negative actuarial balance (i.e., an actuarial deficit) is one measure of the

unfunded obligation of the program. This subsection presents additional

measures of OASDI unfunded obligations under the intermediate assumptions.

Table IV.B6.—Components of 75-Year Actuarial Balance

Under Intermediate Assumptions

Item OASI DI OASDI

Present value as of January 1, 2015 (in billions):

A. Payroll tax revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $44,551 $7,565 $52,116

B. Reimbursements from general revenue. . . . . . . . . . . . . . . . . . . 0 0 1

C. Taxation of benefits revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,216 205 3,420

D. Non-interest income (A + B + C) . . . . . . . . . . . . . . . . . . . . . . . 47,767 7,770 55,537

E. Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,922 9,054 68,976

F. Cost minus non-interest income (E - D) . . . . . . . . . . . . . . . . . . 12,155 1,285 13,440

G. Trust fund asset reserves at start of period . . . . . . . . . . . . . . . . 2,729 60 2,789

H. Open group unfunded obligation (F - G). . . . . . . . . . . . . . . . . . 9,426 1,224 10,650

I. Ending target trust funda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553 80 633

J. Income minus cost, plus reserves at start of period, minus

ending target trust fund (D - E + G - I = - H - I) . . . . . . . . . . . . -9,979 -1,304 -11,283

K. Taxable payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420,722 420,722 420,722

Percent of taxable payroll:

Actuarial balance (100 × J ÷ K) . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.37 -.31 -2.68

a The calculation of the actuarial balance includes the cost of accumulating a target trust fund reserve equal

to 100 percent of annual cost at the end of the period.
73

Long-Range Estimates

a. Open Group Unfunded Obligations

Consistent with practice since 1965, this report focuses on a 75-year open

group valuation to evaluate the long-run financial status of the OASDI program. The open group valuation includes non-interest income and cost for

past, current, and future participants through the year 2089. The present

value of the open group unfunded obligation for the program is $10.7 trillion

over 2015-89. The open group unfunded obligation measures the adequacy

of financing over the period as a whole for a program financed on a pay-asyou-go basis. On this basis, payroll taxes and scheduled benefits for all participants are included through 2089.

The 75-year unfunded obligation is equivalent to 2.5 percent of future

OASDI taxable payroll and 0.9 percent of GDP through 2089. The 75-year

unfunded obligation as a percentage of taxable payroll is less than the actuarial deficit, because the unfunded obligation excludes the ending target trust

fund value (see table IV.B6).

Consideration of summary measures alone (such as the actuarial balance and

open group unfunded obligation) for a 75-year period can lead to incorrect

perceptions and to policy prescriptions that do not achieve sustainable solvency. These concerns can be addressed by considering the trend in trust

fund ratios toward the end of the period. (See the discussion of “sustainable

solvency” beginning on page 51.)

Another measure of trust fund finances, discussed in Appendix F, is the

infinite horizon unfunded obligation, which takes account of all annual balances, even those after 75 years. The extension of the time period past

75 years assumes that the current-law OASDI program and the demographic

and economic trends used for the 75-year projection continue indefinitely.

This infinite horizon unfunded obligation is estimated to be 3.9 percent of

taxable payroll or 1.3 percent of GDP. Of course, the degree of uncertainty

associated with estimates increases substantially for years further in the

future.
Actuarial Estimates

74

6. Reasons for Change in Actuarial Balance From Last Report

Table IV.B7 shows the effects of changes on the long-range actuarial balance, by category, between last year’s report and this report.

Note: Totals do not necessarily equal the sums of rounded components.

If the assumptions, methods, starting values, and the law had all remained

unchanged from last year’s Trustees Report, the long-range OASDI actuarial

balance would have decreased (become more negative) by 0.06 percent of

taxable payroll solely due to the change in the valuation period. However, as

described below, projections in this report also reflect changes in law, data,

assumptions, and methods. These changes combine to improve the longrange OASDI actuarial balance, from -2.88 percent of taxable payroll in last

year’s report to -2.68 percent in this report.

Since the last report, no law was enacted that is expected to have a significant effect on the long-range cost of the OASDI program. However, on

November 20, 2014, the President announced a series of executive actions on

immigration, which are expected to have a significant effect on the longrange income and cost of the OASDI program. These executive actions

include enhancing security at our nation’s borders, expanding the existing

program for certain undocumented children, creating a new program for certain undocumented parents that provides them with protection from deportation and with the opportunity to work legally, and allowing an estimated

Table IV.B7.—Reasons for Change in the 75-Year Actuarial Balance,

Based on Intermediate Assumptions

[As a percentage of taxable payroll]

Item OASI DI OASDI

Shown in last year’s report:

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.02 1.87 13.89

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.57 2.20 16.77

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.55 -.33 -2.88

Changes in actuarial balance due to changes in:

Legislation / Regulation . . . . . . . . . . . . . . . . . . . . . . . .01 .00 .02

Valuation perioda . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a The change in the 75-year valuation period from last year’s report to this report means that the 75-year

actuarial balance now includes the relatively large negative annual balance for 2088. This change in the valuation period results in a larger long-range actuarial deficit. The actuarial deficit includes the trust fund

reserve at the beginning of the projection period.

-.05 -.01 -.06

Demographic data and assumptions. . . . . . . . . . . . . . -.03 .00 -.03

Economic data and assumptions. . . . . . . . . . . . . . . . . .10 .00 .10

Disability data and assumptions. . . . . . . . . . . . . . . . . .00 .00 .00

Methods and programmatic data . . . . . . . . . . . . . . . . .15 .02 .17

Total change in actuarial balance . . . . . . . . . . . . . . . . . . .18 .02 .20

Shown in this report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.37 -.31 -2.68

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.00 1.86 13.86

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.37 2.17 16.55
75

Long-Range Estimates

additional 10,000 entrepreneurs to enter the country as legal permanent residents each year. Due to a federal court order, implementation of the actions

affecting undocumented children and parents is on hold at the time of this

report. However, the estimates in this report assume this court order will be

temporary and that the executive actions will proceed by the end of 2015.

The effects of these actions are projected to increase the long-range OASDI

actuarial balance by 0.02 percent of taxable payroll.

Changing the 75-year valuation period from 2014-88 to 2015-89 decreased

the projected long-range OASDI actuarial balance by 0.06 percent of taxable

payroll. This decrease is mainly the result of including the relatively large

negative annual balance for 2089 in this year’s 75-year projection period.

Note that the annual balance for 2014 is not excluded from the calculation of

this year’s long-range OASDI actuarial balance because this calculation

includes trust fund asset reserves at the beginning of the projection period.

These reserves at the start of the period reflect the program’s net financial

flows for all past years up to the start of the projection period.

Ultimate demographic assumptions are unchanged from those in last year’s

report. However, updating the starting and historical values, and the transition to ultimate assumed levels, combined to decrease the long-range OASDI

actuarial balance by 0.03 percent of taxable payroll. The following paragraph

describes three of the demographic changes that had significant effects on

the long-range OASDI actuarial balance.

First, final fertility (birth) data for 2012 and preliminary data for 2013 indicate slightly lower birth rates than were assumed for last year’s report for

these years. As in last year’s report, the estimates reflect: (1) the effect of the

recent economic recession on the total fertility rate for recent years and (2)

the assumption that the total fertility rate will rebound to a level above the

ultimate level and will subsequently decline to the ultimate level. However,

in this year’s report, the total fertility rate reaches the ultimate level in 2027,

which is eleven years earlier than in last year’s report. These changes in historical and projected birth rates decreased the long-range OASDI actuarial

balance by about 0.04 percent of taxable payroll. Second, incorporating mortality data obtained from Medicare experience at ages 65 and older for 2012

resulted in slightly higher death rates for 2012 and a slightly slower rate of

decline in mortality over the next 25 years than were projected in last year’s

report. Incorporating mortality data obtained from the National Centers for

Health Statistics at ages under 65 for 2011 resulted in slightly lower death

rates for 2011 and a slightly faster rate of decline in mortality over the next

25 years than were projected in last year’s report. These updated data combined to increase the long-range OASDI actuarial balance by about 0.02 percent of taxable payroll. Third, revising historical legal immigration to
Actuarial Estimates

76

include single age data (rather than 5-year age groups); including more

recent marriage, legal immigration, and other-than-legal immigration data;

and revising historical data since 2001 (to be more consistent with the most

recent estimates from the Census Bureau) combined to decrease the longrange OASDI actuarial balance by 0.01 percent of taxable payroll. 

The only ultimate economic assumption in this year’s report that changed

from the value used in last year’s report is the average annual real wage differential. The ultimate average real wage differential is 1.17 percent per year

for the intermediate assumptions in this report, rather than 1.13 percent in

last year’s report. This change increased the long-range OASDI actuarial balance by 0.06 percent of taxable payroll. The higher real wage differential

assumption is more consistent with recent experience and expectations of

slower growth in employer sponsored group health insurance premiums from

the Centers for Medicare and Medicaid Services. Because these premiums

are not subject to the payroll tax, slower growth in these premiums means

that a greater share of employee compensation will be in the form of wages

that are subject to the payroll tax.

In addition, updated starting values and changes in near-term economic

assumptions combined for a net increase in the long-range OASDI actuarial

balance of 0.04 percent of taxable payroll. One major factor contributing to

this change is the projected relationship between average taxable earnings

and the average wage index. Compared to last year’s report, the ratio of average taxable earnings to the average wage index averages about

0.6 percentage point higher during the long-range period, resulting in higher

payroll taxes (directly related to average taxable earnings) relative to benefit

levels (directly related to the average wage index). The change in this relationship is mainly due to the Bureau of Labor Statistics’ revisions to historical data on proprietor income. This change increased the long-range OASDI

actuarial balance by 0.05 percent of taxable payroll. Another factor, which

offsets most of this increase, is revised projections of the proportion of wages

posted to the Earnings Suspense File.1 For several years, the proportion of

actual wages posted to the suspense file has been significantly less than projected. Thus, compared to last year’s report, the projected suspense file contains fewer wage items, which is consistent with having fewer workers

(many of whom are undocumented immigrants) with wages on the suspense

file and more of these workers with earnings in the underground economy.

This revision decreased the long-range OASDI actuarial balance by 0.05 per-

 1 When earnings are reported for individuals whose identity cannot be verified based on the Social Security

Administration’s name and Social Security number records, those earnings are stored on the suspense file.

When the individual’s identity is verified, the earnings are transferred from the suspense file to the Master

Earnings File.
77

Long-Range Estimates

cent of taxable payroll. Other smaller changes in starting values and nearterm growth assumptions combined to increase the long-range OASDI actuarial balance by 0.04 percent of taxable payroll.

The projections in this report also reflect several methodological improvements and updates of program-specific data. These methodological changes,

updates, and interactions combined to increase the long-range OASDI actuarial balance by 0.17 percent of taxable payroll. Descriptions of five significant methodological changes and updates follow. 

This year’s report includes two significant methodological improvements for

projecting the earnings levels of future cohorts of newly entitled worker beneficiaries, using a 10-percent sample of actual worker beneficiaries newly

entitled in 2008 as a basis. The first improvement changed the projection of

earnings histories of worker beneficiaries to be more consistent with: (1) the

projected employment and earnings by single year of age and gender used in

estimating payroll tax revenue and (2) the projected distribution by single

year of age and gender of newly entitled worker beneficiaries for each projection year. This method improvement increased the long-range OASDI

actuarial balance by 0.07 percent of taxable payroll. Another improvement in

projecting these earnings changed the relative earnings levels in the projection for those over age 65 to those age 65 and younger. In the prior report, the

projection method included an adjustment to lower the earnings levels for

older workers due to the expectation of more part-time employment at these

older ages. Because data on actual earnings levels have not shown this

expected drop in average earnings at older ages, this adjustment is removed

for the projections in this year’s report. As a result, slightly more annual

earnings are allocated to older workers and slightly less are allocated to

younger workers, and overall average benefit levels are slightly reduced,

because the effect on benefit levels of additional earnings tends to be larger

for workers under age 65 than for workers over age 65. This method

improvement increased the long-range OASDI actuarial balance by 0.03 percent of taxable payroll.

A third methodological improvement lowers the projected insured rate for

some immigrants. The affected group of immigrants includes those working

in covered employment with a temporary visa that allows them to work and

those working in covered employment without current legal work authorization. For this group, the ratio of insured individuals to covered workers was

changed from being the same as the ratio of insured to covered workers for

all permanent legal residents and citizens of the same age and sex (legal

ratio) to being three-fourths of the legal ratio. This method improvement

increased the long-range OASDI actuarial balance by 0.03 percent of taxable

payroll.
Actuarial Estimates

78

The fourth significant change is an update that resulted in an increase in

income from taxation of benefits in this year’s report. Recent data and estimates provided by the Office of Tax Analysis at the Department of Treasury

indicate higher levels of revenue from taxation of OASDI benefits than projected in last year’s report. The increase in the ultimate projected ratio of

income from taxation of benefits to benefits resulted in an increase in the

long-range OASDI actuarial balance of 0.03 percent of taxable payroll.

Finally, changes in projected OASI beneficiaries and benefit levels over the

first 10 years of the projection period, updating programmatic data, other

small methodological improvements, and interactions increased the longrange OASDI actuarial balance by a net of 0.01 percent of taxable payroll.

Figure IV.B4 compares the annual cash-flow balances for this report and the

prior year’s report for the combined OASDI program over the long-range

(75-year) projection period. The figure illustrates the annual effects of the

changes described earlier in this section.

This pattern of differences between the annual balances (income rate minus

cost rate) in the two reports is due to the changes described earlier in this section. Except for 2015, the annual balances are higher each year in this year’s

report and average 0.31 percentage point higher over the 75-year projection

 Figure IV.B4.—OASDI Annual Balances: 2014 and 2015 Trustees Reports

[As a percentage of taxable payroll, based on intermediate assumptions]

-6%

-4%

-2%

0%

2%

2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

2014 Report

2015 Report
79

Long-Range Estimates

period. Differences between the annual balances in the two reports are

mainly due to the change in the projected real wage differential, the revised

economic starting levels, and the revised methods for projecting newly entitled worker beneficiaries. Most of these changes and revisions have a positive effect on the projections. For 2088, the projected annual deficit is

4.61 percent of taxable payroll in this report, compared to 4.90 percent in last

year's report.
Assumptions and Methods

80

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES

The future income and cost of the OASDI program will depend on many

demographic, economic, and program-specific factors. Trust fund income

will depend on how these factors affect the size and composition of the

working population as well as the level and distribution of earnings. Similarly, program cost will depend on how these factors affect the size and composition of the beneficiary population as well as the general level of benefits.

The Trustees make basic assumptions for several of these factors based on

analysis of historical trends, historical conditions, and expected future conditions. These factors include fertility, mortality, immigration, marriage,

divorce, productivity, inflation, average earnings, unemployment, real interest rate, and disability incidence and termination. Other factors depend on

these basic assumptions. These other, often interdependent, factors include

total population, life expectancy, labor force participation, gross domestic

product, and program-specific factors. Each year the Trustees reexamine

these assumptions and methods in light of new information and make appropriate revisions. The Trustees selected the assumptions for this report by the

end of January 2015.

Future levels of these factors and their interrelationships are inherently

uncertain. To address these uncertainties, this report uses three sets of

assumptions, designated as intermediate (alternative II), low-cost (alternative

I), and high-cost (alternative III). The intermediate set represents the Trustees’ best estimate of the future course of the population and the economy.

With regard to the net effect on the actuarial status of the OASDI program,

the low-cost set is more optimistic and the high-cost set is more pessimistic.

The low-cost and high-cost sets of assumptions reflect significant potential

changes in the interrelationships among factors, as well as changes in the

values for individual factors. 

While it is unlikely that all of the factors and interactions will differ in the

specified directions from the intermediate values, many combinations of

individual differences in the factors could have a similar overall effect. Outcomes with overall long-range cost as low as the low-cost scenario or as high

as the high-cost scenario are very unlikely. This report also includes sensitivity analysis, where factors are changed one at a time (see appendix D), and a

stochastic projection, which provides a probability distribution of possible

future outcomes that is centered around the intermediate assumptions (see

appendix E).
81

Demographic Assumptions and Methods

Readers should interpret with care the estimates based on the three sets of

alternative assumptions. These estimates are not specific predictions of the

future financial status of the OASDI program. Rather, they represent a reasonable range of future income and cost bounded by two plausible, albeit

very unlikely, demographic and economic scenarios.

The Trustees assume that values for each of the demographic, economic, and

program-specific factors change toward long-range ultimate values from

recent levels or trends within the next 25 years. For extrapolations beyond

the 75-year long-range period, the ultimate levels or trends reached by the

end of the 75-year period remain unchanged. The assumed ultimate values

represent average annual experience or growth rates. Actual future values

will exhibit fluctuations or cyclical patterns, as in the past.

The following sections briefly discuss the various assumptions and methods

required to make the estimates of trust fund financial status, which are the

heart of this report.1 There are, of course, many interrelationships among

these factors that are important but are beyond the scope of this discussion. 

A. DEMOGRAPHIC ASSUMPTIONS AND METHODS

Table V.A1 displays the principal demographic assumptions relating to fertility, mortality, and net immigration for the three alternatives.

1. Fertility Assumptions

Birth rates by single year of age, for women aged 14 to 49, are the basis for

the fertility assumptions. These rates apply to the total number of women,

across all marital statuses, in the midyear population at each age.

Historically, birth rates in the United States have fluctuated widely. The total

fertility rate2 decreased from 3.31 children per woman at the end of World

War I (1918) to 2.15 during the Great Depression (1936). After 1936, the

total fertility rate rose to 3.68 in 1957 and then fell to 1.74 by 1976. After

1976, the total fertility rate began to rise again until it reached a level of 2.07

 1 Actuarial Studies published by the Office of the Chief Actuary, Social Security Administration, contain

further details about the assumptions, methods, and actuarial estimates. A complete list of available studies

may be found at www.socialsecurity.gov/OACT/NOTES/actstud.html. To obtain copies of such studies or of

this report, please submit a request at www.socialsecurity.gov/OACT/request.html or write to: Office of the

Chief Actuary, 700 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235. This entire report,

along with supplemental year-by-year tables, may also be found at

www.socialsecurity.gov/OACT/TR/2015/index.html.

 2 Defined to be the average number of children that would be born to a woman in her lifetime if she were to

experience, at each age of her life, the birth rate observed in, or assumed for, the selected year, and if she

were to survive the entire childbearing period. A rate of about 2.1 would ultimately result in a nearly constant population if immigration and emigration were both zero, and if death rates were to remain at current

levels.
Assumptions and Methods

82

for 1990. From 1991 to 2006, the total fertility rate averaged 2.03 children

per woman. Then, the total fertility rate dropped from 2.12 in 2007 to 1.88 in

2012 and, based on preliminary data, to 1.87 in 2013. The recession and high

unemployment are likely reasons for this drop. The estimated total fertility

rate for 2014 is 1.88.

These variations in the total fertility rate resulted from changes in many factors, including social attitudes, economic conditions, birth-control practices,

and the racial/ethnic composition of the population. The Trustees expect

future total fertility rates to remain close to recent levels. Certain population

characteristics, such as the higher percentages of women who have never

married, of women who are divorced, and of young women who are in the

labor force, are consistent with continued lower total fertility rates than experienced during the baby-boom era (1946-65). Based on consideration of

these factors, the Trustees assume ultimate total fertility rates of 2.20, 2.00,

and 1.80 children per woman for the low-cost, intermediate, and high-cost

assumptions, respectively. The ultimate intermediate total fertility rate is

unchanged from last year’s report. However, the ultimate low-cost and highcost total fertility rates are 0.1 child per woman closer to the ultimate intermediate rate than in last year’s report.

For the intermediate assumptions, the projected total fertility rate rises until it

reaches 2.07 for 2022. This reflects the assumption that the drop in the total

fertility rate below 2.0 children per woman during the recent economic

downturn was in part a deferral in childbearing that will be largely offset

with full economic recovery. Thereafter, the total fertility rate follows a linear trend toward the ultimate level in 2027. The assumed low-cost and highcost total fertility rates trend away from the intermediate path and reach the

ultimate values in 2023 and 2032, respectively. Note that the projected total

fertility rates reach their ultimate levels earlier than assumed in last year’s

report (i.e., earlier than the 25th year of the projection period).

2. Mortality Assumptions

For the projections in this year’s report, ultimate average annual percentage

reductions in future mortality rates were assumed by age group, sex, and

cause of death. These assumptions were then used to estimate future central

death rates, also by age group, sex, and cause of death. From these estimated

central death rates, probabilities of death by single year of age and sex were

calculated.

Historical death rates are calculated for years 1900-2011 for ages below 65

(and for all ages for years prior to 1968) using data from the National Center
83

Demographic Assumptions and Methods

for Health Statistics (NCHS).1 For ages 65 and over, final Medicare data on

deaths and enrollments for years 1968 through 2011 and preliminary data for

2012 are used. Death rates by cause of death are produced for all ages for

years 1979-2011 using data from the NCHS.

The total age-sex-adjusted death rate2 declined at an average annual rate of

1.06 percent between 1900 and 2011. Between 1979 and 2011, the period for

which death rates were analyzed by cause, the total age-sex-adjusted death

rate, for all causes combined, declined at an average rate of 0.96 percent per

year.

Death rates have declined substantially in the U.S. since 1900, with rapid

declines over some periods and slow or no improvement over the other periods. Historical death rates generally declined more slowly for older ages and

more rapidly for children than for the rest of the population. Between 1900

and 2011, the age-sex-adjusted death rate for 65 and over declined at an average rate of 0.79 percent per year, while declining at an average rate of

3.11 percent per year for ages under 15.

Many factors are responsible for historical reductions in death rates, including increased medical knowledge, increased availability of health-care services, and improvements in sanitation and nutrition. Considering the

expected rate of future progress in these and other areas, the Trustees present

three alternative sets of ultimate annual percentage reductions in central

death rates by age group and cause of death, for 2039 and later. The intermediate set, alternative II, represents the Trustees’ best estimate. The average

annual percentage reductions for alternative I (low-cost) are smaller than

those for alternative II, while those for alternative III (high-cost) are larger.

These ultimate annual percentage reductions are the same as those in last

year’s report.

For the years 2012 through 2014, the assumed annual reductions in central

death rates are the same as the average annual reductions by age group, sex,

and cause of death experienced between 2001 and 2011. After 2014, annual

reductions in central death rates for alternative II are assumed to transition

rapidly from the trend experienced between 2001 and 2011, until they reach

the ultimate annual percentage reductions for 2039 and later. The assumed

reductions in death rates under alternatives I and III also rapidly approach

 1 These rates reflect NCHS data on deaths and Census estimates of population.

 2 Based on the enumerated total population as of April 1, 2010, if that population were to experience the

death rates by age and sex for the selected year.
Assumptions and Methods

84

their ultimate levels, but start from levels which are, respectively, 50 and

150 percent of the corresponding alternative II level.

Table V.A1 contains historical and projected age-sex-adjusted death rates for

the total population (all ages), for ages under 65, and for ages 65 and over.

Age-sex adjustment eliminates the effect of a changing distribution of population by age and sex, allowing the pure effects of changes in death rates to

be observed. Under the intermediate assumptions, projected age-sex-adjusted

death rates are slightly lower for ages under 65, and slightly higher for ages

65 and over, than the death rates in last year’s report. These changes primarily result from incorporating an additional year of historical data.

The projected average annual rate of decline for the total age-sex-adjusted

death rate is about 0.41 percent, 0.78 percent, and 1.18 percent between 2014

and 2089 for alternatives I, II, and III, respectively. In keeping with the patterns observed in the historical data, the assumed future rates of decline are

greater for younger ages than for older ages, but to a substantially lesser

degree than in the past. Accordingly, the projected age-sex-adjusted death

rates for ages 65 and over decline at average annual rates of about

0.36 percent, 0.69 percent, and 1.04 percent between 2014 and 2089 for

alternatives I, II, and III, respectively. The projected age-sex-adjusted death

rates for ages under 15 decline at average annual rates of about 0.79 percent,

1.58 percent, and 2.58 percent between 2014 and 2089 for alternatives I, II,

and III, respectively.

Demographers express a wide range of views on the likely rate of future

decline in death rates. For example, some believe that the long-standing historical tendency for mortality to decline more slowly at the highest ages will

cease in the future. Others believe that biological factors, social factors, and

limitations on health care spending may slow future rates of decline in mortality.1

The Trustees periodically revise the assumed ultimate rates of decline in

mortality based on experience and new conditions. Evolving trends in health

care and lifestyle will determine what modifications to the assumed ultimate

rates of decline in mortality will be warranted for future reports.

 1 The 2011 Technical Panel on Assumptions and Methods, appointed by the Social Security Advisory

Board, recommended in their report a specific target for life expectancy at birth in 2085. In order for the

Office of the Chief Actuary to estimate the cost implications of this recommendation, the Technical Panel

and Social Security Advisory Board staff subsequently indicated that rates of mortality decline should be the

same at all ages. Applying the Technical Panel’s recommendation would mean that the ultimate overall rate

of decline in mortality would be higher than the rate of decline experienced for sustained periods of time in

the past or assumed for the intermediate projections in this report.
85

Demographic Assumptions and Methods

3. Immigration Assumptions

Projections of the total Social Security area population reflect assumptions

for annual legal immigration, legal emigration, “other immigration,” and

“other emigration.” Legal immigration consists of persons who are granted

legal permanent resident status. Legal emigration consists of legal permanent

residents and citizens who leave the Social Security area population. Net

legal immigration is the difference between legal immigration and legal emigration. “Other immigration” consists of immigrants who enter the Social

Security area in a given year and stay to the end of that year without having

legal permanent resident status, such as undocumented immigrants and temporary foreign workers and students. “Other emigration” consists of other

immigrants who leave the Social Security area population or who adjust their

status to become legal permanent residents. Net other immigration is the difference between other immigration and other emigration. Net immigration

refers to the sum of net legal immigration and net other immigration.

Immigration assumptions differ for the low-cost, intermediate, and high-cost

scenarios. The low-cost scenario includes higher annual net immigration and

the high-cost scenario includes lower annual net immigration. The immigration assumptions were modified for this year’s report to reflect the President’s 2014 executive actions on immigration.

Legal immigration increased after World War II to around 300,000 persons

per year and remained around that level until shortly after 1960. With the

Immigration Act of 1965 and other related changes, annual legal immigration increased to about 400,000 and remained fairly stable until 1977.

Between 1977 and 1990, legal immigration once again increased, averaging

about 565,0001 per year.

The Immigration Act of 1990, which took effect in fiscal year 1992, restructured the immigration categories and increased significantly the number of

immigrants who may legally enter the United States. Legal immigration

averaged about 780,0001 persons per year during the period 1992 through

1999. Legal immigration increased to about 895,000 in 2000 and about

1,060,000 in 2001, primarily due to an increase in the number of persons

granted legal permanent resident status as immediate relatives of U.S. citizens, the only category of legal immigration that is not numerically limited.

However, legal immigration declined to less than 770,000 by 2003 as processing slowed and the number of pending applications increased. From

 1 This average excludes those persons who attained legal permanent resident status under the special, onetime provisions of the Immigration Reform and Control Act of 1986.
Assumptions and Methods

86

2003 to 2006, processing accelerated and legal immigration increased until it

reached about 1,215,000 for 2006. For 2007 through 2009, legal immigration

decreased to about 1,110,000 and declined further to about 1,050,000 for

2010, 1,055,000 for 2011, 1,020,000 for 2012, and 990,000 for 2013. The

estimated level of legal immigration for 2014 is 1,000,000.

The intermediate alternative assumes that annual legal immigration will be

1,060,000 persons for 2015 and later. Alternatives I and III assume that ultimate annual legal immigration will be 1,260,000 persons and 860,000 persons, respectively, for 2016 and later. The ultimate assumption for each

alternative is 10,000 higher than the level assumed in last year’s report, due

to the President’s 2014 executive actions on immigration.

The assumed ratios of annual legal emigration to legal immigration are 20,

25, and 30 percent for alternatives I, II, and III, respectively. This range is

consistent with the limited historical data for legal emigration from the

Social Security area. These ratios are unchanged from last year’s report.

Under the intermediate alternative, by combining the ultimate annual legal

immigration and emigration assumptions, ultimate annual net legal immigration is 795,000 persons. For the low-cost and high-cost scenarios, ultimate

annual net legal immigration is about 1,010,000 persons and 600,000 persons, respectively.

This year’s report continues with the new methodology introduced in last

year’s report for projecting the other immigrant population. Three categories

of other immigrants are modeled separately: (1) those that were never authorized to enter the Social Security area; (2) those legally admitted for a limited

period of time such as students, temporary workers, and exchange visitors

(“nonimmigrants”); and (3) those that were nonimmigrants, but have overstayed their visas. In addition, other emigration is estimated by applying distinct departure rates to each of the three separate other-immigrant categories,

by age and sex.

The estimated number of other immigrants residing in the Social Security

area increased from 9.1 million persons for January 1, 2000, to 14.1 million

persons for January 1, 2008. The estimated other-immigrant population is

13.3 million persons for January 1, 2009, 13.4 million persons for

January 1, 2010 and January 1, 2011, and 13.3 million persons for

January 1, 2012. The estimates for these 4 years are significantly lower than

estimates for prior years’ levels, and this is likely due to the recession.

During the period from 2000 to 2006, the estimated level of annual other

immigration averaged about 1.4 million persons. However, during 2007 to

2010 (the recession and its surrounding years), annual levels dropped signifi-
87

Demographic Assumptions and Methods

cantly, averaging only about 0.7 million persons. Estimated levels for 2011

through 2014 increase from about 0.6 million persons in 2011 to about

1.2 million persons in 2014. Under the intermediate assumptions, annual

other immigration is 1.4 million for 2015, and increases to 1.55 million for

2018 and 2019, reflecting a recovery from recession-depleted levels of the

other-immigrant population. Subsequently, it decreases to the ultimate level

of 1.35 million persons for 2022. For the low-cost and high-cost scenarios,

the future ultimate annual other immigration is 1.65 million persons and

1.05 million persons, respectively, for 2022 and later. The ultimate assumption for each alternative is 50,000 lower than in last year’s report, due to

changes expected as a result of the President’s 2014 executive actions on

immigration.

Emigration from the other-immigrant population includes those who leave

the Social Security area and those who adjust their status to become legal

permanent residents. This other-immigrant population is highly mobile and

far more likely to leave the Social Security area than is the citizen or legal

permanent resident population.

Under the intermediate assumptions, the total annual number of other emigrants who leave the Social Security area averages about 555,000 through

the 75-year projection period. In addition, the ultimate annual number of

other immigrants who adjust status to become legal permanent residents is

assumed to be 450,000 for the intermediate assumptions. This ultimate

annual number who adjust status is one-third of the ultimate annual number

of other immigrants entering the Social Security area. For the low-cost and

high-cost scenarios, the total annual number of other emigrants averages

about 650,000 and 435,000, respectively, through the 75-year projection

period. The ultimate annual number of people adjusting status to legal permanent resident status is assumed to be 550,000 persons and 350,000 persons, for the low-cost and high-cost scenarios, respectively. While the

ultimate annual number of people adjusting status to become legal permanent residents is unchanged from last year’s report, the annual number of

other emigrants who leave the Social Security area is about 65,000 to 75,000

lower than in last year’s report for each alternative. This lower level of other

emigration reflects the impact of the November 2014 presidential executive

actions on immigration.

Under the assumptions and methods described above, the projected size of

the other-immigrant population grows substantially. This growth reflects the

excess of annual other immigration over the combined annual numbers of

emigrants and deaths that occur within the other-immigrant population.
Assumptions and Methods

88

Estimates of net other immigration for 2005 through 2011 are based on data

from the Department of Homeland Security. The estimated level is 1,145,000

for 2005, decreasing to 805,000 for 2006 and 75,000 for 2007. For 2008,

estimated net other immigration is negative, at -755,000, but returns to a positive level of 105,000 for 2009. Since 2009, estimated net other immigration

has fluctuated while increasing to 400,000 by 2014.

Under the intermediate assumptions, projected net other immigration is

about 670,000 persons for 2015, and about 740,000 persons for 2018. Net

other immigration then sharply decreases to about 470,000 for 2022, primarily due to the decline in the number of other immigrants entering the country.

This is followed by a more gradual decrease after 2022 to about 340,000 for

2040 and 285,000 for 2090. The decline in net other immigration after 2022

is due to the increasing number of other immigrants residing in the Social

Security area. Because the number of other immigrants leaving the Social

Security area is based on rates of departure, an increase in the number of

other immigrants residing in the Social Security area results in an increase in

the number who emigrate out of the area. All other components of other

immigration and emigration are assumed to be stable after 2022, and thus do

not contribute toward any change in net other immigration. Under the intermediate assumptions, the projected average annual level of net other immigration over the 75-year projection period is about 360,000 persons. For the

low-cost and high-cost assumptions, projected average annual net other

immigration is about 455,000 persons and 250,000 persons, respectively.

The projected average total level of net immigration (legal and other, combined) is about 1,155,000 persons per year during the 75-year projection

period under the intermediate assumptions. For the low-cost and high-cost

assumptions, projected average annual total net immigration is about

1,465,000 persons and 850,000 persons, respectively.

Demographers express a wide range of views about the future course of

immigration for the United States. Some, like the 2011 Technical Panel mentioned in the previous section, believe that net immigration will increase substantially in the future. Others believe that potential immigrants may be

increasingly attracted to other countries, that potential immigrants may be

fewer due to lower birth rates in many countries, or that changes in the law or

enforcement of the law could reduce immigration.
89

Demographic Assumptions and Methods

Table V.A1.—Principal Demographic Assumptions, Calendar Years 1940-2090

Calendar year

Total

fertility ratea

Age-sex-adjusted death rateb

per 100,000, by age Net immigrationc d

Total Under 65 65 and over Legale Otherf

Historical data:

1940 . . . . . . . . . 2.23 1,919.8 750.1 9,718.8 45,000 —

1945 . . . . . . . . . 2.42 1,716.6 674.8 8,662.9 55,000 —

1950 . . . . . . . . . 3.03 1,561.9 570.2 8,173.7 170,000 —

1955 . . . . . . . . . 3.50 1,453.8 508.2 7,758.4 210,000 —

1960 . . . . . . . . . 3.61 1,454.3 503.2 7,795.4 200,000 —

1965 . . . . . . . . . 2.88 1,428.8 495.2 7,653.3 230,000 —

1970 . . . . . . . . . 2.43 1,340.0 485.7 7,036.3 280,000 —

1975 . . . . . . . . . 1.77 1,204.8 426.6 6,393.6 295,000 —

1980 . . . . . . . . . 1.82 1,136.9 384.3 6,154.3 405,000 210,000

1985 . . . . . . . . . 1.83 1,081.0 353.3 5,932.9 430,000 265,000

1990 . . . . . . . . . 2.07 1,021.3 333.6 5,606.3 495,000 620,000

1995 . . . . . . . . . 1.98 1,001.5 317.9 5,559.5 575,000 555,000

1996 . . . . . . . . . 1.98 987.8 306.6 5,529.1 665,000 475,000

1997 . . . . . . . . . 1.97 971.9 293.3 5,496.4 570,000 545,000

1998 . . . . . . . . . 2.00 963.8 285.4 5,487.1 490,000 605,000

1999 . . . . . . . . . 2.01 970.6 283.2 5,553.6 520,000 625,000

2000 . . . . . . . . . 2.05 960.7 281.0 5,492.3 670,000 660,000

2001 . . . . . . . . . 2.03 951.1 280.4 5,422.8 795,000 660,000

2002 . . . . . . . . . 2.03 947.0 279.0 5,400.6 730,000 660,000

2003 . . . . . . . . . 2.05 933.4 277.2 5,308.6 575,000 660,000

2004 . . . . . . . . . 2.06 898.9 269.7 5,093.9 750,000 665,000

2005 . . . . . . . . . 2.06 901.3 270.7 5,105.4 870,000 1,145,000

2006 . . . . . . . . . 2.11 876.1 267.6 4,933.5 910,000 805,000

2007 . . . . . . . . . 2.12 856.8 261.6 4,825.2 800,000 75,000

2008 . . . . . . . . . 2.07 857.0 258.8 4,845.5 835,000 -755,000

2009 . . . . . . . . . 2.00 827.1 255.3 4,639.7 830,000 105,000

2010 . . . . . . . . . 1.93 821.3 248.5 4,640.1 785,000 55,000

2011 . . . . . . . . . 1.89 819.4 249.2 4,621.4 790,000 -65,000

2012g . . . . . . . . 1.88 810.0 246.1 4,569.4 765,000 245,000

2013g . . . . . . . . 1.87 792.7 243.2 4,456.5 745,000 215,000

2014g . . . . . . . . 1.88 781.8 240.4 4,391.1 750,000 400,000

Intermediate: 

2015 . . . . . . . . . 1.91 771.3 237.7 4,328.7 795,000 670,000

2020 . . . . . . . . . 2.04 730.1 224.8 4,099.3 795,000 600,000

2025 . . . . . . . . . 2.03 697.1 212.4 3,928.7 795,000 435,000

2030 . . . . . . . . . 2.00 667.6 200.8 3,780.3 795,000 395,000

2035 . . . . . . . . . 2.00 640.4 189.8 3,644.4 795,000 360,000

2040 . . . . . . . . . 2.00 615.0 179.6 3,517.9 795,000 340,000

2045 . . . . . . . . . 2.00 591.2 170.0 3,399.2 795,000 325,000

2050 . . . . . . . . . 2.00 568.9 161.1 3,287.6 795,000 315,000

2055 . . . . . . . . . 2.00 547.9 152.8 3,182.5 795,000 305,000

2060 . . . . . . . . . 2.00 528.2 145.0 3,083.4 795,000 300,000

2065 . . . . . . . . . 2.00 509.7 137.7 2,989.7 795,000 295,000

2070 . . . . . . . . . 2.00 492.2 130.9 2,901.2 795,000 290,000

2075 . . . . . . . . . 2.00 475.7 124.5 2,817.3 795,000 290,000

2080 . . . . . . . . . 2.00 460.1 118.5 2,737.8 795,000 290,000

2085 . . . . . . . . . 2.00 445.4 112.9 2,662.3 795,000 285,000

2090 . . . . . . . . . 2.00 431.4 107.6 2,590.5 795,000 285,000
Assumptions and Methods

90

Low-cost: 

2015 . . . . . . . . . 1.92 778.7 239.6 4,372.8 950,000 695,000

2020 . . . . . . . . . 2.13 763.3 234.5 4,288.8 1,010,000 785,000

2025 . . . . . . . . . 2.20 747.4 228.4 4,207.3 1,010,000 595,000

2030 . . . . . . . . . 2.20 731.4 222.1 4,126.9 1,010,000 530,000

2035 . . . . . . . . . 2.20 715.7 215.9 4,048.4 1,010,000 480,000

2040 . . . . . . . . . 2.20 700.5 209.8 3,972.2 1,010,000 440,000

2045 . . . . . . . . . 2.20 685.8 203.9 3,898.4 1,010,000 415,000

2050 . . . . . . . . . 2.20 671.5 198.2 3,827.0 1,010,000 400,000

2055 . . . . . . . . . 2.20 657.7 192.8 3,757.8 1,010,000 385,000

2060 . . . . . . . . . 2.20 644.4 187.5 3,690.8 1,010,000 375,000

2065 . . . . . . . . . 2.20 631.5 182.4 3,625.9 1,010,000 370,000

2070 . . . . . . . . . 2.20 619.0 177.4 3,563.1 1,010,000 365,000

2075 . . . . . . . . . 2.20 606.9 172.7 3,502.1 1,010,000 360,000

2080 . . . . . . . . . 2.20 595.2 168.1 3,443.0 1,010,000 360,000

2085 . . . . . . . . . 2.20 583.9 163.6 3,385.7 1,010,000 355,000

2090 . . . . . . . . . 2.20 572.9 159.3 3,330.1 1,010,000 355,000

High-cost:

2015 . . . . . . . . . 1.89 763.9 235.8 4,284.6 635,000 445,000

2020 . . . . . . . . . 1.94 696.4 214.6 3,908.7 600,000 165,000

2025 . . . . . . . . . 1.90 645.5 195.3 3,647.2 600,000 340,000

2030 . . . . . . . . . 1.83 602.4 178.1 3,431.3 600,000 310,000

2035 . . . . . . . . . 1.80 564.2 162.6 3,241.9 600,000 285,000

2040 . . . . . . . . . 1.80 530.1 148.8 3,072.0 600,000 265,000

2045 . . . . . . . . . 1.80 499.3 136.5 2,918.1 600,000 255,000

2050 . . . . . . . . . 1.80 471.4 125.4 2,777.8 600,000 245,000

2055 . . . . . . . . . 1.80 446.0 115.5 2,649.5 600,000 240,000

2060 . . . . . . . . . 1.80 422.8 106.5 2,531.6 600,000 235,000

2065 . . . . . . . . . 1.80 401.6 98.5 2,423.1 600,000 230,000

2070 . . . . . . . . . 1.80 382.2 91.1 2,322.8 600,000 225,000

2075 . . . . . . . . . 1.80 364.3 84.5 2,229.7 600,000 225,000

2080 . . . . . . . . . 1.80 347.8 78.5 2,143.3 600,000 220,000

2085 . . . . . . . . . 1.80 332.5 73.0 2,062.6 600,000 220,000

2090 . . . . . . . . . 1.80 318.3 68.0 1,987.3 600,000 220,000

a The total fertility rate for any year is the average number of children that would be born to a woman in her

lifetime if she were to experience, at each age of her life, the birth rate observed in, or assumed for, the

selected year, and if she were to survive the entire childbearing period.

b Based on the enumerated total population as of April 1, 2010, if that population were to experience the

death rates by age and sex observed in, or assumed for, the selected year.

c Net immigration values are rounded to the nearest 5,000.

d Estimates do not include persons who attained legal permanent resident status under the special one-time

provisions of the Immigration Reform and Control Act of 1986.

e Historical estimates of net legal immigration assume a 25 percent reduction in legal immigration due to

legal emigration.

f Historical net other immigration estimates depend on a residual method, using Department of Homeland

Security January 1 stock estimates for 2005 through 2012.

g Fertility is estimated starting in 2013, mortality starting in 2012, and immigration starting in 2013.

Table V.A1.—Principal Demographic Assumptions, Calendar Years 1940-2090 (Cont.)

Calendar year

Total

fertility ratea

Age-sex-adjusted death rateb

per 100,000, by age Net immigrationc d

Total Under 65 65 and over Legale Otherf
91

Demographic Assumptions and Methods

4. Total Population Estimates

The starting Social Security area population for December 31, 2012, is

derived from the Census Bureau’s estimate of the residents of the 50 States

and D.C. and U.S. Armed Forces overseas. Adjustments are made to reflect

mortality assumptions for the aged population since 2010 that are consistent

with Medicare and Social Security data, net immigration assumptions for the

aged population since 2010, estimates of the net undercount in the 2010 census, inclusion of U.S. citizens living abroad (including residents of U.S. territories), and inclusion of non-citizens living abroad who are insured for Social

Security benefits. The Office of the Chief Actuary projects the population in

the Social Security area by age, sex, and marital status for December 31 of

each year 2013 through 2090 by combining the assumptions for future fertility, mortality, and immigration with assumptions for marriage and divorce.

Previous sections of this chapter present the assumptions for future fertility,

mortality, and immigration. Assumptions for future rates of marriage and

divorce reflect historical data from the National Center for Health Statistics,

the Census Bureau, and selected individual States. 

For the estimates in this report, it is assumed that Social Security will expand

its guidelines to recognize all auxiliary beneficiaries of same-sex marriages

and that all States will eventually recognize same-sex marriages. The effect

on marriage rates is assumed to be fully realized within 24 years, reflecting

both the gradual acceptance of same-sex marriage in all States and behavioral changes in the population consistent with the acceptance.

This report presents a July 1 (i.e., midyear) population for each year, which

is derived from surrounding December populations. Table V.A2 shows the

historical and projected population for July 1 by broad age group, for the

three alternatives. It also shows the aged and total dependency ratios (see

table footnotes for definitions).
Assumptions and Methods

92

Table V.A2.—Social Security Area Population on July 1 and Dependency Ratios,

Calendar Years 1945-2090

Calendar year

Population (in thousands) Dependency ratio

Under 20 20-64

65 and

over Total Ageda Totalb

Historical data:

1945 . . . . . . . . . . . . . . 49,121 88,109 10,896 148,126 0.124 0.681

1950 . . . . . . . . . . . . . . 53,903 92,382 12,769 159,053 .138 .722

1955 . . . . . . . . . . . . . . 63,293 96,207 15,075 174,576 .157 .815

1960 . . . . . . . . . . . . . . 73,074 99,802 17,277 190,153 .173 .905

1965 . . . . . . . . . . . . . . 80,020 104,885 19,071 203,975 .182 .945

1970 . . . . . . . . . . . . . . 81,038 112,985 20,898 214,921 .185 .902

1975 . . . . . . . . . . . . . . 78,714 122,637 23,313 224,664 .190 .832

1980 . . . . . . . . . . . . . . 74,850 134,107 26,308 235,265 .196 .754

1985 . . . . . . . . . . . . . . 73,057 144,570 29,145 246,773 .202 .707

1990 . . . . . . . . . . . . . . 74,805 152,765 31,926 259,495 .209 .699

1995 . . . . . . . . . . . . . . 79,339 160,710 34,320 274,369 .214 .707

2000 . . . . . . . . . . . . . . 82,055 170,200 35,512 287,768 .209 .691

2005 . . . . . . . . . . . . . . 84,074 180,214 37,191 301,479 .206 .673

2010 . . . . . . . . . . . . . . 85,704 188,291 41,036 315,030 .218 .673

2014 c . . . . . . . . . . . . . 85,069 192,436 46,369 323,874 .241 .683

Intermediate:

2015 . . . . . . . . . . . . . . 85,303 193,427 47,855 326,586 .247 .688

2020 . . . . . . . . . . . . . . 87,794 197,886 56,318 341,998 .285 .728

2025 . . . . . . . . . . . . . . 90,783 200,485 65,789 357,058 .328 .781

2030 . . . . . . . . . . . . . . 92,882 203,401 74,110 370,393 .364 .821

2035 . . . . . . . . . . . . . . 96,298 206,599 79,246 382,142 .384 .850

2040 . . . . . . . . . . . . . . 98,278 212,126 82,001 392,405 .387 .850

2045 . . . . . . . . . . . . . . 99,197 218,653 83,842 401,692 .383 .837

2050 . . . . . . . . . . . . . . 100,809 223,693 86,203 410,705 .385 .836

2055 . . . . . . . . . . . . . . 103,002 227,842 89,238 420,082 .392 .844

2060 . . . . . . . . . . . . . . 105,431 231,526 92,988 429,945 .402 .857

2065 . . . . . . . . . . . . . . 107,710 235,892 96,526 440,129 .409 .866

2070 . . . . . . . . . . . . . . 109,674 240,364 100,339 450,376 .417 .874

2075 . . . . . . . . . . . . . . 111,376 244,911 104,240 460,527 .426 .880

2080 . . . . . . . . . . . . . . 113,139 251,096 106,330 470,565 .423 .874

2085 . . . . . . . . . . . . . . 115,161 255,974 109,481 480,617 .428 .878

2090 . . . . . . . . . . . . . . 117,331 259,741 113,675 490,747 .438 .889

Low-cost:

2015 . . . . . . . . . . . . . . 85,351 193,480 47,848 326,679 .247 .688

2020 . . . . . . . . . . . . . . 89,060 199,088 56,106 344,254 .282 .729

2025 . . . . . . . . . . . . . . 94,283 202,980 65,166 362,429 .321 .786

2030 . . . . . . . . . . . . . . 99,372 207,160 72,922 379,454 .352 .832

2035 . . . . . . . . . . . . . . 105,872 211,576 77,387 394,836 .366 .866

2040 . . . . . . . . . . . . . . 110,463 218,870 79,445 408,779 .363 .868

2045 . . . . . . . . . . . . . . 113,338 228,131 80,668 422,137 .354 .850

2050 . . . . . . . . . . . . . . 116,771 236,629 82,569 435,969 .349 .842

2055 . . . . . . . . . . . . . . 121,431 244,263 85,318 451,012 .349 .846

2060 . . . . . . . . . . . . . . 126,819 251,512 88,884 467,216 .353 .858

2065 . . . . . . . . . . . . . . 132,109 259,778 92,239 484,126 .355 .864

2070 . . . . . . . . . . . . . . 136,823 268,806 95,776 501,405 .356 .865

2075 . . . . . . . . . . . . . . 141,050 278,684 99,297 519,030 .356 .862

2080 . . . . . . . . . . . . . . 145,389 290,777 101,020 537,186 .347 .847

2085 . . . . . . . . . . . . . . 150,274 301,450 104,335 556,060 .346 .845

2090 . . . . . . . . . . . . . . 155,569 310,472 109,591 575,631 .353 .854
93

Demographic Assumptions and Methods

Notes:

1. Historical data are subject to revision.

2. Totals do not necessarily equal the sums of rounded components.

5. Life Expectancy Estimates

Life expectancy, or average remaining number of years expected prior to

death, is an additional way to summarize the Trustees’ mortality assumptions. This report includes life expectancy in two different forms (period and

cohort) for two separate purposes.

 • Period life expectancy for a given year uses the actual or expected death

rates at each age for that year. It is a useful summary statistic for illustrating the overall level of the death rates experienced in a single year.

Period life expectancy for a particular year provides an individual’s

expected average remaining lifetime at a selected age, assuming no

change in death rates after that year. Table V.A3 presents historical and

projected life expectancy calculated on a period basis. 

 • Cohort life expectancy does not use death rates for a single year, but for

the series of years in which the individual will actually reach each succeeding age if he or she survives. Cohort life expectancy provides an

individual’s expected average remaining lifetime at a selected age in a

given year, using actual or expected future changes in death rates.

Table V.A4 presents historical and projected life expectancy calculated

High-cost:

2015 . . . . . . . . . . . . . . 85,217 193,311 47,861 326,389 0.248 0.688

2020 . . . . . . . . . . . . . . 85,885 195,491 56,508 337,884 .289 .728

2025 . . . . . . . . . . . . . . 86,825 196,686 66,400 349,910 .338 .779

2030 . . . . . . . . . . . . . . 86,678 198,539 75,322 360,539 .379 .816

2035 . . . . . . . . . . . . . . 87,251 200,731 81,185 369,168 .404 .839

2040 . . . . . . . . . . . . . . 86,911 204,639 84,704 376,254 .414 .839

2045 . . . . . . . . . . . . . . 86,121 208,702 87,225 382,048 .418 .831

2050 . . . . . . . . . . . . . . 85,856 211,039 90,087 386,983 .427 .834

2055 . . . . . . . . . . . . . . 86,197 211,981 93,401 391,579 .441 .847

2060 . . . . . . . . . . . . . . 86,440 212,364 97,276 396,080 .458 .865

2065 . . . . . . . . . . . . . . 86,451 213,152 100,918 400,522 .473 .879

2070 . . . . . . . . . . . . . . 86,284 213,545 104,926 404,755 .491 .895

2075 . . . . . . . . . . . . . . 86,059 213,405 109,137 408,601 .511 .915

2080 . . . . . . . . . . . . . . 85,953 214,446 111,537 411,935 .520 .921

2085 . . . . . . . . . . . . . . 86,022 214,445 114,343 414,810 .533 .934

2090 . . . . . . . . . . . . . . 86,140 213,882 117,295 417,318 .548 .951

a Ratio of the population at ages 65 and over to the population at ages 20-64.

b Ratio of the population at ages 65 and over and the population under age 20 to the population at ages

20-64.

c Estimated.

Table V.A2.—Social Security Area Population on July 1 and Dependency Ratios,

Calendar Years 1945-2090 (Cont.)

Calendar year

Population (in thousands) Dependency ratio

Under 20 20-64

65 and

over Total Ageda Totalb
Assumptions and Methods

94

on a cohort basis. Cohort life expectancy is somewhat greater than

period life expectancy for a given year because: (a) death rates at any

age tend to decline over time; and (b) cohort life expectancy uses death

rates from future years, while period life expectancy uses death rates

only from the given year.

Life expectancy at a given age reflects death rates at that and all older ages.

Period life expectancy is somewhat related to the age-sex-adjusted death rate

discussed in section V.A.2. However, life expectancy places far greater

weight on death rates at lower ages than at higher ages. Therefore, changes in

death rates at lower ages have far greater effects in changing life expectancy

over time. It is important to keep this concept in mind when considering

trends in life expectancy. 
95

Demographic Assumptions and Methods

Table V.A3.—Period Life Expectancya

a The period life expectancy at a given age for a given year is the average remaining number of years

expected prior to death for a person at that exact age, born on January 1, using the mortality rates for that

year over the course of his or her remaining life.

Historical data

Calendar

year

At birth At age 65

Male Female Male Female

1940 . . . . 61.4 65.7 11.9 13.4

1945 . . . . 62.9 68.4 12.6 14.4

1950 . . . . 65.6 71.1 12.8 15.1

1955 . . . . 66.7 72.8 13.1 15.6

1960 . . . . 66.7 73.2 12.9 15.9

1965 . . . . 66.8 73.8 12.9 16.3

1970 . . . . 67.2 74.9 13.1 17.1

1975 . . . . 68.7 76.6 13.7 18.0

1980 . . . . 69.9 77.5 14.0 18.4

1985 . . . . 71.1 78.2 14.4 18.6

1990 . . . . 71.8 78.9 15.1 19.1

1995 . . . . 72.5 79.1 15.4 19.1

2000 . . . . 74.0 79.4 15.9 19.0

2001 . . . . 74.1 79.5 16.1 19.1

2002 . . . . 74.2 79.5 16.2 19.1

2003 . . . . 74.4 79.6 16.3 19.2

2004 . . . . 74.8 80.0 16.7 19.5

2005 . . . . 74.8 80.0 16.7 19.5

2006 . . . . 75.1 80.2 17.0 19.7

2007 . . . . 75.4 80.5 17.2 19.9

2008 . . . . 75.5 80.5 17.2 19.9

2009 . . . . 75.9 80.8 17.5 20.2

2010 . . . . 76.1 80.9 17.6 20.2

2011 . . . . 76.2 81.0 17.7 20.2

2012 b . . . 76.3 81.1 17.8 20.3

2013 b . . .

b Estimated.

76.6 81.3 18.0 20.5

2014 b . . . 76.8 81.4 18.1 20.6

Intermediate Low-cost High-cost

Calendar

year

At birth At age 65 At birth At age 65 At birth At age 65

Male Female Male Female Male Female Male Female Male Female Male Female

2015 . . . . 76.9 81.5 18.3 20.7 76.8 81.4 18.2 20.6 77.1 81.6 18.4 20.8

2020 . . . . 77.7 82.1 18.8 21.1 77.2 81.7 18.4 20.8 78.3 82.6 19.2 21.4

2025 . . . . 78.3 82.6 19.2 21.4 77.5 81.9 18.6 20.9 79.3 83.4 19.8 21.9

2030 . . . . 78.9 83.1 19.5 21.7 77.8 82.1 18.8 21.1 80.2 84.1 20.3 22.4

2035 . . . . 79.5 83.5 19.8 22.0 78.1 82.4 19.0 21.2 81.0 84.8 20.8 22.9

2040 . . . . 80.0 84.0 20.1 22.2 78.4 82.6 19.1 21.3 81.8 85.5 21.3 23.3

2045 . . . . 80.5 84.4 20.4 22.5 78.6 82.8 19.3 21.5 82.6 86.1 21.7 23.7

2050 . . . . 81.0 84.8 20.7 22.8 78.9 83.1 19.4 21.6 83.3 86.6 22.1 24.0

2055 . . . . 81.5 85.2 21.0 23.0 79.2 83.3 19.6 21.8 83.9 87.2 22.5 24.4

2060 . . . . 81.9 85.5 21.3 23.3 79.5 83.5 19.8 21.9 84.5 87.7 22.9 24.7

2065 . . . . 82.3 85.9 21.5 23.5 79.7 83.7 19.9 22.0 85.1 88.2 23.3 25.1

2070 . . . . 82.8 86.2 21.8 23.7 80.0 83.9 20.1 22.2 85.7 88.6 23.6 25.4

2075 . . . . 83.2 86.6 22.0 23.9 80.2 84.1 20.2 22.3 86.2 89.0 24.0 25.7

2080 . . . . 83.6 86.9 22.2 24.2 80.5 84.4 20.3 22.4 86.7 89.5 24.3 26.0

2085 . . . . 83.9 87.2 22.5 24.4 80.7 84.6 20.5 22.6 87.2 89.8 24.6 26.3

2090 . . . . 84.3 87.5 22.7 24.6 80.9 84.7 20.6 22.7 87.6 90.2 24.9 26.6
Assumptions and Methods

96

Table V.A4.—Cohort Life Expectancya

a The cohort life expectancy at a given age for a given year is the average remaining number of years

expected prior to death for a person at that exact age, born on January 1, using the mortality rates for the

series of years in which the individual will actually reach each succeeding age if he or she survives.

Calendar

year

Intermediate Low-cost High-cost

At birth b At age 65 c At birth b

b Cohort life expectancy at birth for those born in the calendar year is based on a combination of actual and

estimated death rates for birth years 1940 through 2011. For birth years after 2011, these values depend on

estimated death rates.

At age 65 c

c Age 65 cohort life expectancy for those attaining age 65 in calendar years 1940 though 2011 depends on

actual death rates or on a combination of actual and estimated death rates. After 2011, these values depend

on estimated death rates.

At birth b At age 65 c

Male Female Male Female Male Female Male Female Male Female Male Female

1940 . . . . 70.6 76.7 12.7 14.7 70.4 76.5 12.7 14.7 70.8 77.0 12.7 14.7

1945 . . . . 72.4 78.4 13.0 15.4 72.1 78.1 13.0 15.4 72.8 78.9 13.0 15.4

1950 . . . . 73.7 79.8 13.1 16.2 73.2 79.3 13.1 16.2 74.3 80.4 13.1 16.2

1955 . . . . 74.4 80.4 13.1 16.7 73.8 79.7 13.1 16.7 75.2 81.2 13.1 16.7

1960 . . . . 75.2 80.9 13.2 17.4 74.3 80.0 13.2 17.4 76.1 81.9 13.2 17.4

1965 . . . . 76.1 81.5 13.5 18.0 75.1 80.4 13.5 18.0 77.3 82.6 13.5 18.0

1970 . . . . 77.3 82.3 13.8 18.5 76.0 81.1 13.8 18.5 78.8 83.7 13.8 18.5

1975 . . . . 78.2 83.0 14.2 18.7 76.8 81.7 14.2 18.7 79.9 84.6 14.2 18.7

1980 . . . . 79.1 83.7 14.7 18.8 77.4 82.1 14.7 18.8 81.1 85.5 14.7 18.8

1985 . . . . 79.8 84.2 15.4 19.1 77.9 82.5 15.4 19.1 82.0 86.2 15.4 19.1

1990 . . . . 80.5 84.8 16.1 19.5 78.4 82.9 16.1 19.4 82.9 86.9 16.1 19.5

1995 . . . . 81.2 85.3 16.8 19.8 78.9 83.3 16.8 19.7 83.8 87.5 16.9 20.0

2000 . . . . 81.8 85.7 17.6 20.3 79.3 83.6 17.5 20.1 84.5 88.1 17.8 20.5

2001 . . . . 81.9 85.8 17.8 20.4 79.3 83.6 17.6 20.2 84.6 88.2 18.0 20.7

2002 . . . . 81.9 85.9 17.9 20.5 79.4 83.6 17.7 20.3 84.7 88.3 18.2 20.8

2003 . . . . 82.0 86.0 18.1 20.6 79.4 83.7 17.9 20.4 84.9 88.4 18.3 20.9

2004 . . . . 82.1 86.0 18.2 20.7 79.5 83.7 18.0 20.4 85.0 88.5 18.5 21.1

2005 . . . . 82.2 86.1 18.3 20.8 79.6 83.8 18.0 20.5 85.1 88.6 18.6 21.2

2006 . . . . 82.3 86.2 18.4 20.9 79.6 83.8 18.1 20.6 85.3 88.7 18.8 21.3

2007 . . . . 82.4 86.2 18.6 21.0 79.7 83.9 18.2 20.6 85.4 88.8 19.0 21.4

2008 . . . . 82.5 86.3 18.7 21.1 79.7 83.9 18.3 20.7 85.5 88.9 19.1 21.5

2009 . . . . 82.6 86.4 18.8 21.2 79.8 84.0 18.4 20.7 85.6 89.0 19.2 21.7

2010 . . . . 82.7 86.5 18.9 21.2 79.9 84.0 18.4 20.8 85.8 89.1 19.4 21.8

2011 . . . . 82.8 86.6 19.0 21.3 79.9 84.1 18.5 20.8 85.9 89.2 19.5 21.9

2012 . . . . 82.9 86.6 19.1 21.4 80.0 84.1 18.5 20.9 86.0 89.3 19.7 22.0

2013 . . . . 83.0 86.7 19.1 21.5 80.0 84.2 18.6 20.9 86.1 89.4 19.8 22.1

2014 . . . . 83.1 86.7 19.2 21.6 80.1 84.2 18.6 21.0 86.2 89.5 19.9 22.2

2015 . . . . 83.1 86.8 19.3 21.6 80.1 84.2 18.7 21.0 86.4 89.6 20.1 22.4

2020 . . . . 83.6 87.2 19.7 21.9 80.4 84.5 18.9 21.2 86.9 90.1 20.6 22.9

2025 . . . . 84.0 87.5 20.0 22.2 80.7 84.7 19.0 21.3 87.5 90.5 21.2 23.3

2030 . . . . 84.4 87.8 20.3 22.5 80.9 84.9 19.2 21.5 88.0 90.9 21.6 23.7

2035 . . . . 84.8 88.1 20.6 22.8 81.2 85.1 19.4 21.6 88.5 91.3 22.1 24.1

2040 . . . . 85.2 88.4 20.9 23.0 81.4 85.3 19.5 21.8 89.0 91.7 22.5 24.5

2045 . . . . 85.5 88.7 21.2 23.3 81.6 85.4 19.7 21.9 89.5 92.1 22.9 24.9

2050 . . . . 85.9 89.0 21.5 23.5 81.9 85.6 19.8 22.0 89.9 92.5 23.3 25.2

2055 . . . . 86.2 89.3 21.7 23.8 82.1 85.8 20.0 22.2 90.3 92.8 23.7 25.6

2060 . . . . 86.5 89.6 22.0 24.0 82.3 86.0 20.1 22.3 90.7 93.2 24.1 25.9

2065 . . . . 86.8 89.8 22.2 24.2 82.5 86.2 20.3 22.4 91.1 93.5 24.4 26.2

2070 . . . . 87.2 90.1 22.5 24.4 82.7 86.4 20.4 22.6 91.5 93.8 24.8 26.5

2075 . . . . 87.5 90.3 22.7 24.7 83.0 86.5 20.6 22.7 91.9 94.1 25.1 26.8

2080 . . . . 87.7 90.6 23.0 24.9 83.2 86.7 20.7 22.8 92.2 94.4 25.4 27.1

2085 . . . . 88.0 90.8 23.2 25.1 83.4 86.9 20.9 23.0 92.6 94.7 25.7 27.4

2090 . . . . 88.3 91.0 23.4 25.3 83.6 87.0 21.0 23.1 92.9 94.9 26.0 27.7
97

Economic Assumptions and Methods

B. ECONOMIC ASSUMPTIONS AND METHODS

The three alternative sets of economic assumptions reflect a continuation of

the gradual recovery from the recession that started in December 2007. The

intermediate assumptions reflect the Trustees’ consensus expectation of sustained moderate economic growth and their best estimate for various other

economic parameters. The low-cost assumptions represent a more optimistic

outlook: a faster recovery, stronger long-term economic growth, and relatively optimistic levels for other parameters. The high-cost assumptions represent a more pessimistic scenario: a slower recovery, weaker long-term

economic growth, and relatively pessimistic levels for other parameters.

Actual economic data were available through the third quarter of 2014 at the

time the Trustees set the assumptions for this report. The data indicated that

economic activity peaked in December 20071 with the level of gross domestic product (GDP) about 1 percent above the estimated long-term sustainable

trend level. A severe recession followed, with a low point in the economic

cycle reached in the second quarter of 2009 with GDP about 7 percent below

the estimated sustainable trend level. The annual growth rate in real GDP has

been positive in all years since then, but not as strong as in most past recoveries. The Trustees project that the economy will return to its sustainable

trend level of output within the first 10 years of the projection period and

remain on that trend thereafter. However, the speed of the return varies by

alternative. The economy is projected to return to its sustainable trend level

of output by 2022 for the intermediate assumptions, 2020 for the low-cost

assumptions, and 2024 for the high-cost assumptions, about 1 year later than

in last year’s report for each alternative. Complete cycles have little effect on

the long-range estimates of financial status, so the assumptions do not

include economic cycles beyond 10 years.

The key economic assumptions underlying the three sets of projections of the

future financial status of the OASI and DI Trust Funds are discussed in the

remainder of this section.

 1 See www.nber.org/cycles/cyclesmain.html.
Assumptions and Methods

98

1. Productivity Assumptions

Total U.S. economy productivity is defined as the ratio of real GDP to hours

worked by all workers.1 The rate of change in total-economy productivity is

a major determinant in the growth of average earnings. Over the last five

complete economic cycles (1966-73, 1973-79, 1979-89, 1989-2000, and

2000-07, measured peak to peak), the annual increases in total productivity

averaged 2.27, 1.10, 1.38, 1.79 and 2.15 percent, respectively. For the 41-

year period from 1966 to 2007, covering those last five complete economic

cycles, the annual increase in total-economy productivity averaged 1.73 percent.

The assumed ultimate annual increases in total-economy productivity are

1.98, 1.68, and 1.38 percent for the low-cost, intermediate, and high-cost

assumptions, respectively.2 These rates of increase are unchanged from the

2014 report.

The average annual rate of change in total economy productivity from 2007

(the end of the last complete economic cycle) to 2014 is estimated to be

1.18 percent. For the intermediate assumptions, the annual change in productivity is assumed to be 1.77 percent for 2015, then increase to 1.92 percent

for 2016, gradually decline to 1.67 percent for 2022 and 2023, and then rise

to its ultimate value of 1.68 percent for 2024 and later. For the low-cost

assumptions, the assumed annual change in productivity is 1.94 percent for

2015, then increases to 2.24 percent for 2017, averages 2.03 percent for 2018

through 2022, and reaches its ultimate value of 1.98 percent for 2023. For the

high-cost assumptions, the assumed annual change in productivity is

1.08 percent for 2015, 1.34 percent for 2016, then averages 1.68 percent for

2017 through 2022, 1.24 percent for 2023 through 2024, and reaches its ultimate value of 1.38 percent for 2025 and later.

2. Price Inflation Assumptions

Future changes in the Consumer Price Index for Urban Wage Earners and

Clerical Workers (CPI) will directly affect the OASDI program through the

automatic cost-of-living benefit increases. Future changes in the GDP price

index (GDP deflator) affect the nominal levels of GDP, wages, self-employment income, average earnings, and taxable payroll.

 1 Historical levels of real GDP are from the Bureau of Economic Analysis’ National Income and Product

Accounts. Historical total hours worked is an unpublished series provided by the Bureau of Labor Statistics

that includes all U.S. Armed Forces and civilian employment.

 2 These assumptions are consistent with ultimate annual increases in private non-farm business productivity

of 2.42, 2.06, and 1.69 percent. Compared to total-economy productivity, private non-farm business productivity is a more widely known concept that excludes the farm, government, non-profit institution, and private

household sectors.
99

Economic Assumptions and Methods

The annual increases in the CPI averaged 4.61, 8.54, 5.31, 2.96, and

2.65 percent over the economic cycles 1966-73, 1973-79, 1979-89, 1989-

2000, and 2000-07, respectively. The annual increases in the GDP deflator

averaged 4.60, 7.52, 4.68, 2.20, and 2.50 percent for the same respective economic cycles. For the 41 years from 1966 to 2007, covering the last five

complete economic cycles, the annual increases in the CPI and GDP deflator

averaged 4.56 and 4.03 percent, respectively. The estimated average annual

change from 2007 (the end of the last complete economic cycle) to 2014 is

1.99 percent for the CPI and 1.55 percent for the GDP deflator.

The assumed ultimate annual increases in the CPI are 3.4, 2.7, and

2.0 percent for the low-cost, intermediate, and high-cost assumptions,

respectively. These rates of increase are unchanged from the 2014 report. For

a given rate of growth in average real earnings, a higher price inflation rate

results in faster nominal earnings and revenue growth immediately, while the

resulting added growth in benefit levels occurs with a delay, causing an overall improvement in the actuarial balance. Similarly, a lower price inflation

rate causes an overall decline in the actuarial balance. 

The Federal Reserve Board’s monetary policy changed in the 1980s toward

more vigilance in preventing high inflation. Consistent with the Board’s continued emphasis on containing inflation, as indicated by their current target

for the GDP deflator,1 the Trustees lowered the assumed ultimate annual rate

of increase in the CPI for the intermediate case from 4.0 percent for the 1996

report to 2.8 percent for the 2004 through 2013 reports, and to 2.7 percent for

the 2014 and 2015 reports.

For the intermediate assumptions, the assumed annual change in the CPI is

0.20 percent for 2015, 2.97 percent for 2016, 2.76 percent for 2017, and

reaches the ultimate growth rate of 2.70 percent for 2018 and later. For the

low-cost assumptions, the assumed annual change in the CPI is 0.34 percent

for 2015, increases to 3.44 percent for 2017, and drops to its ultimate annual

growth rate of 3.40 percent for 2018 and later. For the high-cost assumptions,

the assumed annual rate of change in the CPI is 0.11 percent for 2015 and

increases to 2.57 percent for 2016 before dropping to the ultimate annual

change of 2.00 percent for 2018 and later. The projections for the first two

years are influenced by the changes in the price of oil.

The annual increase in the GDP deflator differs from the annual increase in

the CPI because the two indices are constructed using different computa-

 1 The Federal Open Market Committee (FOMC) targets a rate of 2 percent for the price index for Personal

Consumption Expenditures, which is substantially the same as the GDP deflator. See 

www.federalreserve.gov/newsevents/press/monetary/20150128a.htm.
Assumptions and Methods

100

tional methods and coverage. The difference between the rate of change in

the CPI and the rate of change in the GDP deflator is called the price differential in this report. For the 41 years from 1966 to 2007, covering the last

five complete economic cycles, the average annual price differential was

0.54 percentage point. From 2007 (the end of the last complete economic

cycle) to 2014, the average annual price differential is estimated to be

0.45 percentage point.

The assumed ultimate price differential is 0.3, 0.4, and 0.5 percentage point

for the low-cost, intermediate, and high-cost alternatives, respectively. Varying the ultimate projected price differential across alternatives recognizes the

historical variation in this measure. Accordingly, the assumed ultimate

annual increase in the GDP deflator is 3.1 (3.4 less 0.3), 2.3 (2.7 less 0.4),

and 1.5 (2.0 less 0.5) percent for the low-cost, intermediate, and high-cost

alternatives, respectively. The ultimate price differentials for the three alternatives are unchanged from the 2014 report.

The price differential was 1.6 percentage points for 2011, 0.30 percentage

point for 2012, -0.12 percentage point for 2013, and is estimated to be -0.04

percentage point for 2014 and assumed to be -0.80 for 2015. The negative

price differential since 2011 primarily reflects a general decline in oil prices

in recent years. Changes in oil prices affect the CPI much more than the GDP

deflator because oil represents a much larger share of U.S. consumption than

of U.S. production. For 2017 and later, oil prices are assumed to grow at a

relatively stable rate. For the intermediate assumptions, the assumed price

differential is 0.60 percentage point for 2016 and 0.40 percentage point for

2017 and later.

3. Average Earnings Assumptions

The average level of nominal earnings in OASDI covered employment for

each year has a direct effect on the size of the taxable payroll and on the

future level of average benefits. In addition, under the automatic adjustment

provisions in the law, growth in the average wage in the U.S. economy

directly affects certain parameters used in the OASDI benefit formulas as

well as the contribution and benefit base, the exempt amounts under the

retirement earnings test, the amount of earnings required for a quarter of coverage, and in certain circumstances, the automatic cost-of-living benefit

increases.

Projected growth rates in average covered earnings and average wages are

derived from projections of the most inclusive measure, average U.S. earnings. Average U.S. earnings is defined as the ratio of the sum of total U.S.

wage and salary disbursements and net proprietors’ income to the sum of
101

Economic Assumptions and Methods

total U.S. civilian employment and armed forces. The growth rate in average

U.S. earnings for any period is equal to the combined growth rates for total

U.S. economy productivity, average hours worked, the ratio of earnings to

total compensation (which includes fringe benefits), the ratio of total compensation to GDP, and the GDP deflator.

The average annual change in average hours worked was -0.27 percent over

the last five complete economic cycles covering the period from 1966 to

2007. The annual change in average hours worked averaged -0.71, -0.56,

0.00, 0.16, and -0.63 percent over the economic cycles 1966-73, 1973-79,

1979-89, 1989-2000, and 2000-07, respectively. From 2007 (the end of the

last complete economic cycle) to 2014, the average annual change in average

hours worked is estimated to be -0.08 percent.

The ultimate annual rates of change for average hours worked are assumed to

be 0.05, -0.05, and -0.15 percent for the low-cost, intermediate, and high-cost

assumptions, respectively. These ultimate annual rates of change for average

hours worked are unchanged from the 2014 report.

The average annual change in the ratio of earnings to total compensation was

-0.20 percent from 1966 to 2007. Most of this decrease was due to the relative increase in the cost of employer-sponsored group health insurance for

wage workers. Assuming that the level of total employee compensation is

not affected by the amount of employer-sponsored group health insurance,

any increase or decrease in employer-sponsored group health insurance leads

to a commensurate decrease or increase in other components of employee

compensation, including wages. Projections of future ratios of earnings to

total compensation follow this principle. The Trustees assume that the total

amount of future employer-sponsored group health insurance will increase

more slowly than in the past due to provisions of the Affordable Care Act of

2010, as described in the 2010 report. Data from the Bureau of Economic

Analysis (BEA) indicate that the other significant component of non-wage

employee compensation is employer contributions to retirement plans. The

other component is assumed to grow faster than employee compensation in

the future as life expectancy and potential time in retirement increase.

The average annual rate of change in the ratio of wages to employee compensation from 2025 to 2089 is assumed to be about 0.01, -0.09, and -0.19

percent for the low-cost, intermediate, and high-cost assumptions, respectively. These assumed rates are 0.04 percentage point higher (less negative)

than those assumed in the 2014 report. The change is due to new data that

indicate slower growth in employer-sponsored health insurance, and the

assumption that this slower growth will continue. Under the intermediate
Assumptions and Methods

102

assumptions, the ratio of wages to employee compensation is assumed to

decline from 0.807 for 2014 to 0.758 for 2089. The assumed ultimate annual

rate of this decline, now 0.09 percent, compares with 0.13 percent assumed

for the 2014 report, and 0.20 percent assumed for the 2009 report, prior to

enactment of the Affordable Care Act of 2010. The ratio of earnings to compensation includes self-employment income both in the numerator and in the

denominator. As a result, the rate of decline in earnings to compensation

(which, under the intermediate assumptions, averages 0.08 percent from

2025 to 2089) is less than the rate of decline in wages to employee compensation.

The ratio of total compensation (i.e., employee compensation and net proprietors’ income) to GDP varies over the economic cycle and with changes in

the relative sizes of different sectors of the economy. Over the last five economic cycles from 1966 to 2007, this ratio has averaged 0.627. The ratio

declined from 0.648 for 2001 to 0.607 for 2013. This ratio is assumed to rise

as the economy recovers, reaching a level of 0.631 for 2024. For years after

2024, relative sizes of different sectors of the economy are assumed to

remain constant, and therefore the ratio of total compensation to GDP

remains at the 2024 level for each alternative.

The projected average annual growth rate in average nominal U.S. earnings

from 2025 to 2089 is about 3.88 percent for the intermediate alternative. This

growth rate reflects the average annual growth rate of approximately

-0.08 percent for the ratio of earnings to total compensation, and also reflects

the assumed ultimate annual growth rates of 1.68, -0.05, and 2.30 percent for

productivity, average hours worked, and the GDP deflator, respectively. Similarly, the projected average annual growth rate in average nominal U.S.

earnings is 5.20 percent for the low-cost assumptions and 2.58 percent for

the high-cost assumptions.

Over long periods, the average annual growth rate in the average wage in

OASDI covered employment (henceforth the “average covered wage”) is

expected to be very close to the average annual growth rate in average U.S.

earnings. Specifically, the assumed average annual growth rates in the average covered wage from 2025 to 2089 are 5.20, 3.87, and 2.55 percent for the

low-cost, intermediate, and high-cost assumptions, respectively. The annual

rate of change in the average covered wage was 3.24 percent for 2014. For

the intermediate assumptions, as the economy recovers, the annual rate of

change in the average covered wage is projected to average 4.45 percent

from 2014 to 2024. Thereafter, the assumed average annual rate of change in

the average covered wage is 3.87 percent.
103

Economic Assumptions and Methods

4. Assumed Real-Wage Differential

For these reports, the real increase in the average covered wage has traditionally been expressed in the form of a real-wage differential—the annual percentage change in the average covered wage minus the annual percentage

change in the CPI. For the 41-year period including 1967 through 2007, covering the last five complete economic cycles, the real-wage differential averaged 0.89 percentage point, the result of averages of 1.47, 0.01, 0.46, 1.57,

and 0.60 percentage points over the economic cycles 1966-73, 1973-79,

1979-89, 1989-2000, and 2000-07, respectively.

For the years 2025-89, the assumed annual real-wage differentials for

OASDI covered employment average 1.80, 1.17, and 0.55 percentage points

for the low-cost, intermediate, and high-cost assumptions, respectively. The

real-wage differential is higher than the assumed values from last year’s

report by about 0.04 percentage point for each alternative.

The estimated real-wage differential averaged 0.03 percentage point for 2008

through 2014 (the years since the last complete economic cycle ending in a

peak). For the intermediate assumptions, the real-wage differential increases

from 1.75 percentage points for 2014 to 3.18 percentage points for 2015, an

improvement that reflects the economic recovery. Thereafter, the real-wage

differential gradually declines to an average of 1.17 percentage points for

2025-89. For the low-cost assumptions, the real-wage differential is 3.79 percentage points for 2015, and gradually declines to its long-run average of

1.80 percentage points for 2025-89. For the high-cost assumptions, the realwage differential is 1.86 percentage points for 2015, averages 1.49 percentage points for 2016 through 2020, 1.00 percentage point for 2021 through

2025, and 0.55 percentage point for 2025-89.
Assumptions and Methods

104

Table V.B1.—Principal Economic Assumptions

Calendar year

Annual percentage changea in—

Realwage

differentialb

Productivity

(Total U.S.

economy)

Earnings as

a percent of

compensation

Average

hours

worked

GDP

price

index

Average

annual wage

in covered

employment

Consumer

Price

Index

Historical data:

5-year periods:

1960 to 1965 . . . 3.27 -0.18 0.16 1.36 3.22 1.24 1.98

1965 to 1970 . . . 2.06 -.31 -.68 4.03 5.84 4.23 1.61

1970 to 1975 . . . 2.07 -.50 -.87 6.60 6.61 6.76 -.19

1975 to 1980 . . . .95 -.32 -.17 7.19 8.87 8.91 -.06

1980 to 1985 . . . 1.74 -.33 .02 5.21 6.53 5.22 1.30

1985 to 1990 . . . 1.37 -.19 -.07 3.11 4.75 3.83 .91

1990 to 1995 . . . 1.25 -.11 .41 2.44 3.58 3.03 .55

1995 to 2000 . . . 2.33 .28 .15 1.66 5.31 2.43 2.88

2000 to 2005 . . . 2.63 -.41 -.80 2.35 2.69 2.49 .20

2005 to 2010 . . . 1.61 -.08 -.46 1.93 2.53 2.30 .24

Economic cycles:c

1966 to 1973 . . . 2.27 -.29 -.71 4.60 6.08 4.61 1.47

1973 to 1979 . . . 1.10 -.43 -.56 7.52 8.55 8.54 .01

1979 to 1989 . . . 1.38 -.28 d 4.68 5.80 5.31 .46

1989 to 2000 . . . 1.79 .05 .16 2.20 4.52 2.96 1.57

2000 to 2007 . . . 2.15 -.23 -.63 2.50 3.23 2.65 .60

2007 to 2014 . . . 1.18 .03 -.08 1.55 2.02 1.99 .03

Single years:

2004 . . . . . . . . . . 2.63 -.27 .03 2.75 4.67 2.61 2.05

2005 . . . . . . . . . . 1.83 -.22 -.23 3.22 3.69 3.52 .17

2006 . . . . . . . . . . .84 .49 -.03 3.07 4.71 3.19 1.52

2007 . . . . . . . . . . 1.04 -.05 -.38 2.67 4.52 2.88 1.64

2008 . . . . . . . . . . .75 -.06 -.60 1.93 2.34 4.09 -1.74

2009 . . . . . . . . . . 2.87 -.66 -1.85 .79 -1.43 -.67 -.76

2010 . . . . . . . . . . 2.55 -.10 .56 1.23 2.62 2.07 .55

2011 . . . . . . . . . . .05 .28 .98 2.06 3.13 3.56 -.42

2012 . . . . . . . . . . .58 .49 -.06 1.80 3.21 2.10 1.11

2013 . . . . . . . . . . .95 .09 .27 1.49 1.10 1.37 -.27

2014e . . . . . . . . . .56 .15 .19 1.54 3.24 1.49 1.75

Intermediate: 

2015 . . . . . . . . . . 1.77 -.10 .21 1.00 3.38 .20 3.18

2016 . . . . . . . . . . 1.92 .05 -.02 2.37 5.48 2.97 2.51

2017 . . . . . . . . . . 1.87 .10 -.02 2.36 5.09 2.76 2.33

2018 . . . . . . . . . . 1.84 .08 -.03 2.30 4.87 2.70 2.17

2019 . . . . . . . . . . 1.80 d -.03 2.30 4.67 2.70 1.97

2020 . . . . . . . . . . 1.79 -.09 -.03 2.30 4.43 2.70 1.73

2021 . . . . . . . . . . 1.75 -.09 -.04 2.30 4.39 2.70 1.69

2022 . . . . . . . . . . 1.67 -.08 -.04 2.30 4.23 2.70 1.53

2023 . . . . . . . . . . 1.67 -.07 -.05 2.30 4.08 2.70 1.38

2024 . . . . . . . . . . 1.68 -.05 -.05 2.30 3.93 2.70 1.23

2020 to 2025 . . . 1.69 -.07 -.05 2.30 4.10 2.70 1.40

2025 to 2089 . . . 1.68 -.08 -.05 2.30 3.87 2.70 1.17
105

Economic Assumptions and Methods

5. Labor Force and Unemployment Projections

The model used by the Office of the Chief Actuary at the Social Security

Administration for this report projects the civilian labor force by age, sex,

marital status, and presence of children. Projections of the labor force participation rates reflect disability prevalence, educational attainment, the average

level of Social Security retirement benefits, the state of the economy, and the

change in life expectancy. The projections also include a “cohort effect,”

which reflects a trend upward in female participation rates across cohorts

born through 1948.

Low-cost: 

2015 . . . . . . . . . . 1.94 -0.09 0.31 1.23 4.13 0.34 3.79

2016 . . . . . . . . . . 2.19 .06 .10 2.89 6.73 3.39 3.34

2017 . . . . . . . . . . 2.24 .12 .09 3.14 6.60 3.44 3.16

2018 . . . . . . . . . . 2.16 .11 .07 3.10 6.22 3.40 2.82

2019 . . . . . . . . . . 2.04 .04 .06 3.10 5.79 3.40 2.39

2020 . . . . . . . . . . 2.00 -.04 .05 3.10 5.44 3.40 2.04

2021 . . . . . . . . . . 2.01 -.03 .05 3.10 5.45 3.40 2.05

2022 . . . . . . . . . . 1.94 -.01 .05 3.10 5.41 3.40 2.01

2023 . . . . . . . . . . 1.98 d .05 3.10 5.42 3.40 2.02

2024 . . . . . . . . . . 1.98 .03 .05 3.10 5.28 3.40 1.88

2020 to 2025 . . . 1.97 d .05 3.10 5.35 3.40 1.95

2025 to 2089 . . . 1.98 d .05 3.10 5.20 3.40 1.80

High-cost: 

2015 . . . . . . . . . . 1.08 -.10 .10 .83 1.97 .11 1.86

2016 . . . . . . . . . . 1.34 .04 -.15 1.87 3.59 2.57 1.02

2017 . . . . . . . . . . 1.63 .07 -.13 1.59 3.70 2.09 1.61

2018 . . . . . . . . . . 1.69 .04 -.12 1.50 3.78 2.00 1.78

2019 . . . . . . . . . . 1.67 -.04 -.12 1.50 3.62 2.00 1.62

2020 . . . . . . . . . . 1.67 -.14 -.12 1.50 3.42 2.00 1.42

2021 . . . . . . . . . . 1.82 -.15 -.13 1.50 3.63 2.00 1.63

2022 . . . . . . . . . . 1.61 -.15 -.13 1.50 3.38 2.00 1.38

2023 . . . . . . . . . . 1.29 -.16 -.14 1.50 2.94 2.00 .94

2024 . . . . . . . . . . 1.18 -.14 -.15 1.50 2.50 2.00 .50

2020 to 2025 . . . 1.46 -.15 -.14 1.50 3.00 2.00 1.00

2025 to 2089 . . . 1.38 -.16 -.15 1.50 2.55 2.00 .55

a For rows with a single year listed, the value is the annual percentage change from the prior year. For rows

with a range of years listed, the value is the compound average annual percentage change.

b For rows with a single year listed, the value is the annual percentage change in the average annual wage in

covered employment less the annual percentage change in the Consumer Price Index. For rows with a range

of years listed, the value is the average of annual values of the differential. Values are rounded after all computations.

c Economic cycles are shown from peak to peak, except for the last cycle, which is not yet complete.

d Greater than -0.005 and less than 0.005 percent.

e Historical data are not available for the full year. Estimated values vary slightly by alternative and are

shown for the intermediate assumptions.

Table V.B1.—Principal Economic Assumptions (Cont.)

Calendar year

Annual percentage changea in—

Realwage

differentialb

Productivity

(Total U.S.

economy)

Earnings as

a percent of

compensation

Average

hours

worked

GDP

price

index

Average

annual wage

in covered

employment

Consumer

Price

Index
Assumptions and Methods

106

The annual rate of growth in the size of the labor force decreased from an

average of about 2.4 percent during the 1966-73 economic cycle and

2.7 percent during the 1973-79 cycle to 1.7 percent during the 1979-89 cycle,

1.3 percent during the 1989-2000 cycle, and 1.0 percent during the 2000-07

cycle. Further slowing of labor force growth will follow from a substantial

slowing of growth in the working age population in the future—a consequence of the baby-boom generation approaching retirement and succeeding

lower-birth-rate cohorts reaching working age. Under the intermediate

assumptions, the labor force is projected to increase by an average of

1.0 percent per year from 2014 to 2024 and 0.5 percent per year over the

remainder of the 75-year projection period.

The projected labor force participation rates are derived from a model

reflecting the historically based structural relationship that uses demographic

and economic assumptions specific to each alternative. More optimistic economic assumptions in the low-cost alternative are consistent with higher

labor force participation rates, but demographic assumptions in the low-cost

alternative (such as slower improvement in longevity) are consistent with

lower labor force participation rates. These relationships with various basic

assumptions move the labor force participation rates in opposite directions.

Therefore, the projected labor force participation rates do not vary substantially across alternatives.

Historically, labor force participation rates reflect trends in demographics

and pensions. Between the mid-1960s and the mid-1980s, labor force participation rates at ages 50 and over declined for males but were fairly stable for

females. During this period, the baby-boom generation reached working age

and more women entered the labor force. This increasing supply of labor

allowed employers to offer attractive early retirement options. Between the

mid-1980s and the mid-1990s, participation rates at ages 55 and older

roughly stabilized for males and increased for females. Since the mid-1990s,

however, participation rates for both sexes at ages 50 and over have generally risen.

Many economic and demographic factors, including longevity, health, disability prevalence, the business cycle, incentives for retirement in Social

Security and private pensions, education, and marriage patterns, will influence future labor force participation rates. The Office of the Chief Actuary

models some of these factors directly. To model the effects of other factors

related to increases in life expectancy, projected participation rates are

adjusted upward for mid-career and older ages to reflect projected increases
107

Economic Assumptions and Methods

in life expectancy. For the intermediate projections, this adjustment increases

the total labor force by 2.9 percent for 2089.

For men age 16 and over, the projected age-adjusted labor force participation

rate1 for 2089 is 73.5, 73.4, and 73.3 percent for the low-cost, intermediate,

and high-cost assumptions, respectively. For women age 16 and over, the

projected age-adjusted labor force participation rates for 2089 are 61.6, 61.0,

and 60.0 percent for the low-cost, intermediate, and high-cost assumptions,

respectively. These rates are higher than the actual age-adjusted 2013 levels

published by the Bureau of Labor Statistics of 70.4 percent for men and

57.7 percent for women, primarily due to the assumed increase in life expectancy. In the first ten years, the assumed labor force participation rates also

increase as the economic recovery draws more people into the labor force.

Increasing disability prevalence rates offset these increases somewhat in the

intermediate and high-cost assumptions, but a decrease in disability prevalence further contributes to increases in labor force participation in the lowcost assumptions.

The unemployment rates presented in table V.B2 are in the most commonly

cited form, the civilian rate. For years through 2024, the table presents total

civilian rates without adjustment for the changing age-sex distribution of the

population. For years after 2024, the table presents unemployment rates as

age-sex-adjusted rates, using the age-sex distribution of the 2011 civilian

labor force. Age-sex-adjusted rates allow for more meaningful comparisons

across longer time periods. The age-sex adjusted unemployment rate is about

0.1 percentage point lower than the unadjusted rate for 2025.

The total civilian unemployment rate reflects the projected levels of unemployment for various age-sex groups of the population. Each group’s unemployment rate is projected in relation to changes in the economic cycle, as

measured by the ratio of actual to potential GDP.2 For each alternative, the

total civilian unemployment rate moves toward the ultimate assumed rate as

the economy moves toward the long-range sustainable growth path.

The ultimate assumed age-sex-adjusted unemployment rates are 4.5, 5.5, and

6.5 percent for the low-cost, intermediate, and high-cost assumptions,

respectively. These values are unchanged from the 2014 report. The decline

in the overall rate from 6.2 for 2014 to 5.3 for 2016 under intermediate

assumptions reflects a rapid increase in employment with a relatively small

 1 The Office of the Chief Actuary adjusts the labor force participation rates to the 2011 age distribution of

the civilian noninstitutional U.S. population.

 2 Potential GDP is the level of GDP assuming the economy is operating at the underlying sustainable trend

rate of growth.
Assumptions and Methods

108

change in labor force participation. Improvements in labor market conditions

will eventually draw more nonparticipants back into the labor force and

unemployment will reach the ultimate rate in 2022 under the intermediate

assumptions. Under low-cost assumptions the ultimate unemployment rate is

also reached in 2022. Under the high-cost assumptions, unemployment will

reach the ultimate rate in 2024.

6. Gross Domestic Product Projections

The value of real GDP equals the product of three components: (1) average

weekly total employment,1 (2) productivity, and (3) average hours worked

per week. Consequently, the growth rate in real GDP is approximately equal

to the sum of the growth rates for total employment, productivity, and average hours worked. For the period from 1966 to 2007, which covers the last

five complete economic cycles, the average growth rate in real GDP was

3.1 percent. This average growth rate approximately equals the sum of the

average growth rates of 1.6, 1.7, and -0.3 percent for total employment, productivity, and average hours worked, respectively. As a result of the 2007-09

recession, the real GDP in 2013 was only 5.6 percent above the 2007 level.

The estimated real GDP growth from 2013 to 2014 is 2.3 percent.

For the intermediate assumptions, the average annual growth in real GDP is

2.8 percent from 2014 to 2024, the approximate sum of component growth

rates of 1.0 percent for total employment, 1.8 percent for productivity, and

0.0 percent for average hours worked. The projected average annual growth

in real GDP of 2.8 percent for this period is 0.5 percentage point higher than

the underlying sustainable trend rate of 2.3 percent. This 0.5 percentage

point above-trend component reflects a relatively rapid increase in employment as the economy recovers. After 2024, the assumptions do not explicitly

reflect economic cycles. The projected annual growth rate in real GDP combines the projected growth rates for total employment, total U.S. economy

productivity, and average hours worked. After 2024, the annual growth in

real GDP averages 2.1 percent, based on the projected average annual

growth rate of 0.5 percent for total employment and the assumed ultimate

growth rates of 1.7 percent for productivity and -0.05 percent for average

hours worked. The assumed growth rate of real GDP is slower than the past

average growth rate mainly because the working-age population is expected

to grow slower than in the past.

For the low-cost assumptions, the annual growth in real GDP averages

3.4 percent over the decade ending in 2024. The relatively faster growth is

 1 Total employment is the sum of the U.S. Armed Forces and total civilian employment, which depends on

the total civilian labor force and unemployment rate.
109

Economic Assumptions and Methods

due mostly to higher assumed rates of growth for employment and worker

productivity. For the high-cost assumptions, the annual growth in real GDP

averages 2.1 percent for the decade ending in 2024.

7. Interest Rates

Table V.B2 presents average annual nominal and real interest rates for newly

issued trust fund securities. The nominal rate is the average of the nominal

interest rates for special U.S. Government obligations issuable to the trust

funds in each of the 12 months of the year. Interest for these securities is generally compounded semiannually. The real interest rate is defined as the

annual yield rate for investments in these securities divided by the annual

rate of growth in the CPI for the first year after issuance. The real rate shown

for each year reflects the actual realized (historical) or expected (future) real

yield on securities issuable in the prior year.

To develop a reasonable range of assumed ultimate future real interest rates

for the three alternatives, the Office of the Chief Actuary examined historical

experience for the last five complete economic cycles. For the 41-year period

from 1966 to 2007, the real interest rate averaged 2.8 percent per year. The

real interest rates averaged 1.3, -1.0, 5.2, 4.0, and 2.2 percent per year over

the economic cycles 1966-73, 1973-79, 1979-89, 1989-2000, and 2000-07,

respectively. The assumed ultimate real interest rates are 3.4 percent, 2.9 percent, and 2.4 percent for the low-cost, intermediate, and high-cost assumptions, respectively. These rates are unchanged from the 2014 report. 

The actual average annual nominal interest rate was approximately

1.9 percent for 2013, which means that securities newly issued in 2013

would yield 1.9 percent if held one year. Estimated average prices rose from

2013 to 2014 by approximately 1.5 percent. The annual real interest rate for

2014 is 0.4 percent, the approximate difference between the nominal interest

rate and the rate of price increase. For the 10-year short-range projection

period, projected nominal interest rates depend on changes in the economic

cycle and in the CPI. When combined with the ultimate CPI assumptions of

3.4, 2.7, and 2.0 percent, the assumed ultimate real interest rates yield ultimate nominal interest rates of 6.8 percent for the low-cost assumptions,

5.6 percent for the intermediate assumptions, and 4.4 percent for the highcost assumptions. These nominal rates for newly issued trust fund securities

reach their ultimate levels by the end of the short-range period.
Assumptions and Methods

110

Table V.B2.—Additional Economic Factors

Calendar year 

Average annual

unemployment ratea

Annual percentage changeb in— Average annual interest rate

Labor

forcec Totalemploymentd RealGDPe Nominalf Realg

Historical data:

5-year periods:

1960 to 1965. . . . . 5.5 1.3 1.6 5.0 4.0 2.5

1965 to 1970. . . . . 3.9 2.2 2.1 3.5 5.9 1.0

1970 to 1975. . . . . 6.1 2.5 1.5 2.7 6.7 h

1975 to 1980. . . . . 6.8 2.7 2.9 3.7 8.5 -.9

1980 to 1985. . . . . 8.3 1.5 1.5 3.3 12.1 6.9

1985 to 1990. . . . . 5.9 1.7 2.0 3.4 8.5 5.1

1990 to 1995. . . . . 6.6 1.0 .9 2.6 7.0 4.3

1995 to 2000. . . . . 4.6 1.5 1.8 4.3 6.2 3.9

2000 to 2005. . . . . 5.4 .9 .7 2.5 4.6 2.4

2005 to 2010. . . . . 6.8 .6 -.4 .8 3.8 1.8

Economic cycles:i

1966 to 1973. . . . . 4.6 2.4 2.0 3.6 6.1 1.3

1973 to 1979. . . . . 6.8 2.7 2.4 3.0 7.7 -1.0

1979 to 1989. . . . . 7.3 1.7 1.7 3.1 10.5 5.2

1989 to 2000. . . . . 5.6 1.3 1.3 3.3 6.8 4.0

2000 to 2007. . . . . 5.2 1.0 .9 2.4 4.6 2.2

2007 to 2014. . . . . 7.9 .3 h 1.1 2.5 .8

Single years:

2004 . . . . . . . . . . . 5.5 .6 1.1 3.8 4.3 1.5

2005 . . . . . . . . . . . 5.1 1.3 1.7 3.3 4.3 .8

2006 . . . . . . . . . . . 4.6 1.4 1.8 2.7 4.8 1.1

2007 . . . . . . . . . . . 4.6 1.1 1.1 1.8 4.7 1.9

2008 . . . . . . . . . . . 5.8 .8 -.4 -0.3 3.6 .6

2009 . . . . . . . . . . . 9.3 -.1 -3.7 -2.8 2.9 4.4

2010 . . . . . . . . . . . 9.6 -.2 -.6 2.5 2.8 .9

2011 . . . . . . . . . . . 8.9 -.2 .6 1.6 2.4 -.7

2012 . . . . . . . . . . . 8.1 .9 1.8 2.3 1.5 .3

2013 . . . . . . . . . . . 7.4 .3 1.0 2.2 1.9 .1

2014j. . . . . . . . . . . 6.2 .3 1.5 2.3 2.3 .4
111

Economic Assumptions and Methods

Intermediate:

2015 . . . . . . . . . . . 5.5 0.6 1.3 3.3 2.2 2.1

2016 . . . . . . . . . . . 5.3 1.2 1.4 3.3 3.4 -.8

2017 . . . . . . . . . . . 5.4 1.5 1.4 3.3 4.1 .6

2018 . . . . . . . . . . . 5.5 1.4 1.2 3.1 4.8 1.4

2019 . . . . . . . . . . . 5.5 1.1 1.1 2.9 5.1 2.1

2020 . . . . . . . . . . . 5.5 1.0 1.0 2.7 5.3 2.4

2021 . . . . . . . . . . . 5.6 .9 .9 2.6 5.5 2.6

2022 . . . . . . . . . . . 5.6 .8 .8 2.4 5.5 2.8

2023 . . . . . . . . . . . 5.6 .6 .6 2.2 5.5 2.8

2024 . . . . . . . . . . . 5.6 .6 .6 2.2 5.6 2.8

2025 . . . . . . . . . . . 5.5 .6 .6 2.2 5.6 2.9

2030 . . . . . . . . . . . 5.5 .4 .5 2.1 5.6 2.9

2035 . . . . . . . . . . . 5.5 .5 .5 2.1 5.6 2.9

2040 . . . . . . . . . . . 5.5 .6 .6 2.2 5.6 2.9

2045 . . . . . . . . . . . 5.5 .5 .5 2.1 5.6 2.9

2050 . . . . . . . . . . . 5.5 .5 .5 2.1 5.6 2.9

2055 . . . . . . . . . . . 5.5 .4 .4 2.1 5.6 2.9

2060 . . . . . . . . . . . 5.5 .4 .4 2.0 5.6 2.9

2065 . . . . . . . . . . . 5.5 .4 .4 2.1 5.6 2.9

2070 . . . . . . . . . . . 5.5 .4 .4 2.1 5.6 2.9

2075 . . . . . . . . . . . 5.5 .4 .4 2.1 5.6 2.9

2080 . . . . . . . . . . . 5.5 .4 .4 2.1 5.6 2.9

2085 . . . . . . . . . . . 5.5 .4 .4 2.0 5.6 2.9

2090 . . . . . . . . . . . 5.5 .4 .4 2.0 5.6 2.9

Low-cost:

2015 . . . . . . . . . . . 5.3 1.0 1.9 4.2 2.7 1.9

2016 . . . . . . . . . . . 4.9 1.8 2.3 4.6 4.3 -.7

2017 . . . . . . . . . . . 4.7 1.7 1.9 4.2 5.2 .9

2018 . . . . . . . . . . . 4.6 1.5 1.5 3.8 5.9 1.8

2019 . . . . . . . . . . . 4.6 1.2 1.2 3.4 6.1 2.5

2020 . . . . . . . . . . . 4.6 1.1 1.0 3.1 6.3 2.7

2021 . . . . . . . . . . . 4.6 .8 .8 2.9 6.4 2.9

2022 . . . . . . . . . . . 4.6 .8 .8 2.8 6.6 3.0

2023 . . . . . . . . . . . 4.6 .7 .7 2.8 6.8 3.2

2024 . . . . . . . . . . . 4.6 .7 .7 2.7 6.8 3.4

2025 . . . . . . . . . . . 4.5 .7 .7 2.7 6.8 3.4

2030 . . . . . . . . . . . 4.5 .5 .6 2.6 6.8 3.4

2035 . . . . . . . . . . . 4.5 .6 .6 2.7 6.8 3.4

2040 . . . . . . . . . . . 4.5 .7 .7 2.8 6.8 3.4

2045 . . . . . . . . . . . 4.5 .7 .7 2.8 6.8 3.4

2050 . . . . . . . . . . . 4.5 .7 .7 2.8 6.8 3.4

2055 . . . . . . . . . . . 4.5 .7 .7 2.7 6.8 3.4

2060 . . . . . . . . . . . 4.5 .7 .7 2.7 6.8 3.4

2065 . . . . . . . . . . . 4.5 .7 .7 2.7 6.8 3.4

2070 . . . . . . . . . . . 4.5 .7 .7 2.8 6.8 3.4

2075 . . . . . . . . . . . 4.5 .8 .8 2.8 6.8 3.4

2080 . . . . . . . . . . . 4.5 .7 .7 2.8 6.8 3.4

2085 . . . . . . . . . . . 4.5 .7 .7 2.7 6.8 3.4

2090 . . . . . . . . . . . 4.5 .7 .7 2.7 6.8 3.4

Table V.B2.—Additional Economic Factors (Cont.)

Calendar year 

Average annual

unemployment ratea

Annual percentage changeb in— Average annual interest rate

Labor

forcec Totalemploymentd RealGDPe Nominalf Realg
Assumptions and Methods

112

High-cost:

2015 . . . . . . . . . . . 5.9 0.5 0.8 1.9 1.5 2.2

2016 . . . . . . . . . . . 6.1 .7 .5 1.7 2.2 -1.0

2017 . . . . . . . . . . . 6.3 1.0 .8 2.3 3.1 .2

2018 . . . . . . . . . . . 6.5 1.1 .9 2.5 3.8 1.1

2019 . . . . . . . . . . . 6.7 1.0 .8 2.3 4.2 1.8

2020 . . . . . . . . . . . 6.9 .9 .7 2.2 4.3 2.2

2021 . . . . . . . . . . . 7.0 .5 .5 2.2 4.5 2.3

2022 . . . . . . . . . . . 6.8 .4 .6 2.1 4.5 2.5

2023 . . . . . . . . . . . 6.6 .6 .8 1.9 4.5 2.5

2024 . . . . . . . . . . . 6.5 .5 .6 1.6 4.4 2.5

2025 . . . . . . . . . . . 6.5 .5 .5 1.7 4.4 2.4

2030 . . . . . . . . . . . 6.5 .4 .4 1.6 4.4 2.4

2035 . . . . . . . . . . . 6.5 .4 .4 1.6 4.4 2.4

2040 . . . . . . . . . . . 6.5 .4 .4 1.6 4.4 2.4

2045 . . . . . . . . . . . 6.5 .3 .3 1.5 4.4 2.4

2050 . . . . . . . . . . . 6.5 .2 .2 1.5 4.4 2.4

2055 . . . . . . . . . . . 6.5 .2 .2 1.4 4.4 2.4

2060 . . . . . . . . . . . 6.5 .1 .1 1.4 4.4 2.4

2065 . . . . . . . . . . . 6.5 .1 .1 1.4 4.4 2.4

2070 . . . . . . . . . . . 6.5 .1 .1 1.3 4.4 2.4

2075 . . . . . . . . . . . 6.5 .1 .1 1.3 4.4 2.4

2080 . . . . . . . . . . . 6.5 .1 .1 1.3 4.4 2.4

2085 . . . . . . . . . . . 6.5 .1 .1 1.3 4.4 2.4

2090 . . . . . . . . . . . 6.5 .1 .1 1.3 4.4 2.4

a The Office of the Chief Actuary adjusts the civilian unemployment rates for 2025 and later to the age-sex

distribution of the civilian labor force in 2011. For years through 2024, the values are the total rates without

adjustment for the changing age-sex distribution.

b For rows with a single year listed, the value is the annual percentage change from the prior year. For rows

with a range of years listed, the value is the compounded average annual percentage change.

c The U.S. civilian labor force.

d Total U.S. military and civilian employment.

e The value of the total output of goods and services in 2009 dollars.

f The average of the nominal interest rates, which compound semiannually, for special public-debt obligations

issuable to the trust funds in each of the 12 months of the year.

g The realized or expected annual real yield for each year on securities issuable in the prior year.

h Greater than -0.05 and less than 0.05 percent.

i Economic cycles are shown from peak to peak, except for the last cycle, which is not yet complete.

j Historical data are not available for the full year. Estimated values vary slightly by alternative and are shown

for the intermediate assumptions.

Table V.B2.—Additional Economic Factors (Cont.)

Calendar year 

Average annual

unemployment ratea

Annual percentage changeb in— Average annual interest rate

Labor

forcec Totalemploymentd RealGDPe Nominalf Realg
113

Program Assumptions and Methods

C. PROGRAM-SPECIFIC ASSUMPTIONS AND METHODS

The Office of the Chief Actuary at the Social Security Administration uses a

set of models to project future income and cost under the OASDI program.

These models rely not only on the demographic and economic assumptions

described in the previous sections, but also on a number of program-specific

assumptions and methods. Values of many program parameters change from

year to year as prescribed by formulas set out in the Social Security Act.

These program parameters affect the level of payroll taxes collected and the

level of benefits paid. The office uses more complex models to project the

numbers of future workers covered under OASDI and the levels of their covered earnings, as well as the numbers of future beneficiaries and the expected

levels of their benefits. The following subsections provide descriptions of

these program-specific assumptions and methods.

1. Automatically Adjusted Program Parameters

The Social Security Act requires that certain parameters affecting the determination of OASDI benefits and taxes be adjusted annually to reflect

changes in particular economic measures. Formulas prescribed in the law,

applied to reported statistics, change these program parameters annually. The

law bases these automatic adjustments on measured changes in the national

average wage index (AWI) and the Consumer Price Index for Urban Wage

Earners and Clerical Workers (CPI).1 This section shows values for program

parameters adjusted using these indices from the time that these adjustments

became effective through 2024. Projected values for future years depend on

the economic assumptions described in the preceding section of this report.

Tables V.C1 and V.C2 present the historical and projected values of the CPIbased benefit increases, the AWI series, and the values of many of the wageindexed program parameters. Each table shows projections under the three

alternative sets of economic assumptions. Table V.C1 includes:

 • The annual cost-of-living benefit increase percentages. The automatic

cost-of-living adjustment provisions in the Social Security Act specify

increases in OASDI benefits based on increases in the CPI. Volatility in

oil prices has resulted in substantial volatility in recent cost-of-living

adjustments. A large cost-of-living adjustment in December 2008 was

followed by no cost-of-living adjustments in December 2009 and

December 2010. More recent volatility in oil prices has again affected

 1 The Federal Register publishes details of these indexation procedures annually. Also see

www.socialsecurity.gov/OACT/COLA/index.html.
Assumptions and Methods

114

the CPI. As a result, projections under the intermediate and high-cost

assumptions do not have a cost-of-living adjustment for December

2015. Under all three sets of economic assumptions, the projections

include annual cost-of-living adjustments in all future years after 2015.

 • The annual levels of and percentage increases in the AWI. Under section 215(b)(3) of the Social Security Act, Social Security benefit computations index taxable earnings (for most workers first becoming

eligible for benefits in 1979 or later) using the AWI for each year after

1950. This procedure converts a worker’s past earnings to approximately average-wage-indexed equivalent values near the time of his or

her benefit eligibility. Other program parameters presented in this section that are subject to the automatic-adjustment provisions also rely on

the AWI.

 • The wage-indexed contribution and benefit base. For any year, the contribution and benefit base is the maximum amount of earnings subject to

the OASDI payroll tax and creditable toward benefit computation. The

Social Security Act defers any increase in the contribution and benefit

base if there is no cost-of-living adjustment effective for December of

the preceding year. There was no increase in the contribution and benefit base for 2010 and 2011. Increases resumed in 2012. Under the intermediate and high-cost assumptions, there is no cost-of-living

adjustment for December 2015, and therefore no increase in the contribution and benefit base for 2016. Under all three sets of assumptions,

the contribution and benefit base increases in all other future years.

 • The wage-indexed retirement earnings test exempt amounts. The

exempt amounts are the annual amount of earnings below which beneficiaries do not have benefits withheld. A lower exempt amount applies in

years before normal retirement age. A higher amount applies for the

year in which a beneficiary attains normal retirement age. Starting in

2000, the retirement earnings test no longer applies beginning with the

month of normal retirement age attainment. The Social Security Act

defers any increase in these exempt amounts if there is no cost-of-living

adjustment effective for December of the preceding year. There was no

increase in these exempt amounts in 2010 and 2011. Increases resumed

in 2012. Under the intermediate and high-cost assumptions, there is no

cost-of-living adjustment for December 2015, and therefore no increase

in the exempt amounts for 2016. Under all three sets of assumptions, the

exempt amounts increase in all other future years.
115

Program Assumptions and Methods

Table V.C1.—Cost-of-Living Benefit Increases, Average Wage Index, Contribution and 

Benefit Bases, and Retirement Earnings Test Exempt Amounts, 1975-2024

Calendar year

Cost-of-living

benefit

increasea

(percent)

Average

wage index (AWI) b Contribution

and benefit

base c

Retirement earnings

test exempt amount

Amount

Increase

(percent)

Under

NRAd At NRAe

Historical data:

1975 . . . . . . . . . . . 8.0 $8,630.92 7.5 $14,100 $2,520 $2,520

1976 . . . . . . . . . . . 6.4 9,226.48 6.9 15,300 2,760 2,760

1977 . . . . . . . . . . . 5.9 9,779.44 6.0 16,500 3,000 3,000

1978 . . . . . . . . . . . 6.5 10,556.03 7.9 17,700 3,240 4,000

1979 . . . . . . . . . . . 9.9 11,479.46 8.7 22,900 3,480 4,500

1980 . . . . . . . . . . . 14.3 12,513.46 9.0 25,900 3,720 5,000

1981 . . . . . . . . . . . 11.2 13,773.10 10.1 29,700 4,080 5,500

1982 . . . . . . . . . . . 7.4 14,531.34 5.5 32,400 4,440 6,000

1983 . . . . . . . . . . . 3.5 15,239.24 4.9 35,700 4,920 6,600

1984 . . . . . . . . . . . 3.5 16,135.07 5.9 37,800 5,160 6,960

1985 . . . . . . . . . . . 3.1 16,822.51 4.3 39,600 5,400 7,320

1986 . . . . . . . . . . . 1.3 17,321.82 3.0 42,000 5,760 7,800

1987 . . . . . . . . . . . 4.2 18,426.51 6.4 43,800 6,000 8,160

1988 . . . . . . . . . . . 4.0 19,334.04 4.9 45,000 6,120 8,400

1989 . . . . . . . . . . . 4.7 20,099.55 4.0 48,000 6,480 8,880

1990 . . . . . . . . . . . 5.4 21,027.98 4.6 51,300 6,840 9,360

1991 . . . . . . . . . . . 3.7 21,811.60 3.7 53,400 7,080 9,720

1992 . . . . . . . . . . . 3.0 22,935.42 5.2 55,500 7,440 10,200

1993 . . . . . . . . . . . 2.6 23,132.67 .9 57,600 7,680 10,560

1994 . . . . . . . . . . . 2.8 23,753.53 2.7 60,600 8,040 11,160

1995 . . . . . . . . . . . 2.6 24,705.66 4.0 61,200 8,160 11,280

1996 . . . . . . . . . . . 2.9 25,913.90 4.9 62,700 8,280 12,500

1997 . . . . . . . . . . . 2.1 27,426.00 5.8 65,400 8,640 13,500

1998 . . . . . . . . . . . 1.3 28,861.44 5.2 68,400 9,120 14,500

1999 . . . . . . . . . . . f2.5 30,469.84 5.6 72,600 9,600 15,500

2000 . . . . . . . . . . . 3.5 32,154.82 5.5 76,200 10,080 17,000

2001 . . . . . . . . . . . 2.6 32,921.92 2.4 80,400 10,680 25,000

2002 . . . . . . . . . . . 1.4 33,252.09 1.0 84,900 11,280 30,000

2003 . . . . . . . . . . . 2.1 34,064.95 2.4 87,000 11,520 30,720

2004 . . . . . . . . . . . 2.7 35,648.55 4.6 87,900 11,640 31,080

2005 . . . . . . . . . . . 4.1 36,952.94 3.7 90,000 12,000 31,800

2006 . . . . . . . . . . . 3.3 38,651.41 4.6 94,200 12,480 33,240

2007 . . . . . . . . . . . 2.3 40,405.48 4.5 97,500 12,960 34,440

2008 . . . . . . . . . . . 5.8 41,334.97 2.3 102,000 13,560 36,120

2009 . . . . . . . . . . . .0 40,711.61 -1.5 106,800 14,160 37,680

2010 . . . . . . . . . . . .0 41,673.83 2.4 106,800 14,160 37,680

2011 . . . . . . . . . . . 3.6 42,979.61 3.1 106,800 14,160 37,680

2012 . . . . . . . . . . . 1.7 44,321.67 3.1 110,100 14,640 38,880

2013 . . . . . . . . . . . 1.5 44,888.16 1.3 113,700 15,120 40,080

Intermediate:

2014 . . . . . . . . . . . g1.7 46,289.41 3.1 g117,000 g 15,480 g41,400

2015 . . . . . . . . . . . .0 47,820.21 3.3 g118,500 g 15,720 g41,880

2016 . . . . . . . . . . . 3.1 50,388.16 5.4 118,500 15,720 41,880

2017 . . . . . . . . . . . 2.7 52,937.78 5.1 126,300 16,800 44,640

2018 . . . . . . . . . . . 2.7 55,517.91 4.9 133,200 17,640 47,040

2019 . . . . . . . . . . . 2.7 58,106.90 4.7 139,800 18,600 49,440

2020 . . . . . . . . . . . 2.7 60,681.31 4.4 146,700 19,440 51,840

2021 . . . . . . . . . . . 2.7 63,345.67 4.4 153,600 20,400 54,240

2022 . . . . . . . . . . . 2.7 66,028.98 4.2 160,200 21,240 56,640

2023 . . . . . . . . . . . 2.7 68,727.50 4.1 167,400 22,200 59,160

2024 . . . . . . . . . . . 2.7 71,429.77 3.9 174,600 23,160 61,560
Assumptions and Methods

116

Table V.C2 shows values for other wage-indexed parameters. The table provides historical values from 1978, when indexing of the amount of earnings

required for a quarter of coverage first began, through 2015, and also shows

projected values through 2024. These other wage-indexed program parameters are:

 • The bend points in the formula for computing the primary insurance

amount (PIA) for workers who reach age 62, become disabled, or die in

a given year. As figure V.C1 illustrates, these two bend points define

three ranges in a worker’s average indexed monthly earnings (AIME).

The formula for the worker’s PIA multiplies a 90, 32, or 15 percent facLow-cost:

2014 . . . . . . . . . . . g1.7 $46,316.67 3.2 g$117,000 g $15,480 g$41,400

2015 . . . . . . . . . . . .2 48,185.19 4.0 g118,500 g 15,720 g41,880

2016 . . . . . . . . . . . 3.5 51,364.52 6.6 122,400 16,200 43,200

2017 . . . . . . . . . . . 3.4 54,732.51 6.6 127,200 16,920 45,000

2018 . . . . . . . . . . . 3.4 58,135.27 6.2 135,600 18,000 47,880

2019 . . . . . . . . . . . 3.4 61,502.48 5.8 144,600 19,200 51,120

2020 . . . . . . . . . . . 3.4 64,848.32 5.4 153,600 20,400 54,240

2021 . . . . . . . . . . . 3.4 68,381.37 5.4 162,600 21,600 57,360

2022 . . . . . . . . . . . 3.4 72,076.04 5.4 171,300 22,680 60,480

2023 . . . . . . . . . . . 3.4 75,981.57 5.4 180,600 24,000 63,840

2024 . . . . . . . . . . . 3.4 79,993.85 5.3 190,500 25,320 67,200

High-cost:

2014 . . . . . . . . . . . g1.7 46,245.03 3.0 g117,000 g 15,480 g41,400

2015 . . . . . . . . . . . .0 47,150.51 2.0 g118,500 g 15,720 g41,880

2016 . . . . . . . . . . . 2.5 48,817.95 3.5 118,500 15,720 41,880

2017 . . . . . . . . . . . 2.0 50,611.49 3.7 124,500 16,560 44,040

2018 . . . . . . . . . . . 2.0 52,526.83 3.8 129,000 17,160 45,600

2019 . . . . . . . . . . . 2.0 54,437.43 3.6 133,800 17,760 47,160

2020 . . . . . . . . . . . 2.0 56,308.62 3.4 138,900 18,360 48,960

2021 . . . . . . . . . . . 2.0 58,349.32 3.6 143,700 19,080 50,760

2022 . . . . . . . . . . . 2.0 60,320.20 3.4 148,800 19,680 52,560

2023 . . . . . . . . . . . 2.0 62,093.08 2.9 154,200 20,400 54,480

2024 . . . . . . . . . . . 2.0 63,647.09 2.5 159,300 21,120 56,280

a Effective with benefits payable for June in each year 1975-82, and for December in each year after 1982.

b See table VI.G6 for projected dollar amounts of the AWI for years beyond the last year of this table.

c Public Law 95-216 specified amounts for 1978-81. Public Law 101-239 changed the indexing procedure

and caused slightly higher bases after 1989.

d Normal retirement age. See table V.C3 for specific values.

e In 1955-82, the retirement earnings test did not apply at ages 72 and over. In 1983-99, the test did not apply

at ages 70 and over. Beginning in 2000, the test does not apply beginning with the month of normal retirement

age attainment. In the year of normal retirement age attainment, the higher exempt amount applies to earnings

prior to the month of normal retirement age attainment. Public Law 95-216 specified amounts for 1978-82.

Public Law 104-121 specified amounts for 1996-2002.

f Originally determined as 2.4 percent. Pursuant to Public Law 106-554, effectively 2.5 percent.

g Actual amount, as determined under automatic-adjustment provisions.

Table V.C1.—Cost-of-Living Benefit Increases, Average Wage Index, Contribution and 

Benefit Bases, and Retirement Earnings Test Exempt Amounts, 1975-2024 (Cont.)

Calendar year

Cost-of-living

benefit

increasea

(percent)

Average

wage index (AWI) b Contribution

and benefit

base c

Retirement earnings

test exempt amount

Amount

Increase

(percent)

Under

NRAd At NRAe
117

Program Assumptions and Methods

tor by the portion of the worker’s AIME that falls within the three

respective ranges, and then adds the resulting products together.

 • The bend points in the formula for computing the maximum total

amount of monthly benefits payable based on the earnings record of a

retired or deceased worker (maximum family benefit). As figure V.C2

illustrates, these three bend points define four ranges in a worker’s PIA.

The formula for the maximum family benefit multiplies a 150, 272, 134,

or 175 percent factor by the portion of the worker’s PIA that falls within

the four respective ranges, and then adds the resulting products together.

 Figure V.C1.—Primary-Insurance-Amount Formula for Those Newly Eligible in 2015

90% 

32% 

15% 

$0

$500

$1,000

$1,500

$2,000

$2,500

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000

Primary Insurance Amount 

Average Indexed Monthly Earnings 

First 

bend point 

($826) 

Second 

bend point 

($4,980) 
Assumptions and Methods

118

 • The amount of earnings required in a year to earn a quarter of coverage

(QC). The number and timing of QCs earned determines an individual’s

insured status—the basic requirement for benefit eligibility under

OASDI.

 • The old-law contribution and benefit base—the contribution and benefit

base that would have been in effect without enactment of the 1977

amendments. This old-law base is used in determining special-minimum benefits for certain workers who have many years of low earnings

in covered employment. Since 1986, the calculation of OASDI benefits

for certain workers who are eligible to receive pensions based on noncovered employment uses the old-law base. In addition, the Railroad

Retirement program and the Employee Retirement Income Security Act

of 1974 use the old-law base for certain purposes.

 Figure V.C2.—OASI Maximum-Family-Benefit Formula 

for Those Newly Eligible in 2015

150% 

272% 

134% 

175% 

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$0 $500 $1,000 $1,500 $2,000 $2,500

Maximum family benefit 

Primary Insurance Amount 

Third 

bend point 

($1,987) 

Second 

bend point 

($1,524) 

First 

bend point 

($1,056) 
119

Program Assumptions and Methods

Table V.C2.—Values for Selected Wage-Indexed Program Parameters, 

Calendar Years 1978-2024

Calendar year

AIME bend

points in PIA

formulaa

PIA bend points

in OASI maximumfamily-benefit formulab

Earnings

required for

a quarter of

coverage

Old-law

contribution

and benefit

basec First Second First Second Third

Historical data:

1978 . . . . . . . . . d d d d de $250 e $17,700

1979 . . . . . . . . . e $180 e $1,085 e $230 e $332 e $433 260 18,900

1980 . . . . . . . . . 194 1,171 248 358 467 290 20,400

1981 . . . . . . . . . 211 1,274 270 390 508 310 22,200

1982 . . . . . . . . . 230 1,388 294 425 554 340 24,300

1983 . . . . . . . . . 254 1,528 324 468 610 370 26,700

1984 . . . . . . . . . 267 1,612 342 493 643 390 28,200

1985 . . . . . . . . . 280 1,691 358 517 675 410 29,700

1986 . . . . . . . . . 297 1,790 379 548 714 440 31,500

1987 . . . . . . . . . 310 1,866 396 571 745 460 32,700

1988 . . . . . . . . . 319 1,922 407 588 767 470 33,600

1989 . . . . . . . . . 339 2,044 433 626 816 500 35,700

1990 . . . . . . . . . 356 2,145 455 656 856 520 38,100

1991 . . . . . . . . . 370 2,230 473 682 890 540 39,600

1992 . . . . . . . . . 387 2,333 495 714 931 570 41,400

1993 . . . . . . . . . 401 2,420 513 740 966 590 42,900

1994 . . . . . . . . . 422 2,545 539 779 1,016 620 45,000

1995 . . . . . . . . . 426 2,567 544 785 1,024 630 45,300

1996 . . . . . . . . . 437 2,635 559 806 1,052 640 46,500

1997 . . . . . . . . . 455 2,741 581 839 1,094 670 48,600

1998 . . . . . . . . . 477 2,875 609 880 1,147 700 50,700

1999 . . . . . . . . . 505 3,043 645 931 1,214 740 53,700

2000 . . . . . . . . . 531 3,202 679 980 1,278 780 56,700

2001 . . . . . . . . . 561 3,381 717 1,034 1,349 830 59,700

2002 . . . . . . . . . 592 3,567 756 1,092 1,424 870 63,000

2003 . . . . . . . . . 606 3,653 774 1,118 1,458 890 64,500

2004 . . . . . . . . . 612 3,689 782 1,129 1,472 900 65,100

2005 . . . . . . . . . 627 3,779 801 1,156 1,508 920 66,900

2006 . . . . . . . . . 656 3,955 838 1,210 1,578 970 69,900

2007 . . . . . . . . . 680 4,100 869 1,255 1,636 1,000 72,600

2008 . . . . . . . . . 711 4,288 909 1,312 1,711 1,050 75,900

2009 . . . . . . . . . 744 4,483 950 1,372 1,789 1,090 79,200

2010 . . . . . . . . . 761 4,586 972 1,403 1,830 1,120 79,200

2011 . . . . . . . . . 749 4,517 957 1,382 1,803 1,120 79,200

2012 . . . . . . . . . 767 4,624 980 1,415 1,845 1,130 81,900

2013 . . . . . . . . . 791 4,768 1,011 1,459 1,903 1,160 84,300

2014 . . . . . . . . . 816 4,917 1,042 1,505 1,962 1,200 87,000

2015 . . . . . . . . . 826 4,980 1,056 1,524 1,987 1,220 88,200

Intermediate:

2016 . . . . . . . . . 852 5,136 1,089 1,571 2,050 1,250 88,200

2017 . . . . . . . . . 880 5,306 1,125 1,623 2,117 1,300 93,900

2018 . . . . . . . . . 927 5,590 1,185 1,711 2,231 1,370 99,000

2019 . . . . . . . . . 974 5,873 1,245 1,797 2,344 1,430 103,800

2020 . . . . . . . . . 1,022 6,160 1,306 1,885 2,458 1,500 108,900

2021 . . . . . . . . . 1,070 6,447 1,367 1,973 2,573 1,570 114,000

2022 . . . . . . . . . 1,117 6,732 1,427 2,060 2,687 1,640 119,100

2023 . . . . . . . . . 1,166 7,028 1,490 2,151 2,805 1,720 124,200

2024 . . . . . . . . . 1,215 7,326 1,553 2,242 2,924 1,790 129,600
Assumptions and Methods

120

In addition to the economic factors that affect the determination of OASDI

benefits, there are certain legislated changes that affect current and future

benefit amounts. Two such changes are the scheduled increases in the normal

retirement age and in the delayed retirement credits. Table V.C3 shows the

scheduled changes in these parameters and the resulting effects on benefit

levels expressed as a percentage of PIA.

Low-cost:

2016 . . . . . . . . . $853 $5,139 $1,089 $1,572 $2,051 $1,250 $90,900

2017 . . . . . . . . . 887 5,346 1,133 1,636 2,133 1,310 94,500

2018 . . . . . . . . . 945 5,699 1,208 1,744 2,274 1,390 100,800

2019 . . . . . . . . . 1,007 6,072 1,287 1,858 2,423 1,480 107,400

2020 . . . . . . . . . 1,070 6,450 1,367 1,974 2,574 1,580 114,000

2021 . . . . . . . . . 1,132 6,824 1,446 2,088 2,723 1,670 120,600

2022 . . . . . . . . . 1,194 7,195 1,525 2,202 2,871 1,760 127,200

2023 . . . . . . . . . 1,259 7,587 1,608 2,321 3,028 1,850 134,100

2024 . . . . . . . . . 1,327 7,997 1,695 2,447 3,191 1,950 141,300

High-cost:

2016 . . . . . . . . . 851 5,131 1,088 1,570 2,048 1,250 88,200

2017 . . . . . . . . . 868 5,231 1,109 1,601 2,088 1,280 92,400

2018 . . . . . . . . . 899 5,416 1,148 1,657 2,161 1,320 95,700

2019 . . . . . . . . . 932 5,615 1,190 1,718 2,241 1,370 99,300

2020 . . . . . . . . . 967 5,828 1,235 1,783 2,326 1,420 103,200

2021 . . . . . . . . . 1,002 6,040 1,280 1,848 2,410 1,480 106,800

2022 . . . . . . . . . 1,036 6,247 1,324 1,912 2,493 1,530 110,400

2023 . . . . . . . . . 1,074 6,474 1,372 1,981 2,584 1,580 114,600

2024 . . . . . . . . . 1,110 6,692 1,419 2,048 2,671 1,630 118,500

a The formula to compute a PIA is: (1) 90% of AIME below the first bend point, plus (2) 32% of AIME in

excess of the first bend point but not in excess of the second, plus (3) 15% of AIME in excess of the second

bend point. The bend points are determined based on the first year a beneficiary becomes eligible for benefits.

b The formula to compute an OASI family maximum is: (1) 150% of PIA below the first bend point, plus (2)

272% of PIA in excess of the first bend point but not in excess of the second, plus (3) 134% of PIA in excess

of the second bend point but not in excess of the third, plus (4) 175% of PIA in excess of the third bend

point. This formula also determines family maximums for disabled workers first eligible after 1978 and entitled before July 1980.

c Contribution and benefit base that would have been in effect without enactment of the Social Security

Amendments of 1977. Public Law 101-239 changed the indexing procedure and caused slightly higher bases

after 1989.

d No provision in law for this amount in this year.

e Amount specified by Social Security Amendments of 1977.

Table V.C2.—Values for Selected Wage-Indexed Program Parameters, 

Calendar Years 1978-2024 (Cont.)

Calendar year

AIME bend

points in PIA

formulaa

PIA bend points

in OASI maximumfamily-benefit formulab

Earnings

required for

a quarter of

coverage

Old-law

contribution

and benefit

basec First Second First Second Third
121

Program Assumptions and Methods

2. Covered Employment

Projections of the total U.S. labor force and unemployment rate (see

table V.B2) are based on Bureau of Labor Statistics definitions from the Current Population Survey (CPS). These projections represent the average

weekly number of employed and unemployed persons, age 16 and over, in

the U.S. in a calendar year. The Office of the Chief Actuary defines covered

employment for a calendar year as the total number of persons who have any

OASDI covered earnings (that is, earnings subject to the OASDI payroll tax)

at any time during that year. For those age 16 and over, projected covered

employment is the sum of age-sex components, each reflecting the growth

projected for the component’s total U.S employment and average weeks

worked per year.1For the short-range period, the average weeks worked for

each component is assumed to increase during the economic recovery. After

2024, the average weeks worked for each component is assumed to remain

constant. The projection method also accounts for changes in non-OASDITable V.C3.—Legislated Changes in Normal Retirement Age and Delayed Retirement

Credits for Persons Reaching Age 62 in Each Year 1986 and Later

Year of birth

Year of

attainment of

age 62

Normal

retirement

age (NRA)

Credit for each 

year of delayed 

retirement after

NRA (percent)

Benefit, as a percentage of PIA, 

beginning at age —

62 65 66 67 70

1924 . . . . . . . . 1986. . . . . . . . 65 . . . . . . . . 3 80 100 103 106 115

1925 . . . . . . . . 1987. . . . . . . . 65 . . . . . . . . 3 1/2 80 100 103 1/2 107 117 1/2

1926 . . . . . . . . 1988. . . . . . . . 65 . . . . . . . . 3 1/2 80 100 103 1/2 107 117 1/2

1927 . . . . . . . . 1989. . . . . . . . 65 . . . . . . . . 4 80 100 104 108 120

1928 . . . . . . . . 1990. . . . . . . . 65 . . . . . . . . 4 80 100 104 108 120

1929 . . . . . . . . 1991. . . . . . . . 65 . . . . . . . . 4 1/2 80 100 104 1/2 109 122 1/2

1930 . . . . . . . . 1992. . . . . . . . 65 . . . . . . . . 4 1/2 80 100 104 1/2 109 122 1/2

1931 . . . . . . . . 1993. . . . . . . . 65 . . . . . . . . 5 80 100 105 110 125

1932 . . . . . . . . 1994. . . . . . . . 65 . . . . . . . . 5 80 100 105 110 125

1933 . . . . . . . . 1995. . . . . . . . 65 . . . . . . . . 5 1/2 80 100 105 1/2 111 127 1/2

1934 . . . . . . . . 1996. . . . . . . . 65 . . . . . . . . 5 1/2 80 100 105 1/2 111 127 1/2

1935 . . . . . . . . 1997. . . . . . . . 65 . . . . . . . . 6 80 100 106 112 130

1936 . . . . . . . . 1998. . . . . . . . 65 . . . . . . . . 6 80 100 106 112 130

1937 . . . . . . . . 1999. . . . . . . . 65 . . . . . . . . 6 1/2 80 100 106 1/2 113 132 1/2

1938 . . . . . . . . 2000. . . . . . . . 65, 2 mo . . . 6 1/2 79 1/6 98 8/9 105 5/12 111 11/12 131 5/12

1939 . . . . . . . . 2001. . . . . . . . 65, 4 mo . . . 7 78 1/3 97 7/9 104 2/3 111 2/3 132 2/3

1940 . . . . . . . . 2002. . . . . . . . 65, 6 mo . . . 7 77 1/2 96 2/3 103 1/2 110 1/2 131 1/2

1941 . . . . . . . . 2003. . . . . . . . 65, 8 mo . . . 7 1/2 76 2/3 95 5/9 102 1/2 110 132 1/2

1942 . . . . . . . . 2004. . . . . . . . 65, 10 mo . . 7 1/2 75 5/6 94 4/9 101 1/4 108 3/4 131 1/4

1943-54 . . . . . 2005-16 . . . . . 66 . . . . . . . . 8 75 93 1/3 100 108 132

1955 . . . . . . . . 2017. . . . . . . . 66, 2 mo . . . 8 74 1/6 92 2/9 98 8/9 106 2/3 130 2/3

1956 . . . . . . . . 2018. . . . . . . . 66, 4 mo . . . 8 73 1/3 91 1/9 97 7/9 105 1/3 129 1/3

1957 . . . . . . . . 2019. . . . . . . . 66, 6 mo . . . 8 72 1/2 90 96 2/3 104 128

1958 . . . . . . . . 2020. . . . . . . . 66, 8 mo . . . 8 71 2/3 88 8/9 95 5/9 102 2/3 126 2/3

1959 . . . . . . . . 2021. . . . . . . . 66, 10 mo . . 8 70 5/6 87 7/9 94 4/9 101 1/3 125 1/3

1960 & later . . 2022 & later . 67 . . . . . . . . 8 70 86 2/3 93 1/3 100 124

 1 For those under age 16, projected covered employment is the sum of age-sex components, each of which

the office projects as a ratio to the Social Security area population.
Assumptions and Methods

122

covered employment, the increase in coverage of Federal civilian employment as a result of the 1983 Social Security Amendments, and changes in the

number and employment status of other immigrants residing within the

Social Security coverage area.

The covered-worker rate is the ratio of OASDI covered workers to the Social

Security area population. For men age 16 and over, the projected ageadjusted covered-worker rates1 for 2089 are 70.2, 69.6, and 69.2 percent for

the low-cost, intermediate, and high-cost assumptions, respectively. For

women age 16 and over, the projected covered-worker rates for 2089 are

66.7, 65.3, and 63.6 percent for the low-cost, intermediate, and high-cost

assumptions, respectively. These rates are higher than the 2013 levels of

67.1 percent for males and 61.2 percent for women, due to the assumed

decreases in unemployment rates and assumed increase in labor force participation rates. 

3. Insured Population

Eligibility for worker benefits under the OASDI program requires some

threshold level of work in covered employment. A worker satisfies this

requirement by his or her accumulation of quarters of coverage (QCs). Prior

to 1978, a worker earned one QC for each calendar quarter in which he or

she earned at least $50. In 1978, when annual earnings reporting replaced

quarterly reporting, the amount required to earn a QC (up to a maximum of

four per year) was set at $250. As specified in the law, the Social Security

Administration has adjusted this amount each year since then according to

changes in the AWI. Its value in 2015 is $1,220.

There are three types of insured status that a worker can acquire under the

OASDI program. The number and recency of QCs earned determine each

status. A worker acquires fully insured status when his or her total number of

QCs is greater than or equal to the number of years elapsed after the year of

attainment of age 21 (but not less than six). Once a worker has accumulated

40 QCs, he or she remains permanently fully insured. A worker acquires disability insured status if he or she is: (1) a fully insured worker who has accumulated 20 QCs during the 40-quarter period ending with the current quarter,

(2) a fully insured worker aged 24-30 who has accumulated QCs during onehalf of the quarters elapsed after the quarter of attainment of age 21 and up to

and including the current quarter, or (3) a fully insured worker under age 24

who has accumulated six QCs during the 12-quarter period ending with the

 1 Age-adjusted covered worker rates are adjusted to the 2012 age distribution of the Social Security area

population.
123

Program Assumptions and Methods

current quarter. A worker acquires currently insured status when he or she

has accumulated six QCs during the 13-quarter period ending with the current quarter. Periods of disability reduce the number of quarters required for

insured status, but not below the minimum of six QCs.

There are many types of benefits payable to workers and their family members under the OASDI program. A worker must be fully insured to be eligible for a primary retirement benefit and for his or her spouse or children to

be eligible for auxiliary benefits. A deceased worker must have been either

currently insured or fully insured at the time of death for his or her children

(and their mother or father) to be eligible for benefits. If there are no eligible

surviving children, the deceased worker must have been fully insured at the

time of death for his or her surviving spouse to be eligible. A worker must be

disability insured to be eligible for a primary disability benefit and for his or

her spouse or children to be eligible for auxiliary benefits.

The Office of the Chief Actuary estimates the fully insured population, as a

percentage of the Social Security area population, by single year of age and

sex starting in 1969. The short-range model extrapolates the historical trend

in these rates from data in the Continuous Work History Sample. The model

uses information on quarters of coverage earned due to employment covered

by Social Security derived from tabulations of the Continuous Work History

Sample. The model also uses historical administrative data on beneficiaries

in force and estimated historical mortality rates. The model combines this

information to estimate the proportion of individuals who were alive and

fully insured as of the end of each historical year. Using projected mortality

rates and covered workers, the model extrapolates these rates into the future

and applies them to the historical and projected population to arrive at the

fully insured population by age and sex through the end of the short-range

period.

The long-range fully insured model uses 30,000 simulated work histories for

each sex and birth cohort, representing everyone except the other immigrant

population. For the other immigrant population, the model generates substantially lower percentages attaining fully insured status. The model constructs

simulated work histories using past coverage rates, earnings distributions,

and amounts required for crediting QCs, and develops them in a manner that

replicates historical individual variations in work patterns. The probability of

covered employment in any year is assumed to be higher for those who have

worked more consistently in the recent past. Model parameters are selected

so that simulated fully insured percentages are consistent with the fully

insured percentages estimated by the short-range model for the recent historical period.
Assumptions and Methods

124

The Office of the Chief Actuary estimates the disability insured population,

as a percentage of the fully insured population, by age and sex starting in

1970. The office bases historical values on a tabulation of the disability

insured population from the Continuous Work History Sample and estimates

of the fully insured population. The short-range model projects these percentages by using the relationship between the historical percentages and

covered worker rates. The long-range model projects these percentages by

using the same simulated work histories used to project the fully insured percentages. The long-range model makes additional adjustments to the model

simulations in order to bring the disability insured percentages in the historical and short-range periods into close agreement with those estimated from

the Continuous Work History Sample and the short-range model.

The office does not project the currently insured population because the

number of beneficiaries who are entitled to benefits based solely on currently

insured status has been very small and is likely to remain small in the future.

Using these insured models, the percentage of the Social Security area population aged 62 and over that is fully insured will increase from its estimated

level of 84.8 for December 31, 2012, to 89.1, 89.4, and 90.1 for

December 31, 2090, under the low-cost, intermediate, and high-cost alternatives, respectively. Over the projection period, the percentage for females

increases significantly, reflecting the past substantial growth in the employment of younger cohorts of women. The percentage for males declines to a

small degree, reflecting, in part, increases in the percent of the population

that is classified as other immigrants and is thus less likely to have earnings

reported and credited to them. Under the intermediate assumptions, for

example, the percentage for males decreases slightly from 92.9 to 89.5, and

the percentage for females increases from 78.1 to 89.4.

4. Old-Age and Survivors Insurance Beneficiaries

The Office of the Chief Actuary projects the number of OASI beneficiaries

for each type of benefit separately by the sex of the worker on whose earnings the benefits are based and by the age of the beneficiary. For the longrange period, the office also projects the number of beneficiaries by marital

status for several types of benefits. The office uses two separate models in

making these projections. The short-range model makes projections during

the first 10 years of the projection period and the long-range model makes

projections thereafter.

The short-range model develops the number of retired-worker beneficiaries

by applying award rates to the aged fully insured population, excluding those
125

Program Assumptions and Methods

already receiving retired-worker, disabled-worker, aged-widow(er)’s, or

aged-spouse’s benefits, and by applying termination rates to the number of

retired-worker beneficiaries.

The long-range model projects the number of retired-worker beneficiaries

who were not previously converted from disabled-worker beneficiary status

as a percentage of the exposed population.1 For age 62, the model projects

this percentage by using a linear regression based on the historical relationship between this percentage, the labor force participation rate at age 62, and

the number of months from age 62 to normal retirement age. The percentage

for ages 70 and over is nearly 100 because delayed retirement credits cannot

be earned after age 70. The long-range model projects the percentage for

each age 63 through 69 based on historical experience with an adjustment for

changes in the portion of the primary insurance amount that is payable at

each age of entitlement. The model adjusts these percentages for ages 62

through 69 to reflect changes in the normal retirement age.

The long-range model calculates the number of retired-worker beneficiaries

previously converted from disabled-worker beneficiary status using an

extension of disabled-worker death rates by age, sex, and duration.

The Office of the Chief Actuary estimates the number of aged-spouse beneficiaries, excluding those who are also receiving a retired-worker benefit, from

the population projected by age and sex. Benefits of aged-spouse beneficiaries depend on the earnings records of their husbands or wives, who are

referred to as “earners.” The short-range model projects insured aged-spouse

beneficiaries in conjunction with the retired-worker beneficiaries. This

model projects uninsured aged-spouse beneficiaries by applying award rates

to the aged uninsured male or female population and by applying termination

rates to the population already receiving such benefits.

The long-range model estimates aged-spouse beneficiaries separately for

those married and divorced. The model projects the number of married agedspouse beneficiaries, by age and sex, by applying a series of factors to the

number of spouses, aged 62 and over, in the population. These factors are the

probabilities that the spouse and the earner meet all of the conditions of

eligibility—that is, the probabilities that: (1) the earner is 62 or over, (2) the

earner is insured, (3) the earner is either receiving benefits or has suspended

benefits, (4) the spouse is not receiving a benefit for the care of an entitled

child, (5) the spouse is either not insured or is insured but not receiving bene-

 1 The exposed population is the fully insured population age 62 and over, excluding persons entitled to or

converted from disabled-worker benefits and fully insured persons entitled only to widow(er)’s benefits.
Assumptions and Methods

126

fits, and (6) the spouse is not eligible to receive a significant government

pension based on earnings in noncovered employment. To calculate the estimated number of aged-spouse beneficiaries, the model applies a projected

prevalence rate to the resulting number of spouses.

The long-range model estimates the number of divorced aged-spouse beneficiaries, by age and sex, by applying the same factors to the number of

divorced persons aged 62 and over in the population, with four differences.

First, the model applies a factor to reflect the probability that the earner (former spouse) is still alive. If the former spouse is not alive, the person may be

entitled to a divorced widow(er)’s benefit. Second, the model applies a factor

to reflect the probability that the marriage to the former spouse lasted at least

10 years. Third, the model does not apply factor (3) in the previous paragraph because, effective January 1985, a divorced person is generally no longer required to wait for the former spouse to receive benefits. Fourth, the

spouse cannot be insured for factor (5).

The Office of the Chief Actuary bases the projected numbers of children

under age 18, and students aged 18 and 19, who are eligible for benefits as

children of retired-worker beneficiaries, on the projected number of children

in the population. The short-range model develops the number of entitled

children by applying award rates to the number of children in the population

who have two living parents and by applying termination rates to the number

of children already receiving benefits.

The long-range model projects separately the number of entitled children by

sex of the earner parent. For each age under 18, the model multiplies the projected number of children with a parent aged 62 and over by the ratio of the

number of retired workers aged 62 to 71 to the number of members of the

population aged 62 to 71. For student beneficiaries, the model multiplies the

number of children aged 18 and 19 in the population by the probabilities that:

(1) the parent is alive, aged 62 or over, insured, and receiving a retiredworker benefit; and (2) the child is attending high school.

The Office of the Chief Actuary projects the number of disabled children,

aged 18 and over, of retired-worker beneficiaries from the adult population.

The short-range model applies award rates to the population and applies termination rates to the number of disabled children already receiving benefits.

The long-range model projects the number of disabled children in a manner

similar to that used for student children except for a factor that reflects the

probability of being disabled before age 22.

The short-range model develops the number of spouses of retired workers,

who are entitled to spouse benefits because they are caring for a child who is
127

Program Assumptions and Methods

under age 16 or disabled, by applying award rates to the number of awards to

children of retired workers and by applying termination rates to the number

of young spouses with a child in their care who are already receiving benefits. The long-range model projects the number of young-spouse beneficiaries with a child in their care as a proportion of the number of child

beneficiaries of retired workers, including projected changes in average family size.

The Office of the Chief Actuary projects the number of aged-widow(er) beneficiaries, excluding those who are also receiving a retired-worker benefit,

from the population by age and sex. The short-range model projects fully

insured aged-widow(er) beneficiaries in conjunction with the retired-worker

beneficiaries. The model projects the number of uninsured aged-widow(er)

beneficiaries by applying award rates to the aged uninsured male or female

population and by applying termination rates to the population already

receiving such benefits. The long-range model projects uninsured agedwidow(er) beneficiaries by marital status. The model multiplies the number

of widow(er)s in the population aged 60 and over by the probabilities that:

(1) the deceased earner is fully insured at death, (2) the widow(er) is not

receiving a benefit for the care of an entitled child, (3) the widow(er) is not

fully insured, and (4) the widow(er)’s benefits are not withheld because of

receipt of a significant government pension based on earnings in noncovered

employment. In addition, the model applies the same factors to the number

of divorced persons aged 60 and over in the population and includes additional factors representing the probability that the person’s former earner

spouse has died and that the marriage lasted at least 10 years. The model

projects the number of insured aged-widow(er) beneficiaries who are ages 60

through 70 in a manner similar to that for uninsured aged-widow(er) beneficiaries. In addition, the model assumes that some insured widow(er)s who

had not applied for their retired-worker benefits will receive widow(er)’s

benefits. The model projects insured aged-widow(er) beneficiaries over age

70 by applying termination rates to the population that started receiving such

benefits prior to age 70.

The short-range model develops the number of disabled-widow(er) beneficiaries by applying award rates to the uninsured male or female population

and by applying termination rates to the population already receiving a disabled-widow(er) benefit. The long-range model projects the number for each

cohort by age from 50 to normal retirement age as percentages of the widowed and divorced populations, adjusted for the insured status of the

deceased spouse, the prevalence of disability, and the probability that the disabled spouse is not receiving another type of benefit.
Assumptions and Methods

128

The Office of the Chief Actuary bases the projected number of children

under age 18, and students aged 18 and 19, who are entitled to benefits as

survivors of deceased workers, on the number of children in the population

whose mothers or fathers are deceased. The short-range model develops the

number of entitled children by applying award rates to the number of

orphaned children and by applying termination rates to the number of children already receiving benefits.

The long-range model projects the number of child-survivor beneficiaries in

a manner similar to that for student beneficiaries of retired workers, except

that the model replaces the probability that the parent is aged 62 or over with

the probability that the parent is deceased.

The Office of the Chief Actuary projects the number of disabled-child-survivor beneficiaries, aged 18 and over, from the adult population. The shortrange model applies award rates to the population and applies termination

rates to the number of disabled-child-survivor beneficiaries already receiving

benefits. The long-range model projects the number of disabled-child-survivor beneficiaries in a manner similar to that for student-child-survivor beneficiaries, except for including an additional factor to reflect the probability of

being disabled before age 22.

The short-range model develops the numbers of entitled mother-survivor and

father-survivor beneficiaries by applying award rates to the number of

awards to child-survivor beneficiaries, in cases where the children are either

under age 16 or disabled, and by applying termination rates to the number of

mother-survivors and father-survivors already receiving benefits. The longrange model estimates the numbers of mother-survivor and father-survivor

beneficiaries, assuming they are not remarried, from the number of child-survivor beneficiaries.

The Office of the Chief Actuary projects the number of parent-survivor beneficiaries based on the historical pattern of the number of such beneficiaries.

Table V.C4 shows the projected number of beneficiaries under the OASI program by type of benefit. The retired worker beneficiary counts include those

persons who receive a residual auxiliary benefit in addition to their retiredworker benefit. The office makes estimates of the number and amount of

residual payments separately for spouses and widow(er)s.
129

Program Assumptions and Methods

Table V.C4.—OASI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1945-2090

[In thousands]

Calendar year

Retired workers and auxiliaries Survivors

Worker Total a Spouse Child

WidowwidowerMotherfather Child Parent

Historical data:

1945 . . . . . . . . . . 518 159 13 94 121 377 6 1,288

1950 . . . . . . . . . . 1,771 508 46 314 169 653 15 3,477

1955 . . . . . . . . . . 4,474 1,192 122 701 292 1,154 25 7,961

1960 . . . . . . . . . . 8,061 2,269 268 1,544 401 1,577 36 14,157

1965 . . . . . . . . . . 11,101 2,614 461 2,371 472 2,074 35 19,128

1970 . . . . . . . . . . 13,349 2,668 546 3,227 523 2,688 29 23,030

1975 . . . . . . . . . . 16,589 2,867 643 3,888 582 2,919 21 27,509

1980 . . . . . . . . . . 19,564 3,018 639 4,415 563 2,610 15 30,823

1985 . . . . . . . . . . 22,435 3,069 456 4,862 372 1,918 10 33,122

1990 . . . . . . . . . . 24,841 3,104 421 5,098 304 1,777 6 35,551

1995 . . . . . . . . . . 26,679 3,027 441 5,213 275 1,884 4 37,522

1996 . . . . . . . . . . 26,905 2,971 442 5,199 242 1,898 4 37,661

1997 . . . . . . . . . . 27,282 2,926 441 5,043 230 1,893 3 37,817

1998 . . . . . . . . . . 27,518 2,866 439 4,981 221 1,884 3 37,911

1999 . . . . . . . . . . 27,784 2,811 442 4,936 212 1,885 3 38,073

2000 . . . . . . . . . . 28,505 2,798 459 4,901 203 1,878 3 38,747

2001 . . . . . . . . . . 28,843 2,742 467 4,828 197 1,890 3 38,969

2002 . . . . . . . . . . 29,195 2,681 477 4,771 194 1,908 2 39,227

2003 . . . . . . . . . . 29,537 2,622 480 4,707 190 1,910 2 39,448

2004 . . . . . . . . . . 29,952 2,569 482 4,643 184 1,901 2 39,733

2005 . . . . . . . . . . 30,461 2,524 488 4,569 178 1,903 2 40,126

2006 . . . . . . . . . . 30,976 2,476 490 4,494 171 1,899 2 40,508

2007 . . . . . . . . . . 31,528 2,431 494 4,436 165 1,892 2 40,947

2008 . . . . . . . . . . 32,274 2,370 525 4,380 160 1,915 2 41,625

2009 . . . . . . . . . . 33,514 2,343 561 4,327 160 1,921 2 42,828

2010 . . . . . . . . . . 34,593 2,316 580 4,285 159 1,913 2 43,847

2011 . . . . . . . . . . 35,600 2,291 594 4,239 158 1,907 2 44,791

2012 . . . . . . . . . . 36,720 2,280 612 4,193 154 1,907 1 45,868

2013 . . . . . . . . . . 37,893 2,285 625 4,139 150 1,899 1 46,992

2014 . . . . . . . . . . 39,009 2,303 635 4,092 143 1,892 1 48,075

Intermediate:

2015 . . . . . . . . . . 40,558 2,312 648 4,106 139 1,891 1 49,656

2020 . . . . . . . . . . 49,132 2,334 759 4,069 130 1,898 1 58,323

2025 . . . . . . . . . . 56,786 2,301 859 4,005 129 1,914 1 65,995

2030 . . . . . . . . . . 63,706 2,454 965 3,889 138 1,930 1 73,083

2035 . . . . . . . . . . 68,251 2,561 1,051 3,758 145 1,986 1 77,753

2040 . . . . . . . . . . 70,802 2,541 1,076 3,591 143 1,967 1 80,121

2045 . . . . . . . . . . 72,433 2,506 1,076 3,454 139 1,922 1 81,532

2050 . . . . . . . . . . 74,423 2,515 1,095 3,340 135 1,884 1 83,394

2055 . . . . . . . . . . 77,146 2,565 1,121 3,254 131 1,847 1 86,066

2060 . . . . . . . . . . 80,370 2,668 1,142 3,194 128 1,816 1 89,320

2065 . . . . . . . . . . 83,521 2,780 1,157 3,170 126 1,798 1 92,554

2070 . . . . . . . . . . 86,953 2,903 1,196 3,174 123 1,787 1 96,139

2075 . . . . . . . . . . 89,980 3,023 1,220 3,181 120 1,772 1 99,299

2080 . . . . . . . . . . 91,951 3,118 1,224 3,198 117 1,752 1 101,361

2085 . . . . . . . . . . 94,652 3,230 1,255 3,227 114 1,732 1 104,211

2090 . . . . . . . . . . 98,228 3,333 1,296 3,247 112 1,716 1 107,933
Assumptions and Methods

130

Notes: 

1. The number of beneficiaries does not include uninsured individuals who receive benefits under Section

228 of the Social Security Act. Transfers from the General Fund of the Treasury reimburse the OASI Trust

Fund for the cost of most of these individuals.

2. Totals do not necessarily equal the sums of rounded components.

5. Disability Insurance Beneficiaries

The DI Trust Fund pays for benefits to disabled workers who: (1) satisfy the

disability insured requirements, (2) are unable to engage in any substantial

gainful activity due to a medically determinable physical or mental impairment severe enough to satisfy the requirements of the program, and (3) have

not yet attained normal retirement age. Spouses and children of such disabled

Low-cost:

2015 . . . . . . . . . . 40,549 2,312 648 4,105 139 1,891 1 49,645

2020 . . . . . . . . . . 48,957 2,335 762 4,055 131 1,912 1 58,153

2025 . . . . . . . . . . 56,227 2,271 873 4,009 128 2,000 1 65,510

2030 . . . . . . . . . . 62,547 2,415 991 3,929 136 2,085 1 72,105

2035 . . . . . . . . . . 66,406 2,493 1,094 3,828 144 2,233 1 76,198

2040 . . . . . . . . . . 68,273 2,436 1,135 3,677 143 2,290 1 77,954

2045 . . . . . . . . . . 69,371 2,371 1,149 3,547 142 2,298 1 78,879

2050 . . . . . . . . . . 70,981 2,350 1,187 3,434 141 2,302 1 80,396

2055 . . . . . . . . . . 73,472 2,371 1,236 3,346 142 2,313 1 82,882

2060 . . . . . . . . . . 76,490 2,439 1,283 3,283 145 2,342 1 85,983

2065 . . . . . . . . . . 79,431 2,514 1,321 3,257 148 2,394 1 89,067

2070 . . . . . . . . . . 82,554 2,596 1,387 3,265 151 2,455 1 92,410

2075 . . . . . . . . . . 85,181 2,670 1,436 3,273 153 2,504 1 95,218

2080 . . . . . . . . . . 86,859 2,731 1,457 3,302 155 2,539 1 97,043

2085 . . . . . . . . . . 89,807 2,816 1,515 3,367 156 2,573 1 100,236

2090 . . . . . . . . . . 94,436 2,901 1,597 3,439 159 2,618 1 105,150

High-cost:

2015 . . . . . . . . . . 40,564 2,312 647 4,107 139 1,891 1 49,662

2020 . . . . . . . . . . 49,279 2,331 753 4,080 128 1,877 1 58,449

2025 . . . . . . . . . . 57,377 2,337 842 3,976 133 1,820 1 66,485

2030 . . . . . . . . . . 64,942 2,514 938 3,814 140 1,768 1 74,116

2035 . . . . . . . . . . 70,218 2,668 1,008 3,646 143 1,744 1 79,427

2040 . . . . . . . . . . 73,530 2,684 1,022 3,464 136 1,669 1 82,506

2045 . . . . . . . . . . 75,800 2,684 1,009 3,326 126 1,585 1 84,531

2050 . . . . . . . . . . 78,281 2,724 1,001 3,221 118 1,513 1 86,859

2055 . . . . . . . . . . 81,281 2,809 1,000 3,145 110 1,450 1 89,796

2060 . . . . . . . . . . 84,710 2,944 994 3,092 103 1,389 1 93,234

2065 . . . . . . . . . . 88,027 3,100 985 3,071 96 1,337 1 96,617

2070 . . . . . . . . . . 91,750 3,252 1,000 3,069 90 1,293 1 100,456

2075 . . . . . . . . . . 95,164 3,400 1,003 3,067 84 1,253 1 103,971

2080 . . . . . . . . . . 97,430 3,509 994 3,065 78 1,211 1 106,288

2085 . . . . . . . . . . 99,802 3,629 999 3,059 73 1,171 1 108,735

2090 . . . . . . . . . . 102,301 3,732 1,010 3,038 69 1,135 1 111,285

a Retired-worker beneficiaries include persons who also receive a residual benefit consisting of the excess of

an auxiliary benefit over their retired-worker benefit.

Table V.C4.—OASI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1945-2090 (Cont.)

[In thousands]

Calendar year

Retired workers and auxiliaries Survivors

Worker Total a Spouse Child

WidowwidowerMotherfather Child Parent
131

Program Assumptions and Methods

workers may also receive DI benefits provided they satisfy certain criteria,

primarily age and earnings requirements.

The Office of the Chief Actuary projects the number of disabled-worker beneficiaries in current-payment status (disability prevalence) for each future

year. The projections start with the number in current-payment status as of

December 2014. Projections of the number of new beneficiaries awarded

benefits each year (disability incidence) and the number of beneficiaries

leaving the disability rolls each year then determine the number in currentpayment status in later years. Beneficiaries leave the rolls due to death and

recovery (disability terminations) and due to conversion from disabledworker to retired-worker beneficiary status at normal retirement age, after

which the OASI Trust Fund pays for benefits. The remainder of this section

describes the concepts of disability incidence, termination, and prevalence.

a. Disability Incidence

The disability incidence rate is the ratio of the number of new beneficiaries

awarded benefits each year to the number of individuals who meet insured

requirements but are not yet receiving benefits (the disability-exposed population1). The Office of the Chief Actuary projects the number of newly

awarded beneficiaries for each future year by multiplying assumed age-sexspecific disability incidence rates and the projected disability-exposed population by age and sex.

Figure V.C3 illustrates the historical and estimated incidence rates under the

three alternatives. Incidence rates have varied substantially during the historical period since 1970 due to a variety of demographic and economic factors,

along with changes in legislation and program administration. The solid lines

in figure V.C3 show the incidence rate adjusted to the age-sex distribution of

the disability-exposed population for 2000. This adjustment allows a comparison of incidence rates over time by focusing on the likelihood of becoming disabled, and by excluding the effects of a changing distribution of the

population toward ages where disability is more or less likely.

The dashed lines in figure V.C3 represent the gross (unadjusted) incidence

rates. The changing age-sex distribution of the exposed population over time

influences these unadjusted rates. The gross incidence rate fell substantially

below the age-sex-adjusted rate between 1975 and 1995 as the baby-boom

generation swelled the size of the younger working-age population, where

 1 The disability-exposed population excludes those receiving benefits, while the disability insured population includes them. Section V.C.3 of this report describes the projection of the disability insured population.
Assumptions and Methods

132

disability incidence is lower than in older populations. After 1995, the gross

rate rose faster than the age-sex-adjusted rate as the baby-boom generation

moved into an age range where disability incidence peaks. After 2023, the

projected gross incidence rate declines relative to the age-sex-adjusted rate

as the baby-boom generation moves above the normal retirement age and the

lower-birth-rate cohorts of the 1970s enter prime disability ages (50 to normal retirement age). As these smaller cohorts age beyond normal retirement

age, by about 2050, the gross incidence rate returns to a higher relative level

under the intermediate assumptions. Thereafter, the gross rate remains higher

and reflects the persistently higher average age of the working-age population, which is largely due to lower birth rates since 1965.

For the first 10 years of the projection period (through 2024), incidence rates

reflect several factors including: (1) aspects of program administration, such

as efforts to reduce the disability backlog and recent changes to how claims

are adjudicated; (2) assumed future unemployment rates; and (3) underlying

trends in incidence. As described in section V.B.5, all three sets of economic

assumptions reflect a continuation of the gradual economic recovery from

the recession that began in December 2007. The corresponding projected

unemployment rates follow near-term paths specific to the three alternative

sets of economic assumptions, then gradually move toward their respective

ultimate levels. At the beginning of the recent period of high unemployment,

disability incidence rates were well above the general trend level, with rates

reaching a peak in 2010. Over the last few years, incidence rates have subsided as the economy has recovered. At the beginning of the projection

period, disability incidence rates remain briefly below the general trend level

for each alternative because some of the earlier additional awards would

have occurred in a later year. Due to expected efforts to reduce backlogs in

processing disability determinations which have developed over the last few

years, incidence rates are projected to rise above the general trend level

through about 2020. Over the rest of the short-range period, disability incidence rates under each alternative evolve toward their ultimate levels along

trajectories consistent with the assumed unemployment rates. After 2024,

age-sex-specific incidence rates trend toward the ultimate rates assumed for

the long-range projections and reach these ultimate rates in 2034. These ultimate age-sex-specific disability incidence rates were selected based on careful analysis of historical levels and patterns and expected future conditions,

including the impact of scheduled increases in the normal retirement age.1

 1 Projected incidence rates are adjusted upward to account for additional workers who are expected to file

for disability benefits (rather than retirement benefits) in response to reductions in retirement benefits as the

normal retirement age rises.
133

Program Assumptions and Methods

The ultimate incidence rates represent the expected average rates of incidence for the future.

For the intermediate alternative, the Trustees assume that the ultimate agesex-adjusted incidence rate (adjusted to the disability-exposed population for

the year 2000) will be 5.4 awards per thousand exposed, which is the same as

in last year’s report. Figure V.C3 illustrates that the estimated ultimate agesex-adjusted incidence rate of 5.4 is slightly higher than the average rate for

the historical period 1970 through 2014, reflecting the increase in female

incidence rates over this period. However, a similar comparison using gross

incidence rates gives a different result. The estimated ultimate gross incidence rate is substantially greater than the average gross rate over the historical period due to the large changes in the age-sex distribution of the

disability-exposed population between 1970 and 2010.

The Trustees assume that the ultimate age-sex-adjusted incidence rates for

the low-cost and high-cost alternatives will be 4.3 and 6.5 awards per thousand exposed, or about 17 percent lower and 25 percent higher than the average for the historical period, respectively. These ultimate age-sex-adjusted

incidence rates are similar to those in last year’s report.

 Figure V.C3.—DI Disability Incidence Rates, 1970-2090

[Awards per thousand disability-exposed]

0

1

2

3

4

5

6

7

8

9

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Gross incidence rates

Age-sex-adjusted

incidence rates

I

II

III

Historical Estimated
Assumptions and Methods

134

b. Disability Termination

Beneficiaries stop receiving disability benefits when they die, recover from

their medically-determinable disabling condition, or return to work. Disabled-worker beneficiaries who return to substantial work for an extended

period are deemed to have recovered, and their benefits are then terminated.

The termination rate is the ratio of the number of terminations for these reasons to the average number of disabled-worker beneficiaries during the year.

The Office of the Chief Actuary projects termination rates by age, sex, and

reason for termination. In addition, the office projects termination rates by

duration of entitlement to disabled-worker benefits in the long-range period

(post-2024).

In the short-range period (through 2024), the projected age-sex-adjusted

death rate (adjusted to the 2000 disabled-worker population) under the intermediate assumptions gradually declines from 25.6 deaths per thousand beneficiaries for 2014 to about 22.8 per thousand for 2024. The projected agesex-adjusted recovery rate (medical improvement and return to work) under

the intermediate assumptions evolves from a level of 11.3 per thousand beneficiaries for 2014 to 10.9 per thousand beneficiaries for 2024. Under the lowcost and high-cost assumptions, total age-sex-adjusted termination rates due

to death and recovery are roughly 10-15 percent higher or lower, respectively, than under the intermediate assumptions.

For the long-range period (post-2024), the Office of the Chief Actuary projects death and recovery rates by age, sex, and duration of entitlement relative

to the average level of rates experienced over the base period 2006-2010.

The assumed ultimate age-sex-adjusted recovery rate for disabled workers is

about 10.4 per thousand beneficiaries. The assumed ultimate age-sexadjusted recovery rates for the low-cost and high-cost alternatives are about

12.6 and 8.3 recoveries per thousand beneficiaries, respectively. Recovery

rates by age, sex, and duration of entitlement reach ultimate levels in the

twentieth year of the projection period (2034) for all three sets of assumptions. In contrast, death rates by age and sex change throughout the longrange period at the same rate as death rates in the general population. From

the age-sex-adjusted death rate of 25.6 per thousand beneficiaries in 2014,

this rate decreases to 18.2, 11.4, and 6.7 per thousand disabled-worker beneficiaries for 2090 under the low-cost, intermediate, and high-cost assumptions, respectively.

Figure V.C4 illustrates gross and age-sex-adjusted total termination rates

(including both recoveries and deaths) for disabled-worker beneficiaries for

the historical period since 1970, and for the projection period through 2090.
135

Program Assumptions and Methods

In the near term, through 2017, recovery terminations are projected to

increase, consistent with the assumption that the Social Security Administration will receive sufficient budget appropriations to reduce the pending backlog of continuing disability reviews. As with incidence rates, the age-sexadjusted termination rate illustrates the real change in the tendency to terminate benefits. Changes in the age-sex distribution of the beneficiary population influence the gross termination rate. A shift in the beneficiary population

to older ages, as occurred over the past 20 years when the baby-boom generation moved into pre-retirement ages, increases gross death termination rates

relative to the age-sex-adjusted rates.

c. Comparison of Incidence, Termination, and Conversion

Incidence and termination rates are the foundation for projecting the number

of disabled-worker beneficiaries in current-payment status. At normal retirement age, disabled-worker beneficiaries convert to retired-worker status and

leave the DI rolls. 

Figure V.C5 compares the historical and projected (intermediate) levels of

incidence, termination, and conversion on both a gross basis and an age-sexadjusted basis. Incidence rates have varied widely, and the Trustees expect

 Figure V.C4.—DI Disability Termination Rates, 1970-2090

[Terminations per thousand disabled-worker beneficiaries]

0

20

40

60

80

100

120

140

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Gross termination rates

Age-sex-adjusted

termination rates

II

III

I

Historical Estimated
Assumptions and Methods

136

the age-sex adjusted rates under the intermediate assumptions to remain near

the middle of the high and low extremes experienced since 1970. Termination rates have declined and the Trustees expect them to continue to decline,

largely because of declining death rates. 

Conversions are simply a transfer of beneficiaries at normal retirement age

from the DI Trust Fund account to the OASI Trust Fund account. Therefore,

the disability “conversion” rate is 100 percent for disabled-worker beneficiaries reaching normal retirement age in a given year and zero at all other ages.

After conversion, recovery from the disabling condition is no longer relevant

for benefit eligibility. The conversion ratio is the number of conversions in a

given year (that is, beneficiaries who reach normal retirement age) divided

by the average number of disabled-worker beneficiaries at all ages in that

year. The ratio is constant on an age-sex-adjusted basis, except for the two

periods during which normal retirement age increases under current law. On

a gross basis, however, the conversion ratio rises and falls with the changing

proportion of all disabled-worker beneficiaries who attain normal retirement

age in a given year. The gross conversion ratio generally increases from 2002

to 2030 due to aging of the beneficiary population.

 Figure V.C5.—Comparison of DI Disability Incidence Rates, Termination Rates and 

Conversion Ratios Under Intermediate Assumptions, 1970-2090

[Awards per thousand disability-exposed;

terminations and conversions per thousand disabled-worker beneficiaries]

0

20

40

60

80

100

120

140

160

0

1

2

3

4

5

6

7

8

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Termination rates &

Conversion ratios

Incidence rates

Calendar year

Gross incidence rates

Age-sex-adjusted incidence rates

Gross conversion ratios

Age-sex-adjusted conversion ratios

Gross termination rates

Historical Estimated

Age-sex-adjusted termination rates
137

Program Assumptions and Methods

d. DI Beneficiaries and Disability Prevalence Rates

The Office of the Chief Actuary makes detailed projections of disabledworker awards, terminations, and conversions and combines these to project

the number of disabled workers receiving benefits over the next 75 years.

Table V.C5 presents the projected numbers of disabled workers in currentpayment status. The number of disabled workers in current-payment status

grows from 9.0 million at the end of 2014, to 12.6 million, 14.5 million, and

15.7 million at the end of 2090, under the low-cost, intermediate, and highcost assumptions, respectively. Of course, much of this growth results from

the growth and aging of the population described earlier in this chapter. Table

V.C5 also presents projected numbers of auxiliary beneficiaries and disability prevalence rates on both a gross basis and an age-sex-adjusted basis.

Table V.C5.—DI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1960-2090

[Beneficiaries in thousands; prevalence rates per thousand persons insured for disability benefits]

Calendar year

Disabledworker

beneficiaries

Auxiliary beneficiaries

Total

beneficiaries

Disability

prevalence rates

Spouse Child Gross

Age-sexadjusteda

Historical data:

1960. . . . . . . . . . . . 455 77 155 687 — —

1965. . . . . . . . . . . . 988 193 558 1,739 — —

1970. . . . . . . . . . . . 1,493 283 889 2,665 20 18

1975. . . . . . . . . . . . 2,488 453 1,411 4,351 29 28

1980. . . . . . . . . . . . 2,856 462 1,359 4,677 28 31

1985. . . . . . . . . . . . 2,653 306 945 3,904 24 26

1990. . . . . . . . . . . . 3,007 266 989 4,261 25 28

1995. . . . . . . . . . . . 4,179 264 1,409 5,852 33 35

1996. . . . . . . . . . . . 4,378 224 1,463 6,065 34 36

1997. . . . . . . . . . . . 4,501 207 1,438 6,146 34 36

1998. . . . . . . . . . . . 4,691 190 1,446 6,327 35 36

1999. . . . . . . . . . . . 4,870 176 1,468 6,514 36 36

2000. . . . . . . . . . . . 5,036 165 1,466 6,667 36 36

2001. . . . . . . . . . . . 5,268 157 1,482 6,907 38 37

2002. . . . . . . . . . . . 5,539 152 1,526 7,217 39 38

2003. . . . . . . . . . . . 5,869 151 1,571 7,590 41 38

2004. . . . . . . . . . . . 6,198 153 1,599 7,950 43 39

2005. . . . . . . . . . . . 6,519 157 1,633 8,309 45 40

2006. . . . . . . . . . . . 6,807 156 1,652 8,615 46 40

2007. . . . . . . . . . . . 7,099 154 1,665 8,918 48 41

2008. . . . . . . . . . . . 7,427 155 1,692 9,273 50 41

2009. . . . . . . . . . . . 7,788 159 1,749 9,695 52 43

2010. . . . . . . . . . . . 8,204 161 1,820 10,185 55 44

2011. . . . . . . . . . . . 8,576 164 1,874 10,614 58 45

2012. . . . . . . . . . . . 8,827 163 1,900 10,890 59 46

2013. . . . . . . . . . . . 8,941 157 1,889 10,987 60 46

2014. . . . . . . . . . . . 8,955 150 1,828 10,932 59 46
Assumptions and Methods

138

Note: Totals do not necessarily equal the sums of rounded components.

Intermediate:

2015. . . . . . . . . . . . 9,017 149 1,845 11,012 60 45

2020. . . . . . . . . . . . 9,470 155 1,905 11,530 61 46

2025. . . . . . . . . . . . 10,001 169 1,935 12,106 63 46

2030. . . . . . . . . . . . 9,974 188 2,084 12,246 61 46

2035. . . . . . . . . . . . 10,178 207 2,292 12,677 61 46

2040. . . . . . . . . . . . 10,550 210 2,393 13,152 62 47

2045. . . . . . . . . . . . 11,203 222 2,454 13,878 63 47

2050. . . . . . . . . . . . 11,660 227 2,510 14,398 64 48

2055. . . . . . . . . . . . 12,056 239 2,568 14,863 65 48

2060. . . . . . . . . . . . 12,241 244 2,635 15,121 65 49

2065. . . . . . . . . . . . 12,584 256 2,721 15,561 66 49

2070. . . . . . . . . . . . 12,893 267 2,807 15,967 66 49

2075. . . . . . . . . . . . 13,108 270 2,875 16,253 66 49

2080. . . . . . . . . . . . 13,677 281 2,935 16,892 67 50

2085. . . . . . . . . . . . 14,227 294 2,999 17,520 68 50

2090. . . . . . . . . . . . 14,484 298 3,069 17,851 68 50

Low-cost:

2015. . . . . . . . . . . . 8,934 149 1,815 10,897 59 45

2020. . . . . . . . . . . . 8,828 152 1,757 10,736 57 43

2025. . . . . . . . . . . . 8,897 147 1,746 10,790 55 40

2030. . . . . . . . . . . . 8,512 153 1,837 10,502 51 39

2035. . . . . . . . . . . . 8,382 158 1,997 10,537 49 38

2040. . . . . . . . . . . . 8,475 153 2,076 10,704 48 37

2045. . . . . . . . . . . . 8,876 157 2,122 11,155 48 37

2050. . . . . . . . . . . . 9,182 158 2,170 11,510 48 37

2055. . . . . . . . . . . . 9,481 164 2,236 11,881 48 37

2060. . . . . . . . . . . . 9,657 167 2,331 12,155 48 37

2065. . . . . . . . . . . . 9,987 175 2,458 12,619 48 38

2070. . . . . . . . . . . . 10,334 182 2,589 13,106 47 38

2075. . . . . . . . . . . . 10,679 186 2,700 13,565 47 38

2080. . . . . . . . . . . . 11,378 195 2,800 14,373 48 38

2085. . . . . . . . . . . . 12,113 206 2,904 15,223 49 38

2090. . . . . . . . . . . . 12,572 213 3,021 15,805 49 38

High-cost:

2015. . . . . . . . . . . . 9,100 150 1,875 11,126 60 46

2020. . . . . . . . . . . . 10,137 158 2,048 12,343 67 50

2025. . . . . . . . . . . . 11,115 197 2,110 13,422 71 52

2030. . . . . . . . . . . . 11,455 234 2,304 13,992 71 53

2035. . . . . . . . . . . . 12,004 270 2,538 14,812 73 55

2040. . . . . . . . . . . . 12,672 282 2,649 15,603 76 57

2045. . . . . . . . . . . . 13,588 305 2,701 16,594 80 58

2050. . . . . . . . . . . . 14,192 316 2,739 17,248 82 59

2055. . . . . . . . . . . . 14,670 334 2,777 17,780 84 60

2060. . . . . . . . . . . . 14,830 340 2,803 17,972 85 60

2065. . . . . . . . . . . . 15,133 353 2,830 18,316 87 61

2070. . . . . . . . . . . . 15,322 364 2,851 18,536 88 61

2075. . . . . . . . . . . . 15,286 363 2,855 18,504 87 61

2080. . . . . . . . . . . . 15,559 371 2,857 18,787 89 61

2085. . . . . . . . . . . . 15,749 382 2,865 18,996 89 62

2090. . . . . . . . . . . . 15,707 383 2,880 18,970 89 62

a Adjusted to the age-sex distribution of the insured population for the year 2000.

Table V.C5.—DI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1960-2090 (Cont.)

[Beneficiaries in thousands; prevalence rates per thousand persons insured for disability benefits]

Calendar year

Disabledworker

beneficiaries

Auxiliary beneficiaries

Total

beneficiaries

Disability

prevalence rates

Spouse Child Gross

Age-sexadjusteda
139

Program Assumptions and Methods

The disability prevalence rate is the ratio of the number of disabled-worker

beneficiaries in current-payment status to the number of persons insured for

disability benefits. Figure V.C6 illustrates the historical and projected disability prevalence rates on both a gross basis and on an age-sex-adjusted

basis (adjusted to the age-sex distribution of the insured population for the

year 2000).

Changes in prevalence rates are a direct result of changes in incidence rates

and termination rates. Figure V.C5 depicts patterns for incidence and termination rates, which are helpful for understanding the trend in prevalence

rates. Annual incidence and termination rates are not directly comparable or

combinable because their denominators differ.

Age-sex-adjusted prevalence rates have increased primarily because: (1) termination rates have declined, (2) incidence rates at younger ages have

increased relative to rates at older ages, and (3) incidence rates have

increased substantially for women to parity with men. Gross prevalence rates

have increased more than age-sex-adjusted prevalence rates ever since the

baby-boom generation began to reach ages 45 through normal retirement

age, a time of life when disability incidence rates are relatively high. The

 Figure V.C6.—DI Disability Prevalence Rates, 1970-2090

[Rate per thousand persons insured for disability benefits]

0

10

20

30

40

50

60

70

80

90

100

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Gross prevalence rates

Age-sex-adjusted

prevalence rates

III

II

II

I

I

Historical Estimated

III
Assumptions and Methods

140

Office of the Chief Actuary projects both gross and age-sex adjusted prevalence rates to grow at a slower pace based on assumed stabilization in three

factors: (1) the age distribution of the general population, (2) the age distribution of the disability insured population, and (3) incidence rates by age and

gender. As these factors gradually stabilize, the declining death termination

rate continues to have a small influence toward higher disability prevalence

rates.

As mentioned above in the discussion of incidence and termination rates, the

age-sex-adjusted prevalence rate isolates the changing trend in the underlying likelihood of receiving benefits for the insured population, without

reflecting changes in the age distribution of the population. As with incidence rates, gross disability prevalence rates declined relative to the age-sexadjusted rate when the baby-boom generation reached working age between

1970 and 1990; this trend reflects the lower disability prevalence rates associated with younger ages. Conversely, the gross rate of disability prevalence

has increased relative to the age-sex-adjusted rate after 1990 due to the aging

of the baby-boom generation into ages with higher disability prevalence

rates.

Under the intermediate assumptions, the projected age-sex-adjusted disability prevalence rate grows from 45.6 per thousand disability insured at the end

of 2014 to 49.9 per thousand at the end of 2090. As mentioned above, the

Office of the Chief Actuary projects that the growth in prevalence will slow

relative to the historical period.

Under the low-cost and high-cost assumptions, the age-sex-adjusted disability prevalence rate decreases to 38.3 per thousand and increases to 61.8 per

thousand insured workers at the end of 2090, respectively.

Table V.C5 presents projections of the numbers of auxiliary beneficiaries

paid from the DI Trust Fund. As indicated at the beginning of this subsection, auxiliary beneficiaries are qualifying spouses and children of disabled

workers. A spouse must either be at least age 62 or have an eligible child

beneficiary in his or her care who is either under age 16 or disabled prior to

age 22. A child must be: (1) under age 18, (2) age 18 or 19 and still a student

in high school, or (3) age 18 or older and disabled prior to age 22.

The projection of the number of auxiliary beneficiaries relies on the projected number of disabled-worker beneficiaries. In the short-range period

(2015-24), the Office of the Chief Actuary projects incidence and termination rates for each category of auxiliary beneficiary. After 2024, the office

projects child beneficiaries at ages 18 and under in relation to the projected

number of children in the population using the probability that either of their
141

Program Assumptions and Methods

parents is a disabled-worker beneficiary. The office projects the remaining

categories of children and spouses in a similar manner.

6. Covered and Taxable Earnings, Taxable Payroll, and Payroll Tax

Contributions

Covered earnings are the sum of covered wages and covered self-employment net earnings. The Office of the Chief Actuary projects covered wages

for component sectors of the economy (i.e., private, State and local, Federal

civilian, and military) based on the projected overall growth of sectoral and

total wages in the U.S. economy. The projections of covered wages also

reflect changes in covered employment due to a relative increase in non-covered undocumented immigrants and to the mandatory coverage of new hires

in the Federal civilian sector. The office projects covered self-employment

net earnings based on the growth in net proprietors’ income in the U.S. economy.

Taxable earnings are the amount of covered earnings subject to the Social

Security payroll tax. Taxable wages for an employee are total covered wages

from all wage employment up to the contribution and benefit base. Taxable

wages for an employer are the sum of all covered wages paid to each

employee up to the base. Employees with multiple jobs whose total wages

exceed the base are eligible for a refund of excess employee taxes withheld;

employers are not eligible for a refund on this basis. For self-employed

workers with no taxable wages, taxable earnings are the amount of covered

self-employment net earnings up to the base. For self-employed workers

with taxable wages less than the base, covered self-employment net earnings

are taxable up to the difference between the base and their taxable wages.

For projection purposes, the Office of the Chief Actuary computes taxable

earnings based on a proportion of covered earnings that is at or below the

base.

The OASDI taxable payroll (see table VI.G6) for a year is the amount of

earnings which, when multiplied by the combined OASDI employeeemployer payroll tax rate for that year, yields the total amount of payroll

taxes due from wages paid and self-employment net earnings for the year.

The Trustees use taxable payroll to determine income rates, cost rates, and

actuarial balances. Taxable payroll is derived by adjusting total taxable earnings to account for categories of earnings that are taxed at rates other than the

combined employee-employer rate and to take into account amounts credited

as wages that were not included in normally reported wages. For 1951 and

later, taxable earnings are reduced by one-half of the amount of wages paid

to employees with multiple jobs that exceed the contribution and benefit
Assumptions and Methods

142

base. For 1983 through 2001, deemed wage credits for military service after

1956 are added to taxable earnings. The self-employment tax rates for 1951

through 1983 were less than the combined employee-employer rates; therefore, the self-employment component of taxable payroll for those years is

reduced by multiplying the ratio of the self-employment rate to the combined

employee-employer rate times the taxable self-employment net earnings.

Finally, for 1966 through 1979, employers were exempt from paying their

share of payroll tax on their employees’ tips and, for 1980 through 1987,

employers paid tax on only part of their employees’ tips. For those years, the

taxable payroll is reduced by half of the amount of tips for which the

employer owed no payroll tax.

The ratio of taxable payroll to covered earnings (the taxable ratio) fell from

88.3 percent for 1984 to 82.5 percent for 2000, mostly due to much higher

increases in wage levels for very high earners than for all other earners. From

2000 to 2010, the taxable ratio varied with the business cycle, rising during

economic downturns and falling during recoveries. Specifically, the taxable

ratio rose to 85.5 percent for 2002, declined to 82.3 percent for 2007, rose to

85.0 percent for 2009, and was 83.1 percent for 2013.

For the 2015 report, the Trustees assume a level for the taxable ratio at the

end of the short-range period (2024) of 82.5 percent for the intermediate

assumptions, 81.0 percent for the high-cost assumptions (or 1.5 percentage

points lower than the intermediate assumptions), and 84.0 percent for the

low-cost assumptions (or 1.5 percentage points higher than the intermediate

assumptions). These are the same assumptions that the Trustees made for the

end of the short-range period (2023) for the 2014 report.

The Office of the Chief Actuary projects payroll tax contributions using the

patterns of tax collection required by Federal laws and regulations. The

office determines payroll tax liabilities by multiplying the scheduled tax rates

for each year by the amount of taxable wages and self-employment net earnings for that year. The office then splits these liabilities into amounts by collection period. For wages, Federal law requires that employers withhold

OASDI and HI payroll taxes and Federal individual income taxes from

employees’ pay. As an employer’s accumulation of such taxes (including the

employer share of payroll taxes) meets certain thresholds, which the Department of the Treasury determines, the employer must deposit these taxes with

the U.S. Treasury by a specific day, depending on the amount of money
143

Program Assumptions and Methods

involved.1 For projection purposes, the office splits the payroll tax contributions related to wages into amounts paid in the same quarter as incurred and

in the following quarter. Self-employed workers must make estimated tax

payments on their earnings four times during the year and make up any

underestimate on their individual income tax returns. The projection splits

the self-employed tax liabilities by collection quarter to reflect this pattern of

receipts. 

The projected tax contributions also reflect the method used to ensure that

money transferred to the trust funds is adjusted, over time, to equal the actual

liability owed. Because payers generally make tax payments without identifying the separate OASDI contribution amounts, Treasury makes daily transfers of money from the general fund to the trust funds on an initial estimated

basis. The Social Security Administration periodically certifies the amounts

of wages and self-employment net earnings on which tax contributions are

owed for each year, at which time Treasury determines adjustments to appropriations to reconcile tax liabilities with deposits in the trust funds. This process also includes periodic transfers from the trust funds to the general fund

for contributions on wages in excess of the contribution and benefit base.

Table V.C6 shows the payroll tax contribution rates applicable under current

law in each calendar year and the allocation of these rates between the OASI

and DI Trust Funds.2 It also shows the contribution and benefit base for each

year through 2015.

 1 Generally, the higher the amount of liability, the sooner the taxes must be paid. For smaller employers,

payment is due by the middle of the month following when the liability was incurred. Medium-size employers have three banking days in which to make their deposits. Larger employers must make payment on the

next business day after paying their employees.

 2 Table VI.G1 shows the payroll tax contribution rates for the Hospital Insurance (HI) program.
Assumptions and Methods

144

Table V.C6.—Contribution and Benefit Base and Payroll Tax Contribution Rates

Calendar years

Contribution

and benefit 

base

Payroll tax contribution rates (percent)

Employees and employers, 

combineda Self-employedb

OASDI OASI DI OASDI OASI DI

1937-49 . . . . . . . . . $3,000 2.00 2.00 — — — —

1950. . . . . . . . . . . . 3,000 3.00 3.00 — — — —

1951-53 . . . . . . . . . 3,600 3.00 3.00 — 2.2500 2.2500 —

1954. . . . . . . . . . . . 3,600 4.00 4.00 — 3.0000 3.0000 —

1955-56 . . . . . . . . . 4,200 4.00 4.00 — 3.0000 3.0000 —

1957-58 . . . . . . . . . 4,200 4.50 4.00 0.50 3.3750 3.0000 0.3750

1959. . . . . . . . . . . . 4,800 5.00 4.50 .50 3.7500 3.3750 .3750

1960-61 . . . . . . . . . 4,800 6.00 5.50 .50 4.5000 4.1250 .3750

1962. . . . . . . . . . . . 4,800 6.25 5.75 .50 4.7000 4.3250 .3750

1963-65 . . . . . . . . . 4,800 7.25 6.75 .50 5.4000 5.0250 .3750

1966. . . . . . . . . . . . 6,600 7.70 7.00 .70 5.8000 5.2750 .5250

1967. . . . . . . . . . . . 6,600 7.80 7.10 .70 5.9000 5.3750 .5250

1968. . . . . . . . . . . . 7,800 7.60 6.65 .95 5.8000 5.0875 .7125

1969. . . . . . . . . . . . 7,800 8.40 7.45 .95 6.3000 5.5875 .7125

1970. . . . . . . . . . . . 7,800 8.40 7.30 1.10 6.3000 5.4750 .8250

1971. . . . . . . . . . . . 7,800 9.20 8.10 1.10 6.9000 6.0750 .8250

1972. . . . . . . . . . . . 9,000 9.20 8.10 1.10 6.9000 6.0750 .8250

1973. . . . . . . . . . . . 10,800 9.70 8.60 1.10 7.0000 6.2050 .7950

1974. . . . . . . . . . . . 13,200 9.90 8.75 1.15 7.0000 6.1850 .8150

1975. . . . . . . . . . . . 14,100 9.90 8.75 1.15 7.0000 6.1850 .8150

1976. . . . . . . . . . . . 15,300 9.90 8.75 1.15 7.0000 6.1850 .8150

1977. . . . . . . . . . . . 16,500 9.90 8.75 1.15 7.0000 6.1850 .8150

1978. . . . . . . . . . . . 17,700 10.10 8.55 1.55 7.1000 6.0100 1.0900

1979. . . . . . . . . . . . 22,900 10.16 8.66 1.50 7.0500 6.0100 1.0400

1980. . . . . . . . . . . . 25,900 10.16 9.04 1.12 7.0500 6.2725 .7775

1981. . . . . . . . . . . . 29,700 10.70 9.40 1.30 8.0000 7.0250 .9750

1982. . . . . . . . . . . . 32,400 10.80 9.15 1.65 8.0500 6.8125 1.2375

1983. . . . . . . . . . . . 35,700 10.80 9.55 1.25 8.0500 7.1125 .9375

1984c . . . . . . . . . . . 37,800 11.40 10.40 1.00 11.4000 10.4000 1.0000

1985c . . . . . . . . . . . 39,600 11.40 10.40 1.00 11.4000 10.4000 1.0000

1986c . . . . . . . . . . . 42,000 11.40 10.40 1.00 11.4000 10.4000 1.0000

1987c . . . . . . . . . . . 43,800 11.40 10.40 1.00 11.4000 10.4000 1.0000

1988c . . . . . . . . . . . 45,000 12.12 11.06 1.06 12.1200 11.0600 1.0600

1989c . . . . . . . . . . . 48,000 12.12 11.06 1.06 12.1200 11.0600 1.0600

1990 . . . . . . . . . . . 51,300 12.40 11.20 1.20 12.4000 11.2000 1.2000

1991. . . . . . . . . . . . 53,400 12.40 11.20 1.20 12.4000 11.2000 1.2000

1992. . . . . . . . . . . . 55,500 12.40 11.20 1.20 12.4000 11.2000 1.2000

1993. . . . . . . . . . . . 57,600 12.40 11.20 1.20 12.4000 11.2000 1.2000

1994. . . . . . . . . . . . 60,600 12.40 10.52 1.88 12.4000 10.5200 1.8800

1995. . . . . . . . . . . . 61,200 12.40 10.52 1.88 12.4000 10.5200 1.8800

1996. . . . . . . . . . . . 62,700 12.40 10.52 1.88 12.4000 10.5200 1.8800

1997. . . . . . . . . . . . 65,400 12.40 10.70 1.70 12.4000 10.7000 1.7000

1998. . . . . . . . . . . . 68,400 12.40 10.70 1.70 12.4000 10.7000 1.7000

1999. . . . . . . . . . . . 72,600 12.40 10.70 1.70 12.4000 10.7000 1.7000

2000. . . . . . . . . . . . 76,200 12.40 10.60 1.80 12.4000 10.6000 1.8000

2001. . . . . . . . . . . . 80,400 12.40 10.60 1.80 12.4000 10.6000 1.8000

2002. . . . . . . . . . . . 84,900 12.40 10.60 1.80 12.4000 10.6000 1.8000

2003. . . . . . . . . . . . 87,000 12.40 10.60 1.80 12.4000 10.6000 1.8000

2004. . . . . . . . . . . . 87,900 12.40 10.60 1.80 12.4000 10.6000 1.8000

2005. . . . . . . . . . . . 90,000 12.40 10.60 1.80 12.4000 10.6000 1.8000
145

Program Assumptions and Methods

7. Income From Taxation of Benefits

Under current law, the OASI and DI Trust Funds are credited with income

tax revenue from the taxation of up to the first 50 percent of OASI and DI

benefit payments. (The HI Trust Fund receives the remainder of the income

tax revenue from the taxation of up to 85 percent of OASI and DI benefit

payments.) Benefits are taxed for beneficiaries with adjusted income (including half of benefits and all non-taxable interest) exceeding specified threshold amounts. The threshold amounts are $25,000 for single filers, $32,000

for joint filers, and $0 for those married but filing separately.

For the short-range period, the Office of the Chief Actuary estimates the

income to the trust funds from taxation of benefits by applying the following

two factors (projected by the Office of Tax Analysis, Department of the Treasury) to total OASI and DI scheduled benefits: (1) the percentage of scheduled benefits (limited to 50 percent) that is taxable and (2) the average

marginal tax rate applicable to those benefits.

2006. . . . . . . . . . . . $94,200 12.40 10.60 1.80 12.4000 10.6000 1.8000

2007. . . . . . . . . . . . 97,500 12.40 10.60 1.80 12.4000 10.6000 1.8000

2008. . . . . . . . . . . . 102,000 12.40 10.60 1.80 12.4000 10.6000 1.8000

2009. . . . . . . . . . . . 106,800 12.40 10.60 1.80 12.4000 10.6000 1.8000

2010d . . . . . . . . . . . 106,800 12.40 10.60 1.80 12.4000 10.6000 1.8000

2011d . . . . . . . . . . . 106,800 10.40 8.89 1.51 10.4000 8.8900 1.5100

2012d . . . . . . . . . . . 110,100 10.40 8.89 1.51 10.4000 8.8900 1.5100

2013. . . . . . . . . . . . 113,700 12.40 10.60 1.80 12.4000 10.6000 1.8000

2014. . . . . . . . . . . . 117,000 12.40 10.60 1.80 12.4000 10.6000 1.8000

2015. . . . . . . . . . . . 118,500 12.40 10.60 1.80 12.4000 10.6000 1.8000

2016 and later . . . . e 12.40 10.60 1.80 12.4000 10.6000 1.8000

a Except as noted below, the combined employee/employer rate is divided equally between employees and

employers.

b Beginning in 1990, self-employed persons receive a deduction, for purposes of computing their net earnings, equal to half of the combined OASDI and HI contributions that would be payable without regard to the

contribution and benefit base. The OASDI contribution rate then applies to net earnings after this deduction,

but subject to the OASDI base.

c In 1984 only, employees received an immediate credit of 0.3 percent of taxable wages against their OASDI

payroll tax contributions. The self-employed received similar credits of 2.7 percent, 2.3 percent, and

2.0 percent against their combined OASDI and Hospital Insurance (HI) contributions on net earnings from

self-employment in 1984, 1985, and 1986-89, respectively. The General Fund of the Treasury reimbursed the

trust funds for these credits.

d Public Law 111-147 exempted most employers from paying the employer share of OASDI payroll tax on

wages paid during the period March 19, 2010 through December 31, 2010 to certain qualified individuals

hired after February 3, 2010. Public Law 111-312 reduced the OASDI payroll tax rate for 2011 by 2 percentage points for employees and for self-employed workers. Public Law 112-96 extended the 2011 rate reduction through 2012. These laws require that the General Fund of the Treasury reimburse the OASI and DI

Trust Funds for these temporary reductions in 2010 through 2012 payroll tax revenue, in order to “replicate

to the extent possible” revenue that would have been received if the combined employee/employer payroll

tax rates had remained at 12.4 percent for OASDI (10.6 percent for OASI and 1.8 percent for DI).

e Subject to automatic adjustment based on increases in average wages.

Table V.C6.—Contribution and Benefit Base and Payroll Tax Contribution Rates (Cont.)

Calendar years

Contribution

and benefit 

base

Payroll tax contribution rates (percent)

Employees and employers, 

combineda Self-employedb

OASDI OASI DI OASDI OASI DI
Assumptions and Methods

146

For the long-range period, the office estimates the income to the trust funds

from taxation of benefits by applying projected ratios of taxation of OASI

and DI benefits to total OASI and DI scheduled benefits. The income thresholds used for benefit taxation are, by law, constant in the future, while

income and benefit levels continue to rise. Accordingly, projected ratios of

income from taxation of benefits to the amount of benefits increase gradually. Ultimate tax ratios for OASI and DI benefits used in the projection rely

on estimates from the Office of Tax Analysis in the Department of the Treasury. 

8. Average Benefits

Projections of average benefits for each benefit type reflect recent historical

averages, projected average primary insurance amounts (PIAs), and projected ratios of average benefits to average PIAs. Calculations of average

PIAs are based on projected distributions of beneficiaries by duration from

year of initial entitlement, average PIAs at initial entitlement, and increases

in PIAs after initial entitlement. Projected increases in average PIAs after initial entitlement depend on automatic benefit increases, recomputations to

reflect additional covered earnings, and differences in mortality by level of

lifetime earnings. Calculations of future average PIAs at initial entitlement

are based on projected earnings histories, which in turn reflect a combination

of the actual earnings histories associated with a sample of 2008 initial entitlements and more recent actual earnings levels by age and sex for covered

workers.

For retired-worker, aged-spouse, and aged-widow(er) benefits, the percentage of the PIA that is payable depends on the age at initial entitlement to

benefits. Projected ratios of average benefits to average PIAs for these types

of benefits are based on projections of age distributions at initial entitlement.

9. Scheduled Benefits

For each type of benefit, scheduled benefits are the product of the number of

beneficiaries and the corresponding average monthly benefit. The shortrange model calculates scheduled benefits on a quarterly basis. The longrange model calculates all scheduled benefits on an annual basis, using the

number of beneficiaries at the beginning and end of the year. Adjustments to

these annual scheduled benefits include retroactive payments to newly

awarded beneficiaries and other amounts not reflected in the regular monthly

scheduled benefits.
147

Program Assumptions and Methods

Scheduled lump-sum death benefits are estimated as the product of: (1) the

number of lump-sum death payments projected on the basis of the assumed

death rates, the projected fully insured population, and the estimated percentage of the fully insured population that will qualify for lump-sum death payments; and (2) the amount of the lump-sum death payment, which is $255

(unindexed since 1973).

10.Illustrative Scheduled Benefit Amounts

Table V.C7 shows, under the intermediate assumptions, future benefit

amounts payable upon retirement at the normal retirement age and at age 65,

for various hypothetical workers attaining age 65 in 2015 and subsequent

years. The illustrative benefit amounts in table V.C7 are presented in CPIindexed 2015 dollars—that is, adjusted to 2015 levels by the CPI indexing

series shown in table VI.G6. As a point of comparison, Table V.C7 also

shows the national average wage index (AWI) for 2015 and subsequent years

in CPI-indexed 2015 dollars.

The normal retirement age was 65 for individuals who reached age 62 before

2000. It increased to age 66 during the period 2000-05, at a rate of 2 months

per year as workers attained age 62. Under current law, the normal retirement

age will increase to age 67 during the period 2017-22, also by 2 months per

year as workers attain age 62. The illustrative benefit amounts shown in table

V.C7 for retirees at age 65 are lower than the amounts shown for retirees at

normal retirement age because the statute requires an actuarial reduction for

monthly benefits taken before normal retirement age to reflect the expected

additional years benefits will be collected. For example, those who collect

benefits starting in 2027 at age 65 will receive benefits for two more years

than if they instead claim benefits at the normal retirement age (age 67)

unless they die between the ages of 65 and 67.

Table V.C7 shows five different pre-retirement earnings patterns. Four of

these patterns assume the earnings history of workers with scaled-earnings

patterns1 and reflect very low, low, medium, and high career-average levels

of pre-retirement earnings starting at age 21. The fifth pattern assumes the

earnings history of a steady maximum earner starting at age 22. The four

scaled-earnings patterns derive from earnings experienced by insured workers during 1992-2011. These earnings levels differ by age. The career-average level of earnings for each scaled case targets a percent of the AWI. 

 1 Actuarial Note 2014.3 has more details on scaled-earnings patterns.

See www.socialsecurity.gov/OACT/NOTES/ran3/an2014-3.pdf.
Assumptions and Methods

148

For the scaled medium earner, the career-average earnings level is about

equal to the AWI (or $47,820 for 2015). For the scaled very low, low, and

high earners, the career-average earnings level is about 25 percent, 45 percent, and 160 percent of the AWI, respectively (or $11,955, $21,519, and

$76,512, respectively, for 2015). The steady maximum earner has earnings at

or above the contribution and benefit base for each year starting at age 22

through the year prior to retirement (or $118,500 for 2015).

Table V.C7.—Annual Scheduled Benefit Amounts for Retired Workers 

With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, Calendar Years 2015-90

Benefits in 2015 dollarsa with retirement at normal retirement age

Year attain 

age 65b Age at

retirement

Scaled very

low

earningsc Scaled lowearningsd

Scaled

medium

earningse Scaled highearningsf

Steady

maximum

earningsg

National

Average Wage

Index in 2015

dollarsh

2015 . . . . 66:0 $8,868 $11,602 $19,115 $25,342 $30,834 $47,820

2020 . . . . 66:2 9,441 12,372 20,405 27,004 33,063 52,942

2025 . . . . 67:0 10,485 13,723 22,623 29,964 36,887 56,656

2030 . . . . 67:0 11,219 14,680 24,199 32,057 39,504 60,082

2035 . . . . 67:0 11,895 15,564 25,664 33,996 41,921 63,711

2040 . . . . 67:0 12,613 16,507 27,211 36,051 44,418 67,481

2045 . . . . 67:0 13,360 17,485 28,825 38,184 47,071 71,605

2050 . . . . 67:0 14,181 18,556 30,590 40,521 49,884 75,965

2055 . . . . 67:0 15,044 19,687 32,448 42,985 52,813 80,460

2060 . . . . 67:0 15,936 20,851 34,368 45,530 55,864 85,130

2065 . . . . 67:0 16,859 22,061 36,363 48,171 59,108 89,974

2070 . . . . 67:0 17,820 23,316 38,432 50,911 62,472 94,960

2075 . . . . 67:0 18,808 24,609 40,561 53,734 65,946 100,263

2080 . . . . 67:0 19,860 25,985 42,828 56,736 69,638 105,883

2085 . . . . 67:0 20,973 27,440 45,229 59,916 73,549 111,880

2090 . . . . 67:0 22,161 28,996 47,792 63,311 77,722 118,315

Benefits in 2015 dollarsa with retirement at age 65

2015 . . . . 65:0 $8,496 $11,124 $18,324 $24,288 $29,424 $47,820

2020 . . . . 65:0 8,709 11,396 18,804 24,900 30,356 52,942

2025 . . . . 65:0 9,084 11,893 19,608 25,965 31,723 56,656

2030 . . . . 65:0 9,719 12,725 20,973 27,782 33,988 60,082

2035 . . . . 65:0 10,308 13,489 22,235 29,461 36,075 63,711

2040 . . . . 65:0 10,932 14,306 23,582 31,243 38,221 67,481

2045 . . . . 65:0 11,579 15,153 24,980 33,093 40,516 71,605

2050 . . . . 65:0 12,287 16,080 26,508 35,114 42,941 75,965

2055 . . . . 65:0 13,038 17,061 28,124 37,255 45,461 80,460

2060 . . . . 65:0 13,812 18,070 29,786 39,459 48,088 85,130

2065 . . . . 65:0 14,611 19,120 31,513 41,748 50,883 89,974

2070 . . . . 65:0 15,445 20,208 33,307 44,122 53,784 94,960
149

Program Assumptions and Methods

11. Administrative Expenses

The projection of administrative expenses through the short-range period is

based on historical experience and the projected growth in average wages.

The Office of Budget of the Social Security Administration provides estimates for the first several years of the projection. For years after the shortrange period, projected administrative expenses reflect increases in the number of beneficiaries in current-payment status, and increases in the average

wage. However, the increases in average wage are partially offset by

assumed administrative productivity gains.

12.Railroad Retirement Financial Interchange

Railroad workers are covered under a separate multi-tiered benefit plan, with

a first tier of coverage similar to OASDI coverage. An annual financial interchange between the Railroad Retirement fund and the OASI and DI Trust

Funds is made to resolve the difference between: (1) the amount of OASDI

benefits that would be paid to railroad workers and their families if railroad

employment had been covered under the OASDI program, plus administrative expenses associated with these benefits; and (2) the amount of OASDI

payroll tax and income tax that would be received with allowances for interest from railroad workers.

2075 . . . . 65:0 16,301 21,328 35,152 46,569 56,774 100,263

2080 . . . . 65:0 17,213 22,519 37,118 49,171 59,952 105,883

2085 . . . . 65:0 18,177 23,781 39,199 51,927 63,318 111,880

2090 . . . . 65:0 19,206 25,131 41,419 54,870 66,911 118,315

a Annual amounts are the total for the 12-month period starting with the month of retirement, adjusted to be

in 2015 dollars by using the CPI indexing series from table VI.G6.

b Attains age 65 on January 1 of the year.

c Career-average earnings at about 25 percent of the AWI.

d Career-average earnings at about 45 percent of the AWI.

e Career-average earnings at about 100 percent of the AWI. Such a worker would have career-average earnings at approximately the 56th percentile of all new retired worker beneficiaries.

f Career-average earnings at about 160 percent of the AWI.

g Earnings for each year at or above the contribution and benefit base.

h Average Wage Index from table VI.G6, adjusted to be in 2015 dollars by using the CPI indexing series

from table VI.G6.

Note: Benefits shown at age 65 reflect adjustments for early retirement. For early retirement as early as age

62, the benefit amount is reduced 5/9 of one percent for each month before normal retirement age, up to 36

months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per

month. For example, if the number of reduction months is 60 (the maximum number for retirement at 62

when normal retirement age is 67), then the benefit is reduced by 30 percent. Delayed retirement credit is

generally given for retirement after the normal retirement age. The delayed retirement credit is 2/3 of one

percent per month for persons born in 1943 and later. No credit is given for delaying benefits after attaining

age 70. See Table V.C3 for additional details, including adjustments applying to other birth years.

Table V.C7.—Annual Scheduled Benefit Amounts for Retired Workers 

With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, Calendar Years 2015-90 (Cont.)
Assumptions and Methods

150

Calculation of the financial interchange with the Railroad Retirement reflects

trends similar to those used in estimating the cost of OASDI benefits. The

annual short-range net cost for the OASI and DI Trust Funds averages about

$5 billion and the long-range summarized net cost for the OASI and DI Trust

Funds is 0.04 percent of taxable payroll.

13.Military Service Transfers

Beginning in 1966, the General Fund of the Treasury reimbursed the OASI

and DI Trust Funds annually for the cost (including administrative expenses)

of providing additional benefit payments resulting from noncontributory

wage credits for military service performed prior to 1957. The 1983 amendments modified the reimbursement mechanism and the timing of the reimbursements, and required a reimbursement in 1983 to include all future costs

attributable to the wage credits. The amendments also require adjustments to

that 1983 reimbursement every fifth year, beginning with 1985, to account

for actual data.
151

History of Trust Fund Operations

VI. APPENDICES

A. HISTORY OF OASI AND DI TRUST FUND OPERATIONS

The Federal Old-Age and Survivors Insurance (OASI) Trust Fund was established on January 1, 1940 as a separate account in the United States Treasury.

The Federal Disability Insurance (DI) Trust Fund, another separate account

in the United States Treasury, was established on August 1, 1956. These

funds conduct the financial operations of the OASI and DI programs. The

Board of Trustees is responsible for overseeing the financial operations of

these funds. The following paragraphs describe the various components of

trust fund income and outgo. Following this description, tables VI.A1 and

VI.A2 present the historical operations of the separate trust funds since their

inception, and table VI.A3 presents the operations of the theoretical combined trust funds during the period when they have co-existed.

The primary receipts of these two funds are amounts appropriated under permanent authority on the basis of payroll tax contributions. Federal law

requires that all employees who work in OASDI covered employment, and

their employers, make payroll tax contributions on their wages. Employees

and their employers must also make payroll tax contributions on monthly

cash tips if such tips are at least $20. Self-employed persons must make payroll tax contributions on their covered net earnings from self-employment.

The Federal Government pays amounts equivalent to the combined employer

and employee contributions that would be paid on deemed wage credits

attributable to military service performed between 1957 and 2001, if such

wage credits were covered wages. Treasury initially deposits payroll tax contributions to the trust funds each month on an estimated basis. Subsequently,

Treasury makes adjustments based on the certified amount of wages and selfemployment earnings in the records of the Social Security Administration.

Income also includes various reimbursements from the General Fund of the

Treasury, such as: (1) the cost of noncontributory wage credits for military

service before 1957, and periodic adjustments to previous determinations of

this cost; (2) the cost in 1971-82 of deemed wage credits for military service

performed after 1956; (3) the cost of benefits to certain uninsured persons

who attained age 72 before 1968; (4) the cost of payroll tax credits provided

to employees in 1984 and self-employed persons in 1984-89 by Public Law

98-21; (5) the cost in 2009-17 of excluding certain self-employment earnings

from SECA taxes under Public Law 110-246; and (6) payroll tax revenue

forgone under the provisions of Public Laws 111-147, 111-312, 112-78,

and 112-96.

Beginning in 1984, Federal law subjected up to 50 percent of an individual’s

or couple’s OASDI benefits to Federal income taxation under certain circum-
Appendices

152

stances. Effective for taxable years beginning after 1993, the law increased

the maximum percentage from 50 percent to 85 percent. Treasury credits the

proceeds from this taxation of up to 50 percent of benefits to the OASI and

DI Trust Funds in advance, on an estimated basis, at the beginning of each

calendar quarter, with no reimbursement to the general fund for interest costs

attributable to the advance transfers.1 Treasury makes subsequent adjustments based on the actual amounts shown on annual income tax records.

Each of the OASI and DI Trust Funds receives the income taxes paid on the

benefits from that trust fund.2

Another source of income to the trust funds is interest received on investments held by the trust funds. On a daily basis, Treasury invests trust fund

income not required to meet current operating expenses, primarily in interest-bearing obligations of the U.S. Government. These investments include

the special public-debt obligations described in the next paragraph. The

Social Security Act also authorizes the trust funds to hold obligations guaranteed as to both principal and interest by the United States. The act therefore permits the trust funds to hold certain Federally sponsored agency

obligations and marketable obligations.3 The trust funds may acquire any of

these obligations on original issue at the issue price or by purchase of outstanding obligations at their market price.

The Social Security Act authorizes the issuance of special public-debt obligations for purchase exclusively by the trust funds. The act provides that the

interest rate for special obligations newly issued in any month is the average

market yield, as of the last business day of the prior month, on all of the outstanding marketable U.S. obligations that are due or callable more than 4

years in the future. This rate is rounded to the nearest one-eighth of one percent. Beginning January 1999, in calculating the average market yield rate

for this purpose, the Treasury incorporates the yield to the call date when a

callable bond’s market price is above par.

Although the Social Security Act does not authorize the purchase or sale of

special issues in the open market, Treasury redeems special issues prior to

maturity at par value when needed to meet current operating expenses. Given

this separation from market-based valuations, changes in market yield rates

 1 The HI Trust Fund receives the additional tax revenue resulting from the increase to 85 percent.

 2 A special provision applies to benefits paid to nonresident aliens. Effective for taxable years beginning

after 1994, Public Law 103-465 subjects benefits to a flat-rate tax, usually 25.5 percent, before they are

paid. Therefore, this tax remains in the trust funds. From 1984 to 1994, the flat-rate tax was usually

15 percent.

 3 The Social Security Act requires the trust funds to acquire special-issue obligations unless the Managing

Trustee determines that the purchase of marketable obligations is in the public interest. The purchase of marketable obligations has been quite limited and has not occurred since 1980.
153

History of Trust Fund Operations

do not cause fluctuations in principal value. As is true for marketable Treasury securities held by the public, the full faith and credit of the U.S. Government backs all of the investments held by the trust funds.

The primary expenditures of the OASI and DI Trust Funds are: (1) OASDI

benefit payments, net of any reimbursements from the General Fund of the

Treasury for unnegotiated benefit checks; and (2) expenses incurred by the

Social Security Administration and the Department of the Treasury in administering the OASDI program and the provisions of the Internal Revenue

Code relating to the collection of contributions. Such administrative

expenses include expenditures for construction, rental and lease, or purchase

of office buildings and related facilities for the Social Security Administration. The Social Security Act prohibits expenditures from the OASI and DI

Trust Funds for any purpose not related to the payment of benefits or administrative costs for the OASDI program. 

The expenditures of the trust funds also include: (1) the costs of vocational

rehabilitation services furnished to disabled persons receiving cash benefits

because of their disabilities, where such services contributed to their successful rehabilitation; and (2) net costs of the provisions of the Railroad Retirement Act that provide for a system of coordination and financial interchange

between the Railroad Retirement program and the Social Security program.

Under the financial interchange provisions, the Railroad Retirement program’s Social Security Equivalent Benefit Account and the trust funds interchange amounts on an annual basis so that each trust fund is in the same

position it would have been had railroad employment always been covered

under Social Security.

The statements of the operations of the trust funds in this report do not

include the net worth of facilities and other fixed capital assets because the

value of fixed capital assets is not available in the form of a financial asset

redeemable for the payment of benefits or administrative expenditures. As a

result of this unavailability, the actuarial status of the trust funds does not

take these assets into account.
Appendices

154

Table VI.A1.— Operations of the OASI Trust Fund, Calendar Years 1937-2014

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsaTaxation of

benefits

Net

interestb Total

Benefit

paymentsc

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod

1937e. . $0.8 $0.8 — — ff f — — $0.8 $0.8 —

1938e. . .4 .4 — — ff f — — .4 1.1 7,660

1939e. . .6 .6 — — ff f — — .6 1.7 8,086

1940 . . .4 .3 — — f $0.1 f f — .3 2.0 2,781

1941 . . .8 .8 — — $0.1 .1 $0.1 f — .7 2.8 1,782

1942 . . 1.1 1.0 — — .1 .2 .1 f — .9 3.7 1,737

1943 . . 1.3 1.2 — — .1 .2 .2 f — 1.1 4.8 1,891

1944 . . 1.4 1.3 — — .1 .2 .2 f — 1.2 6.0 2,025

1945 . . 1.4 1.3 — — .1 .3 .3 f — 1.1 7.1 1,975

1946 . . 1.4 1.3 — — .2 .4 .4 f — 1.0 8.1 1,704

1947 . . 1.7 1.6 f — .2 .5 .5 f — 1.2 9.4 1,592

1948 . . 2.0 1.7 f — .3 .6 .6 $0.1 — 1.4 10.7 1,542

1949 . . 1.8 1.7 f — .1 .7 .7 .1 — 1.1 11.8 1,487

1950 . . 2.9 2.7 f — .3 1.0 1.0 .1 — 1.9 13.7 1,156

1951 . . 3.8 3.4 f — .4 2.0 1.9 .1 — 1.8 15.5 698

1952 . . 4.2 3.8 — — .4 2.3 2.2 .1 — 1.9 17.4 681

1953 . . 4.4 3.9 — — .4 3.1 3.0 .1 — 1.3 18.7 564

1954 . . 5.6 5.2 — — .4 3.7 3.7 .1 f 1.9 20.6 500

1955 . . 6.2 5.7 — — .5 5.1 5.0 .1 f 1.1 21.7 405

1956 . . 6.7 6.2 — — .5 5.8 5.7 .1 f .9 22.5 371

1957 . . 7.4 6.8 — — .6 7.5 7.3 .2 f -.1 22.4 300

1958 . . 8.1 7.6 — — .6 8.6 8.3 .2 $0.1 -.5 21.9 259

1959 . . 8.6 8.1 — — .5 10.3 9.8 .2 .3 -1.7 20.1 212

1960 . . 11.4 10.9 — — .5 11.2 10.7 .2 .3 .2 20.3 180

1961 . . 11.8 11.3 — — .5 12.4 11.9 .2 .3 -.6 19.7 163

1962 . . 12.6 12.1 — — .5 14.0 13.4 .3 .4 -1.4 18.3 141

1963 . . 15.1 14.5 — — .5 14.9 14.2 .3 .4 .1 18.5 123

1964 . . 16.3 15.7 — — .6 15.6 14.9 .3 .4 .6 19.1 118

1965 . . 16.6 16.0 — — .6 17.5 16.7 .3 .4 -.9 18.2 109

1966 . . 21.3 20.6 $0.1 — .6 19.0 18.3 .3 .4 2.3 20.6 96

1967 . . 24.0 23.1 .1 — .8 20.4 19.5 .4 .5 3.7 24.2 101

1968 . . 25.0 23.7 .4 — .9 23.6 22.6 .5 .4 1.5 25.7 103

1969 . . 29.6 27.9 .4 — 1.2 25.2 24.2 .5 .5 4.4 30.1 102

1970 . . 32.2 30.3 .4 — 1.5 29.8 28.8 .5 .6 2.4 32.5 101

1971 . . 35.9 33.7 .5 — 1.7 34.5 33.4 .5 .6 1.3 33.8 94

1972 . . 40.1 37.8 .5 — 1.8 38.5 37.1 .7 .7 1.5 35.3 88

1973 . . 48.3 46.0 .4 — 1.9 47.2 45.7 .6 .8 1.2 36.5 75

1974 . . 54.7 52.1 .4 — 2.2 53.4 51.6 .9 .9 1.3 37.8 68

1975 . . 59.6 56.8 .4 — 2.4 60.4 58.5 .9 1.0 -.8 37.0 63

1976 . . 66.3 63.4 .6 — 2.3 67.9 65.7 1.0 1.2 -1.6 35.4 54

1977 . . 72.4 69.6 .6 — 2.2 75.3 73.1 1.0 1.2 -2.9 32.5 47

1978 . . 78.1 75.5 .6 — 2.0 83.1 80.4 1.1 1.6 -5.0 27.5 39

1979 . . 90.3 87.9 .6 — 1.8 93.1 90.6 1.1 1.4 -2.9 24.7 30

1980 . . 105.8 103.5 .5 — 1.8 107.7 105.1 1.2 1.4 -1.8 22.8 23

1981 . . 125.4 122.6 .7 — 2.1 126.7 123.8 1.3 1.6 -1.3 21.5 18

1982 . . 125.2 123.7 .7 — .8 142.1 138.8 1.5 1.8 g .6 22.1 15

1983 . . 150.6 138.3 5.5 — 6.7 153.0 149.2 1.5 2.3 -2.4 19.7 14

1984 . . 169.3 159.5 4.7 $2.8 2.3 161.9 157.8 1.6 2.4 7.4 27.1 h20

1985 . . 184.2 175.1 4.0 3.2 1.9 171.2 167.2 1.6 2.3 g8.7 35.8 h24

1986 . . 197.4 189.1 1.8 3.4 3.1 181.0 176.8 1.6 2.6 g3.2 39.1 h28

1987 . . 210.7 201.1 1.7 3.3 4.7 187.7 183.6 1.5 2.6 23.1 62.1 h30

1988 . . 240.8 227.7 2.1 3.4 7.6 200.0 195.5 1.8 2.8 40.7 102.9 h41

1989 . . 264.7 248.1 2.1 2.4 12.0 212.5 208.0 1.7 2.8 52.2 155.1 h59
155

History of Trust Fund Operations

1990 . . $286.7 $266.1 -$0.7 $4.8 $16.4 $227.5 $223.0 $1.6 $3.0 $59.1 $214.2 h78

1991 . . 299.3 272.5 .1 5.9 20.8 245.6 240.5 1.8 3.4 53.7 267.8 87

1992 . . 311.2 281.1 -.1 5.9 24.3 259.9 254.9 1.8 3.1 51.3 319.1 103

1993 . . 323.3 290.9 f 5.3 27.0 273.1 267.8 2.0 3.4 50.2 369.3 117

1994 . . 328.3 293.3 f 5.0 29.9 284.1 279.1 1.6 3.4 44.1 413.5 130

1995 . . 342.8 304.7 -.2 5.5 32.8 297.8 291.6 2.1 4.1 45.0 458.5 139

1996 . . 363.7 321.6 f 6.5 35.7 308.2 302.9 1.8 3.6 55.5 514.0 149

1997 . . 397.2 349.9 f 7.4 39.8 322.1 316.3 2.1 3.7 75.1 589.1 160

1998 . . 424.8 371.2 f 9.1 44.5 332.3 326.8 1.9 3.7 92.5 681.6 177

1999 . . 457.0 396.4 f 10.9 49.8 339.9 334.4 1.8 3.7 117.2 798.8 201

2000 . . 490.5 421.4 f 11.6 57.5 358.3 352.7 2.1 3.5 132.2 931.0 223

2001 . . 518.1 441.5 f 11.9 64.7 377.5 372.3 2.0 3.3 140.6 1,071.5 247

2002 . . 539.7 455.2 .4 12.9 71.2 393.7 388.1 2.1 3.5 146.0 1,217.5 272

2003 . . 543.8 456.1 f 12.5 75.2 406.0 399.8 2.6 3.6 137.8 1,355.3 300

2004 . . 566.3 472.8 f 14.6 79.0 421.0 415.0 2.4 3.6 145.3 1,500.6 322

2005 . . 604.3 506.9 -.3 13.8 84.0 441.9 435.4 3.0 3.6 162.4 1,663.0 340

2006 . . 642.2 534.8 f 15.6 91.8 461.0 454.5 3.0 3.5 181.3 1,844.3 361

2007 . . 675.0 560.9 f 17.2 97.0 495.7 489.1 3.1 3.6 179.3 2,023.6 372

2008 . . 695.5 574.6 f 15.6 105.3 516.2 509.3 3.2 3.6 179.3 2,202.9 392

2009 . . 698.2 570.4 f 19.9 107.9 564.3 557.2 3.4 3.7 133.9 2,336.8 390

2010 . . 677.1 544.8 2.0 22.1 108.2 584.9 577.4 3.5 3.9 92.2 2,429.0 400

2011 . . 698.8 482.4 87.8 22.2 106.5 603.8 596.2 3.5 4.1 95.0 2,524.1 402

2012 . . 731.1 503.9 97.7 26.7 102.8 645.5 637.9 3.4 4.1 85.6 2,609.7 391

2013 . . 743.8 620.8 4.2 20.7 98.1 679.5 672.1 3.4 3.9 64.3 2,674.0 384

2014 . . 769.4 646.2 .4 28.0 94.8 714.2 706.8 3.1 4.3 55.2 2,729.2 374

a Includes net reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of

noncontributory wage credits for military service before 1957; (2) the cost in 1971-82 of deemed wage credits

for military service performed after 1956; (3) the cost of benefits to certain uninsured persons who attained age

72 before 1968; (4) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in

1984-89 by Public Law 98-21; (5) the cost in 2009-17 of excluding certain self-employment earnings from

SECA taxes under Public Law 110-246; and (6) payroll tax revenue forgone under the provisions of Public

Laws 111-147, 111-312, 112-78, and 112-96.

b Net interest includes net profits or losses on marketable investments. Beginning in 1967, the trust fund pays

administrative expenses on an estimated basis, with a final adjustment including interest made in the following

fiscal year. Net interest includes the amounts of these interest adjustments. The 1970 report describes the

accounting for administrative expenses for years prior to 1967. Beginning in October 1973, figures include relatively small amounts of gifts to the fund. Net interest for 1983-86 reflects payments for interest on amounts

owed under the interfund borrowing provisions. During 1983-90, net interest reflects interest reimbursements

paid from the trust fund to the general fund on advance tax transfers.

c Beginning in 1966, includes payments for vocational rehabilitation services furnished to disabled persons

receiving benefits because of their disabilities. Beginning in 1983, net benefit amounts include reimbursements

paid from the general fund to the trust fund for unnegotiated benefit checks. Excluding the portion attributable

to vocational rehabilitation services and unnegotiated benefit checks, amounts are the same as benefits scheduled under law at that time for all historical years.

d The “Trust fund ratio” column represents asset reserves at the beginning of a year as a percentage of expenditures during the year. The table shows no ratio for 1937 because no reserves existed at the beginning of the year.

e Operations prior to 1940 are for the Old-Age Reserve Account established by the original Social Security Act.

The 1939 Amendments transferred the asset reserves of the Account to the OASI Trust Fund effective January

1, 1940.

f Between -$50 million and $50 million.

g Reflects interfund borrowing and subsequent repayment of loans. The OASI Trust Fund borrowed

$17.5 billion from the DI and HI Trust Funds in 1982 and repaid the loans in 1985 ($4.4 billion) and 1986

($13.2 billion).

h Reserves used for the trust fund ratio calculation include January advance tax transfers.

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.A1.— Operations of the OASI Trust Fund, Calendar Years 1937-2014 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsaTaxation of

benefits

Net

interestb Total

Benefit

pay- mentsc

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod
Appendices

156

Table VI.A2.— Operations of the DI Trust Fund, Calendar Years 1957-2014

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsaTaxation of

benefits

Net

interestb Total

Benefit

paymentsc

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod

1957 . . $0.7 $0.7 — — e $0.1 $0.1 e — $0.6 $0.6 —

1958 . . 1.0 1.0 — — e .3 .2 e — .7 1.4 249

1959 . . .9 .9 — — e .5 .5 e e .4 1.8 284

1960 . . 1.1 1.0 — — $0.1 .6 .6 e e .5 2.3 304

1961 . . 1.1 1.0 — — .1 1.0 .9 $0.1 e .1 2.4 239

1962 . . 1.1 1.0 — — .1 1.2 1.1 .1 e -.1 2.4 206

1963 . . 1.2 1.1 — — .1 1.3 1.2 .1 e -.1 2.2 183

1964 . . 1.2 1.2 — — .1 1.4 1.3 .1 e -.2 2.0 159

1965 . . 1.2 1.2 — — .1 1.7 1.6 .1 e -.4 1.6 121

1966 . . 2.1 2.0 e — .1 1.9 1.8 .1 e .1 1.7 82

1967 . . 2.4 2.3 e — .1 2.1 1.9 .1 e .3 2.0 83

1968 . . 3.5 3.3 e — .1 2.5 2.3 .1 e 1.0 3.0 83

1969 . . 3.8 3.6 e — .2 2.7 2.6 .1 e 1.1 4.1 111

1970 . . 4.8 4.5 e — .3 3.3 3.1 .2 e 1.5 5.6 126

1971 . . 5.0 4.6 $0.1 — .4 4.0 3.8 .2 e 1.0 6.6 140

1972 . . 5.6 5.1 .1 — .4 4.8 4.5 .2 e .8 7.5 140

1973 . . 6.4 5.9 .1 — .5 6.0 5.8 .2 e .5 7.9 125

1974 . . 7.4 6.8 .1 — .5 7.2 7.0 .2 e .2 8.1 110

1975 . . 8.0 7.4 .1 — .5 8.8 8.5 .3 e -.8 7.4 92

1976 . . 8.8 8.2 .1 — .4 10.4 10.1 .3 e -1.6 5.7 71

1977 . . 9.6 9.1 .1 — .3 11.9 11.5 .4 e -2.4 3.4 48

1978 . . 13.8 13.4 .1 — .3 13.0 12.6 .3 e .9 4.2 26

1979 . . 15.6 15.1 .1 — .4 14.2 13.8 .4 e 1.4 5.6 30

1980 . . 13.9 13.3 .1 — .5 15.9 15.5 .4 e -2.0 3.6 35

1981 . . 17.1 16.7 .2 — .2 17.7 17.2 .4 e -.6 3.0 21

1982 . . 22.7 22.0 .2 — .5 18.0 17.4 .6 e f -.4 2.7 17

1983 . . 20.7 18.0 1.1 — 1.6 18.2 17.5 .6 e 2.5 5.2 15

1984 . . 17.3 15.5 .4 $0.2 1.2 18.5 17.9 .6 e -1.2 4.0 g35

1985 . . 19.3 17.0 1.2 .2 .9 19.5 18.8 .6 e f2.4 6.3 g27

1986 . . 19.4 18.2 .2 .2 .8 20.5 19.9 .6 $0.1 f1.5 7.8 g38

1987 . . 20.3 19.5 .2 e .6 21.4 20.5 .8 .1 -1.1 6.7 g44

1988 . . 22.7 21.8 .2 .1 .6 22.5 21.7 .7 .1 .2 6.9 g38

1989 . . 24.8 23.8 .2 .1 .7 23.8 22.9 .8 .1 1.0 7.9 g38

1990 . . 28.8 28.4 -.6 .1 .9 25.6 24.8 .7 .1 3.2 11.1 g40

1991 . . 30.4 29.1 e .2 1.1 28.6 27.7 .8 .1 1.8 12.9 39

1992 . . 31.4 30.1 e .2 1.1 32.0 31.1 .8 .1 -.6 12.3 40

1993 . . 32.3 31.2 e .3 .8 35.7 34.6 1.0 .1 -3.4 9.0 35

1994 . . 52.8 51.4 e .3 1.2 38.9 37.7 1.0 .1 14.0 22.9 23

1995 . . 56.7 54.4 -.2 .3 2.2 42.1 40.9 1.1 .1 14.6 37.6 55

1996 . . 60.7 57.3 e .4 3.0 45.4 44.2 1.2 e 15.4 52.9 83

1997 . . 60.5 56.0 e .5 4.0 47.0 45.7 1.3 .1 13.5 66.4 113

1998 . . 64.4 59.0 e .6 4.8 49.9 48.2 1.6 .2 14.4 80.8 133

1999 . . 69.5 63.2 e .7 5.7 53.0 51.4 1.5 .1 16.5 97.3 152

2000 . . 77.9 71.1 -.8 .7 6.9 56.8 55.0 1.6 .2 21.1 118.5 171

2001 . . 83.9 74.9 e .8 8.2 61.4 59.6 1.7 e 22.5 141.0 193

2002 . . 87.4 77.3 e .9 9.2 67.9 65.7 2.0 .2 19.5 160.5 208

2003 . . 88.1 77.4 e .9 9.7 73.1 70.9 2.0 .2 15.0 175.4 219

2004 . . 91.4 80.3 e 1.1 10.0 80.6 78.2 2.2 .2 10.8 186.2 218
157

History of Trust Fund Operations

2005 . . $97.4 $86.1 e $1.1 $10.3 $88.0 $85.4 $2.3 $0.3 $9.4 $195.6 212

2006 . . 102.6 90.8 e 1.2 10.6 94.5 91.7 2.3 .4 8.2 203.8 207

2007 . . 109.9 95.2 e 1.4 13.2 98.8 95.9 2.5 .4 11.1 214.9 206

2008 . . 109.8 97.6 e 1.3 11.0 109.0 106.0 2.5 .4 .9 215.8 197

2009 . . 109.3 96.9 e 2.0 10.5 121.5 118.3 2.7 .4 -12.2 203.5 178

2010 . . 104.0 92.5 $0.4 1.9 9.3 127.7 124.2 3.0 .5 -23.6 179.9 159

2011 . . 106.3 81.9 14.9 1.6 7.9 132.3 128.9 2.9 .5 -26.1 153.9 136

2012 . . 109.1 85.6 16.5 .6 6.4 140.3 136.9 2.9 .5 -31.2 122.7 110

2013 . . 111.2 105.4 .7 .4 4.7 143.4 140.1 2.8 .6 -32.2 90.4 86

2014 . . 114.9 109.7 .1 1.7 3.4 145.1 141.7 2.9 .4 -30.2 60.2 62

a Includes net reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of

noncontributory wage credits for military service before 1957; (2) the cost in 1971-82 of deemed wage credits

for military service performed after 1956; (3) the cost of payroll tax credits provided to employees in 1984 and

self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain selfemployment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under

the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

b Net interest includes net profits or losses on marketable investments. Beginning in 1967, the trust fund pays

administrative expenses on an estimated basis, with a final adjustment including interest made in the following

fiscal year. Net interest includes the amounts of these interest adjustments. The 1970 report describes the

accounting for administrative expenses for years prior to 1967. Beginning in July 1974, figures include relatively small amounts of gifts to the fund. Net interest for 1983-86 reflects payments for interest on amounts

owed under the interfund borrowing provisions. During 1983-90, net interest reflects interest reimbursements

paid from the trust fund to the general fund on advance tax transfers.

c Beginning in 1966, includes payments for vocational rehabilitation services furnished to disabled persons

receiving benefits because of their disabilities. Beginning in 1983, net benefit amounts include reimbursements

paid from the general fund to the trust fund for unnegotiated benefit checks. Excluding the portion attributable

to vocational rehabilitation services and unnegotiated benefit checks, amounts are the same as benefits scheduled under law at that time for all historical years.

d The “Trust fund ratio” column represents asset reserves at the beginning of a year as a percentage of expenditures during the year. The table shows no ratio for 1957 because no reserves existed at the beginning of the year.

e Between -$50 million and $50 million.

f Reflects interfund borrowing and subsequent repayment of loans. The DI Trust Fund loaned $5.1 billion to the

OASI Trust Fund in 1982. The OASI Trust Fund repaid the loan in 1985 ($2.5 billion) and 1986 ($2.5 billion).

g Reserves used for the trust fund ratio calculation include January advance tax transfers.

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.A2.— Operations of the DI Trust Fund, Calendar Years 1957-2014 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsa

Taxation of

benefits

Net

interestb Total

Benefit

pay- ments c

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod
Appendices

158

Table VI.A3.— Operations of the Combined OASI and DI Trust Funds,

Calendar Years 1957-2014

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsaTaxation of

benefits

Net

interestb Total

Benefit

pay- mentsc

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod

1957 . . $8.1 $7.5 — — $0.6 $7.6 $7.4 $0.2 e $0.5 $23.0 298

1958 9.1 8.5 — — .6 8.9 8.6 .2 $0.1 .2 23.2 259

1959 . . 9.5 8.9 — — .6 10.8 10.3 .2 .3 -1.3 22.0 215

1960 . . 12.4 11.9 — — .6 11.8 11.2 .2 .3 .6 22.6 186

1961 . . 12.9 12.3 — — .6 13.4 12.7 .3 .3 -.5 22.2 169

1962 . . 13.7 13.1 — — .6 15.2 14.5 .3 .4 -1.5 20.7 146

1963 . . 16.2 15.6 — — .6 16.2 15.4 .3 .4 e 20.7 128

1964 . . 17.5 16.8 — — .6 17.0 16.2 .4 .4 .5 21.2 122

1965 . . 17.9 17.2 — — .7 19.2 18.3 .4 .5 -1.3 19.8 110

1966 . . 23.4 22.6 $0.1 — .7 20.9 20.1 .4 .5 2.5 22.3 95

1967 . . 26.4 25.4 .1 — .9 22.5 21.4 .5 .5 3.9 26.3 99

1968 . . 28.5 27.0 .4 — 1.0 26.0 25.0 .6 .5 2.5 28.7 101

1969 . . 33.3 31.5 .5 — 1.3 27.9 26.8 .6 .5 5.5 34.2 103

1970 . . 37.0 34.7 .5 — 1.8 33.1 31.9 .6 .6 3.9 38.1 103

1971 . . 40.9 38.3 .5 — 2.0 38.5 37.2 .7 .6 2.4 40.4 99

1972 . . 45.6 42.9 .5 — 2.2 43.3 41.6 .9 .7 2.3 42.8 93

1973 . . 54.8 51.9 .5 — 2.4 53.1 51.5 .8 .8 1.6 44.4 80

1974 . . 62.1 58.9 .5 — 2.7 60.6 58.6 1.1 .9 1.5 45.9 73

1975 . . 67.6 64.3 .5 — 2.9 69.2 67.0 1.2 1.0 -1.5 44.3 66

1976 . . 75.0 71.6 .7 — 2.7 78.2 75.8 1.2 1.2 -3.2 41.1 57

1977 . . 82.0 78.7 .7 — 2.5 87.3 84.7 1.4 1.2 -5.3 35.9 47

1978 . . 91.9 88.9 .8 — 2.3 96.0 93.0 1.4 1.6 -4.1 31.7 37

1979 . . 105.9 103.0 .7 — 2.2 107.3 104.4 1.5 1.5 -1.5 30.3 30

1980 . . 119.7 116.7 .7 — 2.3 123.5 120.6 1.5 1.4 -3.8 26.5 25

1981 . . 142.4 139.4 .8 — 2.2 144.4 141.0 1.7 1.6 -1.9 24.5 18

1982 . . 147.9 145.7 .9 — 1.4 160.1 156.2 2.1 1.8 f

 .2 24.8 15

1983 . . 171.3 156.3 6.7 — 8.3 171.2 166.7 2.2 2.3 .1 24.9 14

1984 . . 186.6 175.0 5.2 $3.0 3.4 180.4 175.7 2.3 2.4 6.2 31.1 g21

1985 . . 203.5 192.1 5.2 3.4 2.7 190.6 186.1 2.2 2.4 f11.1 42.2 g24

1986 . . 216.8 207.4 1.9 3.7 3.9 201.5 196.7 2.2 2.7 f

 4.7 46.9 g29

1987 . . 231.0 220.6 1.9 3.2 5.3 209.1 204.1 2.4 2.6 21.9 68.8 g31

1988 . . 263.5 249.5 2.3 3.4 8.2 222.5 217.1 2.5 2.9 41.0 109.8 g41

1989 . . 289.4 271.9 2.3 2.5 12.7 236.2 230.9 2.4 2.9 53.2 163.0 g57

1990 . . 315.4 294.5 -1.3 5.0 17.2 253.1 247.8 2.3 3.0 62.3 225.3 g75

1991 . . 329.7 301.6 .1 6.1 21.9 274.2 268.2 2.6 3.5 55.5 280.7 82

1992 . . 342.6 311.3 -.1 6.1 25.4 291.9 286.0 2.7 3.2 50.7 331.5 96

1993 . . 355.6 322.0 .1 5.6 27.9 308.8 302.4 3.0 3.4 46.8 378.3 107

1994 . . 381.1 344.7 e 5.3 31.1 323.0 316.8 2.7 3.5 58.1 436.4 117

1995 . . 399.5 359.1 -.4 5.8 35.0 339.8 332.6 3.1 4.1 59.7 496.1 128

1996 . . 424.5 378.9 e 6.8 38.7 353.6 347.0 3.0 3.6 70.9 567.0 140

1997 . . 457.7 406.0 e 7.9 43.8 369.1 362.0 3.4 3.7 88.6 655.5 154

1998 . . 489.2 430.2 e 9.7 49.3 382.3 375.0 3.5 3.8 106.9 762.5 171

1999 . . 526.6 459.6 e 11.6 55.5 392.9 385.8 3.3 3.8 133.7 896.1 194

2000 . . 568.4 492.5 -.8 12.3 64.5 415.1 407.6 3.8 3.7 153.3 1,049.4 216

2001 . . 602.0 516.4 e 12.7 72.9 438.9 431.9 3.7 3.3 163.1 1,212.5 239

2002 . . 627.1 532.5 .4 13.8 80.4 461.7 453.8 4.2 3.6 165.4 1,378.0 263

2003 . . 631.9 533.5 e 13.4 84.9 479.1 470.8 4.6 3.7 152.8 1,530.8 288

2004 . . 657.7 553.0 e 15.7 89.0 501.6 493.3 4.5 3.8 156.1 1,686.8 305
159

History of Trust Fund Operations

Tables VI.A4 and VI.A5 show the total asset reserves of the OASI Trust

Fund and the DI Trust Fund, respectively, at the end of calendar years 2013

and 2014. The tables show reserves by interest rate and year of maturity.

Bonds issued to the trust funds in 2014 had an interest rate of 2.25 percent,

compared with an interest rate of 1.75 percent for bonds issued in 2013.

2005 . . . $701.8 $592.9 -$0.3 $14.9 $94.3 $529.9 $520.7 $5.3 $3.9 $171.8 $1,858.7 318

2006 . . . 744.9 625.6 e 16.9 102.4 555.4 546.2 5.3 3.8 189.5 2,048.1 335

2007 . . . 784.9 656.1 e 18.6 110.2 594.5 584.9 5.5 4.0 190.4 2,238.5 345

2008 . . . 805.3 672.1 e 16.9 116.3 625.1 615.3 5.7 4.0 180.2 2,418.7 358

2009 . . . 807.5 667.3 e 21.9 118.3 685.8 675.5 6.2 4.1 121.7 2,540.3 353

2010 . . . 781.1 637.3 2.4 23.9 117.5 712.5 701.6 6.5 4.4 68.6 2,609.0 357

2011 . . . 805.1 564.2 102.7 23.8 114.4 736.1 725.1 6.4 4.6 69.0 2,677.9 354

2012 . . . 840.2 589.5 114.3 27.3 109.1 785.8 774.8 6.3 4.7 54.4 2,732.3 341

2013 . . . 855.0 726.2 4.9 21.1 102.8 822.9 812.3 6.2 4.5 32.1 2,764.4 332

2014 . . . 884.3 756.0 .5 29.6 98.2 859.2 848.5 6.1 4.7 25.0 2,789.5 322

a Includes net reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1)

the cost of noncontributory wage credits for military service before 1957; (2) the cost in 1971-82 of deemed

wage credits for military service performed after 1956; (3) the cost of benefits to certain uninsured persons who

attained age 72 before 1968; (4) the cost of payroll tax credits provided to employees in 1984 and self-employed

persons in 1984-89 by Public Law 98-21; (5) the cost in 2009-17 of excluding certain self-employment earnings

from SECA taxes under Public Law 110-246; and (6) payroll tax revenue forgone under the provisions of Public

Laws 111-147, 111-312, 112-78, and 112-96.

b Net interest includes net profits or losses on marketable investments. Beginning in 1967, the trust funds pay

administrative expenses on an estimated basis, with a final adjustment including interest made in the following

fiscal year. Net interest includes the amounts of these interest adjustments. The 1970 report describes the

accounting for administrative expenses for years prior to 1967. Beginning in October 1973, figures include relatively small amounts of gifts to the funds. Net interest for 1983-86 reflects payments for interest on amounts

owed under the interfund borrowing provisions. During 1983-90, net interest reflects interest reimbursements

paid from the trust funds to the general fund on advance tax transfers.

c Beginning in 1966, includes payments for vocational rehabilitation services furnished to disabled persons

receiving benefits because of their disabilities. Beginning in 1983, net benefit amounts include reimbursements

paid from the general fund to the trust funds for unnegotiated benefit checks. Excluding the portion attributable

to vocational rehabilitation services and unnegotiated benefit checks, amounts are the same as benefits scheduled

under law at that time for all historical years.

d The “Trust fund ratio” column represents asset reserves at the beginning of a year as a percentage of expenditures during the year.

e Between -$50 million and $50 million.

f Reflects interfund borrowing and subsequent repayment of loans. The OASI trust fund borrowed $12.4 billion

from the HI Trust Fund in 1982 and repaid the loan in 1985 ($1.8 billion) and 1986 ($10.6 billion).

g Reserves used for the trust fund ratio calculation include January advance tax transfers.

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.A3.— Operations of the Combined OASI and DI Trust Funds,

Calendar Years 1957-2014 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsa

Taxation of

benefits

Net

interestb Total

Benefit

paymentsc

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod
Appendices

160

Note: Amounts of special issues are at par value. The trust fund purchases and redeems special issues at par

value. The table groups equal amounts that mature in two or more years at a given interest rate. A negative

undisbursed balance represents an extension of credit against securities to be redeemed in the next few days.

Table VI.A4.—OASI Trust Fund Asset Reserves, End of Calendar Years 2013 and 2014

[In thousands]

December 31, 2013 December 31, 2014

Obligations sold only to the trust funds (special issues): 

Certificates of indebtedness:

2.000 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $57,308,984

2.250 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,392,770 —

Bonds:

1.375 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,693,019 —

1.375 percent, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,693,019 6,693,019

1.375 percent, 2017-25 . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,237,180 60,237,180

1.375 percent, 2026. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,693,019 6,693,019

1.375 percent, 2027. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,240,401 173,240,401

1.750 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,908,186 —

1.750 percent, 2016-18 . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,724,558 14,724,558

1.750 percent, 2019-25 . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,357,295 34,357,295

1.750 percent, 2026-27 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,816,372 9,816,372

1.750 percent, 2028. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,148,587 178,148,587

2.250 percent, 2016-18 . . . . . . . . . . . . . . . . . . . . . . . . . . . — 11,959,236

2.250 percent, 2019-25 . . . . . . . . . . . . . . . . . . . . . . . . . . . — 27,904,891

2.250 percent, 2026-28 . . . . . . . . . . . . . . . . . . . . . . . . . . . — 11,959,236

2.250 percent, 2029. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 182,134,999

2.500 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,971,788 —

2.500 percent, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,971,788 5,971,788

2.500 percent, 2017-25 . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,746,083 53,746,083

2.500 percent, 2026. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,547,382 166,547,382

2.875 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,264,431 —

2.875 percent, 2016-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,379,888 65,379,888

2.875 percent, 2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,575,595 160,575,595

3.250 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,628,271 —

3.250 percent, 2016-23 . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,026,160 85,026,160

3.250 percent, 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,311,163 153,311,163

3.500 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,513,751 —

3.500 percent, 2016-17 . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,027,504 19,027,504

3.500 percent, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,900,994 86,900,994

4.000 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,075,192 977,473

4.000 percent, 2016-22 . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,526,344 84,526,344

4.000 percent, 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,682,893 142,682,893

4.125 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,439,581 —

4.125 percent, 2015-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,584,730 52,584,730

4.125 percent, 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,585,700 106,585,700

4.625 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,167,664 —

4.625 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,167,664 9,167,664

4.625 percent, 2016-18 . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,502,989 27,502,989

4.625 percent, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,068,657 96,068,657

5.000 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,454,232 —

5.000 percent, 2015-21 . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,179,624 87,179,624

5.000 percent, 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,607,701 130,607,701

5.125 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,567,866 —

5.125 percent, 2015-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,839,330 57,839,330

5.125 percent, 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,567,769 11,567,769

5.125 percent, 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,153,469 118,153,469

5.250 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,235,912 —

5.250 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,235,912 9,235,912

5.250 percent, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,235,911 9,235,911

5.250 percent, 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,387,242 77,387,242

5.625 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,621,437 —

5.625 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,621,437 9,621,437

5.625 percent, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,151,331 68,151,331

6.000 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,952,497 —

6.500 percent, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,577,396 —

6.500 percent, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,529,893 58,529,893

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,674,489,577 2,729,270,403

Undisbursed balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -504,358 -37,873

Total asset reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,673,985,219 2,729,232,530
161

History of Trust Fund Operations

Note: Amounts of special issues are at par value. The trust fund purchases and redeems special issues at par

value. The table groups equal amounts that mature in two or more years at a given interest rate. A negative

undisbursed balance represents an extension of credit against securities to be redeemed in the next few days.

Table VI.A5.—DI Trust Fund Asset Reserves, End of Calendar Years 2013 and 2014

[In thousands]

December 31, 2013 December 31, 2014

Obligations sold only to the trust funds (special issues):

Certificates of indebtedness: 

2.000 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . — $3,493,788

2.250 percent, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,270,852 —

Bonds:

3.250 percent, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 877,560 —

3.250 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 877,560 —

3.500 percent, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,022,082 —

4.000 percent, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,571 —

4.000 percent, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,571 —

4.000 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,572 —

4.000 percent, 2021-22 . . . . . . . . . . . . . . . . . . . . . . . . . 1,245,144 1,245,144

4.000 percent, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,675,554 14,675,554

4.125 percent, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 677,386 —

4.125 percent, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 677,386 —

4.125 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,911,283 11,649,018

4.625 percent, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 855,497 —

4.625 percent, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,233,881 —

5.000 percent, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 476,586 —

5.000 percent, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 476,586 —

5.000 percent, 2020-21 . . . . . . . . . . . . . . . . . . . . . . . . . 953,168 953,168

5.000 percent, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,052,982 14,052,982

5.125 percent, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 665,130 —

5.125 percent, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 665,130 —

5.125 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 665,115 665,115

5.125 percent, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,576,398 13,576,398

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,722,994 60,311,167

Undisbursed balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -277,640 -67,279

Total asset reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,445,354 60,243,888
Appendices

162

B. HISTORY OF ACTUARIAL STATUS ESTIMATES

This appendix chronicles the history of the OASDI actuarial balance and the

year of theoretical combined OASI and DI Trust Fund reserve depletion

since 1982. The actuarial balance is the principal summary measure of longrange actuarial status. The 1983 report was the last report for which the actuarial balance was positive. Section IV.B.4 defines actuarial balance in detail.

The two basic components of actuarial balance are the summarized income

rate and the summarized cost rate, both of which are expressed as percentages of taxable payroll. For any given period, the actuarial balance is the difference between the present value of non-interest income for the period and

the present value of the cost for the period, each divided by the present value

of taxable payroll for all years in the period. The computation of the actuarial

balance also includes:

 • In the reports for 1988 and later, the amount of the trust fund asset

reserves on hand at the beginning of the valuation period; and

 • In the reports for 1991 and later, the present value of a target trust fund

asset reserve equal to 100 percent of the annual cost to be reached and

maintained at the end of the valuation period.

Reports prior to 1973 used the current method of calculating the actuarial

balance based on present values, but the reports of 1973-87 did not. During

that period, the reports used the average-cost method, a simpler method

which approximates the results of the present-value approach. Under the

average-cost method, the sum of the annual cost rates over the 75-year projection period was divided by the total number of years, 75, to obtain the

average cost rate per year. A similar computation produced the average

income rate. The actuarial balance was the difference between the average

income rate and the average cost rate.

When the 1973 report introduced the average-cost method, the long-range

financing of the program was more nearly on a pay-as-you-go basis. Also,

the long-range demographic and economic assumptions in that report produced an annual rate of growth in taxable payroll which was about the same

as the annual rate at which the trust funds earned interest. In either situation

(i.e., pay-as-you-go financing, where the annual income rate is the same as

the annual cost rate, or an annual rate of growth in taxable payroll equal to

the annual interest rate), the average-cost method produces the same result as

the present-value method. However, by 1988, neither of these situations still

existed.
163

History of Actuarial Status

After the 1977 and 1983 Social Security Amendments, estimates showed

substantial increases in the trust funds continuing well into the 21st century.

These laws changed the program’s financing from essentially pay-as-you-go

to partial advance funding. Also, the reports from 1973-87 phased in reductions in long-range fertility rates and average real-wage growth, which produced an annual rate of growth in long-range taxable earnings which was

significantly lower than the assumed interest rate. As a result of the difference between this rate of growth and the assumed interest rate, the results of

the average-cost method and the present-value method in the reports for

1973-87 began to diverge, and by 1988 they were quite different. While the

average-cost method still accounted for most of the effects of the assumed

interest rate, it no longer accounted for all of the interest effects. The presentvalue method, by contrast, accounts for the full effect of the assumed interest

rates. The 1988 report reintroduced the present-value method of calculating

the actuarial balance in order to fully reflect the effects of interest.

A positive actuarial balance indicates that estimated income is more than sufficient to meet estimated trust fund obligations for the period as a whole. A

negative actuarial balance indicates that estimated income is insufficient to

meet estimated trust fund obligations for the entire period. An actuarial balance of zero indicates that the estimated income exactly matches estimated

trust fund obligations for the period.

Table VI.B1 contains the estimated OASDI actuarial balances, summarized

income rates, and summarized cost rates for the 1982 report through the current report. The reports presented these values on the basis of the intermediate assumptions, which recent reports refer to as alternative II and reports

prior to 1991 referred to as alternative II-B.
Appendices

164

Note: Totals do not necessarily equal the sums of rounded components.

For several of the years included in the table, significant legislative changes

or definitional changes affected the estimated actuarial balance. The Social

Table VI.B1.—Long-Range OASDI Actuarial Balances and Trust Fund Reserve 

Depletion Dates as Shown in the Trustees Reports for 1982-2015a

[As a percentage of taxable payroll]

a The reports compute the actuarial balance and year of trust fund reserve depletion based on the intermediate assumptions, which the 1982-90 reports referred to as alternative II-B and the 1991 and later reports

refer to as alternative II.

Year of report

Summarized

income rate

Summarized cost rateActuarial

balanceb

b The definition and method of calculating the actuarial balance were changed in 1988 and 1991. See text

for details.

Change from

previous yearc

c A detailed year-by-year breakdown of the reasons for the changes in the actuarial balance since the 1983

Trustees Report may be found in Actuarial Note 2015.8 at www.socialsecurity.gov/OACT/NOTES/ran8/

index.html.

Year of

combined trust

fund reserve

depletion

1982 12.27 14.09 -1.82 d 1983

1983 12.87 12.84 +.02 +1.84 solvent

1984 12.90 12.95 -.06 -.08 solvent

1985 12.94 13.35 -.41 -.35 2049

1986 12.96 13.40 -.44 -.03 2051

1987 12.89 13.51 -.62 -.18 2051

1988 12.94 13.52 -.58 +.04 2048

1989 13.02 13.72 -.70 -.13 2046

1990 13.04 13.95 -.91 -.21 2043

1991 13.11 14.19 -1.08 -.17 2041

1992 13.16 14.63 -1.46 -.38 2036

1993 13.21 14.67 -1.46 d

d Between -0.005 and 0.005 percent of taxable payroll.

2036

1994 13.24 15.37 -2.13 -.66 2029

1995 13.27 15.44 -2.17 -.04 2030

1996 13.33 15.52 -2.19 -.02 2029

1997 13.37 15.60 -2.23 -.03 2029

1998 13.45 15.64 -2.19 +.04 2032

1999 13.49 15.56 -2.07 +.12 2034

2000 13.51 15.40 -1.89 +.17 2037

2001 13.58 15.44 -1.86 +.03 2038

2002 13.72 15.59 -1.87 -.01 2041

2003 13.78 15.70 -1.92 -.04 2042

2004 13.84 15.73 -1.89 +.03 2042

2005 13.87 15.79 -1.92 -.04 2041

2006 13.88 15.90 -2.02 -.09 2040

2007 13.92 15.87 -1.95 +.06 2041

2008 13.94 15.63 -1.70 +.26 2041

2009 14.02 16.02 -2.00 -.30 2037

2010 14.01 15.93 -1.92 +.08 2037

2011 14.02 16.25 -2.22 -.30 2036

2012 14.02 16.69 -2.67 -.44 2033

2013 13.88 16.60 -2.72 -.05 2033

2014 13.89 16.77 -2.88 -.16 2033

2015 13.86 16.55 -2.68 +.20 2034
165

History of Actuarial Status

Security Amendments of 1983 accounted for the largest single change in

recent history: the actuarial balance of -1.82 for the 1982 report improved to

+0.02 for the 1983 report. In 1985, the estimated actuarial balance changed

largely because of an adjustment made to the method for estimating the age

distribution of immigrants.

Rebenchmarking of the National Income and Product Accounts and changes

in demographic assumptions contributed to the change in the actuarial balance for 1987. Various changes in assumptions and methods for the 1988

report had roughly offsetting effects on the actuarial balance. In 1989 and

1990, changes in economic assumptions accounted for most of the changes

in the estimated actuarial balance.

In 1991, the effect of legislation, changes in economic assumptions, and the

introduction of the cost of reaching and maintaining an ending target trust

fund combined to produce the change in the actuarial balance. In 1992,

changes in disability assumptions and the method for projecting average benefit levels accounted for most of the change in the actuarial balance. In 1993,

numerous small changes in assumptions and methods had offsetting effects

on the actuarial balance. In 1994, changes in the real-wage assumptions, disability rates, and the earnings sample used for projecting average benefit levels accounted for most of the change in the actuarial balance. In 1995,

numerous small changes had largely offsetting effects on the actuarial balance, including a substantial reallocation of the payroll tax rate, which

reduced the OASI actuarial balance, but increased the DI actuarial balance.

In 1996, a change in the method of projecting dually-entitled beneficiaries

produced a large increase in the actuarial balance, which almost totally offset

decreases produced by changes in the valuation period and in the demographic and economic assumptions. Various changes in assumptions and

methods for the 1997 report had roughly offsetting effects on the actuarial

balance. In 1998, increases caused by changes in the economic assumptions,

although partially offset by decreases produced by changes in the valuation

period and in the demographic assumptions, accounted for most of the

changes in the estimated actuarial balance. In 1999, increases caused by

changes in the economic assumptions (related to improvements in the CPI by

the Bureau of Labor Statistics) accounted for most of the changes in the estimated actuarial balance.

For the 2000 report, changes in economic assumptions and methodology

caused increases in the actuarial balance, although reductions in the balance

caused by the change in valuation period and changes in demographic

assumptions partially offset these increases. For the 2001 report, increases
Appendices

166

caused by changes in the demographic starting values, although partially offset by a decrease produced by the change in the valuation period, accounted

for most of the changes in the estimated actuarial balance. For the 2002

report, changes in the valuation period and the demographic assumptions—

both decreases in the actuarial balance—were offset by changes in the economic assumptions, while an increase due to disability assumptions was

slightly more than offset by a decrease due to changes in the projection methods and data. For the 2003 report, an increase due to the change in program

assumptions was more than offset by decreases due to the change in valuation period and changes in demographic assumptions. In the 2004 report,

increases due to changing the method of projecting benefit levels for higher

earners more than offset decreases in the actuarial balance arising from the

change in the valuation period and the net effect of other changes in programmatic data and methods.

For the 2005 report, an increase due to changing the method of projecting

future average benefit levels was more than offset by decreases due to

changes in the valuation period, updated starting values for the economic

assumptions, and other methodological changes. In 2006, decreases in the

actuarial balance due to the change in the valuation period, a reduction in the

ultimate annual real interest rate, and improvements in calculating mortality

for disabled workers, were greater in aggregate than increases in the actuarial

balance due to changes in demographic starting values and the ultimate total

fertility rate, as well as other programmatic data and method changes. For the

2007 report, increases in the actuarial balance arising from revised disability

incidence rate assumptions, improvements in average benefit level projections, and changes in near-term economic projections, more than offset

decreases in the balance due to the valuation period change and updated historical mortality data.

For the 2008 report, the large increase in the actuarial balance was primarily

due to changes in immigration projection methods and assumptions. These

changes more than offset the decreases in the actuarial balance due to the

change in the valuation period and the lower starting and ultimate mortality

rates. In 2009, changes in starting values and near-term economic assumptions due to the economic recession, faster ultimate rates of decline in death

rates for ages 65-84, and the change in the valuation period accounted for

most of the large decrease in the actuarial balance. Legislative changes, in

particular the estimated effects of the Patient Protection and Affordable Care

Act and the Health Care and Education Reconciliation Act of 2010, were the

main reason for the increase in the actuarial balance for the 2010 report. The

change in the valuation period partially offset this increase; there were also
167

History of Actuarial Status

changes in several assumptions, methods, and recent data which had largely

offsetting effects.

For the 2011 report, changes in mortality projections, due to new starting

values and revised methods, were the most significant of several factors contributing to the increase in the deficit. These mortality changes resulted in

lower death rates for the population age 65 and over. Adding to this negative

effect were near-term lower levels of net other immigration and real earnings

than assumed in the 2010 report.

For the 2012 report, changes in economic assumptions and starting values

accounted for about half of the decrease in actuarial balance. Updating starting economic data resulted in higher benefit levels, lower payroll taxes, and

lower real interest rates in the short term than projected in the previous year.

Other factors worsening the actuarial balance were the change in valuation

period, changes to starting demographic values, changes to ultimate disability incidence assumptions, and methodology changes and data updates.

For the 2013 report, the change in valuation period accounted for the entire

net change in the actuarial balance. The effects of substantially lower death

rates for 2009 than previously projected and the American Taxpayer Relief

Act of 2012 (which lowered the federal marginal income tax rates) were offset by updates of program-specific data and methodology improvements.

The primary factors improving the actuarial balance were changes in ultimate age-sex specific unemployment rates, changes in modeling the number

of workers insured, changes in average benefit levels due to the update of the

sample, changes in projections of income from taxation of benefits, and other

method changes and data updates.

For the 2014 report, changes in economic data and assumptions accounted

for the majority of the net change in the actuarial balance. In particular, the

2014 report includes a lower projected ratio of average taxable earnings to

the average wage index throughout the long-range period, resulting in lower

payroll taxes relative to benefit levels. In addition, the estimated level of fullemployment (potential) GDP is about 1 percent lower in the 2014 report,

resulting in lower earnings and payroll taxes for the future. This change

reflects the fact that GDP growth has not been as strong so far in the economic recovery as had been experienced in prior recoveries. Other factors

worsening the actuarial balance were the change in the valuation period and

various methodology improvements and data updates.

Section IV.B.6 describes changes affecting the actuarial balance shown for

the 2015 report.
Appendices

168

C. FISCAL YEAR HISTORICAL AND PROJECTED TRUST FUND 

OPERATIONS THROUGH 2024

Tables VI.C1, VI.C2, and VI.C3 contain details of the fiscal year 2014 operations of the OASI, DI, and the theoretical combined OASI and DI Trust

Funds, respectively. The fiscal year for the U.S. Government is the 12-month

period ending September 30. Fiscal year 2014 is the most recent fiscal year

for which complete information is available. The descriptions of the values

in these tables are similar to the corresponding descriptions and values in the

calendar year operations tables in section III.A. Please see that section for a

description of the various items of income and outgo.
169

Fiscal Year Operations and Projections

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C1.—Operations of the OASI Trust Fund, Fiscal Year 2014

[In millions]

Total asset reserves, September 30, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,655,049

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

a Includes adjustments for prior years

$644,414

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,158

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642,256

Reimbursements from the general fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a . 95

Reduction in payroll tax contributions due to P.L. 111-147a . . . . . . . . . . . . . . . . . . 25

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net general fund reimbursementsa 126

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 182

All other, not subject to withholdinga. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,459

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,641

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,270

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust fund and

the general fund account for the Supplemental Security Income program, (2) interest arising from the revised

allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the

trust fund.

2

Total investment income and interest adjustments . . . . . . . . . . . . . . . . . . . . . . . . 96,271

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 763,295

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

698,279

Reimbursement from the general fund for unnegotiated checks . . . . . . . . . . . . . . . -45

Payment for costs of vocational rehabilitation services for disabled beneficiaries 2

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 698,235

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,257

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,898

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536

Adjustments for prior year administrative expenses . . . . . . . . . . . . . . . . . . . . . . . -271

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5

Miscellaneous reimbursements from the general fund e . . . . . . . . . . . . . . . . . . . . . 

e Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the OASI program.

-5

Net administrative expenses 3,153

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705,645

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,650

Total asset reserves, September 30, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,712,699
Appendices

170

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C2.—Operations of the DI Trust Fund, Fiscal Year 2014

[In millions]

Total asset reserves, September 30, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,486

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior years.

$109,426

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -366

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,060

Reimbursements from the general fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a. 21

Reduction in payroll tax contributions due to P.L. 111-147a . . . . . . . . . . . . . . . . . . 4

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net general fund reimbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 4

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,018

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,022

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,995

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust fund and

the general fund account for the Supplemental Security Income program, (2) interest arising from the revised

allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to

the trust fund.

1

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 3,997

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,105

Disbursements:

Benefit payments:

Monthly benefitsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

141,270

Reimbursement from the general fund for unnegotiated checks . . . . . . . . . . . . . . . -23

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 80

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,327

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,674

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Adjustments for prior year administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 109

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Miscellaneous reimbursements from the general funde. . . . . . . . . . . . . . . . . . . . . .

e Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the DI program.

-4

Net administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,897

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,667

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30,562

Total asset reserves, September 30, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,925
171

Fiscal Year Operations and Projections

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C3.—Operations of the Combined OASI and DI Trust Funds, Fiscal Year 2014

[In millions]

Total asset reserves, September 30, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,755,536

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior years.

$753,840

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,524

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751,316

Reimbursements from the general fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a. 116

Reduction in payroll tax contributions due to P.L. 111-147a . . . . . . . . . . . . . . . . . . 29

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net general fund reimbursementsa 153

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 187

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,477

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,664

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,265

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust funds

and the general fund account for the Supplemental Security Income program, (2) interest arising from the

revised allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the trust funds.

3

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 100,268

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877,401

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

839,549

Reimbursement from the general fund for unnegotiated checks . . . . . . . . . . . . . . . -68

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 81

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 839,562

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,701

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,572

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 638

Adjustments for prior year administrative expenses . . . . . . . . . . . . . . . . . . . . . . . -163

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Miscellaneous reimbursements from the general funde . . . . . . . . . . . . . . . . . . . . . .

e Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the OASI and DI programs.

-8

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,050

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 850,312

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,088

Total asset reserves, September 30, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,782,624
Appendices

172

Tables VI.C4, VI.C5, and VI.C6 show estimates of the operations and status of

the OASI, DI, and the theoretical combined OASI and DI Trust Funds, respectively, during fiscal years 2010-24. 

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C4.—Operations of the OASI Trust Fund, Fiscal Years 2010-24

[Dollar amounts in billions]

Fiscal 

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsa

a Includes reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of

noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984 and selfemployed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

Taxation of

benefitsb

b Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

Net

interest Total

Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioc

c The “Trust fund ratio” column represents asset reserves at the beginning of a year (which are identical to

reserves at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for

the year. 

Historical data:

2010 . $682.4 $552.0 $0.7 $21.1 $108.6 $579.9 $572.5 $3.5 $3.9 $102.5 $2,398.4 396

2011 . 692.5 495.0 68.9 21.2 107.4 599.2 591.5 3.6 4.1 93.3 2,491.7 400

2012 . 729.0 500.7 95.9 27.2 105.2 634.7 627.2 3.4 4.1 94.3 2,585.9 393

2013 . 739.7 590.0 26.4 23.1 100.1 670.6 663.2 3.4 3.9 69.1 2,655.0 386

2014 . 763.3 642.3 .1 24.6 96.3 705.6 698.2 3.2 4.3 57.6 2,712.7 376

Intermediate:

2015 . 790.7 667.8 .2 29.5 93.2 743.7 736.3 3.2 4.3 47.0 2,759.7 365

2016 . 828.5 705.5 .2 33.3 89.4 779.9 772.2 3.3 4.4 48.6 2,808.3 354

2017 . 881.0 754.1 .1 36.9 89.9 832.9 825.4 3.3 4.1 48.1 2,856.4 337

2018 . 935.9 803.2 d

d Between -$50 million and $50 million. 

40.4 92.3 894.2 886.2 3.5 4.6 41.7 2,898.1 319

2019 . 991.8 851.1 d 44.2 96.5 958.6 950.2 3.6 4.7 33.2 2,931.3 302

2020 . 1,043.2 894.2 d 48.3 100.8 1,026.5 1,018.0 3.8 4.7 16.7 2,948.0 286

2021 . 1,105.2 949.0 d 52.4 103.9 1,095.1 1,086.2 3.9 5.0 10.1 2,958.1 269

2022 . 1,163.9 1,000.6 d 56.8 106.4 1,167.9 1,158.7 4.0 5.2 -4.0 2,954.1 253

2023 . 1,217.2 1,046.2 d 61.6 109.4 1,245.9 1,236.5 4.2 5.3 -28.7 2,925.4 237

2024 . 1,275.7 1,096.5 d 66.8 112.4 1,329.3 1,319.7 4.3 5.3 -53.6 2,871.8 220

Low-cost:

2015 . 793.2 670.1 .2 29.5 93.3 743.5 736.1 3.2 4.3 49.7 2,762.4 365

2016 . 855.7 730.7 .2 33.4 91.5 780.3 772.7 3.3 4.3 75.4 2,837.8 354

2017 . 925.3 792.5 .1 37.0 95.7 835.3 827.9 3.3 4.1 89.9 2,927.7 340

2018 . 1,000.8 855.8 d 40.7 104.2 901.2 893.2 3.6 4.5 99.5 3,027.3 325

2019 . 1,080.3 921.0 d 44.8 114.5 971.4 962.9 3.8 4.7 109.0 3,136.2 312

2020 . 1,156.6 981.5 d 49.2 125.9 1,045.9 1,037.3 3.9 4.7 110.8 3,247.0 300

2021 . 1,245.5 1,054.7 d 53.7 137.1 1,122.2 1,113.1 4.1 5.0 123.3 3,370.2 289

2022 . 1,335.2 1,126.9 d 58.6 149.7 1,203.9 1,194.4 4.3 5.2 131.4 3,501.6 280

2023 . 1,424.9 1,196.4 d 63.9 164.6 1,292.2 1,282.3 4.5 5.3 132.8 3,634.4 271

2024 . 1,524.2 1,273.4 d 69.7 181.1 1,387.3 1,377.3 4.7 5.3 136.8 3,771.2 262

High-cost:

2015 . 787.7 664.8 .2 29.5 93.2 743.9 736.5 3.2 4.3 43.8 2,756.5 365

2016 . 797.7 677.1 .2 33.4 87.1 780.6 772.9 3.3 4.4 17.1 2,773.6 353

2017 . 834.7 714.0 .1 36.8 83.9 830.7 823.1 3.3 4.2 4.0 2,777.7 334

2018 . 869.8 747.9 d 40.0 81.8 886.9 878.8 3.4 4.6 -17.1 2,760.5 313

2019 . 906.0 780.4 d 43.6 82.0 945.3 937.0 3.5 4.8 -39.2 2,721.3 292

2020 . 934.2 807.9 d 47.3 78.9 1,006.5 998.1 3.6 4.7 -72.3 2,649.0 270

2021 . 973.3 845.3 d 51.0 77.0 1,067.5 1,058.7 3.7 5.1 -94.2 2,554.8 248

2022 . 1,007.6 879.2 d 55.1 73.3 1,131.6 1,122.6 3.8 5.2 -124.0 2,430.8 226

2023 . 1,035.3 908.3 d 59.3 67.6 1,199.6 1,190.5 3.9 5.2 -164.3 2,266.5 203

2024 . 1,064.7 938.4 d 63.9 62.4 1,271.6 1,262.5 3.9 5.2 -206.9 2,059.5 178
173

Fiscal Year Operations and Projections

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C5.—Operations of the DI Trust Fund, Fiscal Years 2010-24a

[Dollar amounts in billions]

a The DI Trust Fund becomes depleted in fiscal years 2017 and 2016 and remains so through 2024 under the

intermediate and high-cost assumptions, respectively. Under the low-cost assumptions, reserves would be

depleted in 2018 through early 2023. For any period during which reserves would be depleted, scheduled benefits could not be paid in full on a timely basis, income from taxing benefits would be less than would apply to

scheduled benefits, and interest on trust fund reserves would be negligible.

Fiscal 

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsb

b Includes reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of noncontributory wage credits for military service before 1957; (2) the cost of payroll tax credits provided to

employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; (3) the cost in 2009-17 of

excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (4) payroll tax

revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

Taxation of

benefitsc

c Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

Net

interest Total

Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod

d The “Trust fund ratio” column represents asset reserves at the beginning of a year (which are identical to

reserves at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for

the year. 

Historical data:

2010 . $105.5 $93.7 $0.1 $1.7 $9.9 $126.3 $122.9 $2.9 $0.5 -$20.8 $186.9 164

2011 . 106.2 84.0 11.7 1.9 8.6 131.5 128.0 3.0 .5 -25.3 161.7 142

2012 . 108.8 85.1 16.2 .4 7.2 138.5 135.1 2.9 .5 -29.7 132.0 117

2013 . 111.3 100.2 4.5 1.1 5.5 142.8 139.4 2.8 .6 -31.5 100.5 92

2014 . 114.1 109.1 e

e Between -$50 million and $50 million.

1.0 4.0 144.7 141.3 2.9 .4 -30.6 69.9 69

Intermediate:

2015 . 117.2 113.4 e 1.0 2.7 148.3 144.9 3.0 .4 -31.1 38.8 47

2016 . 123.0 119.8 e 1.9 1.2 151.6 148.0 3.2 .3 -28.6 10.2 26

2017 . f

f While the fund is depleted, values under current law would reflect permissible expenditures only, which are

inconsistent with the cost of scheduled benefits shown in this table.

128.1 e 2.1 f 156.9 153.4 3.1 .3 f f 7

2018 . f 136.4 e 2.3 f 163.9 160.1 3.5 .3 f ff

2019 . f 144.5 e 2.5 f 171.4 167.3 3.9 .2 f ff

2020 . f 151.8 e 2.7 f 178.7 174.4 4.2 .2 f ff

2021 . f 161.1 e 2.9 f 186.7 182.1 4.4 .1 f ff

2022 . f 169.9 e 3.1 f 195.2 190.4 4.7 .1 f ff

2023 . f 177.7 e 3.3 f 204.2 199.1 5.0 .1 f ff

2024 . f 186.2 e 3.5 f 213.1 207.8 5.3 .1 f ff

Low-cost:

2015 . 117.6 113.8 e 1.0 2.7 146.8 143.4 3.0 .4 -29.2 40.7 48

2016 . 127.4 124.1 e 1.9 1.4 148.1 144.6 3.2 .3 -20.8 20.0 27

2017 . 137.2 134.6 e 2.0 .6 151.8 148.3 3.1 .3 -14.6 5.3 13

2018 . f 145.3 e 2.2 f 157.5 153.7 3.6 .3 f f 3

2019 . f 156.4 e 2.4 f 163.8 159.6 4.0 .2 f ff

2020 . f 166.7 e 2.5 f 170.2 165.6 4.4 .2 f ff

2021 . f 179.1 e 2.7 f 177.3 172.5 4.7 .1 f ff

2022 . f 191.4 e 2.9 f 185.3 180.1 5.1 .1 f ff

2023 . f 203.2 e 3.1 f 193.7 188.1 5.4 .1 f 12.0 f

2024 . 220.4 216.2 e 3.4 .8 202.1 196.2 5.8 .1 18.3 30.3 6

High-cost:

2015 . 116.7 112.9 e 1.0 2.7 149.9 146.5 3.0 .4 -33.2 36.8 47

2016 . f 115.0 e 1.9 f 155.4 151.8 3.2 .4 f f 24

2017 . f 121.2 e 2.2 f 162.3 158.9 3.1 .3 f ff

2018 . f 127.0 e 2.4 f 170.5 166.8 3.5 .3 f ff

2019 . f 132.5 e 2.6 f 178.8 174.9 3.7 .2 f ff

2020 . f 137.2 e 2.8 f 186.9 182.8 3.9 .2 f ff

2021 . f 143.5 e 3.0 f 195.4 191.0 4.2 .2 f ff

2022 . f 149.3 e 3.2 f 204.3 199.7 4.4 .1 f ff

2023 . f 154.2 e 3.5 f 213.3 208.6 4.6 .1 f ff

2024 . f 159.4 e 3.7 f 222.1 217.2 4.8 .1 f ff
Appendices

174

Table VI.C6.—Operations of the Combined OASI and DI Trust Funds,

Fiscal Years 2010-24

[Dollar amounts in billions]

Fiscal

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsa

a Includes reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1) the

cost of noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984

and self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain selfemployment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under

the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

Taxation of

benefitsb

b Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioc

c The “Trust fund ratio” column represents asset reserves at the beginning of a year (which are identical to

reserves at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for

the year. 

Historical data:

2010. . $788.0 $645.8 $0.9 $22.8 $118.5 $706.3 $695.4 $6.4 $4.4 $81.7 $2,585.3 354

2011. . 798.7 579.1 80.6 23.1 116.0 730.7 719.5 6.7 4.6 68.0 2,653.3 354

2012. . 837.8 585.7 112.2 27.5 112.4 773.2 762.3 6.3 4.7 64.6 2,717.9 343

2013. . 850.9 690.1 30.9 24.2 105.7 813.3 802.6 6.2 4.5 37.6 2,755.5 334

2014. . 877.4 751.3 .2 25.7 100.3 850.3 839.6 6.0 4.7 27.1 2,782.6 324

Intermediate:

2015. . 907.9 781.2 .3 30.6 95.9 892.0 881.2 6.1 4.6 15.9 2,798.5 312

2016. . 951.4 825.3 .2 35.2 90.7 931.5 920.3 6.5 4.7 20.0 2,818.5 300

2017. . 1,011.1 882.2 .1 38.9 89.8 989.7 978.8 6.5 4.4 21.3 2,839.8 285

2018. . 1,073.4 939.5 d

d Between -$50 million and $50 million.

42.6 91.2 1,058.1 1,046.3 7.0 4.8 15.3 2,855.1 268

2019. . 1,136.2 995.6 d 46.7 93.9 1,129.9 1,117.5 7.5 4.9 6.2 2,861.4 253

2020. . 1,193.8 1,046.1 d 51.0 96.7 1,205.2 1,192.4 7.9 4.9 -11.5 2,849.9 237

2021. . 1,263.7 1,110.1 d 55.2 98.3 1,281.8 1,268.3 8.4 5.2 -18.1 2,831.8 222

2022. . 1,329.7 1,170.5 d 59.9 99.2 1,363.1 1,349.1 8.8 5.3 -33.4 2,798.4 208

2023. . 1,389.3 1,223.8 d 64.9 100.5 1,450.1 1,435.6 9.2 5.4 -60.8 2,737.5 193

2024. . 1,454.6 1,282.7 d 70.3 101.6 1,542.4 1,527.5 9.5 5.4 -87.8 2,649.8 177

Low-cost:

2015. . 910.7 783.9 .3 30.5 96.0 890.3 879.5 6.1 4.6 20.5 2,803.1 313

2016. . 983.1 854.8 .2 35.2 92.9 928.5 917.3 6.5 4.7 54.6 2,857.7 302

2017. . 1,062.4 927.1 .1 39.0 96.3 987.1 976.2 6.5 4.4 75.3 2,933.1 290

2018. . 1,148.2 1,001.2 d 42.9 104.1 1,058.8 1,046.8 7.2 4.8 89.4 3,022.5 277

2019. . 1,238.4 1,077.4 d 47.2 113.8 1,135.2 1,122.5 7.8 4.9 103.2 3,125.7 266

2020. . 1,324.9 1,148.2 d 51.7 125.0 1,216.1 1,202.9 8.3 4.8 108.8 3,234.5 257

2021. . 1,426.4 1,233.8 d 56.4 136.2 1,299.6 1,285.6 8.8 5.2 126.8 3,361.3 249

2022. . 1,528.9 1,318.3 d 61.5 149.1 1,389.1 1,374.5 9.4 5.3 139.8 3,501.1 242

2023. . 1,631.2 1,399.6 d 67.0 164.6 1,485.8 1,470.5 10.0 5.4 145.3 3,646.4 236

2024. . 1,744.6 1,489.6 d 73.1 181.9 1,589.4 1,573.5 10.5 5.4 155.2 3,801.6 229

High-cost:

2015. . 904.4 777.7 .3 30.6 95.9 893.8 883.0 6.1 4.6 10.6 2,793.3 311

2016. . 915.7 792.1 .2 35.3 88.1 936.0 924.7 6.5 4.7 -20.3 2,773.0 298

2017. . 957.7 835.3 .1 38.9 83.5 993.0 982.0 6.5 4.5 -35.3 2,737.7 279

2018. . 997.4 874.9 d 42.4 80.1 1,057.4 1,045.6 6.9 4.9 -60.0 2,677.7 259

2019. . 1,037.5 912.9 d 46.2 78.4 1,124.1 1,111.8 7.2 5.0 -86.6 2,591.2 238

2020. . 1,068.4 945.1 d 50.1 73.2 1,193.4 1,180.9 7.6 4.9 -125.0 2,466.2 217

2021. . 1,111.7 988.8 d 54.0 68.8 1,262.9 1,249.8 7.9 5.2 -151.1 2,315.0 195

2022. . 1,149.2 1,028.5 d 58.3 62.4 1,335.8 1,322.3 8.2 5.3 -186.6 2,128.4 173

2023. . 1,179.2 1,062.6 d 62.8 53.8 1,412.9 1,399.1 8.5 5.4 -233.8 1,894.7 151

2024. . 1,210.6 1,097.7 d 67.6 45.3 1,493.7 1,479.7 8.7 5.3 -283.1 1,611.6 127
175

Long-Range Sensitivity Analysis

D. LONG-RANGE SENSITIVITY ANALYSIS

This appendix presents estimates that illustrate the sensitivity of the longrange actuarial status of the OASDI program to changes in selected individual assumptions. The estimates based on the three alternative sets of assumptions, which were presented earlier in this report, illustrate the effects of

varying all of the principal assumptions simultaneously, in order to portray a

significantly more optimistic or pessimistic future. For each sensitivity analysis presented in this appendix, the intermediate alternative II projection is

the reference point, and one assumption is varied within that alternative. The

variation used for each individual assumption is the same as the level used

for that assumption in the low-cost alternative I and high-cost alternative III

projections.

Each table in this section shows the effects of changing a particular assumption on the OASDI summarized income rates, summarized cost rates, and

actuarial balances for 25-year, 50-year, and 75-year valuation periods. Following each table is a discussion of the estimated changes in cost rates. The

change in each of the actuarial balances is approximately equal to the change

in the corresponding cost rate, but in the opposite direction. This appendix

does not discuss income rates following each table because income rates

vary only slightly with changes in assumptions that affect revenue from taxation of benefits.

1. Total Fertility Rate

Table VI.D1 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about the ultimate

total fertility rate. The Trustees assume that total fertility will ultimately be

1.8, 2.0, and 2.2 children per woman under alternatives III, II, and I, respectively. The total fertility rate reaches ultimate values in 2032, 2027, and 2023

under alternatives III, II, and I, respectively.
Appendices

176

For the 25-year period, the cost rate for the three fertility assumptions varies

by only about 0.03 percent of taxable payroll. In contrast, the 75-year cost

rate varies over a wide range, decreasing from 16.90 to 16.16 percent, as the

assumed ultimate total fertility rate increases from 1.8 to 2.2. Similarly,

while the 25-year actuarial balance varies by only 0.03 percent of taxable

payroll, the 75-year actuarial balance varies over a much wider range, from

-3.01 to -2.34 percent.

During the 25-year period, the very slight increases in the working population resulting from higher fertility (than that experienced in an alternative

scenario) are more than offset by decreases in the female labor force and

increases in the number of child beneficiaries. Therefore, program cost

increases slightly with higher fertility. For the 75-year long-range period,

however, changes in fertility have a relatively greater effect on the labor

force than on the beneficiary population. As a result, an increase in fertility

significantly reduces the cost rate. Each increase of 0.1 in the ultimate total

fertility rate increases the long-range actuarial balance by about 0.17 percent

of taxable payroll.1

Table VI.D1.—Sensitivity of OASDI Measures to Varying Fertility Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate total fertility ratea b

a The total fertility rate for any year is the average number of children that would be born to a woman in her

lifetime if she were to experience, at each age of her life, the birth rate observed in, or assumed for, the

selected year, and if she were to survive the entire childbearing period. The ultimate total fertility rate is

reached in 2032, 2027, and 2023 under alternatives III, II, and I, respectively.

b Ultimate total fertility rates used for this analysis are: 1.8 from the alternative III assumptions, 2.0 from the

alternative II assumptions, and 2.2 from the alternative I assumptions. All other assumptions used for this

analysis are from alternative II.

1.8 2.0 2.2

Summarized income rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.66 14.67 14.67

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.05 14.04 14.02

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.90 13.86 13.83

Summarized cost rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.05 16.06 16.07

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.39 16.26 16.12

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.90 16.55 16.16

Actuarial balance:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.38 -1.39 -1.41

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.34 -2.23 -2.10

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.01 -2.68 -2.34

Annual balance for 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . -6.19 -4.65 -3.28

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2034

 1 This 0.17 percent increase in the long-range actuarial balance is larger than the 0.13 indicated in last year’s

report. This is due to the shortening of the transition periods during which the total fertility rate reaches its

ultimate value for each alternative. These shorter transition periods cause the ultimate values to have larger

effects on the long-range projections. See section V.A.1 for more details on the shortened transition periods.
177

Long-Range Sensitivity Analysis

2. Death Rates

Table VI.D2 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about future reductions in death rates for the period 2014-89. These assumptions are described

in section V.A.2. The Trustees assume that the age-sex-adjusted death rates

will decline at average annual rates of 0.41 percent, 0.78 percent, and

1.18 percent for alternatives I, II, and III, respectively. 

The variation in cost for the 25-year period is less pronounced than the variation for the 75-year period because decreases in death rates have cumulative

effects. The 25-year cost rate increases from 15.92 percent (for an average

annual death-rate reduction of 0.41 percent) to 16.20 percent (for an average

annual death-rate reduction of 1.18 percent). The 75-year cost rate increases

from 16.08 to 17.02 percent. The actuarial balance decreases from -1.25 to

-1.54 percent for the 25-year period, and from -2.23 to -3.14 percent for the

75-year period.

Lower death rates raise both the income (through increased taxable payroll)

and the cost of the OASDI program. The relative increase in cost, however,

exceeds the relative increase in taxable payroll. For any given year, reductions in the death rates for people who are age 62 and over (ages at which

Table VI.D2.—Sensitivity of OASDI Measures to Varying Death-Rate Assumptions

[As a percentage of taxable payroll]

Valuation period

Average annual death-rate reductiona b

a The average annual death-rate reduction is the average annual geometric rate of decline in the age-sexadjusted death rate between 2014 and 2089. The overall age-sex-adjusted death rate decreases from 2014 to

2089 by 26 percent, 44 percent, and 59 percent for alternatives I, II, and III, respectively.

b The average annual death-rate reductions used for this analysis are: 0.41 percent from the alternative I

assumptions, 0.78 percent from the alternative II assumptions, and 1.18 percent from the alternative III

assumptions. All other assumptions used for this analysis are from alternative II.

0.41 percent 0.78 percent 1.18 percent

Summarized income rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.67 14.67 14.66

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.03 14.04 14.05

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.85 13.86 13.88

Summarized cost rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.92 16.06 16.20

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.94 16.26 16.61

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.08 16.55 17.02

Actuarial balance:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.25 -1.39 -1.54

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.90 -2.23 -2.56

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.23 -2.68 -3.14

Annual balance for 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . -3.69 -4.65 -5.59

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2033
Appendices

178

death rates are the highest) increase the number of retired-worker beneficiaries (and, therefore, the amount of retirement benefits paid) without adding

significantly to the number of covered workers (and, therefore, to the taxable

payroll). Reductions for people at age 50 to retirement eligibility age result

in significant increases to the taxable payroll. However, those increases are

not large enough to offset the sum of the additional retirement benefits mentioned above and the disability benefits paid to additional beneficiaries at

these pre-retirement ages, which are ages of high disability incidence. At

ages under 50, death rates are so low that even substantial reductions in death

rates do not result in significant increases in the numbers of covered workers

or beneficiaries. Consequently, if death rates decline by about the same relative amount for all ages, the cost increases faster than the rate of growth in

payroll, which results in higher cost rates and lower actuarial balances. Each

additional 0.1-percentage-point increase in the average annual rate of decline

in the death rate decreases the long-range actuarial balance by about

0.12 percent of taxable payroll.

3. Immigration

Table VI.D3 shows OASDI income rates, cost rates, and actuarial balances

under alternative II with various assumptions about the magnitude of net

immigration (immigration minus emigration). The Trustees assume annual

levels of immigration and emigration, with new annual immigration averaging 850,000 persons, 1,155,000 persons, and 1,465,000 persons over the

long-range period under alternatives III, II, and I, respectively.

Table VI.D3.—Sensitivity of OASDI Measures to Varying Net-Immigration Assumptions

[As a percentage of taxable payroll]

Valuation period

Average annual net immigrationa b

a Net immigration per year is the annual net immigration to the Social Security area, including both legal and

other immigration, averaged over the 75-year projection period.

b The average annual net immigration assumptions used for this analysis are: 850,000 from the alternative III

assumptions, 1,155,000 from the alternative II assumptions, and 1,465,000 from the alternative I assumptions. All other assumptions used for this analysis are from alternative II.

850,000 1,155,000 1,465,000

Summarized income rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.70 14.67 14.64

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.07 14.04 14.01

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.90 13.86 13.83

Summarized cost rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.25 16.06 15.90

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.51 16.26 16.04

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.83 16.55 16.30

Actuarial balance:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.55 -1.39 -1.26

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.44 -2.23 -2.03

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.93 -2.68 -2.47

Annual balance for 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . -5.08 -4.65 -4.28

Year of combined trust fund reserve depletion . . . . . . . . 2033 2034 2034
179

Long-Range Sensitivity Analysis

For all three periods, when net immigration increases, the cost rate decreases.

For the 25-year period, the cost rate decreases from 16.25 percent of taxable

payroll (for average annual net immigration of 850,000 persons) to

15.90 percent (for average annual net immigration of 1,465,000 persons).

For the 50-year period, it decreases from 16.51 percent to 16.04 percent, and

for the 75-year period, it decreases from 16.83 percent to 16.30 percent. The

actuarial balance increases from -1.55 to -1.26 percent for the 25-year

period, from -2.44 to -2.03 percent for the 50-year period, and from -2.93 to

-2.47 percent for the 75-year period.

The cost rate decreases with an increase in net immigration because immigration occurs at relatively young ages, thereby increasing the numbers of

covered workers earlier than the numbers of beneficiaries. Increasing average annual net immigration by 100,000 persons improves the long-range

actuarial balance by about 0.07 percent of taxable payroll.

4. Real-Wage Differential

Table VI.D4 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about the real-wage

differential. The Trustees assume the ultimate real-wage differential will be

0.55 percentage point, 1.17 percentage points, and 1.80 percentage points

under alternatives III, II, and I, respectively. In each case, the ultimate annual

increase in the CPI is 2.70 percent (consistent with alternative II). Therefore,

the ultimate percentage increases in average annual wages in covered

employment are 3.25, 3.87, and 4.50 percent.

For the 25-year period, the cost rate decreases from 16.82 percent (for a realwage differential of 0.55 percentage point) to 15.31 percent (for a differential

of 1.80 percentage points). For the 50-year period, it decreases from 17.36 to

15.20 percent, and for the 75-year period it decreases from 17.74 to

15.37 percent. The actuarial balance increases from -2.02 to -0.77 percent for

the 25-year period, from -3.15 to -1.32 percent for the 50-year period, and

from -3.69 to -1.68 percent for the 75-year period.
Appendices

180

The cost rate decreases with increasing real-wage differentials. Higher wages

increase taxable payroll immediately, but they increase benefit levels only

gradually as new beneficiaries become entitled. In addition, cost-of-living

adjustments (COLAs) to benefits depend not on changes in wages, but on

changes in prices. Each 0.5-percentage-point increase in the real-wage differential increases the long-range actuarial balance by about 0.80 percent of

taxable payroll.

5. Consumer Price Index

Table VI.D5 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about the rate of

increase for the Consumer Price Index (CPI). The Trustees assume the

annual increase in the CPI will be 3.40 percent, 2.70 percent, and

2.00 percent under alternatives I, II, and III, respectively.1 In each case, the

ultimate real-wage differential is 1.17 percentage points (consistent with

alternative II), yielding ultimate percentage increases in average annual

wages in covered employment of 4.57, 3.87, and 3.17 percent.

Table VI.D4.—Sensitivity of OASDI Measures to Varying Real-Wage Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate percentage increase in wages-CPIa b

a The first value in each pair is the ultimate annual percentage increase in average wages in covered employment. The second value is the ultimate annual percentage increase in the Consumer Price Index. The difference between the two values is the ultimate real-wage differential.

b The ultimate real-wage differentials of 0.55, 1.17, and 1.80 percentage points are the same as in alternatives III, II, and I, respectively. All other assumptions used for this analysis are from alternative II.

3.25-2.70 3.87-2.70 4.50-2.70

Summarized income rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.80 14.67 14.54

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.20 14.04 13.88

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.05 13.86 13.69

Summarized cost rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.82 16.06 15.31

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.36 16.26 15.20

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.74 16.55 15.37

Actuarial balance:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.02 -1.39 -.77

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.15 -2.23 -1.32

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.69 -2.68 -1.68

Annual balance for 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . -6.58 -4.65 -2.96

Year of combined trust fund reserve depletion . . . . . . . . 2032 2034 2038

 1 Prior to the 2014 report, alternative I included a lower ultimate annual change in the CPI and alternative III

included a higher ultimate annual change in the CPI than was included for alternative II.
181

Long-Range Sensitivity Analysis

For all three periods, the cost rate increases when the assumed rates of

increase in the CPI are smaller. For the 25-year period, the cost rate increases

from 15.94 (for CPI increases of 3.40 percent) to 16.18 percent (for CPI

increases of 2.00 percent). For the 50-year period, it increases from 16.11 to

16.42 percent, and for the 75-year period, it increases from 16.38 to

16.72 percent. The actuarial balance decreases from -1.30 to -1.49 percent

for the 25-year period, from -2.09 to -2.36 percent for the 50-year period,

and from -2.53 to -2.84 percent for the 75-year period.

The time lag between the effects of the CPI changes on taxable payroll and

on scheduled benefits explains these patterns. When the rate of increase in

the CPI is greater and the real-wage differential is constant, then: (1) the

effect on taxable payroll due to a greater rate of increase in average wages

occurs immediately and (2) the effect on benefits due to a larger COLA

occurs with a lag of about 1 year. As a result of these effects, the higher taxable payrolls have a stronger effect than the higher benefits, which results in

lower cost rates. Each 1.0-percentage-point decrease in the rate of the change

in the CPI decreases the long-range actuarial balance by about 0.22 percent

of taxable payroll.

Table VI.D5.—Sensitivity of OASDI Measures to Varying CPI-Increase Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate percentage increase in wages-CPIa b

a The first value in each pair is the ultimate annual percentage increase in average wages in covered employment. The second value is the ultimate annual percentage increase in the Consumer Price Index. The difference between the two values is the ultimate real-wage differential.

b The ultimate CPI increases of 3.40, 2.70, and 2.00 percent are the same as in alternatives I, II, and III,

respectively. The ultimate real-wage differential of 1.17 percentage points is the same as in alternative II. All

other assumptions used for this analysis are also from alternative II.

4.57-3.40 3.87-2.70 3.17-2.00

Summarized income rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.64 14.67 14.69

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.02 14.04 14.06

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.85 13.86 13.88

Summarized cost rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.94 16.06 16.18

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.11 16.26 16.42

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.38 16.55 16.72

Actuarial balance:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.30 -1.39 -1.49

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.09 -2.23 -2.36

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.53 -2.68 -2.84

Annual balance for 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.45 -4.65 -4.86

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2033
Appendices

182

6. Real Interest Rate

Table VI.D6 shows OASDI income rates, cost rates, and actuarial balances

under alternative II with various assumptions about the annual real interest

rate (compounded semiannually) for special public-debt obligations issuable

to the trust funds. The Trustees assume that the ultimate annual real interest

rate will be 2.4 percent, 2.9 percent, and 3.4 percent under alternatives III, II,

and I, respectively. In each case, the ultimate annual increase in the CPI is

2.70 percent, which is consistent with alternative II. Therefore, the ultimate

annual yields are 5.2, 5.7, and 6.2 percent, respectively.

For the 25-year period, the cost rate decreases with increasing real interest

rates from 16.12 percent (for an ultimate real interest rate of 2.4 percent) to

15.99 percent (for an ultimate real interest rate of 3.4 percent). For the 50-

year period, it decreases from 16.35 to 16.18 percent and, for the 75-year

period, it decreases from 16.68 to 16.42 percent. The actuarial balance

increases from -1.52 to -1.26 percent for the 25-year period, from -2.39 to

-2.06 percent for the 50-year period, and from -2.89 to -2.47 percent for the

75-year period. Each 0.5-percentage-point increase in the real interest rate

increases the long-range actuarial balance by about 0.21 percent of taxable

payroll.

Table VI.D6.—Sensitivity of OASDI Measures to Varying Real-Interest Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate annual real interest ratea b

a The ultimate real interest rate is the effective annual yield on asset reserves held by the trust funds divided

by the annual rate of growth in the CPI.

b The ultimate annual real interest rates used for this analysis are: 2.4 percent from the alternative III

assumptions, 2.9 percent from the alternative II assumptions, and 3.4 percent from the alternative I assumptions. All other assumptions used for this analysis are from alternative II.

2.4 percent 2.9 percent 3.4 percent

Summarized income rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.61 14.67 14.73

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.97 14.04 14.11

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.78 13.86 13.95

Summarized cost rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.12 16.06 15.99

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.35 16.26 16.18

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.68 16.55 16.42

Actuarial balance:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.52 -1.39 -1.26

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.39 -2.23 -2.06

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.89 -2.68 -2.47

Annual balance for 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.65 -4.65 -4.65

Year of combined trust fund reserve depletion . . . . . . . . 2033 2034 2034
183

Long-Range Sensitivity Analysis

7. Disability Incidence Rates

Table VI.D7 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions concerning future disability incidence rates. For all three alternatives, the Trustees assume that

incidence rates by age and sex will vary during the early years of the projection period before attaining ultimate levels. In comparison to the historical

period 1970 through 2014, the ultimate age-sex-adjusted incidence rate is

about 4 percent higher for alternative II, 17 percent lower for alternative I,

and 25 percent higher for alternative III.

For the 25-year period, the cost rate increases with increasing disability incidence rates, from 15.85 percent (for the relatively low rates assumed for

alternative I) to 16.26 percent (for the relatively high rates assumed for alternative III). For the 50-year period, it increases from 16.00 to 16.52 percent,

and for the 75-year period, it increases from 16.27 to 16.81 percent. The

actuarial balance decreases from -1.19 to -1.59 percent for the 25-year

period, from -1.97 to -2.48 percent for the 50-year period, and from -2.41 to

-2.95 percent for the 75-year period.

8. Disability Termination Rates

Table VI.D8 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about future disability

Table VI.D7.—Sensitivity of OASDI Measures to 

Varying Disability Incidence Assumptions

[As a percentage of taxable payroll]

Valuation period

Disability incidence rates

based on alternative—

I II III

Summarized income rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.66 14.67 14.67

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.03 14.04 14.04

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.86 13.86 13.87

Summarized cost rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.85 16.06 16.26

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.00 16.26 16.52

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.27 16.55 16.81

Actuarial balance:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.19 -1.39 -1.59

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.97 -2.23 -2.48

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.41 -2.68 -2.95

Annual balance for 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.34 -4.65 -4.96

Year of combined trust fund reserve depletion . . . . . . . . 2035 2034 2033
Appendices

184

termination rates, including deaths and recoveries up to the age at which disabled-worker beneficiaries convert to retired-worker status. 

For all three alternatives, the Trustees assume that death rates for disabledworker beneficiaries will decline throughout the long-range period. For alternative II, the age-sex-adjusted1 disability death rate declines to a level in

2089 that is about 55 percent lower than the level in 2014. For alternative I,

the age-sex-adjusted disability death rate declines to a level in 2089 that is

about 29 percent lower than the level in 2014. For alternative III, the agesex-adjusted disability death rate declines to a level in 2089 that is about

73 percent lower than the level in 2014.

For all three alternatives, ultimate recovery rates by age, sex, and duration

are attained in the twentieth year of the projection period. For alternative II,

the age-sex-adjusted1 recovery rate in 2034 is about 10 recoveries per thousand disabled-worker beneficiaries. For alternative I, the age-sex-adjusted

recovery rate in 2034 is about 13 recoveries per thousand disabled-worker

beneficiaries. For alternative III, the age-sex-adjusted recovery rate in 2034

is about 8 recoveries per thousand disabled-worker beneficiaries.

For the 25-year period, the cost rate increases with decreasing disability termination rates, from 16.02 percent (for the relatively high termination rates

assumed for alternative I) to 16.09 percent (for the relatively low termination

rates assumed for alternative III). For the 50-year period, it increases from

16.22 to 16.30 percent, and for the 75-year period, it increases from 16.51 to

 1 Age adjusted to the total disabled workers in current-payment status as of the year 2000.

Table VI.D8.—Sensitivity of OASDI Measures to 

Varying Disability Termination Assumptions

[As a percentage of taxable payroll]

Valuation period

Disability termination rates

based on alternative—

I II III

Summarized income rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.67 14.67 14.67

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.04 14.04 14.04

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.86 13.86 13.86

Summarized cost rate:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.02 16.06 16.09

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.22 16.26 16.30

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.51 16.55 16.57

Actuarial balance:

25-year: 2015-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.36 -1.39 -1.43

50-year: 2015-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.19 -2.23 -2.26

75-year: 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.64 -2.68 -2.71

Annual balance for 2089 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.62 -4.65 -4.65

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2034
185

Long-Range Sensitivity Analysis

16.57 percent. The actuarial balance decreases from -1.36 to -1.43 percent

for the 25-year period, from -2.19 to -2.26 percent for the 50-year period,

and from -2.64 to -2.71 percent for the 75-year period.
Appendices

186

E. STOCHASTIC PROJECTIONS AND UNCERTAINTY

Significant uncertainty surrounds the estimates under the intermediate

assumptions, especially for a period as long as 75 years. This appendix presents a way to illustrate the uncertainty of these estimates. The stochastic projections supplement the traditional methods of examining such uncertainty.

1. Background

The Trustees have traditionally shown estimates using the low-cost and highcost sets of specified assumptions to illustrate the presence of uncertainty.

These alternative estimates provide a range of possible outcomes for the projections. However, they do not provide an indication of the probability that

actual future experience will be inside or outside this range. This appendix

presents the results of a model, based on stochastic modeling techniques, that

estimates a probability distribution of future outcomes of the financial status

of the theoretical combined OASI and DI Trust Funds. This model, which

was first included in the 2003 report, is subject to further development.

2. Stochastic Methodology

Other sections of this report provide estimates of the financial status of the

combined OASI and DI Trust Funds using a scenario-based model. For the

scenario-based model, the Trustees use three alternative scenarios (low-cost,

intermediate, and high-cost) that make assumptions about levels of fertility,

changes in mortality, legal and other immigration levels, legal and other emigration levels, changes in the Consumer Price Index, changes in average real

wages, unemployment rates, trust fund real yield rates, and disability incidence and recovery rates. In general, the Trustees assume that each of these

variables will reach an ultimate value at a specific point during the longrange period, and will maintain that value throughout the remainder of the

period. The three alternative scenarios assume separate, specified values for

each of these variables. Chapter V contains more details about each of these

assumptions.

This appendix presents estimates of the probability that key measures of

OASDI solvency will fall in certain ranges, based on 5,000 independent stochastic simulations. Each simulation allows the above variables to vary

throughout the long-range period. The fluctuation of each variable over time

is simulated using historical data and standard time-series techniques. Generally, each variable is modeled using an equation that: (a) captures a relationship between current and prior years’ values of the variable; and (b)

introduces year-by-year random variation as observed in the historical
187

Stochastic Projections 

period. For some variables, the equations also reflect relationships with other

variables. The equations contain parameters that are estimated using historical data for periods of at least 5 years and at most 110 years, depending on

the nature and quality of the available data. Each time-series equation is

designed so that, in the absence of random variation over time, the value of

the variable for each year equals its value under the intermediate assumptions.1

For each simulation, the stochastic method develops year-by-year random

variation for each variable using Monte Carlo techniques. Each simulation

produces an estimate of the financial status of the theoretical combined

OASI and DI Trust Funds. This appendix shows the distribution of results

from 5,000 simulations of the model.

Readers should interpret the results from this model with caution and with an

understanding of the model’s limitations. Results are very sensitive to equation specifications, degrees of interdependence among variables, and the historical periods used for the estimates. For some variables, recent historical

variation may not provide a realistic representation of the potential variation

for the future. Also, results would differ if additional variables (such as labor

force participation rates, retirement rates, marriage rates, and divorce rates)

were also allowed to vary randomly. Furthermore, more variability would

result if statistical approaches were used to model uncertainty in the central

tendencies of the variables. Time-series modeling reflects only what

occurred in the historical period. Future uncertainty exists not only for the

underlying central tendency but also for the frequency and size of occasional

longer-term shifts in the central tendency. The future will bring with it the

likelihood of substantial shifts, as predicted by many experts and as seen in

prior centuries, that are not fully reflected in the current model. As a result,

readers should understand that the true range of uncertainty is larger than

indicated in this appendix.

3. Stochastic Results

Figure VI.E1 displays the probability distribution of the year-by-year

OASDI cost rates (that is, cost as a percentage of taxable payroll). The range

of the cost rates widens as the projections move further into the future, which

reflects increasing uncertainty. Because there is relatively little variation in

income rates across the 5,000 stochastic simulations, the figure includes the

 1 More detail on this model, and stochastic modeling in general, is available at

www.socialsecurity.gov/OACT/stochastic/index.html.
Appendices

188

income rate only under the intermediate assumptions. The two extreme lines

in this figure illustrate the range within which future annual cost rates are

projected by the current model to occur 95 percent of the time (i.e., a 95-percent confidence interval). In other words, the current model indicates that

there is a 2.5 percent probability that the cost rate in a given year will exceed

the upper bound and a 2.5 percent probability that it will fall below the lower

bound. Other lines in the figure delineate additional confidence intervals

(80-percent, 60-percent, 40-percent, and 20-percent) around future annual

cost rates. The median (50th percentile) cost rate for each year is the rate for

which half of the simulated outcomes are higher and half are lower for that

year. These lines do not represent the results of individual stochastic simulations. Instead, for each given year, they represent the percentile distribution

of cost rates based on all stochastic simulations for that year. 

Figure VI.E2 presents the simulated probability distribution of the annual

trust fund ratios for the theoretical combined OASI and DI Trust Funds. The

lines in this figure display the median set (50th percentile) of estimated

annual trust fund ratios and delineate the 95-percent, 80-percent, 60-percent,

40-percent, and 20-percent confidence intervals expected for future annual

 Figure VI.E1.—Long-Range OASDI Cost Rates From Stochastic Modeling

5%

10%

15%

20%

25%

30%

2015 2030 2045 2060 2075 2090

Projection year 

50%

97.5%

2.5%

90%

10%

Income Rate
189

Stochastic Projections 

trust fund ratios. These lines are not the results of individual stochastic simulations. For each given year, they represent the percentile distribution of trust

fund ratios based on all stochastic simulations for that year.

Figure VI.E2 shows that the 95-percent confidence interval for the trust fund

depletion year ranges from 2029 to 2046, and there is a 50-percent probability of trust fund depletion by the end of 2034 (the median depletion year).

The median depletion year is the same as the Trustees project under the intermediate assumptions. The figure also shows confidence intervals for the trust

fund ratio in each year. For example, the 95-percent confidence interval for

the trust fund ratio in 2025 ranges from 233 to 93 percent of annual cost. 

4. Comparison of Results: Stochastic to Low-Cost, Intermediate, and

High-Cost Alternatives

This section compares results from two different approaches for determining

ranges of uncertainty for trust fund actuarial status. One approach uses

results from the low-cost, intermediate, and high-cost alternative scenarios.

The other approach uses stochastic distributions of results. Each of these

approaches provides insights into uncertainty. Comparison of the results

 Figure VI.E2.—Long-Range OASDI Trust Fund Ratios From Stochastic Modeling

0%

100%

200%

300%

400%

2015 2030 2045 2060 2075 2090

Projection year

50%

97.5%

2.5%

90%

10%
Appendices

190

requires an understanding of the differences in the approaches. Two fundamental differences exist between the approach using alternative scenarios

and the stochastic approach.

The first fundamental difference relates to the presentation of results.

Figure VI.E3 shows projected OASDI annual cost rates for the low-cost,

intermediate, and high-cost alternatives along with the annual cost rates at

the 97.5th percentile, 50th percentile, and 2.5th percentile for the stochastic

simulations. While all values on each line for the alternatives are results from

a single specified scenario, the values on each stochastic line may be results

from different simulations for different years. The one stochastic simulation

(from the 5,000 simulations) that yields results closest to a particular percentile in one year may yield results that are distant from that percentile in

another year. Thus, the stochastic presentation illustrates distributions of the

range of potential results one year at a time, with no direct relationship of the

results among years.

Even with this fundamental difference in the presentation of results,

figure VI.E3 shows similar results between the range of OASDI cost rates

resulting from the alternatives and from the 95-percent confidence interval of

stochastic results for years before 2030. After 2030, results for the alternatives show a slightly wider range. Prior to 2060, the cost rates for the intermediate alternative are very similar to the stochastic year-by-year results at

the 50th percentile. After 2060, the cost rates are somewhat lower for the

intermediate alternative than for the stochastic year-by-year results at the

50th percentile. The cost rates are lower for the low-cost alternative than for

the stochastic year-by-year results at the 2.5th percentile for years after 2030.

The cost rates for the high-cost alternative are higher than the stochastic

year-by-year results at the 97.5th percentile after 2030 through about 2065.

After 2065 the cost rates for the high-cost alternative are very similar to the

stochastic year-by-year results at the 97.5th percentile.

Both the alternatives and the stochastic results suggest that the range of

potential cost rates above the central levels (those for the intermediate alternative and for the median, respectively) is larger than the potential range

below these central results. The difference between the central results and the

higher cost levels (the high-cost alternative and the upper end of the 95-percent confidence range, respectively) is about 1.5 times as large as the difference between the central and lower cost levels for both models by the end of

the projection period.
191

Stochastic Projections 

The second fundamental difference between the alternatives and the stochastic simulations is the method of assigning values for assumptions in the simulations. For the alternatives, the Trustees assign specific values for key

demographic and economic variables. In comparison to the intermediate

alternative, every value assigned to the high-cost alternative tends to raise

estimated program cost and every value assigned to the low-cost alternative

tends to reduce it throughout the projection period. In contrast, the stochastic

method randomly assigns values for the key demographic and economic

variables for each year in each of the 5,000 independent stochastic simulations. For each of the stochastic simulations, randomly assigned values for

the various assumptions may have varying effects on projected cost, with

some tending toward higher cost and some tending toward lower cost. 

Figure VI.E4 compares the ranges of trust fund (unfunded obligation) ratios

for the alternative scenarios and the 95-percent confidence interval of the

stochastic simulations. This figure extends figure VI.E2 to show unfunded

obligation ratios, expressed as negative values below the zero percent line.

Unfunded obligation ratios are the ratio of the unfunded obligation through

the beginning of the year to the present value of annual cost for that year.

 Figure VI.E3.—OASDI Cost Rates: Comparison of Stochastic to Low-Cost, Intermediate, 

and High-Cost Alternatives

[as a percentage of taxable payroll]

10%

15%

20%

25%

30%

2015 2030 2045 2060 2075 2090

Projection year

Low-Cost

Intermediate

High-Cost

Stochastic 2.5%

Stochastic 50%

Stochastic 97.5%
Appendices

192

Figure VI.E4 presents a more complete picture of the difference between the

results from the three alternative scenarios and the stochastic simulations.

The range of stochastic results for trust fund (unfunded obligation) ratios in

Figure VI.E4 appears to be consistent with the range seen for the stochastic

cost rates. That is, the difference between the central result (the median) and

the high-cost result is much larger than the difference between the central

and low-cost result by the end of the projection period. However, the range

for the alternatives is substantially different. For the alternatives, the difference between the central and high-cost projected trust fund (unfunded obligation) ratios is smaller than the difference between central and low-cost

ratios, the opposite of the results for cost rates.

The difference in the ranges of trust fund (unfunded obligation) ratios

between the alternatives and the stochastic results may be a little surprising

given the similarity of the ranges for cost rates. Several factors contribute to

this finding, including the fact that cost rates are annual measures, while trust

 Figure VI.E4.—OASDI Trust Fund (Unfunded Obligation) Ratios: Comparison of 

Stochastic to Low-Cost, Intermediate, and High-Cost Alternativesa

[Asset reserves (unfunded obligation) as a percentage of annual cost]

a An unfunded obligation, shown as a negative value in this figure, is equivalent to the amount the trust

funds would need to have borrowed to date in order to pay all scheduled benefits (on a timely basis) after

trust fund asset reserves are depleted. Note that current law does not permit the trust funds to borrow.

-5000%

-4500%

-4000%

-3500%

-3000%

-2500%

-2000%

-1500%

-1000%

-500%

0%

500%

1000%

2015 2030 2045 2060 2075 2090

Projection year

Low-Cost

Intermediate

High-Cost

Stochastic 2.5%

Stochastic 50%

Stochastic 97.5%

Trustfund asset reserves (positive)

Unfunded obligation (negative)
193

Stochastic Projections 

fund (unfunded obligation) ratios are cumulative measures of all financial

activity up to that date. However, a clear difference between the ratios for the

alternatives and the ratios for the stochastic model is the assignment of interest rates.

For the stochastic model, real interest rates are assigned essentially randomly, and as a result, the range for trust fund (unfunded obligation) ratios is

consistent with the range for cost rates. But for the alternatives, real interest

rates are specified to be higher for the low-cost alternative and lower for the

high-cost alternative. This assignment has the effect of shifting the trust fund

(unfunded obligation) ratios up (higher or less negative) for both the highcost and low-cost alternatives. High interest rates boost the level of the positive trust fund ratio in alternative 1, and low interest rates reduce the magnitude of the negative ratio (unfunded obligation) for alternative 3. This

assignment of real interest rates contributes substantially to the upward shift

in the range of the ratios for the alternatives.

It is important to understand that the stochastic model’s 95-percent confidence intervals for any summary measure of trust fund finances would tend

to be narrower than the range produced for the low-cost and high-cost alternatives, even if the stochastic model’s 95-percent confidence interval for

annual cost rates were identical to the range defined by the low-cost and

high-cost projections. This is true because summary measures of trust fund

finances depend on cost rates for many years, and the probability that annual

cost rates, on average for individual stochastic simulations, will be at least as

low (high) as the 2.5 (97.5) percentile line is significantly lower than 2.5 percent. As a result, the relationship between the ranges presented for annual

cost rates and summary measures of trust fund finances is fundamentally different for the stochastic model than it is for the low-cost and high-cost alternatives.

This contrast in results and methods does not mean that either approach to

illustrating ranges of uncertainty, alternative scenarios or stochastic simulations, is superior to the other. The ranges are different and explainable. 

Table VI.E1 displays long-range actuarial estimates for the combined

OASDI program using the two methods of illustrating uncertainty: (1) alternative scenarios and (2) stochastic simulations. The table shows stochastic

estimates for the median (50th percentile) and for the 95-percent and 80-percent confidence intervals. For comparison, the table shows scenario-based

estimates for the intermediate, low-cost, and high-cost assumptions. Each

individual stochastic estimate in the table is the level at that percentile from

the distribution of the 5,000 simulations. For each given percentile, the val-
Appendices

194

ues in the table for each long-range actuarial measure are generally from different stochastic simulations.

The median stochastic estimates displayed in table VI.E1 are, in general,

slightly more pessimistic than the intermediate scenario-based estimates. The

median estimate of the long-range actuarial balance is -2.75 percent of taxable payroll, about 0.07 percentage point lower than projected under the

intermediate assumptions. The median first projected year that cost exceeds

non-interest income (as it did in 2010 through 2014), and remains in excess

of non-interest income throughout the remainder of the long-range period, is

2015. This is the same year as projected under the intermediate assumptions.

The median year that asset reserves first become depleted is 2034, also the

same as projected under the intermediate assumptions. The median estimates

of the annual cost rate for the 75th year of the projection period are

18.36 percent of taxable payroll and 6.32 percent of gross domestic product

(GDP). The comparable estimates under the intermediate assumptions are

17.97 percent of payroll and 6.19 percent of GDP.

For four measures in table VI.E1 (the actuarial balance, the first year cost

exceeds non-interest income and remains in excess through 2089, the first

projected year asset reserves become depleted, and annual cost in the 75th

year as a percent of taxable payroll), the 95-percent stochastic confidence

interval is narrower than the range defined by the low-cost and high-cost

alternatives. In other words, for these measures, the range defined by the

low-cost and high-cost alternatives contains the 95-percent confidence interval of the stochastic modeling projections. For the remaining two measures

(the open group unfunded obligation, and the annual cost in the 75th year as

a percent of GDP), one or both of the bounds of the 95-percent stochastic

confidence interval fall outside the range defined by the low-cost and highcost alternatives.
195

Stochastic Projections 

Table VI.E1.—Long-Range Estimates Relating to the Actuarial Status of

the Combined OASDI Program

[Comparison of scenario-based and stochastic results]

Traditional

scenario-based model Stochastic model

IntermediateLowcostHighcost

Median

50th

percentile

80-percent

confidence interval

95-percent

confidence interval

10th

percentile

90th

percentile

2.5th

percentile

97.5th

percentile

Actuarial balance . . . . . . -2.68 0.16 -6.31 -2.75 -4.09 -1.61 -4.92 -1.04

Open group unfunded 

obligation 

(in trillions) . . . . . . . . . $10.7 -$1.4 $22.3 $11.1 $5.6 $19.3 $3.4 $26.1

First projected year cost 

exceeds non-interest 

income and remains

in excess 

through 2089a . . . . . . .

a Cost also exceeded non-interest income in 2010 through 2014.

2015 2089 2015 2015 2015 2023 2015 2082

First year asset reserves 

become depletedb . . . .

b For some stochastic simulations, the first year in which trust fund reserves become depleted does not indicate a permanent depletion of reserves.

2034 c

c Trust fund reserves are not estimated to be depleted within the projection period.

2028 2034 2030 2040 2029 2046

Annual cost in 75th year 

(percent of taxable

payroll) . . . . . . . . . . . . 17.97 13.07 25.28 18.36 15.22 22.62 13.76 25.21

Annual cost in 75th year 

(percent of GDP). . . . . 6.19 4.90 8.01 6.32 5.26 7.74 4.77 8.60
Appendices

196

F. INFINITE HORIZON PROJECTIONS

Another measure of trust fund finances is the infinite horizon unfunded obligation, which takes account of all annual balances, even those after 75 years.

The extension of the time period past 75 years assumes that the current-law

OASDI program and the demographic and economic trends used for the 75-

year projection continue indefinitely.

Table VI.F1 shows that the OASDI open group unfunded obligation over the

infinite horizon is $25.8 trillion in present value, which is $15.1 trillion

larger than for the 75-year period. The $15.1 trillion increment reflects a significant financing gap projected for OASDI for years after 2089 into perpetuity. Of course, the degree of uncertainty associated with estimates increases

substantially for years further in the future.

The $25.8 trillion infinite horizon open group unfunded obligation is equivalent to 3.9 percent of taxable payroll or 1.3 percent of GDP. These relative

measures of the unfunded obligation over the infinite horizon express its

magnitude in relation to the resources potentially available to finance the

shortfall.

The summarized shortfalls for the 75-year period and through the infinite

horizon both reflect annual cash-flow shortfalls for all years after trust fund

reserve depletion. The annual shortfalls after trust fund reserve depletion rise

slowly and reflect increases in life expectancy after 2034. The summarized

shortfalls for the 75-year period, as percentages of taxable payroll and GDP,

are lower than those for the infinite horizon principally because only about

three-quarters of the years in the 75-year period have unfunded annual shortfalls, and annual shortfalls within the 75-year period represent a smaller

share of taxable payroll and GDP than do the shortfalls in later years.

The projected infinite horizon shortfall could be eliminated with additional

revenue equivalent to an immediate increase in the combined payroll tax rate

from 12.4 percent to about 16.5 percent (a relative increase of 33 percent).1

This shortfall could be eliminated by reducing cost in a manner equivalent to

an immediate and permanent reduction in benefits for all current and future

beneficiaries by 23.4 percent.

 1 The indicated increase in the payroll tax rate of 4.1 percent is somewhat larger than the 3.9 percent infinite

horizon actuarial deficit because the indicated increase reflects a behavioral response to tax rate changes. In

particular, the calculation assumes that an increase in payroll taxes results in a small shift of wages and salaries to forms of employee compensation that are not subject to the payroll tax.
197

Infinite Horizon Projections 

Notes:

1. The present values of future taxable payroll for 2015-89 and for 2015 through the infinite horizon are

$420.7 trillion and $663.6 trillion, respectively.

2. The present values of GDP for 2015-89 and for 2015 through the infinite horizon are $1,175.5 trillion and

$1,952.3 trillion, respectively. Present values of GDP shown in the Medicare Trustees Report differ slightly

due to the use of interest discount rates that are specific to each program’s trust fund holdings.

Last year, the Trustees projected that the infinite horizon unfunded obligation

was $24.9 trillion in present value. If the assumptions, methods, and starting

values had not changed, moving the valuation date forward by 1 year would

have increased the unfunded obligation by about $0.9 trillion, to

$25.8 trillion. The net effects of changes in assumptions, methods, law, and

starting values increased the infinite horizon unfunded obligation by less

than $0.1 trillion.

The infinite horizon unfunded obligation is 0.2 percentage point lower than

in last year’s report when expressed as a share of taxable payroll, and

0.1 percentage point lower than last year when expressed as a share of GDP.

The main changes affecting the infinite horizon unfunded obligation for this

report are changes in economic data and assumptions, method changes in

projecting future earnings levels of workers, legislative changes, and revised

starting values. See section IV.B.6 for details regarding changes in law, data,

methods, and assumptions.

a. Unfunded Obligations for Past, Current, and Future Participants

Table VI.F2 separates the components of the infinite horizon unfunded obligation (with the exception of general fund reimbursements) among past, current, and future participants. The table does not separate past general fund

reimbursements among participants because there is no clear basis for attributing the reimbursements across generations.

Table VI.F1.—Unfunded OASDI Obligations Through the Infinite Horizon,

Based on Intermediate Assumptions

[Present values as of January 1, 2015; dollar amounts in trillions]

Present

value

Expressed as a percentage

of future payroll and GDP

Taxable

payroll GDP

Unfunded obligation through the infinite horizona . . . . . . . . . . . . 

a Present value of future cost less future non-interest income, reduced by the amount of trust fund asset

reserves at the beginning of 2015. Expressed as a percentage of payroll and GDP for the period 2015 through

the infinite horizon.

$25.8 3.9 1.3

Unfunded obligation through 2089b . . . . . . . . . . . . . . . . . . . . . . . 

b Present value of future cost less future non-interest income through 2089, reduced by the amount of trust

fund reserves at the beginning of 2015. Expressed as a percentage of payroll and GDP for the period 2015

through 2089.

10.7 2.5 0.9
Appendices

198

Past participants are defined as those no longer alive as of the valuation date.

Current participants are those age 15 and older as of 2015. Future participants are those under age 15 or not yet born. 

The excess of the present value of cost for past and current participants over

the present value of dedicated tax income for past and current participants

produces an unfunded obligation for past and current participants of $27.3

trillion. Table VI.F2 also shows an unfunded obligation of $26.7 trillion for

past and current participants, including past and future general fund reimbursements. Future participants will pay dedicated taxes of $1.0 trillion more

into the system than the cost of their benefits ($59.2 trillion of dedicated tax

income as compared to $58.2 trillion of cost). The unfunded obligation for

all participants through the infinite horizon thus equals $25.8 trillion.

This accounting demonstrates that some generations are scheduled to receive

benefits with a present value exceeding the present value of their dedicated

tax income, while other generations are scheduled to receive benefits with a

present value less than the present value of their dedicated tax income,

whether past general fund reimbursements are included or not. Making

Social Security solvent over the infinite horizon requires some combination

of increased revenue or reduced benefits for current and future participants

amounting to $25.8 trillion in present value, 3.9 percent of future taxable

payroll, or 1.3 percent of future GDP.
199

Infinite Horizon Projections 

Notes:

1. The present value of future taxable payroll for 2015 through the infinite horizon is $663.6 trillion.

2. The present value of GDP for 2015 through the infinite horizon is $1,952.3 trillion.

3. Totals do not necessarily equal the sums of rounded components.

Table VI.F2.—Present Values of OASDI Cost Less Non-interest Income

and Unfunded Obligations for Program Participants,

Based on Intermediate Assumptions

[Present values as of January 1, 2015; dollar amounts in trillions]

Present

value

Expressed as a 

percentage of future 

payroll and GDP

Taxable

payroll GDP

Present value of past cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $53.7 8.1 2.7

Less present value of past dedicated tax income . . . . . . . . . . . . . . . . . . 55.9 8.4 2.9

Plus present value of future cost for current participants . . . . . . . . . . . 58.5 8.8 3.0

Less present value of future dedicated tax income for current 

participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.0 4.4 1.5

Equals unfunded obligation for past and current participants 

excluding general fund reimbursements . . . . . . . . . . . . . . . . . . . . . . 27.3 4.1 1.4

Less present value of past general fund reimbursementsa . . . . . . . . . . . .6 .1 b

Less present value of future general fund reimbursements over 

the infinite horizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . cdb

Equals unfunded obligation for past and current participants 

including general fund reimbursements . . . . . . . . . . . . . . . . . . . . . . 26.7 4.0 1.4

Plus present value of cost for future participants over the infinite 

horizon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.2 8.8 3.0

Less present value of dedicated tax income for future participants 

over the infinite horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.2 8.9 3.0

Equals unfunded obligation for all participants through the infinite 

horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.8 3.9 1.3

a Distribution of general fund reimbursements among past, current, and future participants cannot be determined.

b Less than 0.05 percent of GDP.

c Less than $50 billion.

d Less than 0.05 percent of taxable payroll.
Appendices

200

G. ESTIMATES FOR OASDI AND HI, SEPARATE AND COMBINED

In this appendix, the Trustees present long-range actuarial estimates for the

OASDI and Hospital Insurance (HI) programs both separately and on a combined basis. These estimates facilitate analysis of the adequacy of the income

and asset reserves of these programs relative to their cost under current law.

This appendix does not include estimates for the Supplementary Medical

Insurance (SMI) program because adequate financing is guaranteed in the

law, and because the SMI program is not financed through a payroll tax. For

more information on Medicare estimates, please see the 2015 Medicare

Trustees Report.

The information in this appendix on combined operations, while significant,

should not obscure the analysis of the financial status of the individual trust

funds, which are legally separate and cannot be commingled. In addition, the

factors which determine the costs of the OASI, DI, and HI programs differ

substantially.

1. Estimates as a Percentage of Taxable Payroll

Comparing cost and income rates for the OASDI and HI programs as percentages of taxable payroll requires a note of caution. The taxable payrolls

for the HI program are larger than those estimated for the OASDI program

because: (1) a larger maximum taxable amount was established for the HI

program in 1991, with the maximum eliminated altogether for the HI program in 1994; (2) a larger proportion of Federal, State, and local government

employees are covered under the HI program; and (3) the earnings of railroad workers are included directly in the HI taxable payroll but not in the

OASDI taxable payroll. (Railroad contributions for the equivalent of OASDI

benefits are accounted for in a net interchange that occurs annually between

the OASDI and Railroad Retirement programs.) As a result, the HI taxable

payroll is about 25 percent larger than the OASDI taxable payroll throughout

the long-range period.

As with the OASI and DI Trust Funds, income to the HI Trust Fund comes

primarily from contributions paid by employees, employers, and selfemployed persons. Table VI.G1 shows the OASDI and HI contribution rates

that are authorized in the Federal Insurance Contributions Act.
201

OASDI and HI: Percent of Payroll

Table VI.G2 shows the Trustees’ estimates of annual income rates and cost

rates for the OASDI program and the HI program under the low-cost, intermediate, and high-cost sets of assumptions described earlier in this report.

The income rates reflect the payroll tax rates shown in table VI.G1 and reveTable VI.G1.—Payroll Tax Contribution Rates for the OASDI and HI Programs

[In percent]

Calendar years

Employees and employers, 

combineda

a Except as noted below, the combined employee/employer rate is divided equally between employees and

employers.

Employees 

only Self employedb

b Beginning in 1990, self-employed persons receive a deduction, for purposes of computing their net earnings, equal to half of the combined OASDI and HI contributions that would be payable without regard to the

contribution and benefit base. The OASDI contribution rate then applies to net earnings after this deduction,

but subject to the OASDI base.

OASDI

up to basec

c The payroll tax on earnings for the OASDI program applies to annual earnings up to a contribution and

benefit base indexed to the average wage level. The base is $118,500 for 2015.

HI

all earningsd

d Prior to 1994, the payroll tax on earnings for the HI program applied to annual earnings up to a contribution base. The HI contribution base was eliminated beginning in 1994.

HI

over limite

e Starting with Federal personal income tax returns for tax year 2013, earned income exceeding $200,000 for

individual filers and $250,000 for married couples filing jointly is subject to an additional HI tax of

0.9 percent. These income limits are not indexed after 2013.

OASDI

up to basec HIall earningsd HIover limite

1966 . . . . . . . . . . . . . 7.70 0.70 — 5.80 0.35 —

1967 . . . . . . . . . . . . . 7.80 1.00 — 5.90 .50 —

1968 . . . . . . . . . . . . . 7.60 1.20 — 5.80 .60 —

1969-70 . . . . . . . . . . 8.40 1.20 — 6.30 .60 —

1971-72 . . . . . . . . . . 9.20 1.20 — 6.90 .60 —

1973 . . . . . . . . . . . . . 9.70 2.00 — 7.00 1.00 —

1974-77 . . . . . . . . . . 9.90 1.80 — 7.00 .90 —

1978 . . . . . . . . . . . . . 10.10 2.00 — 7.10 1.00 —

1979-80 . . . . . . . . . . 10.16 2.10 — 7.05 1.05 —

1981 . . . . . . . . . . . . . 10.70 2.60 — 8.00 1.30 —

1982-83 . . . . . . . . . . 10.80 2.60 — 8.05 1.30 —

1984f. . . . . . . . . . . . .

f In 1984 only, employees received an immediate credit of 0.3 percent of taxable wages against their OASDI

payroll tax contributions. The self-employed received similar credits of 2.7 percent, 2.3 percent, and

2.0 percent against their combined OASDI and Hospital Insurance (HI) contributions on net earnings from

self-employment in 1984, 1985, and 1986-89, respectively. The General Fund of the Treasury reimbursed

the trust funds for these credits. 

11.40 2.60 — 11.40 2.60 —

1985f . . . . . . . . . . . . 11.40 2.70 — 11.40 2.70 —

1986-87f. . . . . . . . . . 11.40 2.90 — 11.40 2.90 —

1988-89f. . . . . . . . . . 12.12 2.90 — 12.12 2.90 —

1990-2010g. . . . . . . .

g Public Law 111-147 exempted most employers from paying the employer share of OASDI payroll tax on

wages paid during the period March 19, 2010 through December 31, 2010 to certain qualified individuals

hired after February 3, 2010. Public Law 111-312, Public Law 112-78, and Public Law 112-96 reduced the

OASDI payroll tax rate for 2011 and 2012 by 2 percentage points for employees and for self-employed

workers. These laws require that the General Fund of the Treasury reimburse the OASI and DI Trust Funds

for these temporary reductions in 2010, 2011, and 2012 payroll tax revenue, in order to “replicate to the

extent possible” revenue that would have been received if the combined employee/employer payroll tax

rates had remained at 12.4 percent for OASDI (10.6 percent for OASI and 1.8 percent for DI).

12.40 2.90 — 12.40 2.90 —

2011-2012g. . . . . . . . 10.40 2.90 — 10.40 2.90 —

2013 and later. . . . . . 12.40 2.90 0.90 12.40 2.90 0.90
Appendices

202

nue from taxation of OASDI benefits for both the OASDI and HI Trust

Funds. For the HI program, the income rates also reflect: (1) the additional

0.9-percent tax on employees for relatively high earnings and (2) the portion

of total payroll to which the 0.9-percent rate applies. Annual income and cost

rates indicate the cash-flow operation of the programs. Therefore, income

rates exclude interest earned on trust fund asset reserves. Table VI.G2 also

shows annual balances, which are the differences between annual income

rates and cost rates.

The Trustees project that the OASDI and HI cost rates will rise generally

above current levels under the intermediate and high-cost sets of assumptions. The greatest increase occurs during the period 2018-35 under both sets

of assumptions for OASDI and under the intermediate assumptions for HI.

Under the intermediate assumptions, the OASDI cost rate increases by

27 percent from its current level by 2089, while under the high-cost assumptions, the cost rate increases by 75 percent by 2089. For HI, cost rates

increase 53 percent and 215 percent from 2015-89 under the intermediate

and high-cost assumptions, respectively. Under the low-cost assumptions, the

OASDI and HI cost rates decrease from 2015-89 by 6 percent and

27 percent, respectively. 

The Trustees project annual deficits for every year of the projection period

under the intermediate and high-cost assumptions for the OASDI program

and under the high-cost assumptions for HI. For the HI program intermediate

assumptions, the Trustees project a positive annual balance from 2016-21.

Under the low-cost assumptions, OASDI annual balances are negative

through 2078, positive from 2079-88, and negative thereafter. HI annual balances are positive throughout the projection period.
203

OASDI and HI: Percent of Payroll

Table VI.G2.—OASDI and HI Annual Income Rates, Cost Rates, and Balances,

Calendar Years 2015-90

[As a percentage of taxable payrolla]

Calendar year

OASDI HI

Income rateCost

rate Balance

Income rateCost

rateb Balance

Intermediate:

2015 . . . . . . . . . . 12.82 14.13 -1.31 3.32 3.37 -0.05

2016 . . . . . . . . . . 12.88 13.88 -1.00 3.33 3.31 .02

2017 . . . . . . . . . . 12.91 13.89 -.98 3.35 3.26 .09

2018 . . . . . . . . . . 12.94 13.97 -1.03 3.36 3.25 .11

2019 . . . . . . . . . . 12.95 14.09 -1.14 3.38 3.28 .10

2020 . . . . . . . . . . 12.96 14.23 -1.26 3.40 3.34 .06

2021 . . . . . . . . . . 12.98 14.35 -1.36 3.41 3.40 .01

2022 . . . . . . . . . . 13.01 14.52 -1.51 3.43 3.48 -.04

2023 . . . . . . . . . . 13.03 14.72 -1.69 3.45 3.55 -.09

2024 . . . . . . . . . . 13.06 14.96 -1.89 3.47 3.62 -.15

2025 . . . . . . . . . . 13.08 15.16 -2.08 3.50 3.79 -.29

2030 . . . . . . . . . . 13.15 16.10 -2.94 3.59 4.16 -.57

2035 . . . . . . . . . . 13.20 16.62 -3.42 3.67 4.50 -.83

2040 . . . . . . . . . . 13.21 16.71 -3.50 3.73 4.72 -.99

2045 . . . . . . . . . . 13.22 16.60 -3.38 3.79 4.82 -1.03

2050 . . . . . . . . . . 13.22 16.54 -3.32 3.86 4.84 -.98

2055 . . . . . . . . . . 13.23 16.69 -3.45 3.93 4.82 -.89

2060 . . . . . . . . . . 13.25 16.95 -3.70 4.00 4.83 -.82

2065 . . . . . . . . . . 13.27 17.22 -3.95 4.07 4.89 -.82

2070 . . . . . . . . . . 13.29 17.50 -4.21 4.14 5.00 -.86

2075 . . . . . . . . . . 13.30 17.68 -4.38 4.19 5.09 -.89

2080 . . . . . . . . . . 13.30 17.71 -4.41 4.24 5.12 -.88

2085 . . . . . . . . . . 13.31 17.81 -4.50 4.28 5.13 -.85

2090 . . . . . . . . . . 13.32 18.01 -4.69 4.33 5.14 -.81

Low-cost:

2015 . . . . . . . . . . 12.75 13.90 -1.15 3.32 3.26 .05

2016 . . . . . . . . . . 12.90 13.32 -.42 3.32 3.11 .21

2017 . . . . . . . . . . 12.88 13.18 -.30 3.33 3.00 .33

2018 . . . . . . . . . . 12.89 13.08 -.18 3.35 2.94 .41

2019 . . . . . . . . . . 12.90 13.04 -.13 3.36 2.90 .46

2020 . . . . . . . . . . 12.91 13.05 -.14 3.38 2.90 .48

2021 . . . . . . . . . . 12.92 13.06 -.13 3.39 2.90 .49

2022 . . . . . . . . . . 12.95 13.10 -.16 3.41 2.91 .50

2023 . . . . . . . . . . 12.96 13.16 -.20 3.43 2.91 .52

2024 . . . . . . . . . . 12.98 13.24 -.26 3.44 2.91 .54

2025 . . . . . . . . . . 13.00 13.35 -.35 3.47 2.98 .48

2030 . . . . . . . . . . 13.05 13.79 -.74 3.57 2.97 .60

2035 . . . . . . . . . . 13.07 13.91 -.84 3.66 2.91 .75

2040 . . . . . . . . . . 13.07 13.68 -.61 3.75 2.77 .98

2045 . . . . . . . . . . 13.06 13.33 -.27 3.82 2.59 1.24

2050 . . . . . . . . . . 13.05 13.10 -.05 3.90 2.42 1.47

2055 . . . . . . . . . . 13.05 13.09 -.04 3.97 2.31 1.67

2060 . . . . . . . . . . 13.06 13.18 -.12 4.04 2.25 1.79

2065 . . . . . . . . . . 13.07 13.23 -.17 4.10 2.27 1.83

2070 . . . . . . . . . . 13.07 13.26 -.20 4.16 2.32 1.83

2075 . . . . . . . . . . 13.06 13.19 -.12 4.20 2.37 1.83

2080 . . . . . . . . . . 13.05 12.99 .06 4.23 2.38 1.84

2085 . . . . . . . . . . 13.05 12.95 .10 4.26 2.39 1.87

2090 . . . . . . . . . . 13.06 13.10 -.05 4.30 2.39 1.91
Appendices

204

Notes:

1. The income rate excludes interest income.

2. Totals do not necessarily equal the sums of rounded components.

Table VI.G3 shows summarized values over the 25-year, 50-year, and 75-

year valuation periods. For each of those periods, the summarized income

rates include beginning trust fund asset reserves, and the summarized cost

rates include the cost of accumulating an ending fund reserve equal to

100 percent of annual cost at the end of the period.

High-cost:

2015 . . . . . . . . . . 12.90 14.41 -1.50 3.32 3.50 -.18

2016 . . . . . . . . . . 12.84 14.52 -1.67 3.34 3.56 -.21

2017 . . . . . . . . . . 12.95 14.78 -1.83 3.36 3.57 -.20

2018 . . . . . . . . . . 12.99 15.04 -2.06 3.38 3.62 -.24

2019 . . . . . . . . . . 13.01 15.33 -2.32 3.40 3.73 -.33

2020 . . . . . . . . . . 13.03 15.64 -2.61 3.42 3.87 -.45

2021 . . . . . . . . . . 13.06 15.91 -2.86 3.44 4.02 -.58

2022 . . . . . . . . . . 13.09 16.22 -3.13 3.47 4.19 -.73

2023 . . . . . . . . . . 13.12 16.56 -3.44 3.49 4.36 -.87

2024 . . . . . . . . . . 13.16 16.97 -3.81 3.51 4.53 -1.02

2025 . . . . . . . . . . 13.18 17.29 -4.11 3.53 4.83 -1.30

2030 . . . . . . . . . . 13.28 18.82 -5.54 3.62 5.85 -2.23

2035 . . . . . . . . . . 13.34 19.87 -6.52 3.70 6.98 -3.28

2040 . . . . . . . . . . 13.39 20.47 -7.08 3.76 8.07 -4.32

2045 . . . . . . . . . . 13.41 20.76 -7.35 3.80 9.00 -5.20

2050 . . . . . . . . . . 13.43 21.04 -7.61 3.85 9.65 -5.80

2055 . . . . . . . . . . 13.46 21.51 -8.05 3.90 10.06 -6.15

2060 . . . . . . . . . . 13.50 22.09 -8.59 3.97 10.33 -6.36

2065 . . . . . . . . . . 13.54 22.72 -9.18 4.03 10.53 -6.50

2070 . . . . . . . . . . 13.59 23.45 -9.86 4.10 10.74 -6.64

2075 . . . . . . . . . . 13.63 24.09 -10.46 4.17 10.93 -6.77

2080 . . . . . . . . . . 13.65 24.54 -10.89 4.23 11.01 -6.78

2085 . . . . . . . . . . 13.68 24.96 -11.28 4.28 11.01 -6.73

2090 . . . . . . . . . . 13.70 25.35 -11.64 4.34 11.01 -6.68

a The taxable payroll for HI is significantly larger than the taxable payroll for OASDI because the HI taxable

maximum amount was eliminated beginning in 1994, and because HI covers all Federal civilian employees,

all State and local government employees hired after April 1, 1986, and railroad employees.

b Estimated costs attributable to insured beneficiaries only, on an incurred basis. The Trustees expect benefits and administrative costs for non-insured persons to be financed through general revenue transfers and

premium payments, rather than through payroll taxes.

Table VI.G2.—OASDI and HI Annual Income Rates, Cost Rates, and Balances,

Calendar Years 2015-90 (Cont.)

[As a percentage of taxable payrolla]

Calendar year

OASDI HI

Income

rate

Cost

rate Balance

Income

rate

Cost

rateb Balance
205

OASDI and HI: Percent of Payroll

Note: Totals do not necessarily equal the sums of rounded components.

The Trustees project that the OASDI and HI programs will each experience

large actuarial deficits for the 25-year, 50-year, and 75-year valuation periods

under the high-cost assumptions. Actuarial deficits under the intermediate

assumptions are smaller than those for the high-cost assumptions for all three

valuation periods. Under the low-cost assumptions, the OASDI and HI programs have a positive actuarial balance for all three valuation periods, even

though annual balances are negative for most of the projection period. Due to

the size of the reserves at the beginning of the period, the small negative

annual balances still leave a reserve in excess of annual cost at the end of the

period.

Table VI.G3.—Summarized OASDI and HI Income Rates and Cost Rates for Valuation 

Periods,a Calendar Years 2015-89

[As a percentage of taxable payrollb]

Valuation

period 

OASDI HI

Income rate Cost

rate

Actuarial

balance

Income rate Cost

rate

Actuarial

balance

Intermediate:

25-year:

2015-39 . . . . . . 14.67 16.06 -1.39 3.62 4.07 -0.45

50-year:

2015-64 . . . . . . 14.04 16.26 -2.23 3.73 4.37 -.64

75-year:

2015-89 . . . . . . 13.86 16.55 -2.68 3.84 4.52 -.68

Low-cost:

25-year:

2015-39 . . . . . . 14.44 14.07 .37 3.60 3.05 .55

50-year:

2015-64 . . . . . . 13.81 13.62 .19 3.74 2.75 .99

75-year:

2015-89 . . . . . . 13.62 13.45 .16 3.86 2.65 1.22

High-cost:

25-year:

2015-39 . . . . . . 14.91 18.42 -3.51 3.65 5.53 -1.88

50-year:

2015-64 . . . . . . 14.29 19.54 -5.25 3.74 7.19 -3.44

75-year:

2015-89 . . . . . . 14.15 20.46 -6.31 3.84 7.94 -4.11

a Income rates include beginning trust fund asset reserves and cost rates include the cost of reaching an ending target trust fund equal to 100 percent of annual cost at the end of the period.

b The taxable payroll for HI is significantly larger than the taxable payroll for OASDI because the HI taxable

maximum amount was eliminated beginning 1994, and because HI covers all Federal civilian employees, all

State and local government employees hired after April 1, 1986, and railroad employees.
Appendices

206

2. Estimates as a Percentage of Gross Domestic Product

This section contains long-range projections of the operations of the theoretical combined Old-Age and Survivors Insurance and Disability Insurance

(OASI and DI) Trust Funds and of the Hospital Insurance (HI) Trust Fund,

expressed as a percentage of gross domestic product (GDP). While expressing fund operations as a percentage of taxable payroll is a very useful

approach for assessing the financial status of the programs (see

section IV.B.1), expressing them as a percentage of the total value of goods

and services produced in the United States provides an additional perspective.

Table VI.G4 shows non-interest income, total cost, and the resulting balance

of the combined OASI and DI Trust Funds, of the HI Trust Fund, and of the

combined OASI, DI, and HI Trust Funds, expressed as percentages of GDP

on the basis of each of the three alternative sets of assumptions. Table VI.G4

also contains estimates of GDP. For OASDI, non-interest income consists of

payroll tax contributions, proceeds from taxation of benefits, and reimbursements from the General Fund of the Treasury, if any. Cost consists of scheduled benefits, administrative expenses, financial interchange with the

Railroad Retirement program, and payments for vocational rehabilitation

services for disabled beneficiaries. For HI, non-interest income consists of

payroll tax contributions (including contributions from railroad employment), up to an additional 0.9 percent tax on earned income for relatively

high earners, proceeds from taxation of OASDI benefits, and reimbursements from the General Fund of the Treasury, if any. Cost consists of outlays

(benefits and administrative expenses) for insured beneficiaries. The Trustees show income and cost estimates on a cash basis for the OASDI program

and on an incurred basis for the HI program.

The Trustees project the OASDI annual balance (non-interest income less

cost) as a percentage of GDP to be negative throughout the projection period

under the intermediate and high-cost assumptions, and to be negative for all

years except 2079-88 under the low-cost assumptions. Under the low-cost

assumptions the OASDI annual deficit as a percentage of GDP decreases

through 2019. After 2021, deficits increase to a peak in 2033, decrease

through 2053, increase again through 2070, and decrease through 2078.

Annual balances are positive from 2079 through 2088 and negative thereafter. Under the intermediate assumptions, annual deficits decrease from 2015

to 2017, increase through 2038, decrease from 2038 through 2050, and

mostly increase thereafter. Under the high-cost assumptions, annual deficits

increase throughout the projection period.
207

OASDI and HI: Percent of GDP

The Trustees project that the HI balance as a percentage of GDP will be positive throughout the projection period under the low-cost assumptions. Under

the intermediate assumptions, the HI balance is negative for each year of the

projection period except for 2016-21. After 2021, annual deficits increase

through 2045, decline through 2063, and remain relatively stable thereafter.

Under the high-cost assumptions, the HI balance is negative for all years of

the projection period. Annual deficits reach a peak in 2075 and decline

slowly thereafter.

The combined OASDI and HI annual balance as a percentage of GDP is negative throughout the projection period under both the intermediate and highcost assumptions. Under the low-cost assumptions, the combined OASDI

and HI balance is negative through 2016, positive from 2017 through 2029,

negative from 2030 through 2033, and then positive and mostly rising thereafter. Under the intermediate assumptions, combined OASDI and HI annual

deficits decline from 2015 through 2017, increase from 2017 through 2040,

and decrease through 2053. After 2053, annual deficits generally rise, reaching 1.96 percent of GDP by 2089. Under the high-cost assumptions, combined annual deficits rise throughout the projection period.

By 2089, the combined OASDI and HI annual balances as percentages of

GDP range from a positive balance of 0.87 percent for the low-cost assumptions to a deficit of 6.39 percent for the high-cost assumptions. Balances differ by a much smaller amount for the tenth year, 2024, ranging from a

positive balance of 0.15 percent for the low-cost assumptions to a deficit of

1.85 percent for the high-cost assumptions.

The summarized long-range (75-year) balance as a percentage of GDP for

the combined OASDI and HI programs varies among the three alternatives

by a relatively large amount, from a positive balance of 0.62 percent under

the low-cost assumptions to a deficit of 3.98 percent under the high-cost

assumptions. The 25-year summarized balance varies by a smaller amount,

from a positive balance of 0.39 percent to a deficit of 2.10 percent. Summarized rates are calculated on a present-value basis. They include the trust

fund balances on January 1, 2015 and the cost of reaching a target trust fund

level equal to 100 percent of the following year’s annual cost at the end of

the period. (See section IV.B.4 for further explanation.)
Appendices

208

Table VI.G4.—OASDI and HI Annual and Summarized Income, Cost, and Balance

as a Percentage of GDP, Calendar Years 2015-90

Calendar year

Percentage of GDP GDP in

dollars

(billions)

OASDI HI Combined

Incomea Cost Balance Incomea Cost Balance Incomea Cost Balance

Intermediate:

2015 . . . . . . 4.52 4.98 -0.46 1.47 1.49 -0.02 5.99 6.47 -0.48 $18,163

2016 . . . . . . 4.54 4.89 -.35 1.49 1.48 .01 6.03 6.38 -.35 19,216

2017 . . . . . . 4.61 4.96 -.35 1.51 1.47 .04 6.12 6.43 -.31 20,311

2018 . . . . . . 4.65 5.02 -.37 1.53 1.48 .05 6.18 6.50 -.32 21,415

2019 . . . . . . 4.68 5.10 -.41 1.54 1.50 .05 6.23 6.59 -.37 22,537

2020 . . . . . . 4.71 5.17 -.46 1.56 1.53 .03 6.27 6.70 -.43 23,687

2021 . . . . . . 4.74 5.23 -.50 1.57 1.56 .01 6.31 6.80 -.49 24,861

2022 . . . . . . 4.76 5.31 -.55 1.58 1.60 -.02 6.34 6.92 -.57 26,042

2023 . . . . . . 4.78 5.41 -.62 1.59 1.64 -.04 6.38 7.04 -.67 27,234

2024 . . . . . . 4.80 5.50 -.70 1.60 1.67 -.07 6.41 7.17 -.76 28,472

2025 . . . . . . 4.80 5.57 -.77 1.61 1.74 -.13 6.41 7.31 -.90 29,765

2030 . . . . . . 4.80 5.87 -1.07 1.64 1.90 -.26 6.44 7.77 -1.33 37,089

2035 . . . . . . 4.78 6.02 -1.24 1.67 2.05 -.38 6.45 8.07 -1.62 46,085

2040 . . . . . . 4.77 6.03 -1.26 1.69 2.13 -.45 6.46 8.16 -1.71 57,462

2045 . . . . . . 4.75 5.97 -1.22 1.71 2.17 -.46 6.46 8.14 -1.68 71,742

2050 . . . . . . 4.74 5.93 -1.19 1.73 2.17 -.44 6.47 8.10 -1.63 89,342

2055 . . . . . . 4.73 5.96 -1.23 1.76 2.16 -.40 6.49 8.12 -1.63 110,936

2060 . . . . . . 4.71 6.03 -1.32 1.78 2.15 -.37 6.50 8.18 -1.68 137,548

2065 . . . . . . 4.69 6.09 -1.40 1.81 2.17 -.36 6.50 8.26 -1.76 170,579

2070 . . . . . . 4.67 6.15 -1.48 1.82 2.20 -.38 6.49 8.35 -1.86 211,683

2075 . . . . . . 4.65 6.18 -1.53 1.84 2.23 -.39 6.49 8.41 -1.92 262,889

2080 . . . . . . 4.62 6.15 -1.53 1.85 2.23 -.39 6.47 8.38 -1.92 326,408

2085 . . . . . . 4.60 6.16 -1.56 1.86 2.23 -.37 6.46 8.38 -1.92 404,758

2090 . . . . . . 4.59 6.20 -1.62 1.87 2.22 -.35 6.46 8.42 -1.97 501,306

Summarized rates: b

25-year:

 2015-39 . . . 5.32 5.83 -.51 1.65 1.85 -.20 6.97 7.68 -.71

50-year:

 2015-64 . . . 5.07 5.87 -.80 1.69 1.98 -.29 6.76 7.85 -1.09

75-year:

 2015-89 . . . 4.96 5.92 -.96 1.73 2.03 -.30 6.69 7.95 -1.26

Low-cost:

2015 . . . . . . 4.50 4.91 -.41 1.47 1.45 .02 5.98 6.36 -.38 18,376

2016 . . . . . . 4.59 4.74 -.15 1.49 1.40 .09 6.08 6.14 -.06 19,776

2017 . . . . . . 4.62 4.72 -.11 1.51 1.36 .15 6.13 6.08 .05 21,261

2018 . . . . . . 4.67 4.73 -.07 1.53 1.34 .19 6.20 6.07 .12 22,749

2019 . . . . . . 4.71 4.76 -.05 1.54 1.33 .21 6.26 6.09 .16 24,245

2020 . . . . . . 4.75 4.80 -.05 1.55 1.33 .22 6.30 6.13 .17 25,767

2021 . . . . . . 4.78 4.83 -.05 1.56 1.33 .23 6.34 6.17 .18 27,333

2022 . . . . . . 4.82 4.87 -.06 1.57 1.34 .23 6.39 6.21 .17 28,970

2023 . . . . . . 4.85 4.92 -.08 1.58 1.34 .24 6.43 6.26 .16 30,694

2024 . . . . . . 4.87 4.97 -.10 1.59 1.34 .25 6.47 6.32 .15 32,504

2025 . . . . . . 4.88 5.01 -.13 1.60 1.38 .22 6.48 6.39 .09 34,408

2030 . . . . . . 4.88 5.16 -.28 1.64 1.37 .28 6.52 6.52 c 45,697

2035 . . . . . . 4.88 5.19 -.31 1.68 1.34 .34 6.56 6.53 .03 60,563

2040 . . . . . . 4.88 5.10 -.23 1.72 1.27 .45 6.59 6.37 .22 80,726

2045 . . . . . . 4.88 4.98 -.10 1.76 1.19 .57 6.63 6.17 .47 108,017

2050 . . . . . . 4.89 4.91 -.02 1.79 1.12 .68 6.68 6.02 .66 144,330

2055 . . . . . . 4.89 4.91 -.01 1.83 1.06 .77 6.72 5.97 .75 192,279

2060 . . . . . . 4.90 4.94 -.04 1.86 1.04 .82 6.76 5.98 .78 255,850

2065 . . . . . . 4.90 4.96 -.06 1.89 1.05 .84 6.79 6.01 .78 340,834

2070 . . . . . . 4.90 4.97 -.07 1.91 1.07 .84 6.81 6.04 .77 454,976

2075 . . . . . . 4.89 4.94 -.05 1.93 1.09 .84 6.82 6.03 .80 608,502

2080 . . . . . . 4.89 4.86 .02 1.94 1.10 .85 6.83 5.96 .87 813,923

2085 . . . . . . 4.89 4.85 .04 1.96 1.10 .86 6.85 5.95 .90 1,086,422

2090 . . . . . . 4.90 4.92 -.02 1.98 1.10 .88 6.88 6.02 .86 1,446,970
209

OASDI and HI: Percent of GDP

Note: Totals do not necessarily equal the sums of rounded components.

To compare trust fund operations expressed as percentages of taxable payroll

and those expressed as percentages of GDP, table VI.G5 displays ratios of

OASDI taxable payroll to GDP. HI taxable payroll is about 25 percent larger

than the OASDI taxable payroll throughout the long-range period; see section 1 of this appendix for a detailed description of the difference. The cost

Low-cost (Cont.):

Summarized rates: b

25-year:

 2015-39 . . . 5.35 5.22 .14 1.65 1.40 .25 7.01 6.62 .39

50-year:

 2015-64 . . . 5.15 5.08 .07 1.72 1.26 .45 6.86 6.34 .52

75-year:

 2015-89 . . . 5.08 5.02 .06 1.78 1.22 .56 6.86 6.24 .62

High-cost:

2015 . . . . . . 4.54 5.07 -.53 1.47 1.55 -.08 6.02 6.62 -.61 17,880

2016 . . . . . . 4.52 5.11 -.59 1.49 1.58 -.10 6.01 6.69 -.68 18,516

2017 . . . . . . 4.60 5.24 -.65 1.51 1.60 -.09 6.10 6.84 -.74 19,246

2018 . . . . . . 4.63 5.36 -.73 1.53 1.64 -.11 6.16 7.00 -.84 20,019

2019 . . . . . . 4.66 5.49 -.83 1.55 1.70 -.15 6.20 7.18 -.98 20,795

2020 . . . . . . 4.68 5.61 -.94 1.56 1.77 -.20 6.24 7.38 -1.14 21,575

2021 . . . . . . 4.69 5.72 -1.03 1.58 1.84 -.27 6.27 7.57 -1.29 22,376

2022 . . . . . . 4.71 5.84 -1.13 1.59 1.93 -.33 6.31 7.77 -1.46 23,181

2023 . . . . . . 4.73 5.97 -1.24 1.61 2.01 -.40 6.34 7.98 -1.64 23,979

2024 . . . . . . 4.75 6.12 -1.37 1.62 2.09 -.47 6.37 8.21 -1.85 24,738

2025 . . . . . . 4.75 6.23 -1.48 1.63 2.22 -.60 6.37 8.45 -2.08 25,543

2030 . . . . . . 4.73 6.70 -1.97 1.65 2.66 -1.01 6.38 9.36 -2.99 29,888

2035 . . . . . . 4.70 7.00 -2.30 1.67 3.14 -1.48 6.37 10.15 -3.78 34,863

2040 . . . . . . 4.68 7.15 -2.47 1.68 3.61 -1.93 6.36 10.76 -4.40 40,679

2045 . . . . . . 4.65 7.20 -2.55 1.69 3.99 -2.30 6.33 11.19 -4.85 47,436

2050 . . . . . . 4.62 7.24 -2.62 1.69 4.24 -2.55 6.31 11.48 -5.17 55,079

2055 . . . . . . 4.59 7.33 -2.74 1.70 4.39 -2.68 6.29 11.72 -5.43 63,679

2060 . . . . . . 4.56 7.46 -2.90 1.71 4.46 -2.75 6.27 11.93 -5.65 73,474

2065 . . . . . . 4.52 7.59 -3.07 1.72 4.50 -2.78 6.25 12.09 -5.85 84,697

2070 . . . . . . 4.49 7.74 -3.26 1.73 4.54 -2.81 6.22 12.28 -6.06 97,561

2075 . . . . . . 4.45 7.86 -3.42 1.74 4.57 -2.83 6.19 12.44 -6.24 112,331

2080 . . . . . . 4.41 7.92 -3.51 1.75 4.55 -2.80 6.15 12.47 -6.32 129,209

2085 . . . . . . 4.37 7.97 -3.60 1.75 4.51 -2.75 6.12 12.48 -6.36 148,465

2090 . . . . . . 4.34 8.02 -3.68 1.76 4.47 -2.71 6.10 12.49 -6.39 170,494

Summarized rates: b

25-year:

 2015-39 . . . 5.31 6.56 -1.25 1.66 2.51 -.85 6.96 9.07 -2.10

50-year:

 2015-64 . . . 5.01 6.84 -1.84 1.67 3.22 -1.54 6.68 10.06 -3.38

75-year:

 2015-89 . . . 4.88 7.05 -2.18 1.69 3.50 -1.81 6.57 10.55 -3.98

a Income for individual years excludes interest on the trust funds. Interest is implicit in all summarized values.

b Summarized rates are calculated on a present-value basis. They include the value of the trust funds on

January 1, 2015 and the cost of reaching a target trust fund level equal to 100 percent of annual cost at the end

of the period.

c Between -0.005 and 0 percent of GDP.

Table VI.G4.—OASDI and HI Annual and Summarized Income, Cost, and Balance

as a Percentage of GDP, Calendar Years 2015-90 (Cont.)

Calendar year

Percentage of GDP GDP in

dollars

(billions)

OASDI HI Combined

Incomea Cost Balance Incomea Cost Balance Incomea Cost Balance
Appendices

210

as a percentage of GDP is equal to the cost as a percentage of taxable payroll

multiplied by the ratio of taxable payroll to GDP.

Projections of GDP reflect projected increases in U.S. employment, labor

productivity, average hours worked, and the GDP deflator. Projections of

taxable payroll reflect the components of growth in GDP along with assumed

changes in the ratio of worker compensation to GDP, the ratio of earnings to

worker compensation, the ratio of OASDI covered earnings to total earnings,

and the ratio of taxable to total covered earnings.

Over the long-range period, the ratio of OASDI taxable payroll to GDP is

projected to decline mostly due to a projected decline in the ratio of wages to

employee compensation. Over the last five complete economic cycles, the

ratio of wages to employee compensation declined at an average annual rate

of 0.23 percent. Over the 65-year period ending in 2089, the ratio of wages to

employee compensation is projected to decline at an average annual rate of

0.09 and 0.19 percent for the intermediate and high-cost assumptions,

respectively, and to increase at an average annual rate of 0.01 percent for the

low-cost assumptions.

Table VI.G5.—Ratio of OASDI Taxable Payroll to GDP, Calendar Years 2015-90 

Calendar year Intermediate Low-cost High-cost

2015 . . . . . . . . . . . . . . . . . . . . . . . . . 0.353 0.353 0.352

2016 . . . . . . . . . . . . . . . . . . . . . . . . . .353 .356 .352

2017 . . . . . . . . . . . . . . . . . . . . . . . . . .357 .358 .355

2018 . . . . . . . . . . . . . . . . . . . . . . . . . .360 .362 .357

2019 . . . . . . . . . . . . . . . . . . . . . . . . . .362 .365 .358

2020 . . . . . . . . . . . . . . . . . . . . . . . . . .363 .368 .359

2021 . . . . . . . . . . . . . . . . . . . . . . . . . .365 .370 .360

2022 . . . . . . . . . . . . . . . . . . . . . . . . . .366 .372 .360

2023 . . . . . . . . . . . . . . . . . . . . . . . . . .367 .374 .361

2024 . . . . . . . . . . . . . . . . . . . . . . . . . .368 .376 .361

2025 . . . . . . . . . . . . . . . . . . . . . . . . . .367 .375 .360

2030 . . . . . . . . . . . . . . . . . . . . . . . . . .365 .374 .356

2035 . . . . . . . . . . . . . . . . . . . . . . . . . .362 .373 .352

2040 . . . . . . . . . . . . . . . . . . . . . . . . . .361 .373 .349

2045 . . . . . . . . . . . . . . . . . . . . . . . . . .360 .374 .347

2050 . . . . . . . . . . . . . . . . . . . . . . . . . .359 .374 .344

2055 . . . . . . . . . . . . . . . . . . . . . . . . . .357 .375 .341

2060 . . . . . . . . . . . . . . . . . . . . . . . . . .356 .375 .338

2065 . . . . . . . . . . . . . . . . . . . . . . . . . .354 .375 .334

2070 . . . . . . . . . . . . . . . . . . . . . . . . . .351 .375 .330

2075 . . . . . . . . . . . . . . . . . . . . . . . . . .349 .374 .326

2080 . . . . . . . . . . . . . . . . . . . . . . . . . .347 .374 .323

2085 . . . . . . . . . . . . . . . . . . . . . . . . . .346 .375 .319

2090 . . . . . . . . . . . . . . . . . . . . . . . . . .344 .375 .316
211

OASDI and HI: Estimates in Dollars

3. Estimates in Dollars

This section contains long-range projections, in dollars, of the operations of

the theoretical combined OASI and DI Trust Funds and in some cases the HI

Trust Fund. Comparing current dollar values over long periods of time is difficult because of the effect of inflation. In order to compare dollar values in a

meaningful way, table VI.G6 provides several economic series or indices

which can be used to adjust current dollars for changes in prices, wages, or

other aspects of economic growth during the projection period. Any series of

values can be adjusted by dividing the value for each year by the corresponding index value for the year.

One of the most common forms of standardization is price indexing, which

uses some measure of change in the prices of consumer goods. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W,

hereafter referred to as CPI), published by the Bureau of Labor Statistics,

Department of Labor, is one such price index. The Social Security Administration (SSA) uses this index to determine the annual cost-of-living increases

for OASDI monthly benefits. The ultimate annual rate of increase in the CPI

is assumed to be 3.4, 2.7, and 2.0 percent for the low-cost, intermediate, and

high-cost sets of assumptions, respectively. Table VI.G7 provides CPIindexed dollar values (those adjusted using the CPI in table VI.G6), which

indicate the relative purchasing power of the values over time.

Wage indexing is another type of standardization. It combines the effects of

price inflation and real-wage growth. The wage index presented here is the

national average wage index, as defined in section 209(k)(1) of the Social

Security Act. SSA uses this index to annually adjust the contribution and

benefit base and other earnings-related program amounts. The average wage

is assumed to grow by an average rate of 5.2, 3.9, and 2.5 percent under the

low-cost, intermediate, and high-cost assumptions, respectively, between

2024 and 2089. Wage-indexed values indicate the level of a series relative to

the standard of living of workers over time.

The taxable payroll index adjusts for the effects of changes in the number of

workers and changes in the proportion of earnings that are taxable, as well as

for the effects of price inflation and real-wage growth. The OASDI taxable

payroll consists of all earnings subject to OASDI taxation, with an adjustment for the lower effective tax rate on multiple-employer excess wages. A

series of values, divided by the taxable payroll, indicates the percentage of

payroll that each value represents, and thus the extent to which the series of

values increases or decreases as a percent of payroll over time.
Appendices

212

The GDP index adjusts for the growth in the aggregate amount of goods and

services produced in the United States. Values adjusted by GDP (see

section 2 of this appendix) indicate their relative share of the total output of

the economy. No explicit assumption is made about growth in taxable payroll

or GDP. These series reflect the basic demographic and economic assumptions, as discussed in sections V.A and V.B, respectively.

Discounting at the rate of interest is another way of adjusting current dollars.

Each interest-rate factor shown in table VI.G6 equals the average of the

assumed annual interest rates for special public-debt obligations issuable to

the trust funds in that year. This series is slightly different from the annual

interest rates used to create summarized values elsewhere in this report,

where the actual yield on currently-held trust fund assets is used for each

year. Ultimate nominal interest rates, which in practice are compounded

semiannually, are assumed to be 6.8, 5.6, and 4.4 percent for the low-cost,

intermediate, and high-cost assumptions, respectively.
213

OASDI and HI: Estimates in Dollars

Table VI.G6.—Selected Economic Variables, Calendar Years 2014-90

[GDP and taxable payroll in billions]

Calendar year

Adjusted

CPIa Averagewage index

Taxable

payrollb

Gross

domestic

product

Compound

interest-rate

factorc

Intermediate:

2014 . . . . . . . . . . . . . 99.80 46,289.41 6,140 17,411 0.9787

2015 . . . . . . . . . . . . . 100.00 47,820.21 6,403 18,163 1.0000

2016 . . . . . . . . . . . . . 102.97 50,388.16 6,776 19,216 1.0342

2017 . . . . . . . . . . . . . 105.81 52,937.78 7,246 20,311 1.0773

2018 . . . . . . . . . . . . . 108.67 55,517.91 7,699 21,415 1.1298

2019 . . . . . . . . . . . . . 111.61 58,106.90 8,151 22,537 1.1885

2020 . . . . . . . . . . . . . 114.62 60,681.31 8,607 23,687 1.2526

2021 . . . . . . . . . . . . . 117.71 63,345.67 9,070 24,861 1.3224

2022 . . . . . . . . . . . . . 120.89 66,028.98 9,531 26,042 1.3961

2023 . . . . . . . . . . . . . 124.16 68,727.50 9,999 27,234 1.4746

2024 . . . . . . . . . . . . . 127.51 71,429.77 10,470 28,472 1.5584

2025 . . . . . . . . . . . . . 130.95 74,191.44 10,933 29,765 1.6469

2030 . . . . . . . . . . . . . 149.61 89,887.89 13,521 37,089 2.1706

2035 . . . . . . . . . . . . . 170.93 108,900.00 16,696 46,085 2.8610

2040 . . . . . . . . . . . . . 195.28 131,777.87 20,728 57,462 3.7709

2045 . . . . . . . . . . . . . 223.11 159,757.58 25,800 71,742 4.9702

2050 . . . . . . . . . . . . . 254.90 193,633.81 32,034 89,342 6.5509

2055 . . . . . . . . . . . . . 291.22 234,316.22 39,633 110,936 8.6344

2060 . . . . . . . . . . . . . 332.72 283,240.49 48,918 137,548 11.3805

2065 . . . . . . . . . . . . . 380.12 342,011.90 60,330 170,579 15.0000

2070 . . . . . . . . . . . . . 434.29 412,399.05 74,393 211,683 19.7706

2075 . . . . . . . . . . . . . 496.17 497,476.37 91,848 262,889 26.0585

2080 . . . . . . . . . . . . . 566.87 600,217.78 113,358 326,408 34.3462

2085 . . . . . . . . . . . . . 647.64 724,578.13 139,899 404,758 45.2697

2090 . . . . . . . . . . . . . 739.92 875,441.99 172,611 501,306 59.6673

Low-cost:

2014 . . . . . . . . . . . . . 99.66 46,316.67 6,142 17,422 0.9736

2015 . . . . . . . . . . . . . 100.00 48,185.19 6,488 18,376 1.0000

2016 . . . . . . . . . . . . . 103.39 51,364.52 7,038 19,776 1.0439

2017 . . . . . . . . . . . . . 106.94 54,732.51 7,621 21,261 1.0992

2018 . . . . . . . . . . . . . 110.58 58,135.27 8,236 22,749 1.1645

2019 . . . . . . . . . . . . . 114.34 61,502.48 8,859 24,245 1.2367

2020 . . . . . . . . . . . . . 118.23 64,848.32 9,481 25,767 1.3156

2021 . . . . . . . . . . . . . 122.25 68,381.37 10,116 27,333 1.4018

2022 . . . . . . . . . . . . . 126.40 72,076.04 10,777 28,970 1.4962

2023 . . . . . . . . . . . . . 130.70 75,981.57 11,478 30,694 1.5989

2024 . . . . . . . . . . . . . 135.14 79,993.85 12,207 32,504 1.7093

2025 . . . . . . . . . . . . . 139.74 84,141.10 12,917 34,408 1.8275

2030 . . . . . . . . . . . . . 165.17 108,724.36 17,089 45,697 2.5531

2035 . . . . . . . . . . . . . 195.22 140,388.73 22,596 60,563 3.5667

2040 . . . . . . . . . . . . . 230.74 180,885.19 30,116 80,726 4.9828

2045 . . . . . . . . . . . . . 272.73 233,466.27 40,360 108,017 6.9611

2050 . . . . . . . . . . . . . 322.35 301,532.66 54,029 144,330 9.7249

2055 . . . . . . . . . . . . . 381.01 388,965.90 72,077 192,279 13.5860

2060 . . . . . . . . . . . . . 450.34 501,172.42 95,963 255,850 18.9800

2065 . . . . . . . . . . . . . 532.28 644,977.25 127,805 340,834 26.5156

2070 . . . . . . . . . . . . . 629.13 828,908.54 170,441 454,976 37.0431

2075 . . . . . . . . . . . . . 743.61 1,065,770.78 227,861 608,502 51.7502

2080 . . . . . . . . . . . . . 878.92 1,370,510.91 304,622 813,923 72.2965

2085 . . . . . . . . . . . . . 1,038.84 1,763,280.53 406,873 1,086,422 101.0004

2090 . . . . . . . . . . . . . 1,227.87 2,270,089.80 542,748 1,446,970 141.1004
Appendices

214

Table VI.G7 shows the operations of the theoretical combined OASI and DI

Trust Funds in CPI-indexed 2015 dollars—that is, adjusted by the CPI indexing series as discussed above. The following items are presented in the table:

(1) non-interest income, (2) interest income, (3) total income, (4) cost, and

(5) asset reserves at the end of the year. Non-interest income consists of payroll tax contributions, income from taxation of benefits, and reimbursements

from the General Fund of the Treasury, if any. Cost consists of scheduled

benefits, administrative expenses, financial interchange with the Railroad

Retirement program, and payments for vocational rehabilitation services for

disabled beneficiaries. Table VI.G7 shows trust fund operations under the

low-cost, intermediate, and high-cost sets of assumptions.

High-cost:

2014 . . . . . . . . . . . . . 99.89 46,245.03 6,136 17,395 0.9849

2015 . . . . . . . . . . . . . 100.00 47,150.51 6,298 17,880 1.0000

2016 . . . . . . . . . . . . . 102.57 48,817.95 6,516 18,516 1.0224

2017 . . . . . . . . . . . . . 104.71 50,611.49 6,829 19,246 1.0540

2018 . . . . . . . . . . . . . 106.80 52,526.83 7,137 20,019 1.0948

2019 . . . . . . . . . . . . . 108.94 54,437.43 7,445 20,795 1.1408

2020 . . . . . . . . . . . . . 111.12 56,308.62 7,746 21,575 1.1907

2021 . . . . . . . . . . . . . 113.34 58,349.32 8,046 22,376 1.2449

2022 . . . . . . . . . . . . . 115.61 60,320.20 8,348 23,181 1.3015

2023 . . . . . . . . . . . . . 117.92 62,093.08 8,652 23,979 1.3608

2024 . . . . . . . . . . . . . 120.28 63,647.09 8,925 24,738 1.4218

2025 . . . . . . . . . . . . . 122.68 65,272.90 9,200 25,543 1.4851

2030 . . . . . . . . . . . . . 135.45 74,118.72 10,643 29,888 1.8460

2035 . . . . . . . . . . . . . 149.55 84,222.42 12,288 34,863 2.2948

2040 . . . . . . . . . . . . . 165.12 95,704.94 14,214 40,679 2.8526

2045 . . . . . . . . . . . . . 182.30 108,878.19 16,447 47,436 3.5461

2050 . . . . . . . . . . . . . 201.28 123,853.53 18,947 55,079 4.4080

2055 . . . . . . . . . . . . . 222.23 140,602.52 21,716 63,679 5.4796

2060 . . . . . . . . . . . . . 245.36 159,390.45 24,813 73,474 6.8116

2065 . . . . . . . . . . . . . 270.89 180,489.76 28,295 84,697 8.4674

2070 . . . . . . . . . . . . . 299.09 204,095.70 32,212 97,561 10.5256

2075 . . . . . . . . . . . . . 330.22 230,866.87 36,670 112,331 13.0843

2080 . . . . . . . . . . . . . 364.59 261,229.70 41,697 129,209 16.2648

2085 . . . . . . . . . . . . . 402.53 295,809.06 47,423 148,465 20.2186

2090 . . . . . . . . . . . . . 444.43 335,295.17 53,959 170,494 25.1334

a CPI-W indexed to calendar year 2015.

b Total earnings subject to OASDI contribution rates, adjusted to reflect the lower effective contribution

rates (compared to the combined employee-employer rate) that apply to multiple-employer “excess wages.”

c Incorporates the average of the assumed annual interest rates for special public-debt obligations issuable to

the trust funds in the 12 months of the year, under each alternative.

Table VI.G6.—Selected Economic Variables, Calendar Years 2014-90

[GDP and taxable payroll in billions]

Calendar year

Adjusted

CPIa Average

wage index

Taxable

payrollb

Gross

domestic

product

Compound

interest-rate

factorc
215

OASDI and HI: Estimates in Dollars

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.G7.—Operations of the Combined OASI and DI Trust Funds,

in CPI-indexed 2015 Dollars,a Calendar Years 2015-90

[In billions]

a CPI-indexed 2015 dollars equal current dollars adjusted by the CPI indexing series in table VI.G6.

Calendar year

Non-interest

income

Interest

income

Total

income Cost

Asset reserves at

end of year

Intermediate:

2015 . . . . . . . . . . . . . $820.8 $93.1 $913.9 $904.7 $2,798.7

2016 . . . . . . . . . . . . . 847.7 87.1 934.8 913.5 2,739.3

2017 . . . . . . . . . . . . . 884.1 85.0 969.2 951.4 2,683.4

2018 . . . . . . . . . . . . . 916.5 85.1 1,001.6 989.7 2,624.7

2019 . . . . . . . . . . . . . 945.9 85.3 1,031.3 1,028.9 2,558.1

2020 . . . . . . . . . . . . . 973.5 85.0 1,058.6 1,068.4 2,481.1

2021 . . . . . . . . . . . . . 1,000.4 84.0 1,084.5 1,105.3 2,394.9

2022 . . . . . . . . . . . . . 1,025.9 82.8 1,108.7 1,144.8 2,295.9

2023 . . . . . . . . . . . . . 1,049.5 81.5 1,130.9 1,185.8 2,180.7

2024 . . . . . . . . . . . . . 1,072.6 79.9 1,152.5 1,228.1 2,047.7

2025 . . . . . . . . . . . . . 1,092.1 81.2 1,173.3 1,266.1 1,901.1

2030b . . . . . . . . . . . .

b The combined OASI and DI Trust Funds become depleted in 2034 under the intermediate assumptions and

in 2028 under the high-cost assumptions, so estimates for later years are not shown.

1,188.8 57.8 1,246.6 1,454.6 914.9

Low-cost: 

2015 . . . . . . . . . . . . . 827.3 93.9 921.2 902.1 2,808.5

2016 . . . . . . . . . . . . . 878.1 90.6 968.7 906.6 2,778.5

2017 . . . . . . . . . . . . . 918.1 93.0 1,011.1 939.1 2,758.2

2018 . . . . . . . . . . . . . 960.4 98.4 1,058.7 974.1 2,752.1

2019 . . . . . . . . . . . . . 999.6 104.2 1,103.8 1,010.0 2,755.5

2020 . . . . . . . . . . . . . 1,035.2 110.2 1,145.4 1,046.2 2,764.1

2021 . . . . . . . . . . . . . 1,069.5 116.4 1,185.9 1,080.4 2,778.6

2022 . . . . . . . . . . . . . 1,103.8 123.8 1,227.6 1,117.2 2,797.7

2023 . . . . . . . . . . . . . 1,137.9 132.3 1,270.2 1,155.7 2,820.1

2024 . . . . . . . . . . . . . 1,172.4 141.3 1,313.7 1,195.8 2,845.4

2025 . . . . . . . . . . . . . 1,201.4 152.3 1,353.7 1,233.6 2,871.8

2030 . . . . . . . . . . . . . 1,350.1 199.6 1,549.7 1,426.7 3,016.3

2035 . . . . . . . . . . . . . 1,512.9 203.8 1,716.8 1,610.5 3,066.2

2040 . . . . . . . . . . . . . 1,705.8 208.1 1,913.9 1,785.6 3,135.6

2045 . . . . . . . . . . . . . 1,932.3 224.8 2,157.0 1,972.8 3,408.4

2050 . . . . . . . . . . . . . 2,187.3 258.1 2,445.4 2,196.3 3,933.2

2055 . . . . . . . . . . . . . 2,469.3 304.3 2,773.5 2,476.3 4,641.7

2060 . . . . . . . . . . . . . 2,783.2 355.2 3,138.4 2,808.5 5,411.7

2065 . . . . . . . . . . . . . 3,137.1 409.4 3,546.5 3,177.0 6,233.7

2070 . . . . . . . . . . . . . 3,540.4 468.6 4,009.0 3,593.3 7,132.5

2075 . . . . . . . . . . . . . 4,003.4 537.7 4,541.2 4,041.0 8,198.0

2080 . . . . . . . . . . . . . 4,524.2 634.1 5,158.3 4,502.6 9,705.0

2085 . . . . . . . . . . . . . 5,111.4 765.5 5,876.8 5,071.6 11,732.2

2090 . . . . . . . . . . . . . 5,772.6 913.1 6,685.7 5,792.7 13,968.0

High-cost:

2015 . . . . . . . . . . . . . 812.5 92.2 904.7 907.3 2,786.9

2016 . . . . . . . . . . . . . 815.8 83.4 899.3 922.1 2,694.3

2017 . . . . . . . . . . . . . 844.8 78.0 922.9 964.0 2,598.1

2018 . . . . . . . . . . . . . 867.8 74.0 941.8 1,005.3 2,483.7

2019 . . . . . . . . . . . . . 888.9 69.7 958.6 1,047.5 2,346.1

2020 . . . . . . . . . . . . . 908.2 64.4 972.6 1,089.9 2,182.8

2021 . . . . . . . . . . . . . 926.8 57.7 984.5 1,129.6 1,995.0

2022 . . . . . . . . . . . . . 945.3 50.1 995.4 1,171.6 1,779.7

2023 . . . . . . . . . . . . . 962.3 42.3 1,004.6 1,214.7 1,534.7

2024 . . . . . . . . . . . . . 976.3 34.1 1,010.4 1,258.9 1,256.1

2025b . . . . . . . . . . . . 988.2 29.9 1,018.1 1,296.4 953.2
Appendices

216

Figure VI.G1 compares annual cost with annual total income and annual

non-interest income. The figure shows only the OASDI program under intermediate assumptions, and presents values in CPI-indexed 2015 dollars, consistent with table VI.G7. The difference between the income values for each

year is equal to the trust fund interest earnings. The figure illustrates that,

under intermediate assumptions: (1) annual cost exceeds non-interest income

in each year of the projection period; (2) total annual income, which includes

interest earnings on trust fund asset reserves, is sufficient to cover annual

cost for years 2015 through 2019; and (3) total annual income is not sufficient to cover annual cost for years beginning in 2020. From 2020 through

2033 (the year preceding the year of trust fund reserve depletion), annual

cost is covered by drawing down theoretical combined trust fund reserves.

Table VI.G8 shows the operations of the combined OASI and DI Trust Funds

in current, or nominal, dollars—that is, in dollars unadjusted for inflation.

The following items are presented in the table: (1) non-interest income, (2)

interest income, (3) total income, (4) cost, and (5) asset reserves at the end of

the year. The Trustees present these estimates using the low-cost, intermediate, and high-cost sets of demographic and economic assumptions to facilitate independent analysis.

 Figure VI.G1.—Estimated OASDI Income and Cost in CPI-indexed 2015 Dollars,

Based on Intermediate Assumptions

[In billions]

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2015 2020 2025 2030 2035

Calendar year

Cost Total income

Non-interest income
217

OASDI and HI: Estimates in Dollars

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.G8.—Operations of the Combined OASI and DI Trust Funds, 

in Current Dollars, Calendar Years 2015-90

[In billions]

Calendar year

Non-interest

income

Interest

income

Total

income Cost

Asset reserves at

end of year

Intermediate:

2015 . . . . . . . . . . . . . $820.8 $93.1 $913.9 $904.7 $2,798.7

2016 . . . . . . . . . . . . . 872.9 89.7 962.6 940.6 2,820.7

2017 . . . . . . . . . . . . . 935.5 90.0 1,025.5 1,006.8 2,839.4

2018 . . . . . . . . . . . . . 995.9 92.5 1,088.4 1,075.5 2,852.3

2019 . . . . . . . . . . . . . 1,055.7 95.2 1,150.9 1,148.3 2,854.9

2020 . . . . . . . . . . . . . 1,115.9 97.5 1,213.3 1,224.5 2,843.8

2021 . . . . . . . . . . . . . 1,177.7 98.9 1,276.6 1,301.1 2,819.2

2022 . . . . . . . . . . . . . 1,240.3 100.1 1,340.3 1,383.9 2,775.6

2023 . . . . . . . . . . . . . 1,303.0 101.2 1,404.1 1,472.3 2,707.4

2024 . . . . . . . . . . . . . 1,367.7 101.9 1,469.5 1,566.0 2,611.0

2025 . . . . . . . . . . . . . 1,430.2 106.3 1,536.5 1,657.9 2,489.5

2030a . . . . . . . . . . . .

a The combined OASI and DI Trust Funds become depleted in 2034 under the intermediate assumptions and

in 2028 under the high-cost assumptions, so estimates for later years are not shown.

1,778.6 86.5 1,865.1 2,176.2 1,368.7

Low-cost:

2015 . . . . . . . . . . . . . 827.3 93.9 921.2 902.1 2,808.5

2016 . . . . . . . . . . . . . 907.8 93.7 1,001.5 937.4 2,872.7

2017 . . . . . . . . . . . . . 981.9 99.5 1,081.4 1,004.4 2,949.7

2018 . . . . . . . . . . . . . 1,062.0 108.8 1,170.8 1,077.2 3,043.3

2019 . . . . . . . . . . . . . 1,142.9 119.1 1,262.1 1,154.8 3,150.6

2020 . . . . . . . . . . . . . 1,223.9 130.2 1,354.2 1,236.9 3,267.9

2021 . . . . . . . . . . . . . 1,307.4 142.3 1,449.7 1,320.8 3,396.8

2022 . . . . . . . . . . . . . 1,395.2 156.5 1,551.7 1,412.2 3,536.3

2023 . . . . . . . . . . . . . 1,487.3 172.9 1,660.2 1,510.6 3,685.9

2024 . . . . . . . . . . . . . 1,584.5 190.9 1,775.4 1,616.0 3,845.3

2025 . . . . . . . . . . . . . 1,678.8 212.8 1,891.6 1,723.8 4,013.1

2030 . . . . . . . . . . . . . 2,229.9 329.7 2,559.6 2,356.5 4,981.9

2035 . . . . . . . . . . . . . 2,953.5 397.9 3,351.5 3,144.0 5,985.8

2040 . . . . . . . . . . . . . 3,936.1 480.1 4,416.2 4,120.1 7,235.2

2045 . . . . . . . . . . . . . 5,269.9 613.0 5,882.9 5,380.5 9,295.7

2050 . . . . . . . . . . . . . 7,050.7 831.9 7,882.7 7,079.9 12,678.8

2055 . . . . . . . . . . . . . 9,408.1 1,159.3 10,567.4 9,435.0 17,685.2

2060 . . . . . . . . . . . . . 12,533.7 1,599.5 14,133.2 12,647.7 24,370.7

2065 . . . . . . . . . . . . . 16,698.3 2,179.1 18,877.4 16,910.5 33,180.7

2070 . . . . . . . . . . . . . 22,273.8 2,948.0 25,221.8 22,606.6 44,872.6

2075 . . . . . . . . . . . . . 29,770.0 3,998.5 33,768.5 30,049.4 60,961.2

2080 . . . . . . . . . . . . . 39,764.2 5,572.8 45,337.0 39,574.2 85,299.3

2085 . . . . . . . . . . . . . 53,099.1 7,952.1 61,051.2 52,686.0 121,878.9

2090 . . . . . . . . . . . . . 70,880.3 11,211.5 82,091.7 71,126.8 171,508.6

High-cost:

2015 . . . . . . . . . . . . . 812.5 92.2 904.7 907.3 2,786.9

2016 . . . . . . . . . . . . . 836.8 85.6 922.4 945.8 2,763.5

2017 . . . . . . . . . . . . . 884.6 81.7 966.3 1,009.4 2,720.5

2018 . . . . . . . . . . . . . 926.8 79.1 1,005.9 1,073.7 2,652.7

2019 . . . . . . . . . . . . . 968.4 75.9 1,044.3 1,141.2 2,555.9

2020 . . . . . . . . . . . . . 1,009.2 71.6 1,080.8 1,211.1 2,425.6

2021 . . . . . . . . . . . . . 1,050.5 65.4 1,115.9 1,280.3 2,261.2

2022 . . . . . . . . . . . . . 1,092.9 57.9 1,150.7 1,354.4 2,057.5

2023 . . . . . . . . . . . . . 1,134.8 49.8 1,184.6 1,432.4 1,809.7

2024 . . . . . . . . . . . . . 1,174.3 41.1 1,215.3 1,514.2 1,510.8

2025a . . . . . . . . . . . . 1,212.4 36.6 1,249.0 1,590.4 1,169.4
Appendices

218

Table VI.G9 shows values in CPI-indexed 2015 dollars—that is, adjusted by

the CPI indexing series discussed at the beginning of this section. This table

contains the annual non-interest income and cost of the combined OASI and

DI Trust Funds, of the HI Trust Fund, and of the combined OASI, DI, and HI

Trust Funds, based on the low-cost, intermediate, and high-cost sets of

assumptions. For OASDI, non-interest income consists of payroll tax contributions, proceeds from taxation of OASDI benefits, and reimbursements

from the General Fund of the Treasury, if any. Cost consists of scheduled

benefits, administrative expenses, financial interchange with the Railroad

Retirement program, and payments for vocational rehabilitation services for

disabled beneficiaries. For HI, non-interest income consists of payroll tax

contributions (including contributions from railroad employment), up to an

additional 0.9 percent tax on earned income for relatively high earners, proceeds from the taxation of OASDI benefits, and reimbursements from the

General Fund of the Treasury, if any. Total cost consists of outlays (scheduled benefits and administrative expenses) for insured beneficiaries. The

Trustees show income and cost estimates on a cash basis for the OASDI program and on an incurred basis for the HI program. Table VI.G9 also shows

the balance, which equals the difference between non-interest income and

cost.
219

OASDI and HI: Estimates in Dollars

Table VI.G9.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2015-90

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Cost Balance

Noninterest

income Cost Balance

Noninterest

income Cost Balance

Intermediate:

2015 . . . . . $821 $905 -$84 $268 $271 -$4 $1,088 $1,176 -$88

2016 . . . . . 848 913 -66 278 277 1 1,126 1,190 -64

2017 . . . . . 884 951 -67 290 282 8 1,174 1,234 -60

2018 . . . . . 916 990 -73 301 291 10 1,218 1,281 -63

2019 . . . . . 946 1,029 -83 312 303 9 1,258 1,331 -74

2020 . . . . . 974 1,068 -95 322 316 6 1,295 1,384 -89

2021 . . . . . 1,000 1,105 -105 331 330 1 1,332 1,436 -104

2022 . . . . . 1,026 1,145 -119 341 345 -4 1,367 1,490 -123

2023 . . . . . 1,049 1,186 -136 349 359 -10 1,399 1,545 -146

2024 . . . . . 1,073 1,228 -156 358 373 -15 1,430 1,601 -171

2025 . . . . . 1,092 1,266 -174 366 396 -30 1,458 1,662 -204

2030 . . . . . 1,189 1,455 -266 407 471 -64 1,596 1,926 -330

2035 . . . . . 1,289 1,623 -334 449 551 -102 1,739 2,175 -436

2040 . . . . . 1,403 1,774 -371 497 628 -131 1,900 2,402 -502

2045 . . . . . 1,528 1,919 -391 550 699 -149 2,078 2,618 -540

2050 . . . . . 1,661 2,079 -417 608 762 -154 2,269 2,841 -572

2055 . . . . . 1,801 2,271 -470 670 822 -151 2,471 3,093 -621

2060 . . . . . 1,948 2,492 -544 738 890 -152 2,686 3,382 -696

2065 . . . . . 2,106 2,732 -626 810 974 -164 2,917 3,706 -790

2070 . . . . . 2,276 2,998 -722 889 1,073 -184 3,165 4,071 -906

2075 . . . . . 2,462 3,274 -811 974 1,182 -208 3,436 4,455 -1,019

2080 . . . . . 2,660 3,541 -881 1,064 1,286 -222 3,724 4,827 -1,103

2085 . . . . . 2,875 3,847 -972 1,161 1,391 -230 4,036 5,238 -1,202

2090 . . . . . 3,108 4,203 -1,095 1,267 1,504 -237 4,375 5,707 -1,332

Low-cost:

2015 . . . . . 827 902 -75 271 266 4 1,098 1,169 -70

2016 . . . . . 878 907 -29 285 268 18 1,163 1,174 -11

2017 . . . . . 918 939 -21 301 270 30 1,219 1,209 9

2018 . . . . . 960 974 -14 314 276 39 1,275 1,250 25

2019 . . . . . 1,000 1,010 -10 327 282 44 1,326 1,292 34

2020 . . . . . 1,035 1,046 -11 338 290 48 1,373 1,336 37

2021 . . . . . 1,069 1,080 -11 349 298 51 1,418 1,379 40

2022 . . . . . 1,104 1,117 -13 360 307 53 1,464 1,424 40

2023 . . . . . 1,138 1,156 -18 372 315 56 1,509 1,471 39

2024 . . . . . 1,172 1,196 -23 383 323 60 1,555 1,519 36

2025 . . . . . 1,201 1,234 -32 394 339 55 1,596 1,573 23

2030 . . . . . 1,350 1,427 -77 455 378 76 1,805 1,805 a

2035 . . . . . 1,513 1,611 -98 522 415 107 2,035 2,025 9

2040 . . . . . 1,706 1,786 -80 601 444 157 2,307 2,230 77

2045 . . . . . 1,932 1,973 -41 695 470 225 2,628 2,443 184

2050 . . . . . 2,187 2,196 -9 803 500 304 2,990 2,696 295

2055 . . . . . 2,469 2,476 -7 924 536 388 3,393 3,012 381

2060 . . . . . 2,783 2,808 -25 1,059 591 469 3,842 3,399 443

2065 . . . . . 3,137 3,177 -40 1,211 671 540 4,348 3,848 500

2070 . . . . . 3,540 3,593 -53 1,384 773 610 4,924 4,367 558

2075 . . . . . 4,003 4,041 -38 1,580 891 689 5,584 4,932 652

2080 . . . . . 4,524 4,503 22 1,801 1,016 785 6,325 5,518 807

2085 . . . . . 5,111 5,072 40 2,051 1,150 902 7,163 6,221 942

2090 . . . . . 5,773 5,793 -20 2,338 1,300 1,039 8,111 7,092 1,018
Appendices

220

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.G10 shows values in current, or nominal, dollars—that is, in dollars

unadjusted for inflation. This table contains the annual non-interest income,

cost, and balance of the combined OASI and DI Trust Funds, of the HI Trust

Fund, and of the combined OASI, DI, and HI Trust Funds, based on the lowcost, intermediate, and high-cost sets of assumptions.

High-cost:

2015 . . . . . $813 $907 -$95 $263 $277 -$14 $1,076 $1,184 -$109

2016 . . . . . 816 922 -106 268 286 -17 1,084 1,208 -123

2017 . . . . . 845 964 -119 277 294 -17 1,122 1,258 -136

2018 . . . . . 868 1,005 -137 286 307 -21 1,154 1,312 -158

2019 . . . . . 889 1,048 -159 295 324 -28 1,184 1,371 -187

2020 . . . . . 908 1,090 -182 304 343 -40 1,212 1,433 -221

2021 . . . . . 927 1,130 -203 312 364 -52 1,239 1,494 -255

2022 . . . . . 945 1,172 -226 320 387 -67 1,265 1,558 -293

2023 . . . . . 962 1,215 -252 327 408 -81 1,289 1,623 -334

2024 . . . . . 976 1,259 -283 333 430 -97 1,309 1,689 -380

2025 . . . . . 988 1,296 -308 338 463 -124 1,327 1,759 -432

2030 . . . . . 1,043 1,478 -435 364 587 -224 1,407 2,066 -659

2035 . . . . . 1,096 1,632 -536 388 733 -345 1,485 2,365 -881

2040 . . . . . 1,152 1,762 -610 413 888 -475 1,566 2,650 -1,085

2045 . . . . . 1,210 1,873 -664 439 1,038 -600 1,648 2,912 -1,263

2050 . . . . . 1,264 1,981 -716 463 1,161 -698 1,728 3,142 -1,415

2055 . . . . . 1,316 2,102 -786 488 1,257 -769 1,804 3,358 -1,555

2060 . . . . . 1,366 2,235 -869 513 1,337 -823 1,879 3,571 -1,692

2065 . . . . . 1,414 2,374 -959 539 1,408 -869 1,953 3,781 -1,828

2070 . . . . . 1,463 2,525 -1,062 565 1,481 -916 2,029 4,006 -1,978

2075 . . . . . 1,513 2,675 -1,162 593 1,555 -962 2,106 4,230 -2,124

2080 . . . . . 1,562 2,807 -1,246 619 1,613 -993 2,181 4,420 -2,239

2085 . . . . . 1,612 2,940 -1,329 647 1,662 -1,016 2,259 4,603 -2,344

2090 . . . . . 1,664 3,078 -1,414 675 1,715 -1,039 2,339 4,792 -2,453

a Between -$500 million and $0.

Table VI.G9.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2015-90 (Cont.)

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Cost Balance

Noninterest

income Cost Balance

Noninterest

income Cost Balance
221

OASDI and HI: Estimates in Dollars

Table VI.G10.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in Current Dollars, Calendar Years 2015-90

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Cost Balance

Noninterest

income Cost Balance

Noninterest

income Cost Balance

Intermediate:

2015 . . . . . $821 $905 -$84 $268 $271 -$4 $1,088 $1,176 -$88

2016 . . . . . 873 941 -68 286 285 1 1,159 1,226 -66

2017 . . . . . 936 1,007 -71 307 299 8 1,242 1,306 -63

2018 . . . . . 996 1,075 -80 327 316 11 1,323 1,392 -69

2019 . . . . . 1,056 1,148 -93 348 338 10 1,404 1,486 -82

2020 . . . . . 1,116 1,225 -109 369 362 7 1,485 1,587 -102

2021 . . . . . 1,178 1,301 -123 390 389 1 1,568 1,690 -122

2022 . . . . . 1,240 1,384 -144 412 417 -5 1,652 1,801 -149

2023 . . . . . 1,303 1,472 -169 434 446 -12 1,737 1,918 -181

2024 . . . . . 1,368 1,566 -198 456 475 -19 1,824 2,041 -218

2025 . . . . . 1,430 1,658 -228 479 519 -40 1,909 2,177 -267

2030 . . . . . 1,779 2,176 -398 609 705 -96 2,387 2,881 -493

2035 . . . . . 2,204 2,775 -571 768 942 -174 2,972 3,717 -746

2040 . . . . . 2,739 3,464 -725 970 1,226 -256 3,709 4,691 -981

2045 . . . . . 3,410 4,282 -872 1,227 1,560 -333 4,637 5,842 -1,205

2050 . . . . . 4,235 5,299 -1,064 1,549 1,942 -393 5,784 7,241 -1,457

2055 . . . . . 5,245 6,614 -1,369 1,952 2,393 -441 7,197 9,007 -1,810

2060 . . . . . 6,483 8,293 -1,810 2,455 2,961 -506 8,938 11,254 -2,316

2065 . . . . . 8,006 10,387 -2,381 3,081 3,702 -622 11,086 14,089 -3,002

2070 . . . . . 9,886 13,020 -3,135 3,860 4,661 -801 13,746 17,681 -3,936

2075 . . . . . 12,217 16,243 -4,026 4,833 5,862 -1,030 17,049 22,105 -5,056

2080 . . . . . 15,080 20,074 -4,995 6,030 7,288 -1,258 21,110 27,363 -6,252

2085 . . . . . 18,618 24,914 -6,296 7,519 9,007 -1,488 26,138 33,921 -7,783

2090 . . . . . 22,994 31,095 -8,102 9,375 11,130 -1,754 32,369 42,225 -9,856

Low-cost:

2015 . . . . . 827 902 -75 271 266 4 1,098 1,169 -70

2016 . . . . . 908 937 -30 295 277 18 1,203 1,214 -11

2017 . . . . . 982 1,004 -22 321 289 32 1,303 1,293 10

2018 . . . . . 1,062 1,077 -15 347 305 43 1,409 1,382 27

2019 . . . . . 1,143 1,155 -12 374 323 51 1,517 1,478 39

2020 . . . . . 1,224 1,237 -13 400 343 57 1,624 1,580 44

2021 . . . . . 1,307 1,321 -13 427 365 62 1,734 1,686 48

2022 . . . . . 1,395 1,412 -17 455 388 67 1,851 1,800 50

2023 . . . . . 1,487 1,511 -23 486 412 74 1,973 1,922 50

2024 . . . . . 1,584 1,616 -32 517 437 81 2,102 2,053 49

2025 . . . . . 1,679 1,724 -45 551 474 77 2,230 2,198 32

2030 . . . . . 2,230 2,356 -127 751 624 126 2,981 2,981 a

2035 . . . . . 2,954 3,144 -191 1,018 810 208 3,972 3,954 18

2040 . . . . . 3,936 4,120 -184 1,387 1,024 363 5,323 5,144 179

2045 . . . . . 5,270 5,380 -111 1,896 1,283 613 7,166 6,664 502

2050 . . . . . 7,051 7,080 -29 2,589 1,610 979 9,640 8,690 950

2055 . . . . . 9,408 9,435 -27 3,520 2,043 1,478 12,928 11,478 1,451

2060 . . . . . 12,534 12,648 -114 4,770 2,660 2,110 17,304 15,307 1,996

2065 . . . . . 16,698 16,911 -212 6,447 3,571 2,876 23,145 20,482 2,664

2070 . . . . . 22,274 22,607 -333 8,705 4,865 3,840 30,979 27,471 3,508

2075 . . . . . 29,770 30,049 -279 11,752 6,627 5,125 41,522 36,677 4,845

2080 . . . . . 39,764 39,574 190 15,828 8,927 6,901 55,592 48,501 7,091

2085 . . . . . 53,099 52,686 413 21,312 11,944 9,368 74,411 64,630 9,781

2090 . . . . . 70,880 71,127 -247 28,710 15,958 12,752 99,590 87,085 12,505
Appendices

222

High-cost:

2015 . . . . . $813 $907 -$95 $263 $277 -$14 $1,076 $1,184 -$109

2016 . . . . . 837 946 -109 275 293 -18 1,112 1,239 -127

2017 . . . . . 885 1,009 -125 290 308 -18 1,175 1,317 -142

2018 . . . . . 927 1,074 -147 306 328 -22 1,233 1,401 -169

2019 . . . . . 968 1,141 -173 322 353 -31 1,290 1,494 -204

2020 . . . . . 1,009 1,211 -202 337 381 -44 1,347 1,593 -246

2021 . . . . . 1,051 1,280 -230 353 413 -59 1,404 1,693 -289

2022 . . . . . 1,093 1,354 -262 370 447 -77 1,462 1,801 -339

2023 . . . . . 1,135 1,432 -298 386 482 -96 1,520 1,914 -394

2024 . . . . . 1,174 1,514 -340 401 517 -117 1,575 2,031 -456

2025 . . . . . 1,212 1,590 -378 415 568 -152 1,628 2,158 -530

2030 . . . . . 1,413 2,003 -590 493 796 -303 1,906 2,798 -893

2035 . . . . . 1,640 2,441 -801 580 1,096 -516 2,220 3,537 -1,317

2040 . . . . . 1,903 2,910 -1,007 682 1,467 -784 2,585 4,376 -1,791

2045 . . . . . 2,206 3,415 -1,210 799 1,893 -1,093 3,005 5,308 -2,303

2050 . . . . . 2,545 3,987 -1,442 932 2,338 -1,405 3,478 6,325 -2,847

2055 . . . . . 2,924 4,671 -1,747 1,084 2,793 -1,708 4,008 7,463 -3,455

2060 . . . . . 3,350 5,483 -2,132 1,259 3,279 -2,020 4,610 8,762 -4,152

2065 . . . . . 3,832 6,430 -2,598 1,460 3,813 -2,353 5,291 10,243 -4,951

2070 . . . . . 4,376 7,552 -3,176 1,691 4,430 -2,740 6,067 11,983 -5,916

2075 . . . . . 4,997 8,833 -3,836 1,957 5,135 -3,178 6,954 13,969 -7,014

2080 . . . . . 5,694 10,235 -4,541 2,258 5,879 -3,621 7,952 16,114 -8,162

2085 . . . . . 6,487 11,836 -5,349 2,604 6,692 -4,088 9,091 18,528 -9,437

2090 . . . . . 7,395 13,677 -6,282 3,002 7,620 -4,619 10,397 21,298 -10,901

a Between -$500 million and $0.

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.G10.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in Current Dollars, Calendar Years 2015-90 (Cont.)

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Cost Balance

Noninterest

income Cost Balance

Noninterest

income Cost Balance
223

OASI Expenditures for the Disabled

H. ANALYSIS OF BENEFIT DISBURSEMENTS FROM THE OASI 

TRUST FUND WITH RESPECT TO DISABLED BENEFICIARIES

(Required by section 201(c) of the Social Security Act)

Effective January 1957, the OASI Trust Fund pays monthly benefits to disabled children aged 18 and over of retired and deceased workers if the disability began before age 18. The age by which disability must have begun

was later changed to age 22. Effective February 1968, the OASI Trust Fund

pays reduced monthly benefits to disabled widows and widowers at ages 50

and over. Effective January 1991, the requirements for the disability of the

widow or widower were made less restrictive.

As of December 31, 2014, about 1,079,000 individuals were receiving

monthly benefits from the OASI Trust Fund because of their disabilities or

the disabilities of children. This total includes approximately 25,000 mothers

and fathers (wives or husbands under normal retirement age of retiredworker beneficiaries and widows or widowers of deceased insured workers)

who met all other qualifying requirements and were receiving unreduced

benefits solely because they had disabled-child beneficiaries (or disabled

children aged 16 or 17) in their care. In calendar year 2014, the OASI Trust

Fund paid a total of $10,326 million to the people described above. Table

VI.H1 shows OASI scheduled benefits for disability for selected calendar

years during 1960-2014 and estimates for 2015-24 based on the intermediate

set of assumptions.
Appendices

224

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.H1.—Scheduled Benefit Disbursements From the OASI Trust Fund

With Respect to Disabled Beneficiaries

[Beneficiaries in thousands; scheduled benefits in millions]

Calendar year

Disabled beneficiaries, end of year Amount of scheduled benefitsa

a Beginning in 1966, includes payments for vocational rehabilitation services.

Total Children b

b Also includes certain mothers and fathers (see text).

Widowswidowers c

c In 1984 and later years, includes only disabled widows and widowers aged 50-59, because disabled widows and widowers age 60 and older are eligible for the same benefit as a nondisabled aged widow or widower. Therefore, they are not receiving benefits solely because of a disability.

Total Childrenb Widowswidowers d

d In 1983 and prior years, includes the offsetting effect of lower benefits payable to disabled widows and

widowers who continued to receive benefits after attaining age 60 (62, for disabled widowers prior to 1973),

compared to the higher nondisabled widow’s and widower’s benefits that would otherwise be payable. In

1984 and later years, includes only scheduled benefits to disabled widows and widowers aged 50-59 (see

footnote c).

Historical data:

1960 . . . . . . . . . 117 117 — $59 $59 —

1965 . . . . . . . . . 214 214 — 134 134 —

1970 . . . . . . . . . 316 281 36 301 260 $41

1975 . . . . . . . . . 435 376 58 664 560 104

1980 . . . . . . . . . 519 460 59 1,223 1,097 126

1985 . . . . . . . . . 594 547 47 2,072 1,885 187

1990 . . . . . . . . . 662 613 49 2,882 2,649 233

1991 . . . . . . . . . 687 627 61 3,179 2,875 304

1992 . . . . . . . . . 715 643 72 3,459 3,079 380

1993 . . . . . . . . . 740 659 81 3,752 3,296 456

1994 . . . . . . . . . 758 671 86 3,973 3,481 492

1995 . . . . . . . . . 772 681 91 4,202 3,672 531

1996 . . . . . . . . . 782 687 94 4,410 3,846 565

1997 . . . . . . . . . 789 693 96 4,646 4,050 596

1998 . . . . . . . . . 797 698 99 4,838 4,210 627

1999 . . . . . . . . . 805 702 102 4,991 4,336 655

2000 . . . . . . . . . 811 707 104 5,203 4,523 680

2001 . . . . . . . . . 817 712 105 5,520 4,802 718

2002 . . . . . . . . . 823 717 106 5,773 5,024 749

2003 . . . . . . . . . 827 722 105 5,950 5,184 764

2004 . . . . . . . . . 828 723 105 6,099 5,316 781

2005 . . . . . . . . . 836 728 108 6,449 5,556 834

2006 . . . . . . . . . 840 732 108 6,720 5,852 864

2007 . . . . . . . . . 851 744 107 7,053 6,181 869

2008 . . . . . . . . . 922 813 109 7,688 6,776 908

2009 . . . . . . . . . 969 857 112 8,595 7,618 974

2010 . . . . . . . . . 996 879 117 8,858 7,848 1,008

2011 . . . . . . . . . 1,020 899 121 9,136 8,085 1,050

2012 . . . . . . . . . 1,045 920 125 9,698 8,595 1,102

2013 . . . . . . . . . 1,065 939 126 9,953 8,840 1,109

2014 . . . . . . . . . 1,079 954 125 10,326 9,217 1,108

Estimates under the intermediate assumptions:

2015 . . . . . . . . . 1,094 971 123 10,789 9,668 1,117

2016 . . . . . . . . . 1,109 988 121 11,004 9,909 1,091

2017 . . . . . . . . . 1,122 1,005 118 11,560 10,460 1,096

2018 . . . . . . . . . 1,137 1,021 116 12,103 10,991 1,107

2019 . . . . . . . . . 1,150 1,037 114 12,665 11,544 1,116

2020 . . . . . . . . . 1,165 1,052 113 13,264 12,121 1,138

2021 . . . . . . . . . 1,180 1,068 112 13,896 12,721 1,170

2022 . . . . . . . . . 1,195 1,082 112 14,562 13,351 1,206

2023 . . . . . . . . . 1,209 1,097 113 15,259 14,012 1,242

2024 . . . . . . . . . 1,224 1,111 113 16,008 14,710 1,292
225

OASI Expenditures for the Disabled

Under the intermediate assumptions, estimated total scheduled benefits from

the OASI Trust Fund with respect to disabled beneficiaries will increase

from $10,789 million in calendar year 2015 to $16,008 million in calendar

year 2024.

In calendar year 2014, benefit payments (including expenditures for vocational rehabilitation services) with respect to disabled persons from the OASI

Trust Fund and from the DI Trust Fund (including payments from the DI

fund to all children and spouses of disabled-worker beneficiaries) totaled

$152,031 million. Of this amount, $10,326 million, or 6.8 percent, represented payments from the OASI Trust Fund. Table VI.H2 contains these and

similar figures for selected calendar years during 1960-2014 and estimates

for calendar years 2015-24.
Appendices

226

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.H2.—Scheduled Benefit Disbursements Under the OASDI Program

With Respect to Disabled Beneficiaries

[Amounts in millions]

Calendar year Totala

a Beginning in 1966, includes payments for vocational rehabilitation services.

DI Trust Fund b

b Scheduled benefits for disabled workers and their children and spouses.

OASI Trust Fund

Amount c

c Scheduled benefits for disabled children aged 18 and over, for certain mothers and fathers (see text), and for

disabled widows and widowers (see footnote d, table VI.H1).

Percentage of total

Historical data:

1960 . . . . . . . . . $627 $568 $59 9.4

1965 . . . . . . . . . 1,707 1,573 134 7.9

1970 . . . . . . . . . 3,386 3,085 301 8.9

1975 . . . . . . . . . 9,169 8,505 664 7.2

1980 . . . . . . . . . 16,738 15,515 1,223 7.3

1985 . . . . . . . . . 20,908 18,836 2,072 9.9

1990 . . . . . . . . . 27,717 24,835 2,882 10.4

1991 . . . . . . . . . 30,877 27,698 3,179 10.3

1992 . . . . . . . . . 34,583 31,124 3,459 10.0

1993 . . . . . . . . . 38,378 34,626 3,752 9.8

1994 . . . . . . . . . 41,730 37,757 3,973 9.5

1995 . . . . . . . . . 45,140 40,937 4,202 9.3

1996 . . . . . . . . . 48,615 44,205 4,410 9.1

1997 . . . . . . . . . 50,358 45,712 4,646 9.2

1998 . . . . . . . . . 53,062 48,224 4,838 9.1

1999 . . . . . . . . . 56,390 51,399 4,991 8.9

2000 . . . . . . . . . 60,204 55,001 5,203 8.6

2001 . . . . . . . . . 65,157 59,637 5,520 8.5

2002 . . . . . . . . . 71,493 65,721 5,773 8.1

2003 . . . . . . . . . 76,902 70,952 5,950 7.7

2004 . . . . . . . . . 84,350 78,251 6,099 7.2

2005 . . . . . . . . . 91,835 85,386 6,449 7.0

2006 . . . . . . . . . 99,165 92,446 6,720 6.8

2007 . . . . . . . . . 106,200 99,147 7,053 6.6

2008 . . . . . . . . . 114,064 106,376 7,688 6.7

2009 . . . . . . . . . 127,002 118,407 8,595 6.8

2010 . . . . . . . . . 133,103 124,245 8,858 6.7

2011 . . . . . . . . . 138,115 128,979 9,136 6.6

2012 . . . . . . . . . 146,623 136,925 9,698 6.6

2013 . . . . . . . . . 150,108 140,155 9,953 6.6

2014 . . . . . . . . . 152,031 141,705 10,326 6.8

Estimates under the intermediate assumptions:

2015 . . . . . . . . . 157,360 146,571 10,789 6.9

2016 . . . . . . . . . 159,632 148,628 11,004 6.9

2017 . . . . . . . . . 166,616 155,056 11,560 6.9

2018 . . . . . . . . . 173,949 161,846 12,103 7.0

2019 . . . . . . . . . 181,790 169,125 12,665 7.0

2020 . . . . . . . . . 189,391 176,127 13,264 7.0

2021 . . . . . . . . . 197,961 184,065 13,896 7.0

2022 . . . . . . . . . 207,137 192,575 14,562 7.0

2023 . . . . . . . . . 216,612 201,353 15,259 7.0

2024 . . . . . . . . . 226,141 210,133 16,008 7.1
227

Glossary

I. GLOSSARY

Actuarial balance. The difference between the summarized income rate and

the summarized cost rate over a given valuation period.

Actuarial deficit. A negative actuarial balance.

Administrative expenses. Expenses incurred by the Social Security Administration and the Department of the Treasury in administering the OASDI

program and the provisions of the Internal Revenue Code relating to the collection of contributions. Such administrative expenses are paid from the

OASI and DI Trust Funds.

Advance tax transfers. Amounts representing the estimated total OASDI

tax contributions for a given month. From May 1983 through November

1990, such amounts were credited to the OASI and DI Trust Funds at the

beginning of each month. The trust funds reimbursed the General Fund of

the Treasury for the associated loss of interest. Advance tax transfers are no

longer made unless needed in order to pay benefits.

Alternatives I, II, or III. See “Assumptions.”

Annual balance. The difference between the income rate and the cost rate

for a given year.

Asset reserves. Treasury notes and bonds, other securities guaranteed by the

Federal Government, certain Federally sponsored agency obligations, and

cash, held by the trust funds for investment purposes.

Assumptions. Values related to future trends in key factors that affect the

trust funds. Demographic assumptions include fertility, mortality, net immigration, marriage, and divorce. Economic assumptions include unemployment rates, average earnings, inflation, interest rates, and productivity.

Program-specific assumptions include retirement patterns, and disability

incidence and termination rates. This report presents three sets of demographic, economic, and program-specific assumptions:

 • Alternative II is the intermediate set of assumptions, and represents the

Trustees’ best estimates of likely future demographic, economic, and

program-specific conditions.

 • Alternative I is a low-cost set of assumptions—it assumes relatively

rapid economic growth, high inflation, and favorable (from the standpoint of program financing) demographic and program-specific conditions.

 • Alternative III is a high-cost set of assumptions—it assumes relatively

slow economic growth, low inflation, and unfavorable (from the standpoint of program financing) demographic and program-specific conditions.

See tables V.A1, V.B1, and V.B2.
Appendices

228

Automatic cost-of-living benefit increase. The annual increase in benefits,

effective for December, reflecting the increase, if any, in the cost of living. A

benefit increase is applicable only after a beneficiary becomes eligible for

benefits. In general, the benefit increase equals the percentage increase in the

Consumer Price Index for Urban Wage Earners and Clerical Workers

(CPI-W) measured from the third quarter of the previous year to the third

quarter of the current year. If there is no increase in the CPI-W, there is no

cost-of-living benefit increase. See table V.C1.

Auxiliary benefits. Monthly benefits payable to a spouse or child of a

retired or disabled worker, or to a survivor of a deceased worker.

Average indexed monthly earnings—AIME. The measure of lifetime

earnings used in determining the primary insurance amount (PIA) for most

workers who attain age 62, become disabled, or die after 1978. A worker’s

actual past earnings are adjusted by changes in the average wage index, in

order to bring them up to their approximately equivalent value at the time of

retirement or other eligibility for benefits.

Average wage index—AWI. A series that generally increases with the average amount of total wages for each year after 1950, including wages in noncovered employment and wages in covered employment in excess of the

OASDI contribution and benefit base. (See Title 20, Chapter III,

section 404.211(c) of the Code of Federal Regulations for a more precise

definition.) These average wage amounts are used to index the taxable earnings of most workers first becoming eligible for benefits in 1979 or later, and

for automatic adjustments in the contribution and benefit base, bend points,

earnings test exempt amounts, and other wage-indexed amounts. See table

V.C1.

Award. An administrative determination that an individual is entitled to

receive a specified type of OASDI benefit. Awards can represent not only

new entrants to the benefit rolls but also persons already on the rolls who

become entitled to a different type of benefit. Awards usually result in the

immediate payment of benefits, although payments may be deferred or withheld depending on the individual’s particular circumstances.

Baby boom. The period from the end of World War II (1946) through 1965

marked by unusually high birth rates.

Bend points. The dollar amounts defining the AIME or PIA brackets in the

benefit formulas. For the bend points for years 1979 and later, see table V.C2.

Beneficiary. A person who has been awarded benefits on the basis of his or

her own or another’s earnings record. The benefits may be either in currentpayment status or withheld.

Benefit award. See “Award.”
229

Glossary

Benefit payments. The amounts disbursed for OASI and DI benefits by the

Department of the Treasury.

Benefit termination. See “Termination.”

Best estimate assumptions. See “Assumptions.”

Board. See “Board of Trustees.”

Board of Trustees. A Board established by the Social Security Act to oversee the financial operations of the Federal Old-Age and Survivors Insurance

Trust Fund and the Federal Disability Insurance Trust Fund. The Board is

composed of six members. Four members serve by virtue of their positions

in the Federal Government: the Secretary of the Treasury, who is the Managing Trustee; the Secretary of Labor; the Secretary of Health and Human Services; and the Commissioner of Social Security. The President appoints and

the Senate confirms the other two members to serve as public representatives. Also referred to as the “Board” or the “Trustees.”

Cash flow. Actual or projected revenue and costs reflecting the levels of

payroll tax contribution rates and benefits scheduled in the law. Net cash

flow is the difference between non-interest income and cost.

Consumer Price Index—CPI. An official measure of inflation in consumer

prices. In this report, CPI refers to the Consumer Price Index for Urban Wage

Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics,

Department of Labor, publishes historical values for the CPI-W.

Contribution and benefit base. Annual dollar amount above which earnings in employment covered under the OASDI program are neither taxable

nor creditable for benefit-computation purposes. (Also referred to as maximum contribution and benefit base, annual creditable maximum, taxable

maximum, and maximum taxable.) See tables V.C1 and V.C6. See “HI contribution base.”

Contributions. See “Payroll tax contributions.”

Cost. The cost for a year includes scheduled benefits, administrative

expenses, financial interchange with the Railroad Retirement program, and

payments for vocational rehabilitation services for disabled beneficiaries.

Cost-of-living adjustment. See “Automatic cost-of-living benefit increase.”

Cost rate. The cost rate for a year is the ratio of the cost of the program to

the taxable payroll for the year.

Covered earnings. Earnings in employment covered by the OASDI program.

Covered employment. All employment for which earnings are creditable

for Social Security purposes. The program covers almost all employment.

Some exceptions are:
Appendices

230

 • State and local government employees whose employer has not elected

to be covered under Social Security and who are participating in an

employer-provided pension plan.

 • Current Federal civilian workers hired before 1984 who have not

elected to be covered.

 • Self-employed workers earning less than $400 in a calendar year.

Covered worker. A person who has earnings creditable for Social Security

purposes based on services for wages in covered employment or income

from covered self-employment.

CPI-indexed dollars. Amounts adjusted by the CPI to the value of the dollar

in a particular year.

Creditable earnings. Wages or self-employment earnings posted to a

worker’s earnings record. Such earnings determine eligibility for benefits

and the amount of benefits on that worker’s record. The contribution and

benefit base is the maximum amount of creditable earnings for each worker

in a calendar year.

Current-cost financing. See “Pay-as-you-go financing.”

Current dollars. Amounts expressed in nominal dollars with no adjustment

for inflation.

Currently insured status. A worker acquires currently insured status when

he or she has accumulated six quarters of coverage during the 13-quarter

period ending with the current quarter.

Current-payment status. Status of a beneficiary to whom a benefit is being

paid for a given month (with or without deductions, provided the deductions

add to less than a full month’s benefit).

Deemed wage credit. See “Military service wage credits.”

Delayed retirement credits. Increases in the benefit amount for certain individuals who did not receive benefits for months after attaining normal retirement age but before age 70. Delayed retirement credits apply to benefits for

January of the year following the year they are earned or for the month of

attainment of age 70, whichever comes first. See table V.C3.

Demographic assumptions. See “Assumptions.”

Disability. For Social Security purposes, the inability to engage in substantial gainful activity (see “Substantial gainful activity—SGA”) by reason of

any medically determinable physical or mental impairment that can be

expected to result in death or to last for a continuous period of not less than

12 months. Special rules apply for workers at ages 55 and over whose disability is based on blindness.

The law generally requires that a person be disabled continuously for

5 months before he or she can qualify for a disabled-worker benefit.
231

Glossary

Disability conversion ratio. For a given year, the ratio of the number of disability conversions to the average number of disabled-worker beneficiaries at

all ages during the year.

Disability conversion. Upon attainment of normal retirement age, a disabled-worker beneficiary is automatically converted to retired-worker status.

Disability incidence rate. The proportion of workers in a given year,

insured for but not receiving disability benefits, who apply for and are

awarded disability benefits.

Disability Insurance (DI) Trust Fund. See “Trust fund.”

Disability insured status. A worker acquires disability insured status if he

or she is: (1) a fully insured worker who has accumulated 20 quarters of coverage during the 40-quarter period ending with the current quarter, (2) a fully

insured worker aged 24-30 who has accumulated quarters of coverage during

one-half of the quarters elapsed after the quarter of attainment of age 21 and

up to and including the current quarter, or (3) a fully insured worker under

age 24 who has accumulated six quarters of coverage during the 12-quarter

period ending with the current quarter.

Disability prevalence rate. The proportion of persons insured for disability

benefits who are disabled-worker beneficiaries in current-payment status.

Disability termination rate. The proportion of disabled-worker beneficiaries in a given year whose disability benefits terminate as a result of their

recovery or death.

Disabled-worker benefit. A monthly benefit payable to a disabled worker

under normal retirement age and insured for disability. Before

November 1960, disability benefits were limited to disabled workers aged

50-64.

Disbursements. Actual expenditures (outgo) made or expected to be made

under current law, including benefits paid or payable, administrative

expenses, financial interchange with the Railroad Retirement program, and

payments for vocational rehabilitation services for disabled beneficiaries.

Earnings. Unless otherwise qualified, all wages from employment and net

earnings from self-employment, whether or not they are taxable or covered.

Earnings test. The provision requiring the withholding of benefits if beneficiaries under normal retirement age have earnings in excess of certain

exempt amounts. See table V.C1.

Economic assumptions. See “Assumptions.”

Effective interest rate. See “Interest rate.”

Excess wages. Wages in excess of the contribution and benefit base on

which a worker initially makes payroll tax contributions, usually as a result

of working for more than one employer during a year. Employee payroll
Appendices

232

taxes on excess wages are refundable to affected employees, while the

employer taxes are not refundable.

Expenditures. See “Disbursements.”

Federal Insurance Contributions Act—FICA. Provision authorizing payroll taxes on the wages of employed persons to provide for Old-Age, Survivors, and Disability Insurance, and for Hospital Insurance. Workers and their

employers generally pay the tax in equal amounts.

Financial interchange. Provisions of the Railroad Retirement Act providing

for transfers between the trust funds and the Social Security Equivalent Benefit Account of the Railroad Retirement program in order to place each trust

fund in the same financial position it would have been had railroad employment always been covered under Social Security.

Fiscal year. The accounting year of the United States Government. A fiscal

year is the 12-month period ending September 30. For example, fiscal year

2015 began October 1, 2014, and will end September 30, 2015.

Full advance funding. A financing method in which contributions are established to match the full cost of future benefits as these costs are incurred

through current service. Such financing methods also provide for amortization over a fixed period of any financial obligation that is incurred at the

beginning of the program (or subsequent modification) as a result of granting

credit for past service.

Fully insured status. A worker acquires fully insured status when his or her

total number of quarters of coverage is greater than or equal to the number of

years elapsed after the year of attainment of age 21 (but not less than six).

Once a worker has accumulated 40 quarters of coverage, he or she remains

permanently fully insured.

General Fund of the Treasury. Funds held by the Treasury of the United

States, other than receipts collected for a specific purpose (such as Social

Security), and maintained in a separate account for that purpose.

General fund reimbursements. Payments from the General Fund of the

Treasury to the trust funds for specific purposes defined in the law, including:

 • The cost of noncontributory wage credits for military service before

1957, and periodic adjustments of previous determinations.

 • The cost in 1971-82 of deemed wage credits for military service performed after 1956.

 • The cost of benefits to certain uninsured persons who attained age 72

before 1968.

 • The cost of payroll tax credits provided to employees in 1984 and selfemployed persons in 1984-89 by Public Law 98-21.
233

Glossary

 • The cost in 2009-17 of excluding certain self-employment earnings

from SECA taxes under Public Law 110-246.

 • Payroll tax revenue forgone under the provisions of Public Laws 111-

147, 111-312, 112-78, and 112-96.

The general fund also reimburses the trust funds for various other items,

including interest on checks which are not negotiated 6 months after the

month of issue and costs incurred in performing certain legislatively mandated activities not directly related to administering the OASI and DI programs.

Gross domestic product—GDP. The total dollar value of all goods and services produced by labor and property located in the United States, regardless

of who supplies the labor or property.

HI contribution base. Annual dollar amount above which earnings in

employment covered under the HI program are not taxable. (Also referred to

as maximum contribution base, taxable maximum, and maximum taxable.)

Beginning in 1994, the HI contribution base was eliminated.

High-cost assumptions. See “Assumptions.”

Hospital Insurance (HI) Trust Fund. See “Trust fund.”

Immigration. See “Legal immigration” and “Other immigration.”

Income. Income for a given year is the sum of tax revenue on a cash basis

(payroll tax contributions and income from the taxation of scheduled benefits), reimbursements from the General Fund of the Treasury, if any, and

interest credited to the trust funds.

Income rate. Ratio of non-interest income to the OASDI taxable payroll for

the year.

Infinite horizon. The period extending into the indefinite future.

Inflation. An increase in the general price level of goods and services.

Insured status. The state or condition of having sufficient quarters of coverage to meet the eligibility requirements for retired-worker or disabled-worker

benefits, or to permit the worker’s spouse and children or survivors to establish eligibility for benefits in the event of his or her disability, retirement, or

death. See “Quarters of coverage.”

Interest. A payment in exchange for the use of money during a specified

period.

Interest rate. Interest rates on new public-debt obligations issuable to Federal trust funds (see “Special public-debt obligation”) are determined

monthly. Such rates are equal to the average market yield on all outstanding

marketable U.S. securities not due or callable until after 4 years from the date

the rate is determined. See table V.B2 for historical and assumed future interest rates on new special-issue securities. The effective interest rate for a trust

fund is the ratio of the interest earned by the fund over a given period of time
Appendices

234

to the average level of asset reserves held by the fund during the period. The

effective rate of interest thus represents a measure of the overall average

interest earnings on the fund’s portfolio of investments.

Interfund borrowing. The borrowing of asset reserves by a trust fund

(OASI, DI, or HI) from another trust fund when the first fund is in danger of

depletion. The Social Security Act permitted interfund borrowing only

during 1982 through 1987, and required all amounts borrowed to be repaid

prior to the end of 1989. The only exercise of this authority occurred in 1982,

when the OASI Trust Fund borrowed from the DI and HI Trust Funds. The

final repayment of borrowed amounts occurred in 1986.

Intermediate assumptions. See “Assumptions.”

Legal emigration. Legal emigration for a given year consists of those legal

permanent residents and native-born citizens who leave the Social Security

area during the year.

Legal immigration. Consistent with the definition used by the Department

of Homeland Security, legal immigration for a given year consists of foreignborn individuals who are granted legal permanent resident status during the

year.

Life expectancy. Average remaining number of years expected prior to

death. Period life expectancy is calculated for a given year using the actual or

expected death rates at each age for that year. Cohort life expectancy, sometimes referred to as generational life expectancy, is calculated for individuals

at a specific age in a given year using actual or expected death rates from the

years in which the individuals would actually reach each succeeding age if

they survive.

Long range. The next 75 years. The Trustees make long-range actuarial estimates for this period because it is approximately the maximum remaining

lifetime of current Social Security participants.

Low-cost assumptions. See “Assumptions.”

Lump-sum death payment. A lump sum, generally $255, payable on the

death of a fully or currently insured worker. The lump sum is payable to the

surviving spouse of the worker, under most circumstances, or to the worker’s

children.

Maximum family benefit. The maximum monthly amount that can be paid

on a worker’s earnings record. Whenever the total of the individual monthly

benefits payable to all the beneficiaries entitled on one earnings record

exceeds the maximum, each dependent’s or survivor’s benefit is proportionately reduced. Benefits payable to divorced spouses or surviving divorced

spouses are not reduced under the family maximum provision.

Medicare. A nationwide, Federally administered health insurance program

authorized in 1965 under Title XVIII of the Social Security Act to cover the
235

Glossary

cost of hospitalization, medical care, and some related services for most people age 65 and over. In 1972, lawmakers extended coverage to people receiving Social Security Disability Insurance payments for 2 years and people

with End-Stage Renal Disease. (For beneficiaries whose primary or secondary diagnosis is Amyotrophic Lateral Sclerosis, the 2-year waiting period is

waived.) In 2010, people exposed to environmental health hazards within

areas under a corresponding emergency declaration became Medicare-eligible. In 2006, prescription drug coverage was added as well. Medicare consists of two separate but coordinated trust funds—Hospital Insurance (HI,

Part A) and Supplementary Medical Insurance (SMI). The SMI trust fund is

composed of two separate accounts—the Part B account and the Part D

account. Almost all persons who are aged 65 and over or disabled and who

are entitled to HI are eligible to enroll in Part B and Part D on a voluntary

basis by paying monthly premiums.

Military service wage credits. Credits toward OASDI earnings records for

benefit computation purposes, recognizing that military personnel receive

non-wage compensation (such as food and shelter) in addition to their basic

pay and other cash payments. Military personnel do not pay payroll taxes on

these credits. Noncontributory wage credits of $160 were provided for each

month of active military service from September 16, 1940, through December 31, 1956. For years after 1956, the basic pay of military personnel is covered under the Social Security program on a contributory basis. In addition to

the contributory credits for basic pay, noncontributory wage credits of $300

were granted for each calendar quarter, from January 1957 through December 1977, in which a person received pay for military service. Noncontributory wage credits of $100 were granted for each $300 of military wages, up

to a maximum credit of $1,200 per calendar year, from January 1978 through

December 2001.

National average wage index—AWI. See “Average wage index—AWI.”

Non-interest income. Non-interest income for a given year is the sum of tax

revenue on a cash basis (payroll tax contributions and income from the taxation of scheduled benefits) and reimbursements from the General Fund of the

Treasury, if any.

Normal retirement age—NRA. The age at which a person may first

become entitled to retirement benefits without reduction based on age. For

persons reaching age 62 before 2000, the normal retirement age is 65. It will

increase gradually to 67 for persons reaching that age in 2027 or later, beginning with an increase to 65 years and 2 months for persons reaching age 65

in 2003. See table V.C3.

Old-Age and Survivors Insurance (OASI) Trust Fund. See “Trust fund.”

Old-law base. Amount the contribution and benefit base would have been if

the 1977 amendments had not provided for ad hoc increases. The Social
Appendices

236

Security Amendments of 1972 provided for automatic annual indexing of the

contribution and benefit base. The Social Security Amendments of 1977

specified ad hoc bases for 1978-81, with subsequent bases updated in accordance with the normal indexing procedure. See table V.C2.

Open group unfunded obligation. See “Unfunded obligation.”

Other emigration. Other emigration for a given year consists of individuals

from the other-immigrant population who leave the Social Security area

during the year or who adjust status to become legal permanent residents

during the year.

Other immigration. Other immigration for a given year consists of individuals who enter the Social Security area and stay 6 months or more but without legal permanent resident status, such as undocumented immigrants and

temporary workers and students.

Outgo. See “Disbursements.”

Par value. The value printed on the face of a bond. For both public and special issues held by the trust funds, par value is also the redemption value at

maturity.

Partial advance funding. A financing method in which contributions are

established to provide a substantial accumulation of trust fund asset reserves,

thereby generating additional interest income to the trust funds and reducing

the need for payroll tax increases in periods when costs are relatively high.

Higher general contributions or additional borrowing may be required, however, to support the payment of such interest. While substantial, the trust

fund buildup under partial advance funding is much smaller than it would be

with full advance funding.

Pay-as-you-go financing. A financing method in which contributions are

established to produce just as much income as required to pay current benefits, with trust fund asset reserves built up only to the extent needed to prevent depletion of the fund by random economic fluctuations.

Payment cycling. Beneficiaries who applied for benefits before

May 1, 1997, are paid on the third of the month. Persons applying for

OASDI benefits after April 1997 generally are paid on the second, third, or

fourth Wednesday of the month following the month for which payment is

due. The particular Wednesday payment date is based on the earner’s date of

birth. For those born on the first through tenth, the benefit payment day is the

second Wednesday of the month; for those born on the eleventh through the

twentieth, the benefit payment day is the third Wednesday of the month; and

for those born after the twentieth of the month, the payment day is the fourth

Wednesday of the month.
237

Glossary

Payroll tax contributions. The amount based on a percent of earnings, up to

an annual maximum, that must be paid by:

 • employers and employees on wages from employment under the Federal Insurance Contributions Act,

 • the self-employed on net earnings from self-employment under the

Self-Employment Contributions Act, and

 • States on the wages of State and local government employees covered

under the Social Security Act through voluntary agreements under section 218 of the act. 

Also referred to as payroll taxes.

Population in the Social Security area. See “Social Security area population.”

Present value. The equivalent value, at the present time, of a stream of values (either income or cost, past or future). Present values are used widely in

calculations involving financial transactions over long periods of time to

account for the time value of money, by discounting or accumulating these

transactions at the rate of interest. Present-value calculations for this report

use the effective yield on trust fund asset reserves.

Primary insurance amount—PIA. The monthly amount payable to a

retired worker who begins to receive benefits at normal retirement age or,

generally, to a disabled worker. This amount, which is typically related to the

worker’s average monthly wage or average indexed monthly earnings, is also

used as a base for computing all types of benefits payable on an individual’s

earnings record.

Primary-insurance-amount formula. The mathematical formula relating

the PIA to the AIME for workers who attain age 62, become disabled, or die

after 1978. The PIA is equal to the sum of 90 percent of AIME up to the first

bend point, plus 32 percent of AIME above the first bend point up to the second bend point, plus 15 percent of AIME in excess of the second bend point.

Automatic benefit increases are applied beginning with the year of eligibility.

See table V.C2 for historical and assumed future bend points and table V.C1

for historical and assumed future benefit increases.

Quarters of coverage. Basic unit of measurement for determining insured

status. In 2015, a worker receives one quarter of coverage (up to a total of

four) for each $1,220 of annual covered earnings. For years after 1978, the

amount of earnings required for a quarter of coverage is subject to annual

automatic increases in proportion to increases in average wages. See

table V.C2. 

Railroad retirement. A Federal insurance program, similar to Social Security, designed for workers in the railroad industry. The provisions of the Railroad Retirement Act provide for a system of coordination and financial
Appendices

238

interchange between the Railroad Retirement program and the Social Security program.

Reallocation of payroll tax rates. An increase in the payroll tax rate for

either the OASI or DI Trust Fund, with a corresponding reduction in the rate

for the other fund, so that the total OASDI payroll tax rate is not changed. 

Real-wage differential. The difference between the percentage increases in:

(1) the average annual wage in covered employment and (2) the average

annual Consumer Price Index. See table V.B1.

Recession. A period of adverse economic conditions; in particular, two or

more successive calendar quarters of negative growth in gross domestic

product.

Reserves. See “Asset reserves.”

Retired-worker benefit. A monthly benefit payable to a fully insured retired

worker aged 62 or older or to a person entitled under the transitionally

insured status provision in the law.

Retirement earnings test. See “Earnings test.”

Retirement eligibility age. The age, currently age 62, at which a fully

insured individual first becomes eligible to receive retired-worker benefits.

Retirement test. See “Earnings test.”

Scheduled benefits. The level of benefits specified under current law.

Scenario-based model. A model with specified assumptions for and relationships among variables. Under such a model, any specified set of assumptions determines a single outcome directly reflecting the specifications.

Self-employment. Operation of a trade or business by an individual or by a

partnership in which an individual is a member.

Self-Employment Contributions Act–SECA. Provision authorizing Social

Security payroll taxes on the net earnings of most self-employed persons.

Short range. The next 10 years. The Trustees prepare short-range actuarial

estimates for this period because of the short-range test of financial adequacy. The Social Security Act requires estimates for 5 years; the Trustees

prepare estimates for an additional 5 years to help clarify trends which are

only starting to develop in the mandated first 5-year period. 

Social Security Act. Provisions of the law governing most operations of the

Social Security program. The original Social Security Act is Public Law 74-

271, enacted August 14, 1935. With subsequent amendments, the Social

Security Act consists of 21 titles, of which three have been repealed. Title II

of the Social Security Act authorized the Old-Age, Survivors, and Disability

Insurance program.
239

Glossary

Social Security area population. The population comprised of: (1) residents

of the 50 States and the District of Columbia (adjusted for net census undercount); (2) civilian residents of Puerto Rico, the Virgin Islands, Guam,

American Samoa and the Northern Mariana Islands; (3) Federal civilian

employees and persons in the U.S. Armed Forces abroad and their dependents; (4) non-citizens living abroad who are insured for Social Security benefits; and (5) all other U.S. citizens abroad.

Solvency. A program is solvent at a point in time if it is able to pay scheduled benefits when due with scheduled financing. For example, the OASDI

program is solvent over any period for which the trust funds maintain a positive level of asset reserves.

Special public-debt obligation. Securities of the United States Government

issued exclusively to the OASI, DI, HI, and SMI Trust Funds and other Federal trust funds. Section 201(d) of the Social Security Act provides that the

public-debt obligations issued for purchase by the OASI and DI Trust Funds

shall have maturities fixed with due regard for the needs of the funds. The

usual practice has been to spread the holdings of special issues, as of each

June 30, so that the amounts maturing in each of the next 15 years are

approximately equal. Special public-debt obligations are redeemable at par

value at any time and carry interest rates determined by law (see “Interest

rate”). See tables VI.A4 and VI.A5 for a listing of the obligations held by the

OASI and DI Trust Funds, respectively.

Statutory blindness. Central visual acuity of 20/200 or less in the better eye

with the use of a correcting lens or tunnel vision of 20 degrees or less.

Stochastic model. A model used for projecting a probability distribution of

potential outcomes. Such models allow for random variation in one or more

variables through time. The random variation is generally based on fluctuations observed in historical data for a selected period. A large number of simulations, each of which reflects random variation in the variable(s), produce

a distribution of potential outcomes.

Substantial gainful activity—SGA. The level of work activity used to

establish disability. A finding of disability requires that a person be unable to

engage in substantial gainful activity. A person who earns more than a certain monthly amount (net of impairment-related work expenses) is ordinarily

considered to be engaging in SGA. The amount of monthly earnings considered as SGA depends on the nature of a person’s disability. The Social Security Act specifies a higher SGA amount for statutorily blind individuals;

Federal regulations specify a lower SGA amount for non-blind individuals.

Both SGA amounts increase with increases in the national average wage

index.

Summarized balance. The difference between the summarized cost rate and

the summarized income rate, expressed as a percentage of taxable payroll.
Appendices

240

Summarized cost rate. The ratio of the present value of cost to the present

value of the taxable payroll for the years in a given period, expressed as a

percentage. To evaluate the financial adequacy of the program, the summarized cost rate is adjusted to include the cost of reaching and maintaining a

target trust fund level. A trust fund level of about 1 year’s cost is considered

to be an adequate reserve for unforeseen contingencies; therefore, the targeted trust fund ratio is 100 percent of annual cost. Accordingly, the adjusted

summarized cost rate is equal to the ratio of: (1) the sum of the present value

of the cost during the period plus the present value of the targeted ending

trust fund level to (2) the present value of the taxable payroll during the projection period.

Summarized income rate. The ratio of the present value of scheduled noninterest income to the present value of taxable payroll for the years in a given

period, expressed as a percentage. To evaluate the financial adequacy of the

program, the summarized income rate is adjusted to include asset reserves on

hand at the beginning of the period. Accordingly, the adjusted summarized

income rate equals the ratio of: (1) the sum of the trust fund reserve at the

beginning of the period plus the present value of non-interest income during

the period to (2) the present value of the taxable payroll for the years in the

period.

Supplemental Security Income—SSI. A Federally administered program

(often with State supplementation) of cash assistance for needy aged, blind,

or disabled persons. The General Fund of the Treasury funds SSI and the

Social Security Administration administers it.

Supplementary Medical Insurance (SMI) Trust Fund. See “Trust fund.”

Survivor benefit. Benefit payable to a survivor of a deceased worker.

Sustainable solvency. Sustainable solvency for the financing of the program

under a specified set of assumptions has been achieved when the projected

trust fund ratio is positive throughout the 75-year projection period and is

either stable or rising at the end of the period.

Taxable earnings. Wages or self-employment income, in employment covered by the OASDI or HI programs, that is under the applicable annual maximum taxable limit. For 1994 and later, no maximum taxable limit applies to

the HI program.

Taxable payroll. A weighted sum of taxable wages and taxable self-employment income. When multiplied by the combined employee-employer payroll

tax rate, taxable payroll yields the total amount of payroll taxes incurred by

employees, employers, and the self-employed for work during the period.

Taxable self-employment income. The maximum amount of net earnings

from self-employment by an earner which, when added to any taxable
241

Glossary

wages, does not exceed the contribution and benefit base. For HI beginning

in 1994, all net earnings from self-employment.

Taxable wages. See “Taxable earnings.”

Taxation of benefits. Beginning in 1984, Federal law subjected up to 50 percent of an individual’s or a couple’s OASDI benefits to Federal income taxation under certain circumstances. Treasury allocates the revenue derived

from this provision to the OASI and DI Trust Funds on the basis of the

income taxes paid on the benefits from each fund. Beginning in 1994, the

law increased the maximum percentage from 50 percent to 85 percent. The

HI Trust Fund receives the additional tax revenue resulting from the increase

to 85 percent.

Taxes. See “Payroll tax contributions” and “Taxation of benefits.”

Termination. Cessation of payment because the beneficiary is no longer

entitled to receive a specific type of benefit. For example, benefits might terminate as a result of the death of the beneficiary, the recovery of a disabled

beneficiary, or the attainment of age 18 by a child beneficiary. In some cases,

the individual may become immediately entitled to another type of benefit,

such as the conversion of a disabled-worker beneficiary at normal retirement

age to a retired-worker beneficiary.

Test of long-range close actuarial balance. The conditions required to

meet this test are: 

 • The trust fund satisfies the short-range test of financial adequacy; 

 • The trust fund ratios stay above zero throughout the 75-year projection

period, such that benefits would be payable in a timely manner throughout the period. 

The Trustees apply the test to OASI, DI, and the combined OASDI program

based on the intermediate set of assumptions.

Test of short-range financial adequacy. The conditions required to meet

this test are:

 • If the trust fund ratio for a fund is at least 100 percent at the beginning

of the projection period, the test requires that it remain at or above

100 percent throughout the 10-year projection period;

 • If the ratio is initially less than 100 percent, then it must reach at least

100 percent within 5 years (without asset reserve depletion at any time

during this period) and then remain at or above 100 percent throughout

the remainder of the 10-year period. 

The Trustees apply the test to OASI, DI, and the combined OASDI program

based on the intermediate set of assumptions.

Total-economy productivity. The ratio of real GDP to hours worked by all

workers. Also referred to as “labor productivity.”
Appendices

242

Total fertility rate. The average number of children that would be born to a

woman in her lifetime if she were to experience the birth rates by age

observed in, or assumed for, a specified year, and if she were to survive the

entire childbearing period.

Trust fund. Separate accounts in the United States Treasury which hold the

payroll taxes received under the Federal Insurance Contributions Act and the

Self-Employment Contributions Act; payroll taxes resulting from coverage

of State and local government employees; any sums received under the

financial interchange with the railroad retirement account; voluntary hospital

and medical insurance premiums; and reimbursements or payments from the

General Fund of the Treasury. As required by law, the Department of the

Treasury invests funds not required to meet current expenditures in interestbearing securities backed by the full faith and credit of the U.S. Government.

The interest earned is also deposited in the trust funds.

 • Old-Age and Survivors Insurance (OASI). The trust fund used for

paying monthly benefits to retired-worker (old-age) beneficiaries, their

spouses and children, and to survivors of deceased insured workers.

 • Disability Insurance (DI). The trust fund used for paying monthly benefits to disabled-worker beneficiaries, their spouses and children, and

for providing rehabilitation services to the disabled.

 • Hospital Insurance (HI). The trust fund used for paying part of the

costs of inpatient hospital services and related care for aged and disabled individuals who meet the eligibility requirements. Also known as

Medicare Part A.

 • Supplementary Medical Insurance (SMI). The Medicare trust fund

composed of the Part B Account, the Part D Account, and the Transitional Assistance Account. The Part B Account pays for a portion of the

costs of physicians’ services, outpatient hospital services, and other

related medical and health services for voluntarily enrolled aged and

disabled individuals. The Part D Account pays private plans to provide

prescription drug coverage, beginning in 2006. The Transitional Assistance Account paid for transitional assistance under the prescription

drug card program in 2004 and 2005.

The trust funds are distinct legal entities which operate independently. Fund

operations are sometimes combined on a theoretical basis.

Trust fund ratio. A measure of trust fund adequacy. The asset reserves at

the beginning of a year, which do not include advance tax transfers,

expressed as a percentage of the cost for the year. The trust fund ratio represents the proportion of a year’s cost which could be paid solely with the

reserves at the beginning of the year.

Trustees. See “Board of Trustees.”
243

Glossary

Unfunded obligation. A measure of the shortfall of trust fund income to

fully cover program cost through a specified date after depletion of trust fund

asset reserves. This measure is computed as the excess of the present value

of the projected cost of the program through a specified date over the sum of:

(1) the value of trust fund reserves at the beginning of the valuation period;

and (2) the present value of the projected non-interest income of the program

through a specified date, assuming scheduled tax rates and benefit levels.

This measure can apply for all participants through a specified date, i.e., the

open group, or be limited to a specified subgroup of participants.

Unfunded obligation ratio. The unfunded obligation at the beginning of a

year expressed as a percentage of the present value of the cost for the year.

Unnegotiated check. A check which has not been cashed 6 months after the

end of the month in which the check was issued. When a check has been outstanding for a year, the Department of the Treasury administratively cancels

the check and reimburses the issuing trust fund separately for the amount of

the check and interest for the period the check was outstanding. The appropriate trust fund also receives an interest adjustment for the time the check

was outstanding if it is cashed 6-12 months after the month of issue. If a

check is presented for payment after it has been administratively cancelled, a

replacement check is issued.

Valuation period. A period of years which is considered as a unit for purposes of calculating the financial status of a trust fund.

Vocational rehabilitation. Services provided to disabled persons to help

them to return to gainful employment. The trust funds reimburse the providers of such services only in those cases where the services contributed to the

successful rehabilitation of the beneficiaries.

Year of depletion. The year in which a trust fund becomes unable to pay

benefits when due because the fund’s asset reserves have been used up.
List of Tables

244

LIST OF TABLES

II. OVERVIEW

II.B1 Summary of 2014 Trust Fund Financial Operations . . . . . . . . 7

II.B2 Payroll Tax Contribution Rates for 2014 . . . . . . . . . . . . . . . . 8

II.C1 Long-Range Values of Key Assumptions for the 

75-year Projection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

II.D1 Projected Maximum Trust Fund Ratios During the Long-Range 

Period and Trust Fund Reserve Depletion Dates. . . . . . . . . . . 16

II.D2 Reasons for Change in the 75-Year Actuarial Balance,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 22

III. FINANCIAL OPERATIONS OF THE TRUST FUNDS AND

LEGISLATIVE CHANGES IN THE LAST YEAR

III.A1 Operations of the OASI Trust Fund, Calendar Year 2014 . . . . 29

III.A2 Operations of the DI Trust Fund, Calendar Year 2014 . . . . . . . 33

III.A3 Operations of the Combined OASI and DI Trust Funds, 

Calendar Year 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

III.A4 Comparison of Actual Calendar Year 2014 Trust Fund 

Operations With Estimates Made in Prior Reports, Based on 

Intermediate Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 36

III.A5 Distribution of Benefit Payments by Type of Beneficiary or 

Payment, Calendar Years 2013 and 2014 . . . . . . . . . . . . . . . . 37

III.A6 Administrative Expenses as a Percentage of Non-interest Income 

and of Total Expenditures, Calendar Years 2010-14 . . . . . . . . 38

III.A7 Trust Fund Investment Transactions, Calendar Year 2014 . . . . 38

IV. ACTUARIAL ESTIMATES

IV.A1 Operations of the OASI Trust Fund, 

Calendar Years 2010-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

IV.A2 Operations of the DI Trust Fund, Calendar Years 2010-24. . . . 45

IV.A3 Operations of the Combined OASI and DI Trust Funds,

Calendar Years 2010-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

IV.A4 Reasons for Change in Trust Fund (Unfunded Obligation) Ratios 

at the Beginning of the Tenth Year of Projection Under 

Intermediate Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 50

IV.B1 Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 54

IV.B2 Components of Annual Income Rates, 

Calendar Years 1990-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 58
List of Tables

245

IV.B3 Covered Workers and Beneficiaries, 

Calendar Years 1945-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 61

IV.B4 Trust Fund Ratios, Calendar Years 2015-90 . . . . . . . . . . . . . . 66

IV.B5 Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2015-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

IV.B6 Components of 75-Year Actuarial Balance

Under Intermediate Assumptions . . . . . . . . . . . . . . . . . . . . . 72

IV.B7 Reasons for Change in the 75-Year Actuarial Balance,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 74

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES

V.A1 Principal Demographic Assumptions, 

Calendar Years 1940-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 89

V.A2 Social Security Area Population on July 1 and 

Dependency Ratios, Calendar Years 1945-2090 . . . . . . . . . . 92

V.A3 Period Life Expectancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

V.A4 Cohort Life Expectancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

V.B1 Principal Economic Assumptions . . . . . . . . . . . . . . . . . . . . . 104

V.B2 Additional Economic Factors . . . . . . . . . . . . . . . . . . . . . . . . 110

V.C1 Cost-of-Living Benefit Increases, Average Wage Index, 

Contribution and Benefit Bases, and Retirement 

Earnings Test Exempt Amounts, 1975-2024 . . . . . . . . . . . . . 115

V.C2 Values for Selected Wage-Indexed Program Parameters, 

Calendar Years 1978-2024 . . . . . . . . . . . . . . . . . . . . . . . . . . 119

V.C3 Legislated Changes in Normal Retirement Age and Delayed 

Retirement Credits for Persons Reaching Age 62 in 

Each Year 1986 and Later. . . . . . . . . . . . . . . . . . . . . . . . . . . 121

V.C4 OASI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1945-2090 . . . . . . . . . . . . . . . . 129

V.C5 DI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1960-2090 . . . . . . . . . . . . . . . . 137

V.C6 Contribution and Benefit Base and 

Payroll Tax Contribution Rates . . . . . . . . . . . . . . . . . . . . . . 144

V.C7 Annual Scheduled Benefit Amounts for Retired Workers 

With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, 

Calendar Years 2015-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
List of Tables

246

VI. APPENDICES

A. HISTORY OF OASI AND DI TRUST FUND OPERATIONS

VI.A1 Operations of the OASI Trust Fund, 

Calendar Years 1937-2014 . . . . . . . . . . . . . . . . . . . . . . . . . . 154

VI.A2 Operations of the DI Trust Fund, Calendar Years 1957-2014 . . 156

VI.A3 Operations of the Combined OASI and DI Trust Funds,

Calendar Years 1957-2014 . . . . . . . . . . . . . . . . . . . . . . . . . . 158

VI.A4 OASI Trust Fund Asset Reserves, End of 

Calendar Years 2013 and 2014 . . . . . . . . . . . . . . . . . . . . . . . 160

VI.A5 DI Trust Fund Asset Reserves, End of 

Calendar Years 2013 and 2014 . . . . . . . . . . . . . . . . . . . . . . . 161

B. HISTORY OF ACTUARIAL STATUS ESTIMATES

VI.B1 Long-Range OASDI Actuarial Balances and 

Trust Fund Reserve Depletion Dates as Shown in the 

Trustees Reports for 1982-2015 . . . . . . . . . . . . . . . . . . . . . . 164

C. FISCAL YEAR HISTORICAL AND PROJECTED 

TRUST FUND OPERATIONS THROUGH 2024

VI.C1 Operations of the OASI Trust Fund, Fiscal Year 2014. . . . . . . 169

VI.C2 Operations of the DI Trust Fund, Fiscal Year 2014 . . . . . . . . . 170

VI.C3 Operations of the Combined OASI and DI Trust Funds, 

Fiscal Year 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

VI.C4 Operations of the OASI Trust Fund, Fiscal Years 2010-24 . . . 172

VI.C5 Operations of the DI Trust Fund, Fiscal Years 2010-24 . . . . . . 173

VI.C6 Operations of the Combined OASI and DI Trust Funds,

Fiscal Years 2010-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

D. LONG-RANGE SENSITIVITY ANALYSIS

VI.D1 Sensitivity of OASDI Measures to Varying 

Fertility Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

VI.D2 Sensitivity of OASDI Measures to Varying 

Death-Rate Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

VI.D3 Sensitivity of OASDI Measures to Varying 

Net-Immigration Assumptions . . . . . . . . . . . . . . . . . . . . . . . 178

VI.D4 Sensitivity of OASDI Measures to Varying 

Real-Wage Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

VI.D5 Sensitivity of OASDI Measures to Varying 

CPI-Increase Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 181

VI.D6 Sensitivity of OASDI Measures to Varying 

Real-Interest Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 182
List of Tables

247

VI.D7 Sensitivity of OASDI Measures to Varying 

Disability Incidence Assumptions . . . . . . . . . . . . . . . . . . . . . 183

VI.D8 Sensitivity of OASDI Measures to Varying 

Disability Termination Assumptions . . . . . . . . . . . . . . . . . . . 184

E. STOCHASTIC PROJECTIONS AND UNCERTAINTY

VI.E1 Long-Range Estimates Relating to the Actuarial Status of

the Combined OASDI Program. . . . . . . . . . . . . . . . . . . . . . . 195

F. INFINITE HORIZON PROJECTIONS

VI.F1 Unfunded OASDI Obligations Through the Infinite Horizon,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 197

VI.F2 Present Values of OASDI Cost Less Non-interest Income

and Unfunded Obligations for Program Participants,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 199

G. ESTIMATES FOR OASDI AND HI, 

SEPARATE AND COMBINED

VI.G1 Payroll Tax Contribution Rates for the OASDI and 

HI Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

VI.G2 OASDI and HI Annual Income Rates, Cost Rates, and 

Balances, Calendar Years 2015-90 . . . . . . . . . . . . . . . . . . . . 203

VI.G3 Summarized OASDI and HI Income Rates and Cost Rates 

for Valuation Periods, Calendar Years 2015-89 . . . . . . . . . . . 205

VI.G4 OASDI and HI Annual and Summarized Income, Cost, and 

Balance as a Percentage of GDP, Calendar Years 2015-90 . . . 208

VI.G5 Ratio of OASDI Taxable Payroll to GDP, 

Calendar Years 2015-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

VI.G6 Selected Economic Variables, Calendar Years 2014-90 . . . . . . 213

VI.G7 Operations of the Combined OASI and DI Trust Funds,

in CPI-indexed 2015 Dollars, Calendar Years 2015-90 . . . . . . 215

VI.G8 Operations of the Combined OASI and DI Trust Funds, 

in Current Dollars, Calendar Years 2015-90 . . . . . . . . . . . . . . 217

VI.G9 OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2015-90. . . . 219

VI.G10 OASDI and HI Annual Non-interest Income, Cost, and

Balance in Current Dollars, Calendar Years 2015-90 . . . . . . . 221
List of Tables

248

H. ANALYSIS OF BENEFIT DISBURSEMENTS 

FROM THE OASI TRUST FUND 

WITH RESPECT TO DISABLED BENEFICIARIES

VI.H1 Scheduled Benefit Disbursements From the OASI Trust Fund

With Respect to Disabled Beneficiaries . . . . . . . . . . . . . . . . . 224

VI.H2 Scheduled Benefit Disbursements Under the OASDI Program

With Respect to Disabled Beneficiaries . . . . . . . . . . . . . . . . . 226
List of Figures

249

LIST OF FIGURES

II. OVERVIEW

II.D1 Short-Range OASI and DI Combined Trust Fund Ratio . . . . . 11

II.D2 OASDI Income, Cost, and Expenditures as Percentages 

of Taxable Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

II.D3 DI Income, Cost, and Expenditures as Percentages 

of Taxable Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

II.D4 Number of Covered Workers Per OASDI Beneficiary. . . . . . . 15

II.D5 OASDI Cost and Non-interest Income as a Percentage 

of GDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

II.D6 Cumulative Scheduled OASDI Income Less Cost,

From Program Inception Through Years 2014-89 . . . . . . . . . . 18

II.D7 Long-Range OASI and DI Combined Trust Fund Ratios 

Under Alternative Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . 20

II.D8 Long-Range OASI and DI Combined Trust Fund Ratios 

From Stochastic Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . 21

II.D9 OASDI Annual Balances: 2014 and 2015 Trustees Reports. . . 23

IV. ACTUARIAL ESTIMATES

IV.A1 Short-Range OASI and DI Trust Fund Ratios. . . . . . . . . . . . . 43

IV.B1 Long-Range OASI and DI Annual Income Rates 

and Cost Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

IV.B2 Number of OASDI Beneficiaries Per 100 Covered Workers . . 63

IV.B3 Long-Range OASI and DI Trust Fund Ratios. . . . . . . . . . . . . 67

IV.B4 OASDI Annual Balances: 2014 and 2015 Trustees Reports. . . 78

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES

V.C1 Primary-Insurance-Amount Formula for 

Those Newly Eligible in 2015. . . . . . . . . . . . . . . . . . . . . . . . 117

V.C2 OASI Maximum-Family-Benefit Formula for 

Those Newly Eligible in 2015. . . . . . . . . . . . . . . . . . . . . . . . 118

V.C3 DI Disability Incidence Rates, 1970-2090 . . . . . . . . . . . . . . . 133

V.C4 DI Disability Termination Rates, 1970-2090 . . . . . . . . . . . . . 135

V.C5 Comparison of DI Disability Incidence Rates, 

Termination Rates and Conversion Ratios Under 

Intermediate Assumptions, 1970-2090. . . . . . . . . . . . . . . . . . 136

V.C6 DI Disability Prevalence Rates, 1970-2090 . . . . . . . . . . . . . . 139
List of Figures

250

VI. APPENDICES

VI.E1 Long-Range OASDI Cost Rates From Stochastic Modeling . . 188

VI.E2 Long-Range OASDI Trust Fund Ratios From 

Stochastic Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

VI.E3 OASDI Cost Rates: Comparison of Stochastic to Low-Cost, 

Intermediate, and High-Cost Alternatives . . . . . . . . . . . . . . . 191

VI.E4 OASDI Trust Fund (Unfunded Obligation) Ratios: 

Comparison of Stochastic to Low-Cost, Intermediate, 

and High-Cost Alternatives. . . . . . . . . . . . . . . . . . . . . . . . . . 192

VI.G1 Estimated OASDI Income and Cost in CPI-indexed 

2015 Dollars, Based on Intermediate Assumptions . . . . . . . . . 216
251

Index

INDEX

A

Actuarial balance 11, 17, 51, 162, 175

Actuarial deficit 4, 17, 24, 69, 205

Actuarial estimates, LR 51

Actuarial estimates, SR 40

Adjusted program amounts 113

Administrative expenses 7, 37, 52, 149, 153, 169, 206, 214

Advance tax transfers 64, 155

Amendments 39

Annual balance 22, 51, 74

Asset reserves 2, 7, 10, 31, 169, 182, 200, 212

Assumptions 10, 80, 97, 113, 162, 175, 201, 206, 211, 223

Automatic cost-of-living benefit increase 44, 98, 113

Auxiliary benefits 123

Average benefits 146

Average earnings assumptions 100

Average indexed monthly earnings (AIME) 116

Average wage index 113, 211

Award 124

B

Baby-boom generation 4, 24, 52, 60, 106, 131

Bend points 116

Beneficiaries, DI 130

Beneficiary 14, 44, 60, 80, 114, 165, 176, 206, 214, 223

Beneficiary, OASI 124

Benefit payments 7, 52, 146, 153, 169

Benefit termination 9

Best estimate 9, 40, 80

Board of Trustees 40, 97, 151

C

Constant dollars 216

Consumer Price Index 98, 180, 211, 228

Contribution and benefit base 43, 100, 114, 228

Contributions 7, 151, 169, 200, 206, 214, 227

Cost 3, 46

Cost rate 4, 52, 200

Cost-of-living adjustment 113

Covered earnings 7, 113, 210

Covered employment 9, 43, 100, 121, 151, 179

Covered worker 62, 121, 178

Creditable earnings 230

Current dollars 211
Index

252

Current-payment status 46, 135, 137, 228

D

Deemed wage credit 52

Delayed retirement credit 120

Demographic assumptions 9, 22, 40, 81, 106, 113, 162, 212, 227

Deterministic model 186, 195

DI beneficiaries 130

Disability 151, 178, 223

Disability conversion ratio 136

Disability incidence rate 80, 131, 133, 178, 183, 227

Disability Insurance Trust Fund 229

Disability prevalence rate 137, 139

Disability termination rate 183

Disabled-worker benefit 134, 230

Disbursements 27, 29, 32, 33, 35, 40, 169, 170, 171, 224, 226

E

Earnings 2, 7, 43, 52, 100, 114, 151, 163, 200, 210, 211, 227

Earnings test 100, 114, 228

Economic assumptions 9, 22, 40, 49, 97, 106, 113, 162, 212, 227

Excess wages 52, 211

Expenditures 7, 9, 31, 38, 40, 153, 231

F

Federal Insurance Contributions Act 200, 237

Fertility assumptions 81

Financial interchange 7, 149, 153

Fiscal year 85, 155, 168

Full advance funding 232

G

General Fund of the Treasury 42, 44, 46, 48, 155, 157, 159, 172, 173, 174,

227

General fund reimbursement 232

Gross domestic product 4, 11, 57, 80, 98, 108, 206

Gross domestic product projections 108

H

High-cost assumptions 9, 19, 40, 41, 53, 80, 97, 134, 175, 193, 201, 206,

211, 227

Hospital Insurance program 143, 200, 235

Hospital Insurance Trust Fund 206

I

Immigration 9, 80, 81, 85, 89, 178, 186, 227, 233
253

Index

Immigration assumptions 85

Income rate 4, 12, 52, 200

Infinite horizon 11

Inflation 9, 80, 98, 211, 227

Inflation assumptions 98

Insured population 9, 122

Insured status 118

Interest 43, 109, 152, 162, 169, 202, 227

Interest rate 80, 162, 182, 227

Interest rate projections 109

Interest rates 9

Interfund borrowing 155, 234

Intermediate assumptions 9, 40, 44, 53, 80, 134, 175, 202, 206, 211, 215,

216, 217, 223, 227

L

Labor force projections 105

Legal immigration 85, 90, 234

Life expectancy 4, 24, 80, 93, 105, 234

Life expectancy estimates 93

Long range 11, 51, 81, 125, 162, 200, 206

Low-cost assumptions 9, 19, 40, 53, 80, 97, 134, 175, 193, 201, 211, 227

Lump-sum death payment 147

M

Medicare 83, 235

Military service 42, 46, 48, 52, 150, 151, 155, 157, 159, 172, 173, 174

N

National average wage index 113, 211

Normal retirement age 114, 130, 147, 230

O

OASI beneficiaries 124

Old-Age and Survivors Insurance Trust Fund 151, 229

Old-law base 118

Other immigration 85, 178, 236

P

Par value 152

Partial advance funding 236

Pay-as-you-go financing 162

Payroll taxes 2, 113, 141, 165, 196, 200, 214

Population estimates 91

Population in the Social Security area 43, 63, 91, 121, 178

Present value 162
Index

254

Primary insurance amount (PIA) 116

Productivity assumptions 98

Q

Quarters of coverage 122

R

Railroad Retirement 52, 68, 118, 149, 153, 169, 170, 171, 200, 206, 214,

229

Reallocation of tax rates 238

Real-wage differential 103, 179

Retired-worker benefit 125, 178, 223

Retirement age 114, 147, 230

Retirement earnings test 100, 114

Retirement eligibility age 178

S

Scenario-based model 238

Scheduled benefits 181, 206, 214, 225, 238

scheduled benefits 41

Self-employment 52, 98, 201, 237

Self-Employment Contributions Act 237, 238

Sensitivity analysis 175

Short range 10, 40, 124

Social Security Act 113, 152, 211, 223, 229

Social Security amendments 39

Solvency 239

Special public-debt obligation 112, 152, 182

Stochastic projections 186

Substantial gainful activity 130, 230

Summarized balance 207

Summarized income and cost rates 68, 162, 175, 204, 227

Supplemental Security Income 169

Supplementary Medical Insurance program 200, 235

Survivor benefit 2, 8, 128, 228

Sustainable solvency 64, 65

T

Taxable earnings 43, 63, 114, 163, 228

Taxable payroll 4, 24, 52, 98, 122, 162, 176, 200, 206, 211, 229

Taxable self-employment income 240

Taxable wages 145, 201, 240

Taxation of benefits 7, 145, 206, 214, 233

Taxes 7, 113, 201

Termination 80
255

Index

Termination rate 9, 125, 183, 227

Test of short-range financial adequacy 41, 238

Total fertility rate 81, 175

Trust fund financial operations 7, 27, 41, 151

Trust fund ratio 10, 40, 51, 64, 155, 172, 242

Trust fund reserves 40

U

Unemployment projections 105

Unfunded obligation 4, 11, 17, 19, 51, 71, 72, 197, 198, 199, 236, 243

Unnegotiated check 169

V

Valuation period 17, 48, 51, 162, 175, 204, 227

Vocational rehabilitation 52, 153, 170, 206, 214, 225, 229

Y

Year of depletion 12, 16, 51, 66
256

STATEMENT OF ACTUARIAL OPINION

It is my opinion that, with the important caveat noted below: (1) the techniques and methodology used herein to evaluate the financial and actuarial

status of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds are based upon sound principles of actuarial practice and

are generally accepted within the actuarial profession; and (2) the assumptions used and the resulting actuarial estimates are, individually and in the

aggregate, reasonable for the purpose of evaluating the financial and actuarial status of the trust funds, taking into consideration the past experience and

future expectations for the population, the economy, and the program. I am a

member of the American Academy of Actuaries and I meet the Qualification

Standards of the American Academy of Actuaries to render the actuarial

opinion contained herein.

Federal Budget Accounting

This report focuses on the actuarial status of the OASI and DI Trust Funds

and includes important information on (1) the years in which trust fund asset

reserves are projected to be depleted and (2) the degree to which benefits

scheduled in the law would no longer be fully payable on a timely basis after

reserve depletion. However, the footnote on page 64 of this report directs the

reader to an appendix in the Medicare Trustees Report, which states, “The

trust fund perspective does not encompass the interrelationship between the

Medicare and Social Security trust funds and the overall federal budget.” The

reader of this report should consider this “overall” federal unified budget

perspective with care because the assumptions underlying unified budget

accounting are inconsistent with the assumptions of trust fund accounting.

In particular, trust fund accounting accurately reflects the law, under which

benefits cannot be paid in full on a timely basis after reserve depletion. In

contrast, unified budget accounting assumes that full scheduled benefits will

continue to be paid through transfers from the General Fund of the Treasury,

thus representing “a draw on other Federal resources for which there is no

earmarked source of revenue from the public.” Not only are such “draws”

not permissible under the law, no precedent exists for a change in the Social

Security Act to finance unfunded trust fund obligations with such draws on

other Federal resources. Under this unified budget accounting assumption,

$10.7 trillion of OASDI unfunded obligations, which are not payable under

the law over the next 75 years, are referred to as “expenditures” requiring a

“draw” from the General Fund of the Treasury.

In addition, unified budget accounting treats redemptions of trust fund

reserves as an addition to annual federal deficits, referring to these redemp-
257

tions also as “a draw on other Federal resources.” In fact, redemptions of

trust fund reserves represent a deferred use of revenues earmarked for the

trust fund program alone, which have been collected in prior years and saved

for later use. These redemptions utilize the entire $2.8 trillion accumulation

of net past earmarked revenue for OASDI, but are referred to as draws on the

General Fund of the Treasury under the unified budget perspective.

Therefore, the actual operations of the trust funds under current law do not

draw on other Federal resources. Expenditures can only be paid from current

or deferred earmarked resources for the specific program financed from the

trust fund. Assertions that trust fund reserve redemption and shortfalls after

reserve depletion represent draws on other Federal resources are based on

assumptions that are inconsistent with the law and with actual trust fund

annual cash-flow operations.

In addition to federal budget annual cash flows, the budget perspective is

equally concerned with the build-up of federal debt. The total federal debt

subject to limit includes trust fund reserves. Thus, as trust fund reserves are

accumulated or redeemed, they are offset in the total federal debt by securities issued to the public, with no net effect on the total federal debt. Moreover, even in considering the federal debt owed to (held by) the public, there

is no net direct effect on that debt from accumulating and then redeeming

trust fund asset reserves. However, budget analysis frequently refers to both

trust fund reserve redemptions and trust fund obligations not payable under

the law after reserve depletion as factors that increase the federal debt held

by the public in the future. This assertion is not consistent with a full assessment of the investment and redemption flows of the trust funds or with the

limitations in the law on paying benefits after trust fund reserves are

depleted. 

Stephen C. Goss

Associate of the Society of Actuaries

Member of the American Academy of Actuaries

Chief Actuary, Social Security Administration