Social Security Actuarial Sta

Recent Experience and Prospects for the F

Presented by Stephen C. Goss, Chief Actuary, 

Social Security Administration

Florida School Finance Officers Association

November 16, 2022
Three-Legged Stool: Basis for Retiremen

Common Wisdom: Aim for 75-80 Percent Replaceme
Defined Benefit Plans Replaced by D

And Lump Sum Options Increasing for DB P

0%

10%20%30%40%50%60%

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Private-Sector Workers Participating in Employment-Based Retirement 

Plans, by Plan Type, 1979-2014

Defined Benefit Total Defined Contribution TotalBoth Either

Source: U.S. Department of Labor Form 5500 Summaries 1979-1998, Pension Benefit Guaranty CorporatCurrent Population Survey 1999-2013, EBRI estimates 1999-2014.
Social Security: What Does It Pr

• Retirement and survivor monthly benefits started in 19

– Never missed a payment!

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

men

• Monthly benefits are higher if start receipt after 62, up • Disability benefits started in 1957• Benefits rise with average wage across generation

CPI after initial eligibility

• Payroll taxes are the primary source of financing

– Rose from 2% in 1937 to 12.4% as system matured
Social Security Financing

• Basically “Pay-As-You-Go” 

– Current workers provide for current beneficiaries– Trust Funds are a “contingency reserve” because cannot borro

– Total spending to date cannot exceed income to date

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

– Available to augment tax income as needed

• Reserves projected to deplete in 2035 under current l

– But 80 percent of scheduled benefits would still then be payable 

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

• Baseline projections of OASDI cost and revenue unde

law

– For the Trustees Reports – For the President’s Budget (including SSI as well)– SSA and Governmentwide Financial Statements

• Estimates for proposals to change law, regulations, an

– For Congress, the Administration, and others

• Actuarial notes and studies
COVID-19 Current and Long-Term Imp

• Raised death rates in US roughly 16% in 2020 and 18• Reduced life expectancy for affected cohorts

– Many died earlier, disproportionately those with other conditions– Most survived infection, but will carry some residual compromis– Thus, possibly no net implication for “trend rate” in mortality 

• However, this is the second coronavirus in 20 years

– Expect periodically in a now mobile world population?

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

– Average level of mortality will be 1.6% above “trend”
Excess Weekly Deaths for US—Estimated 
Solvency: OASI+DI 

Trust Fund Reserve Depletion in 2035 (one year later 

than last year)

Reserve depletion date varied from 2029 to 2042 in reports over the past 30 years (1993-2022).DI Trust Fund: reserves do not deplete.Due largely to continued low recent and near-term disability applications and awards, and a lower assumed ultimate disability incidence rate.
OASDI Annual 

Cost and NonInterest Income as Percent of Taxable Payroll

Persistent negative annual cash-flow balance starting in 2010.80 percent of scheduled benefits still payable at trust fund reserve depletion.Annual deficit in 2096: 4.25 percent of payroll: 0.09 percent smaller than last year
SUSTAINABILITY: 

Cost as percent of GDPRises from a 4.2 percent average in 1990-2008, to a peak of about 6.2 percent for 2077, and then declines to 5.9 percent by 2096.
Aging - Change 

in Age Distribution

Mainly due to drop in birth rates
Changing Age 

Distribution Over Last 20 and Next 20 Years Mainly Due to Macro AgingPermanent level shifts
Currently 

Scheduled Benefit Replacement Rates Based on the 2022 TRBut, 15 percent higher if wait to start benefits until age 67, and 43 percent higher if wait until age 70

Source: Annual Recurring Actuarial Note #9 at www.ssa.gov/oact/NO
Payable Benefits Under the Law, After Trust Fund Reserves Are Depleted, Would Be Lower

Source: Annual Recurring Actuarial Note #9 at www.ssa.gov/oact/NO
The Bottom Line

• Long-term projections provide information to assess so

changes needed to eliminate shortfalls

• If trust fund reserves were to become depleted:

• Full benefits could not be paid timely• NO pressure on the Budget or Federal Debt• So Congress must act, as it always has

• Straightforward solutions:

• Add revenue and/or lower cost for OASDI

• Comprehensive changes implemented by 2035
Some Ways to Lower Cos

• Lower benefits for retirees – not disabled?

• Increase normal retirement age (lowers OASDI cost, but increases • Can exempt long-career low earners (Simpson Bowles 2010)

• Lower benefits mainly for high earners?

• Reduce PIA above some level• Noting that higher earners generally live longer

• Lower benefits mainly for the oldest old?

• Reduce the COLA• Others say increase it with the CPI-E (based on purchases of con

age 62)
Some Ways to Increase Reve

• Raise the 12.4 percent OASDI payroll tax rate?• Raise tax on highest earners?

• Increase taxable maximum amount• Some tax on all earnings above the maximum• Provide additional benefit credit?

• Tax employer group health insurance premiums?

• Affects only middle class if taxable maximum remains

• Tax investment income?

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

• Historically, Congress has waited until reserve depletio

imminent 

• Given uncertainties, difficult to lower benefits or raise taxes until n

• Enacting “sooner” allows more options, more gradual p

and more advance notice

• Best example: 17-year delay in implementing NRA increase in 198

amendments

• OASDI reserve depletion now projected for 2035

• The date has varied between 2029 and 2042 over the past 30 yea
For More Information: http://www.ssa.

There you will find:

• Current and all prior OASDI Trustees Reports• Detailed single-year tables for recent reports• Our estimates for comprehensive proposals• Actuarial notes; including replacement rates• Actuarial studies; including stochastic• Extensive databases• Congressional testimonies• Presentations by OCACT employees