THE 2017 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 2017 ANNUAL REPORT OF THE BOARD OF TRUSTEES OF THE 

FEDERAL OLD-AGE AND SURVIVORS INSURANCE AND FEDERAL 

DISABILITY INSURANCE TRUST FUNDS
.


CONTENTS

(V)

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

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

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

B. TRUST FUND FINANCIAL OPERATIONS IN 2016 . . . . . . . 7

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

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

E. CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

III. FINANCIAL OPERATIONS OF THE TRUST FUNDS AND

LEGISLATIVE CHANGES IN THE LAST YEAR . . . . . . . . . . 26

A. OPERATIONS OF THE OLD-AGE AND SURVIVORS 

INSURANCE (OASI) AND DISABILITY INSURANCE (DI) 

TRUST FUNDS, IN CALENDAR YEAR 2016 . . . . . . . . . . . . 26

1. OASI Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

2. DI Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

3. OASI and DI Trust Funds, Combined . . . . . . . . . . . . . . . . . . 33

B. SOCIAL SECURITY AMENDMENTS SINCE THE 

2016 REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

IV. ACTUARIAL ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

A. SHORT-RANGE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . 39

1. Operations of the OASI Trust Fund. . . . . . . . . . . . . . . . . . . . 40

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 2016 Report . . . . . . . . . . . . . . . . . . . . . . 49

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. Open Group Unfunded Obligation . . . . . . . . . . . . . . . . . . . . 71

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 . . . . . . . . . . . . . . . . . . . . . . . . . . 86

4. Total Population Estimates. . . . . . . . . . . . . . . . . . . . . . . . . . 92

5. Life Expectancy Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . 94

B. ECONOMIC ASSUMPTIONS AND METHODS . . . . . . . . . . . 98

1. Productivity Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 99

2. Price Inflation Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . 99

3. Average Earnings Assumptions . . . . . . . . . . . . . . . . . . . . . . 101

4. Assumed Real-Wage Differential . . . . . . . . . . . . . . . . . . . . . 104

5. Labor Force and Unemployment Projections . . . . . . . . . . . . . 106

6. Gross Domestic Product Projections . . . . . . . . . . . . . . . . . . . 109

7. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

C. PROGRAM-SPECIFIC ASSUMPTIONS AND METHODS . . . 114

1. Automatically Adjusted Program Parameters. . . . . . . . . . . . . 114

2. Covered Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

3. Insured Population. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

4. Old-Age and Survivors Insurance Beneficiaries. . . . . . . . . . . 125

5. Disability Insurance Beneficiaries. . . . . . . . . . . . . . . . . . . . . 132

6. Covered and Taxable Earnings, Taxable Payroll, and 

Payroll Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 142

7. Income From Taxation of Benefits . . . . . . . . . . . . . . . . . . . . 147

8. Average Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

9. Scheduled Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

10. Illustrative Scheduled Benefit Amounts . . . . . . . . . . . . . . . . 149

11. Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

12. Railroad Retirement Financial Interchange . . . . . . . . . . . . . . 151

VI. APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

A. HISTORY OF OASI AND DI TRUST FUND OPERATIONS. . 153

B. HISTORY OF ACTUARIAL STATUS ESTIMATES . . . . . . . . 164

C. FISCAL YEAR HISTORICAL AND PROJECTED 

TRUST FUND OPERATIONS THROUGH 2026 . . . . . . . . . . . 170

D. LONG-RANGE SENSITIVITY ANALYSIS . . . . . . . . . . . . . . 177

1. Total Fertility Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

2. Death Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

3. Immigration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

4. Real-Wage Differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181

5. Consumer Price Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

6. Real Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
(VII)

7. Taxable Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

8. Disability Incidence Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 186

9. Disability Termination Rates . . . . . . . . . . . . . . . . . . . . . . . . 187

E. STOCHASTIC PROJECTIONS AND UNCERTAINTY . . . . . . 189

1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

2. Stochastic Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

3. Stochastic Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

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

Intermediate, and High-Cost Alternatives . . . . . . . . . . . . . . . 193

F. INFINITE HORIZON PROJECTIONS . . . . . . . . . . . . . . . . . . 199

G. ESTIMATES FOR OASDI AND HI, SEPARATE AND 

COMBINED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203

1. Estimates as a Percentage of Taxable Payroll. . . . . . . . . . . . . 203

2. Estimates as a Percentage of Gross Domestic Product . . . . . . 209

3. Estimates in Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

H. ANALYSIS OF BENEFIT DISBURSEMENTS FROM THE 

OASI TRUST FUND WITH RESPECT TO DISABLED 

BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226

I. GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230

LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248

LIST OF FIGURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253

INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

STATEMENT OF ACTUARIAL OPINION . . . . . . . . . . . . . . . 260

THE 2017 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. These two positions are currently vacant. 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 2017 report is the 77th such report.
Overview

2

II. OVERVIEW

A. HIGHLIGHTS

This section summarizes the report’s major findings.

In 2016

At the end of 2016, the OASDI program was providing benefit payments1 to

about 61 million people: 44 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

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

taxes on those earnings. Total expenditures in 2016 were $922 billion. Total

income was $957 billion, which consisted of $869 billion in non-interest

income and $88 billion in interest earnings. Asset reserves held in special

issue U.S. Treasury securities grew from $2,813 billion at the beginning of

the year to $2,848 billion at the end of the year.2

Short-Range Results

Under the Trustees’ intermediate assumptions, Social Security’s total income

is projected to exceed its total cost through 2021, as it has for every year

since 1982. The 2016 excess of total income over cost for the year was

$35 billion. However, when interest income is excluded, Social Security’s

cost is projected to exceed its non-interest income throughout the projection

period, as it has since 2010. For 2016, cost for the year exceeded non-interest

income by $53 billion. For 2017, total income for the program is projected to

exceed cost for the year by $59 billion, and non-interest income is projected

to be $27 billion less than program cost for the year.3

To illustrate the actuarial status of the Social Security program as a whole,

the operations of the OASI and DI funds are often shown on a combined

basis as OASDI. However, by law, the two funds are separate entities and

therefore the combined fund operations and reserves are hypothetical. 

The reserves of the combined OASI and DI Trust Funds along with projected

program income are adequate to cover program cost over the next 10 years

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

 2 Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment each year.

 3 Amounts for 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled

in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015.
3

Highlights

under the intermediate assumptions. The ratio of reserves to cost remains

above 100 percent through 2026, declining from 298 percent of annual cost

at the beginning of 2017 to 165 percent at the beginning of 2026. Therefore,

the combined OASI and DI Trust Funds satisfy the short-range test of financial adequacy.1 For last year’s report, the Trustees projected that combined

reserves would be 293 percent of annual cost at the beginning of 2017 and

149 percent at the beginning of 2026. 

The combined reserves are projected to increase from $2,848 billion at the

beginning of 2017 to $3,000 billion at the beginning of 2022. Reserves

increase through 2021 because annual cost is less than total income for 2017

through 2021. At the same time, however, the ratio of reserves to cost

declines, from 298 percent of annual cost for 2017 to 230 percent for 2022.

Beginning in 2022, annual cost exceeds total income, and therefore the combined reserves begin to decline, reaching $2,607 billion at the end of 2026. 

It should be noted that the DI Trust Fund reserves were projected to become

depleted in 2023 in last year’s report. However, as described below, revisions

reflecting recent experience have extended the projected DI Trust Fund

reserve depletion date beyond the short-range period under the intermediate

assumptions of the 2017 Trustees Report.

Long-Range Results

Under the Trustees’ intermediate assumptions, projected OASDI cost will

exceed total income by increasing amounts starting in 2022, and the dollar

level of the hypothetical combined trust fund reserves declines until reserves

become depleted in 2034.2 Figure II.D2 shows the implications of reserve

depletion for the combined OASDI Trust Funds. Considered separately, the

DI Trust Fund reserves become depleted in 2028 and the OASI Trust Fund

reserves become depleted in 2035. In last year’s report, the projected reserve

depletion years were 2034 for OASDI, 2023 for DI, and 2035 for OASI. 

The change in the reserve depletion date for DI is largely due to continuing

favorable experience for DI applications and benefit awards. Disability

 1 The test of short-range financial adequacy for a trust fund is met if (1) the estimated trust fund ratio is at

least 100 percent at the beginning of the period and remains at or above 100 percent throughout the 10-year

short-range period or (2) the ratio is initially less than 100 percent, reaches at least 100 percent within

5 years (without reserve depletion at any time during this period) and remains at or above 100 percent

throughout the remainder of the 10-year short-range period.

 2 Combined trust fund reserves are clearly hypothetical after one fund becomes depleted, because under current law the funds cannot borrow from each other. For example, if the DI Trust Fund reserves were to

become depleted in 2028 as is currently projected, the operations of the OASDI Trust Funds, shown in this

report on a hypothetical combined basis, would not reflect the aggregated operation of the OASI and DI

Trust Funds because part of the DI benefits could not be paid without a change in the law. Implicitly, the values shown for the hypothetical combined trust funds assume the law will have been changed to permit the

transfer of resources between funds as needed.
Overview

4

applications have been declining since 2010 and the total number of disabled

worker beneficiaries in current payment status has been falling since 2014. In

last year’s report, disabled worker beneficiaries were projected to rise from

8.9 million at the end of 2015 to about 9.0 million at the end of 2016. In fact,

the number dropped to about 8.8 million at the end of 2016. For this report,

ultimate disability incidence rate assumptions are unchanged from the last

report. This year’s report reflects lower recent incidence rates and a more

gradual rise to the ultimate DI incidence rates. These changes are primarily

responsible for the change in the DI reserve depletion date from 2023 in last

year’s report to 2028 in this year’s report.

Projected OASDI cost increases more rapidly than projected non-interest

income through 2037 primarily because the retirement of the baby-boom

generation will increase the number of beneficiaries much faster than the

number of covered workers increases, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. From 2038 to 2051,

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. Thereafter, increases in life

expectancy cause OASDI cost to increase generally relative to non-interest

income, but more slowly than between 2010 and 2037.

The projected OASDI annual cost rate increases from 13.41 percent of taxable payroll for 2017 to 17.02 percent for 2038 and to 17.80 percent for

2091, a level that is 4.48 percent of taxable payroll more than the projected

income rate (the ratio of non-interest income to taxable payroll) for 2091.

For last year’s report, the Trustees estimated the OASDI cost for 2091 at

17.72 percent, or 4.39 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 4.9 percent of GDP for 2017 to

about 6.1 percent by 2037, then declines to 5.9 percent by 2050, and then

generally increases to 6.1 percent by 2091.

For the 75-year projection period, the actuarial deficit is 2.83 percent of taxable payroll, 0.17 percentage point larger than in last year’s report. The

closely-related open group unfunded obligation for OASDI over the 75-year

period is 2.66 percent of taxable payroll, which is 0.17 percentage point

larger than in last year’s report. The open group unfunded obligation for

OASDI over the 75-year period is $12.5 trillion in present value and is

$1.2 trillion more than the measured level of $11.4 trillion a year ago. If the

assumptions, methods, starting values, and the law had all remained

unchanged, the actuarial deficit would have increased to 2.71 percent of taxable payroll, and the unfunded obligation would have risen to about
5

Highlights

2.55 percent of taxable payroll and $11.9 trillion in present value due to the

change in the valuation date. The remaining changes in the actuarial deficit

and the unfunded obligation are due to changes in the law, methods, starting

values, and assumptions. 

To illustrate the magnitude of the 75-year actuarial deficit, consider that 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 2.76 percentage points1 to 15.16 percent, (2) scheduled benefits would

have to be reduced by an amount equivalent to an immediate and permanent

reduction of about 17 percent applied to all current and future beneficiaries,

or about 20 percent if the reductions were applied only to those who become

initially eligible for benefits in 2017 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 combined trust fund reserves become depleted in 2034. For

example, maintaining 75-year solvency with policies that begin in 2034

would require: (1) an increase in revenues by an amount equivalent to a

3.98 percentage point payroll tax rate increase starting in 2034, (2) a reduction in scheduled benefits by an amount equivalent to a 23 percent reduction

in all benefits starting in 2034, or (3) some combination of these approaches

would have to be adopted.

Conclusion

Under the intermediate assumptions, DI Trust Fund asset reserves are projected to become depleted in 2028, at which time continuing income to the

DI Trust Fund would be sufficient to pay 93 percent of DI scheduled benefits. Therefore, legislative action is needed to address the DI program’s

financial imbalance. The OASI Trust Fund reserves are projected to become

depleted in 2035, at which time OASI income would be sufficient to pay

75 percent of OASI scheduled benefits.

 1 The necessary tax rate of 2.76 percent differs from the 2.83 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.
Overview

6

The Trustees also project that annual cost for the OASDI program will

exceed non-interest income throughout the projection period, and will

exceed total income beginning in 2022 under the intermediate assumptions.

The projected hypothetical combined OASI and DI Trust Fund asset reserves

increase through 2021, begin to decline in 2022, and become depleted and

unable to pay scheduled benefits in full on a timely basis in 2034. At the time

of depletion of these combined reserves, continuing income to the combined

trust funds would be sufficient to pay 77 percent of scheduled benefits. Lawmakers have a broad continuum of policy options that would close or reduce

Social Security's long-term financing shortfall. Cost estimates for many such

policy options are available at www.ssa.gov/OACT/solvency/provisions/. 

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 sooner rather than later would allow more generations to share in the

needed revenue increases or reductions in scheduled benefits and could preserve more trust fund reserves to help finance future benefits. Social Security

will play a critical role in the lives of 62 million beneficiaries and

173 million covered workers and their families in 2017. With informed discussion, creative thinking, and timely legislative action, Social Security can

continue to protect future generations.
7

Calendar Year 2016 Operations

B. TRUST FUND FINANCIAL OPERATIONS IN 2016

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

the DI, and the combined OASI and DI Trust Funds in calendar year 2016.

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

In 2016, net payroll tax contributions accounted for 87 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 $118,500 in 2016. Table II.B2 shows the tax rates

for 2016. Approximately 0.01 percent of OASI and DI combined Trust Fund

income came from reimbursements from the General Fund of the Treasury.1

Three percent of OASI and DI combined Trust Fund income in 2016 came

from subjecting up to 50 percent of Social Security benefits to Federal personal income taxation for beneficiaries with income (including half of beneTable II.B1.—Summary of 2016 Trust Fund Financial Operations

[In billions]

OASI DI OASDI

Asset reserves at the end of 2015a . . . . . . . . . . . . . . . . . . .

a Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment each year

without regard to the accelerated payments described above.

$2,780.3 $32.3 $2,812.5

Total income in 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 797.5 160.0 957.5

Net payroll tax contributions . . . . . . . . . . . . . . . . . . . . . 678.8 157.4 836.2

Reimbursement from General Fund of the Treasury . . . .1 b

b Less than $50 million.

.1

Taxation of benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.6 1.2 32.8

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.0 1.4 88.4

Total expenditures in 2016. . . . . . . . . . . . . . . . . . . . . . . . . 776.4 145.9 922.3

Benefit paymentsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 768.6 142.8 911.4

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

Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . 3.5 2.8 6.2

Net increase in asset reserves in 2016a . . . . . . . . . . . . . . . 21.1 14.1 35.2

Asset reserves at the end of 2016. . . . . . . . . . . . . . . . . . . . 2,801.3 46.3 2,847.7

 1 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 for 2011 and 2012.
Overview

8

fits and all non-taxable interest) exceeding specified levels. Interest earned

on invested trust fund asset reserves accounted for 9 percent of OASDI

income. The Department of the Treasury invests trust fund reserves in interest-bearing securities issued by the U.S. Government. In 2016, the combined

trust fund reserves earned interest at an effective annual rate of 3.2 percent. 

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

Funds in 2016 were retirement, survivor, and disability benefits totaling

$911.4 billion. A net payment of $4.7 billion was made to the Railroad

Retirement Social Security Equivalent Benefit Account from the combined

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

expenditures. The administrative expenses of the Social Security program

were $6.2 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. Combined trust fund reserves increased by

$35.2 billion for 2016 because income to each fund, including interest earned

on trust fund reserves, exceeded total expenditures.1 At the end of 2016, the

combined reserves of the OASI and the DI Trust Funds were $2,848 billion,

or 298 percent of estimated expenditures2 for 2017. In comparison, the combined reserves at the end of 2015 were 305 percent of expenditures for 2016.

Note: Section 833 of Public Law 114-74, the Bipartisan Budget Act of 2015, requires a temporary reallocation of the payroll tax rates between the OASI and DI Trust Funds. For earnings in calendar years 2016

through 2018, this section increases from 1.80 percent to 2.37 percent the portion of the total 12.40 percent

OASDI payroll tax that is directed to the DI Trust Fund. There is a corresponding decrease in the portion of

the tax rates directed to the OASI Trust Fund for these years.

 1 As noted in footnote a of table II.B1 and elsewhere in this report, asset reserves shown for the end of 2015

reflect the 12 months of benefits scheduled for payment in 2015 and thus exclude the benefits scheduled for

payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the law.

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

Table II.B2.—Payroll Tax Contribution Rates for 2016

[In percent]

OASI DI OASDI

Payroll tax contribution rate for employees. . . . . . . . . . . . . . . . . . . . . . . 5.015 1.185 6.20

Payroll tax contribution rate for employers . . . . . . . . . . . . . . . . . . . . . . . 5.015 1.185 6.20

Payroll tax contribution rate for self-employed persons . . . . . . . . . . . . . 10.030 2.370 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 outcomes under the intermediate assumptions only. 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 18,

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 2016 to 2091. . . . . . . . . . . . . . . . . . . . . . . . . . .77 .42 1.16

Average annual net immigration (in thousands) for 2017 

to 2091. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,286 1,623 961

Economic:

Average annual percentage change in:

Productivity (total U.S. economy), for 2027 and later . . . . . . . 1.68 1.98 1.38

Average wage in covered employment from 2027 to 2091 . . . 3.80 5.02 2.58

Consumer Price Index (CPI-W), for 2019 and later. . . . . . . . . 2.60 3.20 2.00

Average annual real-wage differential (percent) for 2027 

to 2091. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20 1.82 .58

Unemployment rate (percent, age-sex-adjusted), for 2022 and 

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

Annual trust fund real interest rate (percent), for 2027 and later. 2.7 3.2 2.2

Programmatic:

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

in 2091. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 4.3 6.4

Disability recovery rate (per 1,000 beneficiaries, age-sexadjusted) in 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 12.5 8.3
Overview

10

D. PROJECTIONS OF FUTURE FINANCIAL STATUS

Short-Range Actuarial Estimates

For the short-range period (2017 through 2026), 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 the OASI Trust Fund exceed 100 percent throughout the short-range

period. Therefore, OASI satisfies the Trustees’ short-term test of financial

adequacy. The DI Trust Fund fails the Trustees’ short-term test of financial

adequacy. The Trustees estimate that the DI trust fund ratio was at 31 percent

at the beginning of 2017. The projected DI trust fund ratio increases to

65 percent at the beginning of 2019, largely due to the temporary payroll tax

rate reallocation for 2016 through 2018 from OASI to DI enacted in the

Bipartisan Budget Act of 2015, and then declines through the end of the

short-range period. On a combined basis, OASDI also satisfies the Trustees’

short-term test of financial adequacy. Figure II.D1 shows that the trust fund

ratio for the combined OASI and DI Trust Funds declines consistently after

2010, but remains above 100 percent throughout the short-range period.

Projected OASDI cost is less than total income until 2022, when cost begins

to exceed total income. While trust fund reserves continue to grow through

2021, they grow more slowly than cost, causing the trust fund ratio to

decline, as shown in figure II.D1. OASDI cost exceeds non-interest income

throughout the short-range period.
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 test of short-range 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

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

[Asset reserves as a percentage of annual cost, under Intermediate Assumptions]

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

Calendar year

Historical Estimated

Minimum level for "short-term financial adequacy"
Overview

12

OASI, DI, and combined OASI and DI Trust Funds all fail the test of longrange 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 (2017 through 2091).

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 temporarily depressed taxable earnings and increased the number of beneficiaries, which in turn

sharply, but temporarily, increased the cost rate starting in 2009. From a peak

in 2013, the cost rate declines through 2017 under the economic recovery

and thereafter returns to a gradually rising trend. 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 sufficient to cover costs

through 2021, so trust fund asset reserves continue to grow. Beginning in

2022, cost exceeds total income, and 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 77 percent of program cost for the rest of 2034, declining to

73 percent for 2091. Figure II.D2 depicts OASDI operations as a 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 2028 for DI and in 2035 for OASI.
13

Future Financial Status

Figure II.D3 shows the estimated number of covered workers per OASDI

beneficiary. Figures II.D2 and II.D3 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 2016. 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 2.2 by 2035 when the babyboom generation will have largely retired, with a further gradual decline

thereafter due to increasing longevity.

 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

Non-interest Income

Payable benefits as percent

of scheduled benefits:

2016-33: 100%

2034: 77%

2091: 73%

Cost: Scheduled but not 

fully payable benefits

Expenditures: Payable benefits = income 

after trust fund depletion in 2034
Overview

14

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.D4, the Trustees project that Social Security’s

cost as a percent of GDP will grow from 4.9 percent in 2017 to about

6.1 percent by 2037, then decline to 5.9 percent by 2050, and generally

increase to 6.1 percent by 2091. As the economy recovers, Social Security’s

non-interest income, which reflects scheduled tax rates, remains at its current

level of about 4.8 percent of GDP through 2040. Thereafter, non-interest

income as a percent of GDP declines gradually, to about 4.6 percent by 2091,

because the Trustees expect the share of employee compensation provided as

noncovered fringe benefits to increase gradually.

 Figure II.D3.—Number of Covered Workers Per OASDI Beneficiary

[Under Intermediate Assumptions]

0

1

2

3

4

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

Calendar year

Historical Estimated
15

Future Financial Status

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

(2017 through 2091) and the year of trust fund asset reserve depletion. Each

trust fund ratio has been generally declining in recent years. OASI reached a

peak level of 402 in 2011, DI will reach a peak level of 65 in 2019, and

OASDI reached a peak level of 358 in 2008.

 Figure II.D4.—OASDI Cost and Non-interest Income as a Percentage of GDP

[Under Intermediate Assumptions]

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

and Trust Fund Reserve Depletion Dates

[Under Intermediate Assumptions]

OASI DI OASDI

Maximum projected trust fund ratio (percent). . . . . . 347 65 298

Year attained. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 2019 2017

Projected year of trust fund reserve depletion . . . . . . 2035 2028 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
Overview

16

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. Actuarial balance is expressed as a percentage of the taxable payroll for the 75-year

valuation period. A negative actuarial balance is called 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 2.83 percent of taxable payroll.

The actuarial deficit was 2.66 percent in the 2016 report. If the assumptions,

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

year, the actuarial deficit would have increased to 2.71 percent of payroll

solely due to advancing the valuation period by 1 year. 

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.D5 shows the present value of cumulative OASDI income less

cost from the inception of the program through each of the years from 2016

to 2091. 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 2016. The trust fund reserves decline on a

present value basis after 2016, 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 2091, the combined funds have a

present-value unfunded obligation of $12.5 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 $11.9 trillion due to the

change in the valuation date.

This unfunded obligation represents 2.66 percent of taxable payroll

(increased from 2.49 percent in last year’s report) and 0.9 percent of GDP

(increased slightly from last year’s report, remaining 0.9 percent after rounding) for the 75-year valuation period. The unfunded obligation as a share of
17

Future Financial Status

taxable payroll (2.66 percent) and the actuarial deficit (2.83 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.D4, and II.D5 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

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

 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.D5.—Cumulative Scheduled OASDI Income Less Cost,

From Program Inception Through Years 2016-2091

[Present value as of January 1, 2017, in trillions, under Intermediate Assumptions]

-$13

-$12

-$11

-$10

-$9

-$8

-$7

-$6

-$5

-$4

-$3

-$2

-$1

$0

$1

$2

$3

2016 2031 2046 2061 2076 2091

Ending year of accumulation

Unfunded 

obligation

(negative)

Trust fund 

reserves

(positive)

2034
Overview

18

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 4.2 percent of future taxable payroll or 1.4 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.D6 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.
19

Future Financial Status

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 5,000 independently generated stochastic simulations

that reflect randomly assigned annual values for most of the key parameters.

These simulations produce a distribution of projected outcomes 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.D7 suggests that based on these stochastic simulations, trust fund

asset reserves will become depleted between 2030 and 2043 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.D6.—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
Overview

20

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

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

Changes From Last Year’s Report

The projected long-range OASDI actuarial deficit increased by 0.17 percent

of taxable payroll, from 2.66 percent of taxable payroll for last year’s report

to 2.83 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

2.71 percent, an increase of 0.05 percent of taxable payroll. The remaining

0.12 percent increase is due to changes in law, methods, starting values, and

assumptions. For a detailed description of the specific changes identified in

table II.D2, see section IV.B.6.

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

From Stochastic Modeling

0%

100%

200%

300%

400%

2017 2032 2047 2062 2077 2092

Projection year

50%

97.5%

2.5%

90%

10%
21

Future Financial Status

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

Figure II.D8 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 lower (more negative) for most of the projection period.

See page 79 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.96 1.88 13.84

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.36 2.14 16.50

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.39 -.26 -2.66

Changes in actuarial balance due to changes in:

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

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 2091. 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 -.05

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

Economic data and assumptions. . . . . . . . . . . . . . . . . -.07 -.01 -.08

Disability data and assumptions. . . . . . . . . . . . . . . . . -.01 .03 .03

Methods and programmatic data . . . . . . . . . . . . . . . . -.05 .01 -.04

Total change in actuarial balance . . . . . . . . . . . . . . . . . . -.19 .02 -.17

Shown in this report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.59 -.24 -2.83

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.97 1.87 13.84

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.56 2.11 16.67
Overview

22

 Figure II.D8.—OASDI Annual Balances: 2016 and 2017 Trustees Reports

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

-6%

-4%

-2%

0%

2%

2015 2025 2035 2045 2055 2065 2075 2085 2095

Calendar year

2016 Report

2017 Report
23

Conclusion

E. CONCLUSION

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

projected income through 2037 primarily because the ratio of workers paying taxes to beneficiaries receiving benefits will decline as the baby-boom

generation ages and is replaced at working ages with subsequent lower birthrate generations. While the effects of the aging baby boom and subsequent

lower birth rates will have stabilized after 2037, annual cost will continue to

grow faster than income, but to a lesser degree, reflecting continuing

increases in life expectancy. Based on the Trustees’ intermediate assumptions, Social Security’s total income for years 2017 through 2021 exceeds its

total cost for each year. However, cost exceeds non-interest income for 2017,

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

the remainder of the 75-year projection period. 

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

reserves to pay full benefits on time until 2035 and 2028, respectively. Legislative action will be needed to prevent reserve depletion in those years. In the

absence of such legislation, continuing income to the trust funds at the time

of reserve depletion would be sufficient to pay 75 percent of OASI benefits

and 93 percent of DI benefits. 

Social Security’s combined trust funds increase with the help of interest

income through 2021 and would cover full payment of scheduled benefits on

a timely basis until the trust fund reserves become depleted in 2034. (Full

payment of benefits up until combined reserve depletion in 2034 implicitly

assumes that the law will have been changed to permit the transfer of funds

between OASI and DI as needed.) At that time, projected continuing income

to the combined trust funds equals about 77 percent of the program cost. By

2091, continuing income equals about 73 percent of the program cost.

The 75-year actuarial deficit for the combined trust funds under the intermediate assumptions is 2.83 percent of taxable payroll—0.17 percentage point

larger than the 2.66 percent deficit in last year’s report. To illustrate the magnitude of the deficit, consider that for the combined OASI and DI Trust

Funds to remain fully solvent throughout the 75-year projection period:

(1) revenues would have to be increased by an amount equivalent to an

immediate and permanent payroll tax rate increase of 2.76 percentage points

to 15.16 percent; (2) scheduled benefits would have to be reduced by an

amount equivalent to an immediate and permanent reduction of about

17 percent applied to all current and future beneficiaries, or about 20 percent

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

benefits in 2017 or later; or (3) some combination of these approaches would
Overview

24

have to be adopted. If actions are deferred for several years, the changes necessary to maintain Social Security solvency become concentrated on fewer

years and fewer generations.

If lawmakers design legislative solutions only to eliminate the overall actuarial deficit without consideration of year-by-year financing, then a substantial

financial imbalance could remain at the end of the period, and the long-range

sustainability of program financing could still be in doubt. Sustainable solvency for the financing of the program under a specified set of assumptions

is achieved when the projected trust fund ratio is positive throughout the

long-range period and is either stable or rising at the end of the period. Making changes now that achieve sustainable solvency could avoid the need for

later legislative changes.

Lawmakers have a broad continuum of policy options that would close or

reduce Social Security's long-term financing shortfall. Cost estimates for

many such policy options are available at www.ssa.gov/OACT/solvency/

provisions/. Broadly speaking, the approaches that lawmakers can take

include increasing revenues from workers and employers by raising the tax

rate or the maximum level of taxable earnings, or by dedicating revenues

from other sources; lowering benefits for some or all beneficiaries by changing certain program parameters; or a combination of these approaches. There

are countless variations on these options, including those that vary the timing, magnitude, and other specifics of the change(s) under consideration.

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 sooner rather than later would allow more generations to share in the

needed revenue increases or reductions in scheduled benefits and could preserve more trust fund reserves to help finance future benefits. Social Security

will play a critical role in the lives of 62 million beneficiaries and

173 million covered workers and their families in 2017. 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.ssa.gov/OACT/tr/2017/

 • www.ssa.gov/OACT/solvency/provisions/

 • www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trendsand-Reports/ReportsTrustFunds/
25

Conclusion

 • www.treasury.gov/resource-center/economic-policy/ss-medicare/Pages/

Soc-Sec-and-Medicare.aspx
Financial Operations and Legislative Changes

26

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 2016

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

DI Trust Funds1 during calendar year 2016. Chapter IV provides projections

for calendar years 2017 through 2095.

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 2016,

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 2016 amounted to

$797.5 billion, while disbursements totaled $776.4 billion, an increase in

trust fund reserves during 2016 of $21.1 billion.2

Total receipts during calendar year 2016 included $681.5 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 $2.7 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 $678.8 billion in 2016.

Net reimbursements from the General Fund of the Treasury amounted to

$0.1 billion in 2016. 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, or about

$87.2 million. These acts specified General Fund reimbursement for tempo-

 1 See www.ssa.gov/oact/ProgData/fundsQuery.html.

 2 In order to provide values that are comparable with other years, asset reserves shown for the end of 2015

reflect the 12 months of benefits scheduled for payment in 2015 and thus exclude the benefits scheduled for

payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the law.
27

Calendar Year 2016 Operations

rary reductions in employee and self-employment payroll taxes for earnings

in 2011 and 2012.

Income based on taxation of OASI benefits amounted to $31.6 billion in

2016. 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 2016 and adjustments to initial amounts

transferred for prior periods. The remaining one percent of the total income

from taxation of benefits represents amounts withheld from the benefits paid

to nonresident aliens.

In 2016, the OASI Trust Fund earned $87.0 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 $3 thousand, consisted of gifts received under

the provisions authorizing the deposit of monetary gifts or bequests in the

trust funds.
Financial Operations and Legislative Changes

28

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

Table III.A1.—Operations of the OASI Trust Fund, Calendar Year 2016

[In millions]

Total asset reserves, December 31, 2015a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

a Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset reserves reflect the 12 months of

benefits scheduled for payment in each year without regard to the accelerated payments described above.

$2,780,251

Receipts:

Net payroll tax contributions:

Payroll tax contributionsb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b Includes adjustments for prior calendar years.

$681,463

Payments from the General Fund of the Treasury for payroll tax contributions subject to refundb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,676

Net payroll tax contributionsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 678,787

Reimbursements from the General Fund:

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

and P.L. 112-96b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

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

c Between -$0.5 and $0.5 million.

Net General Fund reimbursementsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 199

All other, not subject to withholdingb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,424

Total income from taxation of benefitsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,623

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,962

Interest adjustmentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d 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. . . . . . . . . . . . . . . . . . . . . . . . 86,960

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 797,457

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsa e . . . . . . . . . . . . . . . . . . . . . . . .

e Includes net reductions for the recovery of overpayments.

768,633

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -34

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 4

Net benefit paymentsa e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 768,603

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,287

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,057

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3

Miscellaneous reimbursements from the General Fund f. . . . . . . . . . . . . . . . . . . . .

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

related to administering the OASI program.

-5

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,469

Total disbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 776,359

Net increase in asset reservesa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,097

Total invested assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,801,406

Undisbursed balances g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

g A negative balance represents a situation where the actual program cash expenditures exceeded the amount

of invested securities of the OASI Trust Fund that were redeemed to pay for such expenditures. In this situation, future redemption of additional invested securities will be required to pay for this shortfall.

-57

Total asset reserves, December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,801,349
29

Calendar Year 2016 Operations

Of the $776.4 billion in total OASI disbursements in 2016, $768.6 billion

was for net benefit payments,1 including recovered overpayments, reimbursements from the General Fund for unnegotiated checks, and the reimbursable costs of vocational rehabilitation services.2 Net benefit payments

increased by 3.5 percent from calendar year 2015 to calendar year 2016.

Normally, net benefit payments increase because of (1) an increase in the

total number of beneficiaries, (2) an increase in the average benefit amount

resulting from the annual cost-of-living adjustment, and (3) the fact that new

beneficiaries tend to have higher benefits than previous cohorts. For 2016,

the second of these factors did not contribute to the increase in benefit payments because there was no automatic cost-of-living adjustment for

December 2015.

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 in which they would have been 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 2016.

The remaining $3.5 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 2016, the cost incurred by the Social Security Administration to administer the OASI program was 88 percent of OASI net administrative expenses.

The Social Security Administration charges such costs to the trust fund

($3.1 billion in 2016). In addition, the Department of the Treasury charges to

 1 As noted in footnote a of table III.A1 and elsewhere in this report, benefit payments shown for 2016 reflect

the 12 months of benefits scheduled for payment in 2016 and thus include the benefits scheduled for payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the law.

 2 Vocational rehabilitation services under the OASI program 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.
Financial Operations and Legislative Changes

30

the trust fund expenses ($0.4 billion in 2016) for services provided in administering the OASI program. A relatively small offset ($3 million in 2016) to

administrative expenses represents income from miscellaneous receipts due

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

2016) and with the provision of information to participants in certain pension

plans ($1 million in 2016). These miscellaneous reimbursements totaled

$5 million in 2016.

The asset reserves shown for the OASI Trust Fund at the end of calendar

year 2016 totaled $2,801.3 billion, consisting of $2,801.4 billion in U.S.

Government obligations and, as an offset, an extension of credit of

$57 million against securities to be redeemed within the first few days of the

following year. The effective annual rate of interest earned by the reserves in

the OASI Trust Fund during calendar year 2016 was 3.1 percent, slightly

lower than the 3.3 percent earned during calendar year 2015. 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 2015 and 2016.

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
31

Calendar Year 2016 Operations

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, 2016, so that

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

over the 15-year period 2017 through 2031. The bonds purchased on that

date have an interest rate of 1.875 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 2016, including the amounts of bonds purchased on June 30, 2016.

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 2016, 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 $160.0 billion in total receipts, $157.4 billion was net payroll tax contributions.

Of the $145.9 billion of total disbursements, $142.8 billion was net benefit

payments.1 Net benefit payments decreased by 0.4 percent from calendar

year 2015 to calendar year 2016. This decrease in DI benefit payments was

primarily due to a decrease in the number of beneficiaries, which was partially offset by a slight increase in average benefit amounts. Non-interest

income, and total income, exceeded total disbursements in 2016 due primarily to the temporary reallocation of the payroll tax rate from OASI to DI for

years 2016 through 2018. DI total disbursements exceeded non-interest

income from 2005 to 2015, and exceeded total income to the trust fund from

2009 to 2015.

 1 As noted in footnote a of table III.A2, and elsewhere in this report, benefit payments shown for 2016

reflect the 12 months of benefits scheduled for payment in 2016 and thus include the benefits scheduled for

payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the law.
Financial Operations and Legislative Changes

32

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

Table III.A2.—Operations of the DI Trust Fund, Calendar Year 2016

[In millions]

Total asset reserves, December 31, 2015a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $6.1 billion. For comparability with the values for historical

years and the projections in this report, all trust fund operations and asset reserves reflect the 12 months of

benefits scheduled for payment in each year without regard to the accelerated payments described above.

$32,259

Receipts:

Net payroll tax contributions:

Payroll tax contributionsb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b Includes adjustments for prior calendar years.

$157,846

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

subject to refundb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -454

Net payroll tax contributionsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,391

Reimbursements from the General Fund:

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

and P.L. 112-96b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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

c Between -$0.5 and $0.5 million.

Net General Fund reimbursementsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Income based on taxation of benefit payments:

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

All other, not subject to withholdingb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,190

Total income from taxation of benefitsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,194

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,390

Interest adjustmentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d 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.

6

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 1,396

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,996

Disbursements:

Benefit payments:

Monthly benefitsa e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

e Includes net reductions for the recovery of overpayments.

142,703

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -18

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 97

Net benefit paymentsa e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,781

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,667

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Miscellaneous reimbursements from the General Fundf . . . . . . . . . . . . . . . . . . . . .

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

administering the DI program.

-4

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,760

Total disbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,917

Net increase in asset reservesa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,079

Total invested assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,481

Undisbursed balancesg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

g A negative balance represents a situation where the actual program cash expenditures exceeded the amount

of invested securities of the DI Trust Fund that were redeemed to pay for such expenditures. In this situation,

future redemption of additional invested securities will be required to pay for this shortfall.

-143

Total asset reserves, December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,338
33

Calendar Year 2016 Operations

During 2016, the reserves in the DI Trust Fund increased by $14.1 billion,

from $32.3 billion at the end of 2015 to $46.3 billion at the end of 2016. This

$46.3 billion consisted of $46.5 billion in U.S. Government obligations and,

as an offset, an extension of credit of $143 million against securities to be

redeemed within the first few days of the following year. The effective

annual rate of interest earned by the asset reserves in the DI Trust Fund

during calendar year 2016 was 3.6 percent, somewhat lower than the

4.6 percent earned during calendar year 2015. Table VI.A5 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 2015 and 2016.

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. Each year, bond

purchases for each trust fund are made on June 30, taking into account the

projected reserve depletion date in the most recently available Trustees

Report. The usual practice has 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 2016, 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, 2016,

so that the bonds would mature over the 6-year period 2017-22. The bonds

purchased have an interest rate of 1.875 percent, reflecting the average market yield, as of the last business day of the prior month, on the outstanding

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

future. As of June 30, 2016, the DI Trust Fund had already redeemed all

bonds coming due on June 30 in each of the years 2017 through 2021, so this

investment approach required that all bond purchases on June 30, 2016 be

split evenly over the maturity dates of June 30, 2017 through June 30, 2022.

Table III.A7 shows details on investment transactions during 2016.

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 hypothetical combined basis.1 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 hypothetical basis.
Financial Operations and Legislative Changes

34

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 2016

[In millions]

Total asset reserves, December 31, 2015a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $25.9 billion. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset reserves reflect the 12 months

of benefits scheduled for payment in each year without regard to the accelerated payments described above.

$2,812,510

Receipts:

Net payroll tax contributions:

Payroll tax contributionsb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b Includes adjustments for prior calendar years.

$839,309

Payments from the General Fund of the Treasury for payroll tax contributions subject to refundb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3,131

Net payroll tax contributionsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 836,178

Reimbursements from the General Fund:

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

and P.L. 112-96b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

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

c Between -$0.5 and $0.5 million.

Net General Fund reimbursementsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 203

All other, not subject to withholdingb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,614

Total income from taxation of benefitsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,817

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,352

Interest adjustmentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d 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.

4

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 88,356

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 957,453

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsa e . . . . . . . . . . . . . . . . . . . . . . . .

e Includes net reductions for the recovery of overpayments.

911,335

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -52

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 101

Net benefit paymentsa e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911,384

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,663

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,724

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Miscellaneous reimbursements from the General Fundf . . . . . . . . . . . . . . . . . . . . .

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

related to administering the OASI and DI programs.

-9

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,229

Total disbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 922,276

Net increase in asset reservesa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,177

Total invested assetsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,847,887

Undisbursed balancesa g. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .

g A negative balance represents a situation where the actual program cash expenditures exceeded the amount

of invested securities of the OASI and DI Trust Funds that were redeemed to pay for such expenditures. In

this situation, future redemption of additional invested securities will be required to pay for this shortfall.

-200

Total asset reserves, December 31, 2016a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,847,687
35

Calendar Year 2016 Operations

Table III.A4 compares estimates of total income and total expenditures for

calendar year 2016 from the 2012 through 2016 Trustees Reports to the corresponding actual amounts for 2016.

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.

Table III.A4.—Comparison of Actual Calendar Year 2016 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 2016 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 costc

c Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year.

Amount

Difference

from actual

(percent) Amount

Difference

from actual

(percent)

OASI Trust Fund:

Estimate in 2012 report . . . . . . . . . . . . . . $903.8 13.3 $823.3 6.0

Estimate in 2013 report . . . . . . . . . . . . . . 881.1 10.5 822.4 5.9

Estimate in 2014 report . . . . . . . . . . . . . . 858.8 7.7 807.5 4.0

Estimate in 2015 report . . . . . . . . . . . . . . 838.6 5.2 788.5 1.6

Estimate in 2016 report . . . . . . . . . . . . . . 786.7 -1.3 778.6 .3

Actual amount . . . . . . . . . . . . . . . . . . . . . 797.5 — 776.4 —

DI Trust Fund:

Estimate in 2012 report . . . . . . . . . . . . . . d

d In the annual reports for each year 2012 through 2015, the DI Trust Fund was projected to become depleted

in calendar year 2016 under the intermediate assumptions. Under those circumstances, scheduled benefits

could not be paid in full on a timely basis, so that certain projected items of income such as income from taxing benefits and interest on trust fund reserves could not be meaningfully projected. Accordingly, total DI

Trust Fund income was not reported for 2016 in those earlier reports. Following the tax rate reallocation

enacted in the Bipartisan Budget Act of 2015, we projected the depletion of the DI Trust Fund would not

occur until 2022 and thus reported an estimate for total income in 2016. Appendix A presents a detailed

description of the components of income and cost, along with complete historical values.

d 165.0 13.1

Estimate in 2013 report . . . . . . . . . . . . . . d d 160.8 10.2

Estimate in 2014 report . . . . . . . . . . . . . . d d 155.8 6.7

Estimate in 2015 report . . . . . . . . . . . . . . d d 152.1 4.3

Estimate in 2016 report . . . . . . . . . . . . . . 157.9 -1.3 150.2 3.0

Actual amount . . . . . . . . . . . . . . . . . . . . . 160.0 — 145.9 —

OASI and DI Trust Funds, combined:

Estimate in 2012 report . . . . . . . . . . . . . . 1,034.6 8.1 988.4 7.2

Estimate in 2013 report . . . . . . . . . . . . . . 1,010.9 5.6 983.2 6.6

Estimate in 2014 report . . . . . . . . . . . . . . 985.3 2.9 963.3 4.4

Estimate in 2015 report . . . . . . . . . . . . . . 962.6 .5 940.6 2.0

Estimate in 2016 report . . . . . . . . . . . . . . 944.6 -1.3 928.9 .7

Actual amount . . . . . . . . . . . . . . . . . . . . . 957.5 — 922.3 —
Financial Operations and Legislative Changes

36

At the end of calendar year 2016, the OASDI program was providing

monthly benefits to about 60.9 million people. The OASI Trust Fund was

providing benefits to about 50.3 million people and the DI Trust Fund was

providing benefits to about 10.6 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 1.8 percent during calendar

year 2016. These changes reflect the gradual aging of the population, with

the earliest cohorts of the baby-boom generation now 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 2015

and 2016, 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 2016 totaled $6.2 billion, equal to 0.7 percent each of total expenditures

and non-interest income. Table III.A6 shows corresponding percentages for

each trust fund separately and for OASDI as a whole for the last 5 years.

Table III.A5.—Distribution of Benefit Paymentsa by Type of Beneficiary or Payment, 

Calendar Years 2015 and 2016

[Amounts in millions]

a Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year

without regard to the accelerated payments described above.

Calendar year 2015 Calendar year 2016

Amount

Percentage

of total Amount

Percentage

of total

Total OASDI benefit payments . . . . . . . . . . $886,221 100.0 $911,335 100.0

OASI benefit payments . . . . . . . . . . . . . . 742,939 83.8 768,633 84.3

DI benefit payments . . . . . . . . . . . . . . . . . 143,282 16.2 142,703 15.7

OASI benefit payments, total. . . . . . . . . . . . 742,939 100.0 768,633 100.0

Monthly benefits:

Retired workers and auxiliaries . . . . . . 626,378 84.3 651,280 84.7

Retired workers . . . . . . . . . . . . . . . . 592,423 79.7 616,003 80.1

Spouses . . . . . . . . . . . . . . . . . . . . . . . 28,760 3.9 29,895 3.9

Children . . . . . . . . . . . . . . . . . . . . . . 5,195 .7 5,382 .7

Survivors of deceased workers. . . . . . . 116,352 15.7 117,148 15.2

Aged widows and widowers. . . . . . . 92,748 12.5 93,383 12.1

Disabled widows and widowers . . . . 2,368 .3 2,373 .3

Parents . . . . . . . . . . . . . . . . . . . . . . . 21 b

b Less than 0.05 percent.

21 b

Children . . . . . . . . . . . . . . . . . . . . . . 19,597 2.6 19,805 2.6

Widowed mothers and fathers 

caring for child beneficiaries . . . . 1,618 .2 1,568 .2

Lump-sum death payments . . . . . . . . . . . 209 b 204 b

DI benefit payments, total . . . . . . . . . . . . . . 143,282 100.0 142,703 100.0

Disabled workers . . . . . . . . . . . . . . . . . 133,945 93.5 133,644 93.7

Spouses. . . . . . . . . . . . . . . . . . . . . . . . . 588 .4 570 .4

Children . . . . . . . . . . . . . . . . . . . . . . . . 8,749 6.1 8,489 5.9
37

Calendar Year 2016 Operations

The acquisition and disposition of securities during calendar year 2016

changed the invested reserves of the OASI and DI Trust Funds. Table III.A7

presents investment transactions for each fund separately and combined.

Note: 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 2012-2016

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

2012 . . . . . . . . . . . 0.5 0.5 2.8 2.1 0.9 0.8

2013 . . . . . . . . . . . .5 .5 2.6 1.9 .8 .7

2014 . . . . . . . . . . . .5 .4 2.6 2.0 .8 .7

2015 . . . . . . . . . . . .5 .4 2.4 1.9 .7 .7

2016 . . . . . . . . . . . .5 .4 1.7 1.9 .7 .7

Table III.A7.—Trust Fund Investment Transactions, Calendar Year 2016

[In millions]

OASI

Trust Fund

DI

Trust Fund

OASI and DI

Trust Funds,

combined

Invested asset reserves, 

December 31, 2015a b . . . . . . . . . . . . . . . . .

a Invested asset reserves differ from total asset reserves by the amount of undisbursed balances. See

tables VI.A4 and VI.A5 for details.

b Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year

without regard to the accelerated payments described above. Redemptions of special issues and invested

asset reserves reflect the early redemption required in order to pay benefits on a timely basis as required by

law.

$2,760,518 $26,101 $2,786,619

Acquisitions:

Special issues:

Certificates of indebtedness . . . . . . . . . . . 753,291 159,541 912,832

Bondsc . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Purchased on June 30, 2016. The interest rate on these purchases was 1.875 percent.

220,605 18,068 238,673

Total acquisitions . . . . . . . . . . . . . . . . . . . 973,896 177,609 1,151,505

Dispositions:

Special issues:

Certificates of indebtedness . . . . . . . . . . . 741,844 151,103 892,947

Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191,165 6,126 197,291

Total dispositionsb . . . . . . . . . . . . . . . . . . 933,008 157,229 1,090,238

Net increase in invested asset reservesb. . . . . . 40,888 20,379 61,267

Invested asset reserves, 

December 31, 2016a . . . . . . . . . . . . . . . . . . 2,801,406 46,481 2,847,887
Financial Operations and Legislative Changes

38

B. SOCIAL SECURITY AMENDMENTS SINCE THE 2016 REPORT

Since the Trustees submitted the 2016 report to Congress, there have been no

new laws, regulations, or policy changes that are expected to have significant

effects on the actuarial status of the OASDI program. However, parts of

President Obama’s 2014 executive actions on immigration are no longer

expected to be implemented. Specifically, the estimates in this report assume

that the following two provisions will not be implemented: (1) granting legal

work and residence status to an expanded group of individuals who entered

the country as children (deferred action for childhood arrivals, or DACA) and

(2) granting similar status to certain parents of children born in the U.S. or

otherwise living in the country legally (deferred action for parents of

Americans, or DAPA). Last year’s report assumed that these two actions

would become effective late in 2016, with individuals gaining authorization

starting around the beginning of 2017. This change is projected to have a

negligible effect on the financial status of the OASDI program.

Sections IV.A.4 and IV.B.6 of this report provide further description of the

magnitude of effects on the financial status of the OASDI program.
39

Short-Range Estimates

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 (2017 through 2026) first, followed by estimates and measures of actuarial status for the long-range period (2017

through 2091). 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 solvent at any point in time if the

funds can pay scheduled benefits in full on a timely basis. A standard measure for assessing solvency is the “trust fund ratio,” which is the reserves in a

fund at the beginning of a year (not including advance tax transfers)

expressed as a percentage of the cost during the year. A positive trust fund

ratio indicates that the trust fund was solvent at the end of the prior year. The
Actuarial Estimates

40

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 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 diminish 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 test of short-range financial adequacy applies to the OASI and DI Trust

Funds individually and combined on a hypothetical basis.1 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 2017 through 2026. These estimates assume that there are no further changes in the statutory provisions and regulations under which the

OASDI program currently operates beyond the changes since last year’s

report indicated in section III.B.2

Estimates of the OASI Trust Fund operations presented in Table IV.A1 indicate that the asset reserves of the OASI Trust Fund increase through 2021

and decrease thereafter under the intermediate assumptions, increase

throughout the next 10 years under the low-cost assumptions, and increase

during 2017 and decrease thereafter 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

 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 hypothetical basis.

 2 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 payments when the normal

check delivery date is a Saturday, Sunday, or legal public holiday.
41

Short-Range Estimates

the OASI Trust Fund continue to exceed 100 percent of annual cost by a

large amount through the end of 2026. Consequently, the OASI Trust Fund

satisfies the test of short-range financial adequacy by a wide margin. See

figure IV.A1 for an illustration of these results.

Table IV.A1.—Operations of the OASI Trust Fund, Calendar Years 2012-2026a

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation of

benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

Historical data:

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

2015. . . 801.6 679.5 .3 30.6 91.2 750.5 742.9 3.4 4.3 51.0 2,780.3 364

2016. . . 797.5 678.8 .1 31.6 87.0 776.4 768.6 3.5 4.3 21.1 2,801.3 358

Intermediate:

2017. . . 839.8 719.8 f 36.2 83.8 807.2 799.5 3.3 4.4 32.5 2,833.9 347

2018. . . 873.6 751.0 f 39.2 83.5 859.0 850.9 3.3 4.7 14.6 2,848.5 330

2019. . . 961.1 832.8 f 43.1 85.2 922.9 914.6 3.5 4.8 38.2 2,886.7 309

2020. . . 1,014.2 879.2 f 47.3 87.8 987.8 979.3 3.6 4.9 26.4 2,913.1 292

2021. . . 1,065.2 923.5 f 51.8 89.9 1,053.2 1,044.4 3.8 5.0 12.1 2,925.2 277

2022. . . 1,115.6 967.3 f 56.4 91.9 1,125.0 1,115.9 3.9 5.2 -9.3 2,915.9 260

2023. . . 1,164.7 1,009.4 f 61.3 94.0 1,201.1 1,191.8 4.0 5.3 -36.4 2,879.5 243

2024. . . 1,216.3 1,053.9 f 66.5 95.9 1,281.3 1,271.7 4.1 5.5 -64.9 2,814.5 225

2025. . . 1,267.6 1,098.6 f 72.2 96.8 1,364.2 1,354.5 4.2 5.5 -96.7 2,717.8 206

2026. . . 1,321.3 1,145.7 f 78.4 97.3 1,451.3 1,441.3 4.3 5.7 -129.9 2,587.9 187

Low-cost:

2017. . . 846.6 725.5 f 36.1 85.0 806.7 799.0 3.3 4.4 39.9 2,841.3 347

2018. . . 904.2 776.1 f 39.4 88.8 863.3 855.3 3.3 4.7 40.9 2,882.1 329

2019. . . 1,018.8 879.2 f 43.7 95.8 934.3 926.1 3.5 4.8 84.4 2,966.6 308

2020. . . 1,096.3 944.2 f 48.1 104.0 1,005.4 996.8 3.7 4.9 90.9 3,057.5 295

2021. . . 1,170.5 1,005.4 f 53.0 112.1 1,076.6 1,067.7 3.9 5.0 93.9 3,151.4 284

2022. . . 1,246.1 1,067.0 f 57.9 121.3 1,154.9 1,145.6 4.1 5.2 91.2 3,242.6 273

2023. . . 1,325.5 1,130.2 f 63.2 132.1 1,238.6 1,228.9 4.2 5.4 87.0 3,329.5 262

2024. . . 1,411.3 1,198.3 f 68.9 144.1 1,327.2 1,317.3 4.4 5.5 84.1 3,413.6 251

2025. . . 1,500.5 1,268.7 f 75.2 156.6 1,420.1 1,409.9 4.6 5.6 80.4 3,494.0 240

2026. . . 1,596.3 1,343.9 f 82.0 170.4 1,518.6 1,508.0 4.8 5.8 77.7 3,571.7 230
Actuarial Estimates

42

High-cost:

2017. . . $832.9 $713.8 f $36.2 $83.0 $807.7 $800.0 $3.3 $4.4 $25.2 $2,826.5 347

2018. . . 834.9 717.0 f 39.0 79.0 854.6 846.5 3.3 4.7 -19.6 2,806.9 331

2019. . . 891.5 773.1 f 42.9 75.5 916.7 908.4 3.4 4.9 -25.2 2,781.7 306

2020. . . 922.7 802.7 f 46.8 73.3 977.7 969.2 3.5 5.0 -55.0 2,726.6 284

2021. . . 952.4 831.3 f 51.1 70.0 1,037.6 1,029.0 3.6 5.1 -85.3 2,641.4 263

2022. . . 980.9 860.0 f 55.3 65.6 1,103.4 1,094.4 3.7 5.3 -122.5 2,518.9 239

2023. . . 1,008.3 887.4 f 59.8 61.1 1,172.6 1,163.5 3.8 5.4 -164.3 2,354.5 215

2024. . . 1,036.3 915.6 f 64.6 56.1 1,244.7 1,235.4 3.8 5.5 -208.3 2,146.2 189

2025. . . 1,062.3 942.2 f 69.8 50.3 1,318.1 1,308.7 3.9 5.5 -255.8 1,890.4 163

2026. . . 1,089.3 968.7 f 75.3 45.3 1,394.2 1,384.6 3.9 5.6 -304.9 1,585.5 136

a Appendix A presents a detailed description of the components of income and cost, along with complete historical values.

b Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as required by the

statutory provision for early benefit payments when the normal delivery date is on a weekend or holiday. Such

shifts in payments across calendar years have occurred in the past and will occur periodically in the future

whenever January 3rd falls on a Sunday. In order to provide a consistent perspective on trust fund operations

over time, all trust fund operations in each year reflect the 12 months of benefits that are regularly scheduled for

payment in that year. 

c Includes reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of

benefits to certain uninsured persons who attained age 72 before 1968; (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.

d Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

e 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.

f Between -$50 million and $50 million.

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

Table IV.A1.—Operations of the OASI Trust Fund, Calendar Years 2012-2026a (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation of

benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
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, as well as a return to pre-reallocation tax rates in 2019. Employment

increases in every year through 2026 for all three alternatives, with the

exception of slight decreases in covered employment in 2018 and 2019 for

the high-cost alternative: the number of persons with taxable earnings

increases on the basis of alternatives I, II, and III from 171 million during

calendar year 2016 to about 188 million, 184 million, and 180 million,

respectively, in 2026. The total annual amount of taxable earnings increases

in every year through 2026 for each alternative. Total earnings increase from

$6,757 billion in 2016 to $12,760 billion, $10,873 billion, and $9,189 billion

in 2026, 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.

 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%

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

Calendar year

DI

OASI

Historical Estimated

Minimumlevelfor "short-term financial adequacy"

I

II III

I

II

III
Actuarial Estimates

44

Interest earnings contribute to the overall projected increase in trust fund

income during this period. In the first few years of the projection period,

annual interest earnings decline slightly 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 changes in 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 under

the intermediate assumptions. By 2026, OASI interest income under the

intermediate assumptions is about 7 percent of total trust fund income, as

compared to 11 percent in 2016.

Rising OASI cost during 2017 through 2026 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.1

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 2017 through 2026 under the three sets of

assumptions, together with values for actual experience during 2012 through

2016. Non-interest income for DI is much higher in 2016 through 2018 than

in 2015, due to the temporary payroll tax rate reallocation from OASI to DI.

As a result, DI Trust Fund reserves increase through 2018 under each alternative. After returning to the ultimate allocation of tax rates in 2019, noninterest income is again less than DI cost except under the low-cost alternative. Non-interest income increases steadily thereafter under each alternative,

due to most of the same factors described previously for the OASI Trust

Fund. DI cost grows steadily throughout the period under each alternative.

 1 For an explanation of the interrelationship between the Medicare and Social Security trust funds and the

overall Federal budget, see appendix F of the 2017 Medicare Trustees Report.
45

Short-Range Estimates

Under the intermediate assumptions, reserves decline after 2018. Under the

high-cost assumptions, DI reserves decline after 2018 until depletion in the

fourth quarter of 2021. Under the low-cost assumptions, reserves increase

throughout the short-range period.

Table IV.A2.—Operations of the DI Trust Fund, Calendar Years 2012-2026a

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation of

benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

Historical data:

2012 . . . $109.1 $85.6 $16.5 $0.6 $6.4 $140.3 $136.9 $2.9 $0.5 -$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

2015 . . . 118.6 115.4 f 1.1 2.1 146.6 143.4 2.8 .4 -28.0 32.3 41

2016 . . . 160.0 157.4 f 1.2 1.4 145.9 142.8 2.8 .4 14.1 46.3 22

Intermediate:

2017 . . . 174.0 170.1 f 2.0 1.9 148.0 144.6 3.1 .2 26.0 72.4 31

2018 . . . 182.6 177.4 f 2.1 3.0 152.5 149.5 2.9 .1 30.1 102.4 47

2019 . . . 149.8 143.8 f 2.3 3.6 158.7 155.6 3.0 .1 -8.9 93.5 65

2020 . . . 155.1 149.3 f 2.5 3.3 164.7 161.2 3.4 .1 -9.5 84.0 57

2021 . . . 162.5 156.8 f 2.7 3.0 171.3 167.5 3.7 .1 -8.8 75.1 49

2022 . . . 169.8 164.3 f 2.9 2.6 178.7 174.6 3.9 .1 -8.8 66.3 42

2023 . . . 176.9 171.4 f 3.1 2.4 186.9 182.6 4.2 .1 -10.0 56.3 35

2024 . . . 184.4 179.0 f 3.4 2.0 195.1 190.5 4.5 .1 -10.7 45.6 29

2025 . . . 191.8 186.6 f 3.7 1.6 204.0 199.2 4.7 .1 -12.3 33.3 22

2026 . . . 199.6 194.5 f 4.0 1.1 213.5 208.4 5.0 .1 -13.9 19.5 16

Low-cost:

2017 . . . 175.6 171.4 f 2.0 2.2 145.9 142.6 3.1 .2 29.6 76.0 32

2018 . . . 189.5 183.4 f 2.1 4.0 149.5 146.4 2.9 .1 40.0 116.0 51

2019 . . . 159.5 151.8 f 2.3 5.4 154.8 151.7 3.0 .1 4.7 120.7 75

2020 . . . 168.7 160.3 f 2.4 5.9 159.7 156.2 3.4 .1 8.9 129.6 76

2021 . . . 180.1 170.7 f 2.6 6.7 165.4 161.5 3.8 .1 14.6 144.2 78

2022 . . . 192.0 181.2 f 2.8 8.0 171.8 167.6 4.1 .1 20.2 164.4 84

2023 . . . 204.5 191.9 f 3.0 9.6 179.1 174.6 4.4 .1 25.5 189.9 92

2024 . . . 218.2 203.5 f 3.2 11.5 186.5 181.7 4.8 .1 31.7 221.6 102

2025 . . . 232.7 215.4 f 3.5 13.8 194.8 189.6 5.1 f 38.0 259.6 114

2026 . . . 248.6 228.2 f 3.8 16.6 203.7 198.1 5.5 f 44.9 304.5 127
Actuarial Estimates

46

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.

Future changes in DI cost also reflect changes in the number of DI beneficiaries in current-payment status. In 2016, the number of DI beneficiaries in

current-payment status continued the trend of the prior two years by dropping slightly from the end of 2015 to the end of 2016. Under the intermediate

assumptions, that number is estimated to drop further through the end of

2017, and increase thereafter through the remainder of the short-range projection period. The increases after 2017 are at a much slower rate than has

been experienced on average over the past 20 years, due in large part to longanticipated demographic trends and expected economic conditions, and in

High-cost:

2017 . . .$172.5 $168.7 f $2.0 $1.8 $150.1 $146.8 $3.1 $0.2 $22.3 $68.7 31

2018 . . . 173.7 169.4 f 2.2 2.1 155.7 152.6 2.9 .2 18.1 86.7 44

2019 . . . 138.2 133.6 f 2.4 2.2 163.4 160.3 3.0 .1 -25.2 61.5 53

2020 . . . 140.6 136.3 f 2.6 1.7 170.4 166.9 3.3 .2 -29.8 31.7 36

2021 . . . g 141.2 f 2.8 g 177.6 173.9 3.5 .2 g g 18

2022 . . . g 146.0 f 3.0 g 185.3 181.4 3.8 .1 g gg

2023 . . . g 150.7 f 3.3 g 193.8 189.7 4.0 .1 g gg

2024 . . . g 155.5 f 3.5 g 202.2 197.9 4.2 .1 g gg

2025 . . . g 160.0 f 3.8 g 211.2 206.7 4.4 .1 g gg

2026 . . . g 164.5 f 4.1 g 220.5 215.8 4.6 .1 g gg

a The DI Trust Fund reserves become depleted in the fourth quarter of 2021 under the high-cost assumptions.

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 Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as required by

the statutory provision for early benefit payments when the normal delivery date is on a weekend or holiday.

Such shifts in payments across calendar years have occurred in the past and will occur periodically in the future

whenever January 3rd falls on a Sunday. In order to provide a consistent perspective on trust fund operations

over time, all trust fund operations in each year reflect the 12 months of benefits that are regularly scheduled for

payment in that year. 

c Includes reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; (2)

the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public

Law 110-246; and (3) payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-

78, and 112-96.

d Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

e 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.

f Between -$50 million and $50 million.

g While the fund is depleted, values under current law would reflect permissible expenditures only, which would

be less than the cost of scheduled benefits shown in this table.

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

Table IV.A2.—Operations of the DI Trust Fund, Calendar Years 2012-2026a (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation of

benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
47

Short-Range Estimates

part to an expected continuation of recent low incidence rates through the

first few years of the short-range period as discussed in section V.C.5.

At the beginning of calendar year 2016, the reserves of the DI Trust Fund

represented 22 percent of annual cost. During 2016, DI income substantially

exceeded cost, and the estimated trust fund ratio for the beginning of 2017

increased to about 31 percent. Under the intermediate assumptions, the temporary reallocation of the payroll tax rate from OASI to DI causes DI total

income to exceed cost through 2018, and reserves to increase to a level of

65 percent of annual cost at the beginning of 2019. Thereafter, cost exceeds

total income throughout the short-range projection period and trust fund

reserves steadily decline.

Because the reserves of the DI Trust Fund at the beginning of 2017 were less

than the estimated annual cost for 2017, and they are projected to remain

below annual cost throughout the short-range period under the intermediate

assumptions, the DI Trust Fund fails the Trustees’ test of short-range financial adequacy.

3. Operations of the Combined OASI and DI Trust Funds

Table IV.A3 shows the estimated operations and status of the combined

OASI and DI Trust Funds for calendar years 2017 through 2026 under the

three alternatives, together with actual experience in 2012 through 2016.

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 shortrange 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 test of short-range

financial adequacy. 

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

Calendar Years 2012-2026a

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation

of benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

Historical data:

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

2015 . . 920.2 794.9 .3 31.6 93.3 897.1 886.3 6.2 4.7 23.0 2,812.5 311

2016 . . 957.5 836.2 .1 32.8 88.4 922.3 911.4 6.2 4.7 35.2 2,847.7 305
Actuarial Estimates

48

Intermediate:

2017 . . $1,013.8 $889.9 f $38.1 $85.7 $955.2 $944.1 $6.5 $4.6 $58.6 $2,906.2 298

2018 . . 1,056.2 928.4 f 41.3 86.5 1,011.5 1,000.4 6.3 4.9 44.7 2,950.9 287

2019 . . 1,110.9 976.6 f 45.5 88.8 1,081.6 1,070.2 6.5 4.9 29.3 2,980.2 273

2020 . . 1,169.3 1,028.5 f 49.8 91.1 1,152.5 1,140.4 7.0 5.1 16.8 2,997.1 259

2021 . . 1,227.7 1,080.3 f 54.6 92.8 1,224.5 1,212.0 7.4 5.1 3.3 3,000.3 245

2022 . . 1,285.4 1,131.6 f 59.3 94.6 1,303.6 1,290.5 7.8 5.3 -18.2 2,982.2 230

2023 . . 1,341.6 1,180.8 f 64.4 96.4 1,388.0 1,374.4 8.2 5.4 -46.4 2,935.8 215

2024 . . 1,400.7 1,232.9 f 69.9 97.9 1,476.3 1,462.2 8.6 5.5 -75.7 2,860.1 199

2025 . . 1,459.3 1,285.1 f 75.9 98.3 1,568.3 1,553.8 9.0 5.6 -108.9 2,751.2 182

2026 . . 1,520.9 1,340.2 f 82.3 98.4 1,664.7 1,649.6 9.4 5.7 -143.8 2,607.4 165

Low-cost:

2017 . . 1,022.2 896.9 f 38.1 87.1 952.7 941.6 6.5 4.6 69.5 2,917.2 299

2018 . . 1,093.7 959.5 f 41.5 92.8 1,012.8 1,001.7 6.3 4.8 80.9 2,998.1 288

2019 . . 1,178.2 1,031.0 f 46.0 101.3 1,089.1 1,077.8 6.5 4.9 89.1 3,087.2 275

2020 . . 1,265.0 1,104.5 f 50.6 109.9 1,165.1 1,153.0 7.1 5.1 99.8 3,187.0 265

2021 . . 1,350.6 1,176.1 f 55.6 118.8 1,242.0 1,229.2 7.6 5.1 108.6 3,295.6 257

2022 . . 1,438.0 1,248.1 f 60.7 129.2 1,326.7 1,313.2 8.2 5.3 111.4 3,407.0 248

2023 . . 1,530.0 1,322.2 f 66.2 141.7 1,417.6 1,403.5 8.7 5.5 112.4 3,519.4 240

2024 . . 1,629.5 1,401.8 f 72.1 155.6 1,513.7 1,499.0 9.2 5.6 115.8 3,635.2 232

2025 . . 1,733.2 1,484.2 f 78.7 170.4 1,614.9 1,599.6 9.7 5.6 118.3 3,753.5 225

2026 . . 1,844.9 1,572.1 f 85.8 187.0 1,722.2 1,706.2 10.3 5.8 122.6 3,876.2 218

High-cost:

2017 . . 1,005.4 882.5 f 38.2 84.8 957.9 946.8 6.5 4.6 47.5 2,895.2 297

2018 . . 1,008.7 886.4 f 41.1 81.1 1,010.2 999.1 6.3 4.9 -1.6 2,893.6 287

2019 . . 1,029.7 906.7 f 45.3 77.7 1,080.1 1,068.7 6.5 5.0 -50.5 2,843.2 268

2020 . . 1,063.3 939.0 f 49.4 74.9 1,148.1 1,136.1 6.8 5.2 -84.9 2,758.3 248

2021 . . 1,097.0 972.4 f 53.9 70.7 1,215.2 1,202.8 7.2 5.2 -118.2 2,640.1 227

2022 . . 1,129.2 1,006.1 f 58.3 64.8 1,288.7 1,275.8 7.5 5.4 -159.5 2,480.5 205

2023 . . 1,159.8 1,038.1 f 63.1 58.6 1,366.4 1,353.2 7.7 5.5 -206.6 2,273.9 182

2024 . . 1,191.0 1,071.1 f 68.1 51.7 1,446.8 1,433.3 8.0 5.6 -255.9 2,018.1 157

2025 . . 1,219.6 1,102.2 f 73.6 43.8 1,529.3 1,515.4 8.3 5.6 -309.7 1,708.4 132

2026 . . 1,249.0 1,133.2 f 79.4 36.4 1,614.7 1,600.5 8.5 5.7 -365.7 1,342.7 106

a Appendix A presents a detailed description of the components of income and cost, along with complete historical values.

b Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as required by the

statutory provision for early benefit payments when the normal delivery date is on a weekend or holiday. Such

shifts in payments across calendar years have occurred in the past and will occur periodically in the future whenever January 3rd falls on a Sunday. In order to provide a consistent perspective on trust fund operations over time,

all trust fund operations in each year reflect the 12 months of benefits that are regularly scheduled for payment in

that year. 

c Includes reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1) the

cost of benefits to certain uninsured persons who attained age 72 before 1968; (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.

d Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

e 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.

f Between -$50 million and $50 million.

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

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

Calendar Years 2012-2026a (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation

of benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
49

Short-Range Estimates

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

From the 2016 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 combined funds from last year’s report to this report.

In the 2016 report under intermediate assumptions, the trust fund ratio for

OASI reached 194 percent at the beginning of 2025—the tenth projection

year for that report. The change in the short-range valuation period alone,

from 2016 through 2025 to 2017 through 2026, lowered the estimated trust

fund ratio for the tenth year by 19 percentage points, to 175 percent. All

other changes to reflect modifications in law and regulations since last year’s

report, the most recent data, adjustments to the assumptions for future years,

and changes in projection methods combined for a net increase in the ratio

for the tenth projection year of 12 percentage points. Therefore, the total

change in the 10th-year projected trust fund ratio from last year’s report to

this year’s report is a reduction of 7 percentage points to 187 percent.

Because a portion of the 2014 executive actions on immigration are no longer expected to be implemented, the projected tenth year OASI trust fund

ratio is reduced by 2 percentage points, primarily due to lower payroll tax

revenues. Changes in demographic assumptions over the short-range period

increased the projected tenth-year trust fund ratio for OASI by 1 percentage

point. Changes in economic data and assumptions, primarily the combined

effects of changes in cost-of-living adjustments, interest rates, and payroll

tax revenues over the ten year period, caused a net reduction in the OASI

trust fund ratio of 2 percentage points by the beginning of 2026. Incorporating recent programmatic data resulted in an increase of 9 percentage points

in the tenth year OASI trust fund ratio. This increase was primarily due to

recent data showing that retired workers have been starting benefits at later

ages, which in turn led to lower beneficiary counts throughout the shortrange period. Finally, an improvement in the short-range methodology for

projecting average benefits for newly awarded retired workers increased the

tenth year trust fund ratio by 6 percentage points.

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 for the beginning of 2025 for

the DI Trust Fund and the combined OASI and DI Trust Funds in last year’s

report are hypothetical because the Trustees projected that the DI Trust Fund

reserves would be depleted prior to the end of the short-range projection

period in that report. 
Actuarial Estimates

50

The 34-percentage-point increase in the DI trust fund ratio from last year’s to

this year’s report is the net effect of increases and decreases from the factors

described in the prior paragraph for the OASI Trust Fund, combined with a

large programmatic increase of 45 points predominantly due to decreases in

estimated disabled worker incidence rates over the short range period. Disability applications have been declining since 2010 and the total number of

disabled worker beneficiaries in current payment status has been falling

since 2014. In last year’s report, disabled worker beneficiaries were projected to rise from 8.9 million at the end of 2015 to about 9.0 million at the

end of 2016. In fact, the number dropped to just about 8.8 million at the end

of 2016. For this report, ultimate disability incidence rate assumptions are

unchanged from the last report. This year’s report reflects lower recent incidence rates and a more gradual rise to the ultimate DI incidence rates. These

changes are primarily responsible for extending the DI reserve depletion date

from 2023 in last year’s report to beyond the end of the short-range period in

this year’s report. The long-range effects are noted in section IV.B.6 and are

further described in section V.C.5.

2

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 2025a.

a Figures for DI, and OASI and DI combined, are hypothetical because the DI Trust Fund reserves are

depleted before the beginning of the tenth year under the assumptions of last year’s 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.

194 -18 165

Change in trust fund ratio due to changes in: 

Legislation and regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2 -2 -2

Valuation period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19 -10 -16

Demographic data and assumptions. . . . . . . . . . . . . . . . . . . . . . . 1 b

b Between -0.5 and 0.5 percent.

1

Economic data and assumptions . . . . . . . . . . . . . . . . . . . . . . . . . -2 2 -2

Programmatic data and assumptions . . . . . . . . . . . . . . . . . . . . . . 9 45 14

Projection methods and data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 -2 5

Total change in trust fund ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7 34 b

Trust fund ratio shown in this report for calendar year 2026. . . . . . . 187 16 165
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 increase from 10.61 percent of payroll for 2017 to

11.09 percent of payroll for 2019. The projected OASI income rate is low for

2017 and 2018 because of the payroll tax rate reallocation of 0.57 percentage

point from OASI to DI for 2016 through 2018, as enacted in the Bipartisan

Budget Act of 2015. After returning to the pre-reallocation level for 2019,

the income rate will rise at a very gradual rate to 11.47 percent of taxable

payroll for 2091. 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. 

From 2017 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 2052,

the cost rate declines because the aging baby-boom generation is gradually

 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

replaced at retirement ages by the historically low-birth-rate generation born

between 1966 and 1989. After 2052, the projected OASI cost rate generally

rises slowly, reaching 15.57 percent of taxable payroll for 2091, primarily

because of projected reductions in death rates at higher ages.

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 2035 at 12.75 percent of payroll. The cost rate then

declines to 11.55 percent for 2055, rises to 11.67 percent for 2070, and

declines again to 11.21 percent for 2085 before rising to 11.38 percent for

2091, at which point the income rate reaches 11.23 percent. For the high-cost

assumptions, the OASI cost rate generally rises throughout the 75-year

period. It rises relatively rapidly through about 2039 because of the aging of

the baby-boom generation. Thereafter, the cost rate continues to generally

rise and reaches 21.94 percent of payroll for 2091, at which point the income

rate reaches 11.84 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 is temporarily higher for years 2016 through 2018 because of

the 0.57-percentage-point payroll tax rate reallocation from OASI to DI.

After returning to the pre-reallocation level for 2019, the annual deficit then

rises relatively rapidly from 0.59 percent for 2019 to 3.60 percent for 2037. It

then declines to 3.02 percent of payroll for 2052, and generally rises thereafter, reaching 4.10 percent of taxable payroll for 2091.

Under the low-cost assumptions, after the 2016-2018 payroll tax rate reallocation period, the annual deficit rises from 0.14 percent of payroll for 2019

to 1.47 percent of payroll for 2035. Then the annual deficit generally

declines until it becomes a positive annual balance for 2084. The annual balance turns negative again for 2087, reaching a deficit of 0.16 percent of payroll for 2091. Under the high-cost assumptions, the OASI balance generally

worsens throughout the projection period. Annual deficits rise to

1.69 percent for 2020, 6.53 percent for 2050, and 10.10 percent of payroll for

2091.
Actuarial Estimates

54

Table IV.B1.—Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2095

[As a percentage of taxable payroll]

Calendar 

year

OASI DI OASDI

Income

ratea Costrateb Balanceb Incomeratea Costrateb Balanceb Incomeratea Costrateb Balanceb

Historical data:

1990. . . . . 11.47 9.65 1.82 1.18 1.09 0.10 12.65 10.74 1.91

1995. . . . . 10.65 10.23 .42 1.87 1.44 .43 12.52 11.67 .85

2000. . . . . 10.85 8.98 1.87 1.78 1.42 .36 12.62 10.40 2.23

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 12.54 13.47 -.92

2011 . . . . . 10.84 11.04 -.21 1.80 2.42 -.62 12.64 13.47 -.83

2012. . . . . 11.05 11.35 -.30 1.81 2.47 -.66 12.86 13.82 -.96

2013. . . . . 10.97 11.54 -.57 1.81 2.44 -.63 12.78 13.98 -1.20

2014. . . . . 10.94 11.59 -.64 1.81 2.35 -.54 12.75 13.94 -1.19

2015. . . . . 10.97 11.59 -.62 1.80 2.26 -.46 12.77 13.86 -1.09

2016. . . . . 10.56 11.54 -.98 2.36 2.17 .19 12.91 13.70 -.79

Intermediate:

2017. . . . . 10.61 11.33 -.72 2.42 2.08 .34 13.03 13.41 -.38

2018. . . . . 10.54 11.45 -.92 2.39 2.03 .36 12.93 13.49 -.56

2019. . . . . 11.09 11.69 -.59 1.85 2.01 -.16 12.95 13.70 -.75

2020. . . . . 11.14 11.87 -.74 1.82 1.98 -.15 12.96 13.85 -.89

2021. . . . . 11.17 12.06 -.89 1.83 1.96 -.13 12.99 14.02 -1.03

2022. . . . . 11.19 12.30 -1.11 1.83 1.95 -.13 13.02 14.26 -1.23

2023. . . . . 11.22 12.59 -1.37 1.83 1.96 -.13 13.05 14.54 -1.50

2024. . . . . 11.25 12.87 -1.61 1.83 1.96 -.13 13.08 14.83 -1.74

2025. . . . . 11.27 13.13 -1.86 1.83 1.96 -.13 13.10 15.10 -2.00

2026. . . . . 11.30 13.40 -2.10 1.83 1.97 -.14 13.14 15.37 -2.24

2030. . . . . 11.36 14.31 -2.95 1.83 1.96 -.13 13.20 16.27 -3.07

2035. . . . . 11.41 14.93 -3.52 1.83 2.00 -.16 13.24 16.93 -3.69

2040. . . . . 11.41 14.93 -3.52 1.84 2.03 -.19 13.25 16.96 -3.71

2045. . . . . 11.40 14.62 -3.22 1.84 2.09 -.26 13.24 16.72 -3.48

2050. . . . . 11.39 14.44 -3.05 1.84 2.13 -.29 13.23 16.57 -3.34

2055. . . . . 11.40 14.46 -3.06 1.84 2.16 -.32 13.24 16.62 -3.38

2060. . . . . 11.41 14.68 -3.27 1.84 2.14 -.31 13.25 16.83 -3.58

2065. . . . . 11.43 14.91 -3.48 1.84 2.15 -.31 13.27 17.07 -3.80

2070. . . . . 11.44 15.16 -3.72 1.84 2.16 -.32 13.28 17.33 -4.04

2075. . . . . 11.46 15.36 -3.90 1.84 2.15 -.31 13.30 17.50 -4.21

2080. . . . . 11.46 15.34 -3.89 1.84 2.17 -.33 13.30 17.51 -4.21

2085. . . . . 11.46 15.33 -3.87 1.84 2.22 -.38 13.30 17.55 -4.25

2090. . . . . 11.47 15.52 -4.05 1.84 2.23 -.39 13.31 17.75 -4.44

2095. . . . . 11.48 15.75 -4.27 1.84 2.22 -.38 13.33 17.97 -4.65

First year balance becomes

negative and remains negative

throughout the 75-year

projection period . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . 2010
55

Long-Range Estimates

Low-cost:

2017. . . . . 10.55 11.18 -0.62 2.40 2.02 0.38 12.96 13.20 -0.24

2018. . . . . 10.51 11.13 -.62 2.39 1.93 .46 12.90 13.06 -.15

2019. . . . . 11.06 11.20 -.14 1.85 1.86 -.01 12.91 13.06 -.15

2020. . . . . 11.10 11.25 -.15 1.82 1.79 .03 12.92 13.03 -.11

2021. . . . . 11.12 11.31 -.19 1.82 1.74 .08 12.94 13.05 -.11

2022. . . . . 11.14 11.44 -.30 1.82 1.70 .12 12.97 13.14 -.18

2023. . . . . 11.16 11.58 -.42 1.82 1.67 .15 12.98 13.26 -.27

2024. . . . . 11.19 11.71 -.53 1.82 1.65 .18 13.01 13.36 -.35

2025. . . . . 11.20 11.83 -.63 1.82 1.62 .20 13.02 13.45 -.43

2026. . . . . 11.22 11.95 -.73 1.82 1.60 .22 13.04 13.55 -.51

2030. . . . . 11.26 12.49 -1.23 1.82 1.52 .30 13.08 14.01 -.93

2035. . . . . 11.28 12.75 -1.47 1.82 1.49 .33 13.11 14.25 -1.14

2040. . . . . 11.27 12.47 -1.20 1.82 1.47 .36 13.10 13.94 -.85

2045. . . . . 11.25 11.97 -.73 1.82 1.48 .34 13.07 13.45 -.38

2050. . . . . 11.23 11.65 -.42 1.82 1.48 .35 13.06 13.13 -.07

2055. . . . . 11.23 11.55 -.32 1.82 1.48 .34 13.05 13.03 .03

2060. . . . . 11.24 11.61 -.38 1.82 1.46 .36 13.06 13.08 -.02

2065. . . . . 11.24 11.65 -.41 1.82 1.46 .36 13.06 13.11 -.05

2070. . . . . 11.24 11.67 -.43 1.82 1.46 .36 13.07 13.13 -.06

2075. . . . . 11.24 11.60 -.36 1.82 1.45 .38 13.06 13.05 .01

2080. . . . . 11.22 11.36 -.14 1.82 1.47 .36 13.05 12.83 .22

2085. . . . . 11.22 11.21 .01 1.83 1.51 .31 13.04 12.72 .32

2090. . . . . 11.22 11.34 -.11 1.83 1.53 .30 13.05 12.86 .19

2095. . . . . 11.24 11.57 -.33 1.83 1.52 .31 13.06 13.09 -.02

First year balance becomes

negative and remains negative

throughout the 75-year 

projection period . . . . . . . . . . . 2087 . . . . . . . . . . . . . . . . c . . . . . . . . . . . . . . . . c

High-cost:

2017. . . . . 10.66 11.48 -.82 2.43 2.13 .29 13.09 13.62 -.53

2018. . . . . 10.57 11.95 -1.38 2.40 2.18 .22 12.97 14.13 -1.16

2019. . . . . 11.14 12.51 -1.38 1.86 2.23 -.37 13.00 14.75 -1.75

2020. . . . . 11.20 12.89 -1.69 1.83 2.25 -.41 13.03 15.13 -2.11

2021. . . . . 11.23 13.21 -1.98 1.83 2.26 -.43 13.06 15.47 -2.40

2022. . . . . 11.27 13.58 -2.32 1.83 2.28 -.45 13.10 15.86 -2.76

2023. . . . . 11.30 13.99 -2.69 1.84 2.31 -.48 13.13 16.30 -3.16

2024. . . . . 11.34 14.40 -3.06 1.84 2.34 -.50 13.18 16.73 -3.56

2025. . . . . 11.37 14.80 -3.44 1.84 2.37 -.53 13.21 17.18 -3.97

2026. . . . . 11.41 15.23 -3.83 1.84 2.41 -.57 13.25 17.64 -4.39

Table IV.B1.—Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2095 (Cont.)

[As a percentage of taxable payroll]

Calendar 

year

OASI DI OASDI

Income

ratea Costrateb Balanceb Incomeratea Costrateb Balanceb Incomeratea Costrateb Balanceb
Actuarial Estimates

56

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.

Under the intermediate assumptions, the projected DI cost rate declines from

2.08 percent for 2017 to 1.98 percent for 2020, and remains relatively stable

through 2032. After 2032, the DI cost rate increases gradually to

2.16 percent for 2056. From 2056 to 2077, the DI cost rate stays relatively

stable before increasing slowly to 2.23 percent of payroll for 2091. The projected DI income rate decreases from 2.42 percent of payroll for 2017 to 1.85

for 2019. Between 2016 and 2018, the income rate is higher due to the temporary payroll tax rate reallocation. Beginning in 2020, the income rate

remains relatively stable, reaching 1.84 percent for 2091. The annual balance

is positive for years 2016 through 2018, reflecting the reallocation. Thereafter, the annual deficit reappears, generally declines from 0.16 percent for

2019 to a low of 0.13 percent for 2030, and then generally increases to

0.38 percent for 2091. 

Under the low-cost assumptions, the projected DI cost rate declines from

2.02 percent of payroll for 2017 to 1.47 percent for 2039, and remains relatively stable thereafter, reaching 1.53 percent for 2091. The annual balance is

High-cost (Cont.):

2030. . . . . 11.49 16.55 -5.06 1.84 2.48 -0.64 13.33 19.03 -5.70

2035. . . . . 11.55 17.61 -6.05 1.85 2.61 -.77 13.40 20.22 -6.82

2040. . . . . 11.58 18.03 -6.44 1.85 2.72 -.87 13.43 20.75 -7.31

2045. . . . . 11.59 18.05 -6.45 1.85 2.86 -1.01 13.44 20.91 -7.46

2050. . . . . 11.60 18.13 -6.53 1.85 2.95 -1.09 13.46 21.08 -7.62

2055. . . . . 11.62 18.40 -6.78 1.86 3.03 -1.17 13.48 21.43 -7.95

2060. . . . . 11.65 18.91 -7.26 1.86 3.03 -1.17 13.51 21.94 -8.43

2065. . . . . 11.69 19.46 -7.77 1.86 3.06 -1.20 13.55 22.52 -8.97

2070. . . . . 11.73 20.10 -8.37 1.86 3.09 -1.23 13.59 23.19 -9.60

2075. . . . . 11.77 20.75 -8.98 1.86 3.06 -1.20 13.63 23.81 -10.19

2080. . . . . 11.79 21.17 -9.38 1.86 3.08 -1.22 13.65 24.25 -10.60

2085. . . . . 11.81 21.49 -9.68 1.86 3.12 -1.26 13.67 24.61 -10.94

2090. . . . . 11.84 21.87 -10.03 1.86 3.12 -1.26 13.70 24.98 -11.29

2095. . . . . 11.86 22.19 -10.34 1.86 3.09 -1.23 13.72 25.29 -11.57

First year balance becomes

negative and remains negative

throughout the 75-year

projection period . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . 2010

a Income rates include certain reimbursements from the General Fund of the Treasury.

b Benefit payments scheduled to be paid on January 3 are actually paid on December 31 as required by the

statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset reserves reflect the 12 months of benefits scheduled for

payment each year.

c The annual balance is projected 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 1990-2095 (Cont.)

[As a percentage of taxable payroll]

Calendar 

year

OASI DI OASDI

Income

ratea Costrateb Balanceb Incomeratea Costrateb Balanceb Incomeratea Costrateb Balanceb
57

Long-Range Estimates

positive for 2017 and 2018, negative for 2019, and positive throughout the

remainder of the long-range period. Under the high-cost assumptions, the DI

cost rate generally rises throughout the projection period, reaching

3.11 percent for 2091. The annual deficit is negative from 2019 through the

remainder of the projection period, reaching 0.37 percent for 2019,

1.09 percent for 2050, and 1.25 percent for 2091.

Figure IV.B1 shows the patterns of the historical and projected 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 babyboom 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 babyboom 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 longrange 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.

Table IV.B1 shows the annual balances for OASI, DI, and OASDI. The pattern of the annual balances is important to the analysis of the financial condition of the Social Security program as a whole. As seen in figure IV.B1, the

magnitude of each of the positive balances is the distance between the 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 except for the 2016-2018 payroll tax rate reallocation. 

In the future, the costs of OASI, DI, and the 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.
Actuarial Estimates

58

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 OASDI cost to increase from about 4.9 percent of GDP for 2017 to a

peak of about 6.1 percent for 2037. After 2037, OASDI cost as a percentage

of GDP declines to a low of about 5.9 percent for 2052 and thereafter generally increases slowly, reaching about 6.1 percent by 2091. 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.

 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
59

Long-Range Estimates

Table IV.B2.—Components of Annual Income Rates, Calendar Years 1990-2095

[As a percentage of taxable payroll]

Calendar

year

OASI DI OASDI

Payroll

tax

Taxation

of

benefits

General

Fund

ReimbursementsaTotalb 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 12.65

1995 . . 10.46 .19 -.01 10.65 1.87 .01 -.01 1.87 12.33 .20 -.01 12.52

2000 . . 10.56 .29 c 10.85 1.78 .02 -.02 1.78 12.34 .31 -.02 12.62

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 12.54

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 10.37 .48 2.01 12.86

2013 . . 10.55 .35 .07 10.97 1.79 .01 .01 1.81 12.34 .36 .08 12.78

2014 . . 10.48 .45 .01 10.94 1.78 .03 c 1.81 12.26 .48 .01 12.75

2015 . . 10.50 .47 c 10.97 1.78 .02 c 1.80 12.28 .49 .01 12.77

2016 . . 10.09 .47 c 10.56 2.34 .02 c 2.36 12.42 .49 c 12.91

Intermediate:

2017 . . 10.10 .51 c 10.61 2.39 .03 c 2.42 12.49 .54 c 13.03

2018 . . 10.01 .52 c 10.54 2.37 .03 c 2.39 12.38 .55 c 12.93

2019 . . 10.55 .55 c 11.09 1.82 .03 c 1.85 12.37 .58 c 12.95

2020 . . 10.57 .57 c 11.14 1.79 .03 c 1.82 12.36 .60 c 12.96

2021 . . 10.57 .59 c 11.17 1.80 .03 c 1.83 12.37 .62 c 12.99

2022 . . 10.58 .62 c 11.19 1.80 .03 c 1.83 12.37 .65 c 13.02

2023 . . 10.58 .64 c 11.22 1.80 .03 c 1.83 12.37 .68 c 13.05

2024 . . 10.58 .67 c 11.25 1.80 .03 c 1.83 12.38 .70 c 13.08

2025 . . 10.58 .70 c 11.27 1.80 .04 c 1.83 12.37 .73 c 13.10

2026 . . 10.58 .72 c 11.30 1.80 .04 c 1.83 12.37 .76 c 13.14

2030 . . 10.58 .78 c 11.36 1.80 .04 c 1.83 12.38 .82 c 13.20

2035 . . 10.58 .83 c 11.41 1.80 .04 c 1.83 12.37 .87 c 13.24

2040 . . 10.58 .83 c 11.41 1.80 .04 c 1.84 12.37 .87 c 13.25

2045 . . 10.58 .82 c 11.40 1.80 .04 c 1.84 12.37 .86 c 13.24

2050 . . 10.58 .82 c 11.39 1.80 .04 c 1.84 12.37 .86 c 13.23

2055 . . 10.58 .82 c 11.40 1.80 .04 c 1.84 12.37 .86 c 13.24

2060 . . 10.58 .84 c 11.41 1.80 .04 c 1.84 12.37 .88 c 13.25

2065 . . 10.58 .85 c 11.43 1.80 .04 c 1.84 12.38 .89 c 13.27

2070 . . 10.58 .87 c 11.44 1.80 .04 c 1.84 12.37 .91 c 13.28

2075 . . 10.58 .88 c 11.46 1.80 .04 c 1.84 12.37 .92 c 13.30

2080 . . 10.58 .88 c 11.46 1.80 .04 c 1.84 12.37 .92 c 13.30

2085 . . 10.58 .88 c 11.46 1.80 .04 c 1.84 12.38 .92 c 13.30

2090 . . 10.58 .89 c 11.47 1.80 .05 c 1.84 12.38 .94 c 13.31

2095 . . 10.58 .90 c 11.48 1.80 .05 c 1.84 12.38 .95 c 13.33

Low-cost:

2017 . . 10.05 .50 c 10.55 2.38 .03 c 2.40 12.43 .53 c 12.96

2018 . . 10.01 .51 c 10.51 2.36 .03 c 2.39 12.37 .53 c 12.90

2019 . . 10.54 .52 c 11.06 1.82 .03 c 1.85 12.36 .55 c 12.91

2020 . . 10.56 .54 c 11.10 1.79 .03 c 1.82 12.35 .57 c 12.92

2021 . . 10.56 .56 c 11.12 1.79 .03 c 1.82 12.36 .58 c 12.94

2022 . . 10.57 .57 c 11.14 1.80 .03 c 1.82 12.37 .60 c 12.97

2023 . . 10.57 .59 c 11.16 1.79 .03 c 1.82 12.36 .62 c 12.98

2024 . . 10.58 .61 c 11.19 1.80 .03 c 1.82 12.37 .64 c 13.01

2025 . . 10.57 .63 c 11.20 1.79 .03 c 1.82 12.36 .66 c 13.02

2026 . . 10.57 0.65 c 11.22 1.80 0.03 c 1.82 12.37 0.67 c 13.04
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 rise rapidly between 2017 and 2035, primarily because the number

Low-cost (Cont.):

2030 . . 10.57 .69 c 11.26 1.80 .03 c 1.82 12.37 .71 c 13.08

2035 . . 10.57 .71 c 11.28 1.80 .03 c 1.82 12.37 .74 c 13.11

2040 . . 10.57 .70 c 11.27 1.80 .03 c 1.82 12.37 .73 c 13.10

2045 . . 10.57 .68 c 11.25 1.80 .03 c 1.82 12.37 .71 c 13.07

2050 . . 10.57 .66 c 11.23 1.80 .03 c 1.82 12.37 .69 c 13.06

2055 . . 10.57 .66 c 11.23 1.80 .03 c 1.82 12.37 .69 c 13.05

2060 . . 10.57 .66 c 11.24 1.80 .03 c 1.82 12.37 .69 c 13.06

2065 . . 10.57 .67 c 11.24 1.80 .03 c 1.82 12.37 .70 c 13.06

2070 . . 10.57 .67 c 11.24 1.80 .03 c 1.82 12.37 .70 c 13.07

2075 . . 10.57 .67 c 11.24 1.80 .03 c 1.82 12.37 .69 c 13.06

2080 . . 10.57 .65 c 11.22 1.80 .03 c 1.82 12.37 .68 c 13.05

2085 . . 10.57 .64 c 11.22 1.80 .03 c 1.83 12.37 .67 c 13.04

2090 . . 10.57 .65 c 11.22 1.80 .03 c 1.83 12.37 .68 c 13.05

2095 . . 10.57 .67 c 11.24 1.80 .03 c 1.83 12.37 .70 c 13.06

High-cost:

2017 . . 10.15 .51 c 10.66 2.40 0.03 c 2.43 12.55 .54 c 13.09

2018 . . 10.03 .54 c 10.57 2.37 .03 c 2.40 12.40 .58 c 12.97

2019 . . 10.55 .59 c 11.14 1.82 .03 c 1.86 12.38 .62 c 13.00

2020 . . 10.58 .62 c 11.20 1.80 .03 c 1.83 12.37 .65 c 13.03

2021 . . 10.58 .65 c 11.23 1.80 .04 c 1.83 12.38 .69 c 13.06

2022 . . 10.58 .68 c 11.27 1.80 .04 c 1.83 12.38 .72 c 13.10

2023 . . 10.58 .71 c 11.30 1.80 .04 c 1.84 12.38 .75 c 13.13

2024 . . 10.59 .75 c 11.34 1.80 .04 c 1.84 12.39 .79 c 13.18

2025 . . 10.58 .78 c 11.37 1.80 .04 c 1.84 12.38 .83 c 13.21

2026 . . 10.59 .82 c 11.41 1.80 .04 c 1.84 12.38 .87 c 13.25

2030 . . 10.58 .90 c 11.49 1.80 .05 c 1.84 12.38 .95 c 13.33

2035 . . 10.58 .97 c 11.55 1.80 .05 c 1.85 12.38 1.02 c 13.40

2040 . . 10.58 1.00 c 11.58 1.80 .05 c 1.85 12.38 1.05 c 13.43

2045 . . 10.58 1.01 c 11.59 1.80 .06 c 1.85 12.38 1.06 c 13.44

2050 . . 10.58 1.02 c 11.60 1.80 .06 c 1.85 12.38 1.07 c 13.46

2055 . . 10.59 1.04 c 11.62 1.80 .06 c 1.86 12.38 1.10 c 13.48

2060 . . 10.59 1.07 c 11.65 1.80 .06 c 1.86 12.38 1.13 c 13.51

2065 . . 10.59 1.10 c 11.69 1.80 .06 c 1.86 12.38 1.16 c 13.55

2070 . . 10.59 1.14 c 11.73 1.80 .06 c 1.86 12.38 1.20 c 13.59

2075 . . 10.59 1.18 c 11.77 1.80 .06 c 1.86 12.38 1.24 c 13.63

2080 . . 10.59 1.21 c 11.79 1.80 .06 c 1.86 12.38 1.27 c 13.65

2085 . . 10.59 1.23 c 11.81 1.80 .06 c 1.86 12.38 1.29 c 13.67

2090 . . 10.59 1.25 c 11.84 1.80 .06 c 1.86 12.38 1.31 c 13.70

2095 . . 10.59 1.27 c 11.86 1.80 .06 c 1.86 12.38 1.33 c 13.72

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 1990-2095 (Cont.)

[As a percentage of taxable payroll]

Calendar

year

OASI DI OASDI

Payroll

tax

Taxation

of

benefits

General

Fund

ReimbursementsaTotalb Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation of

benefits

General

Fund

Reimbursementsa Totalb
61

Long-Range Estimates

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 relatively 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 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 1945-2095

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 . . . . . . . . . 120,407 32,763 3,874 36,636 3.3 30

1990 . . . . . . . . . 132,994 35,255 4,204 39,459 3.4 30

1995 . . . . . . . . . 140,775 37,364 5,731 43,096 3.3 31

2000 . . . . . . . . . 154,604 38,556 6,606 45,162 3.4 29

2005 . . . . . . . . . 158,974 39,961 8,172 48,133 3.3 30

2006 . . . . . . . . . 161,488 40,435 8,428 48,863 3.3 30

2007 . . . . . . . . . 163,247 40,863 8,739 49,603 3.3 30

2008 . . . . . . . . . 162,636 41,355 9,065 50,420 3.2 31

2009 . . . . . . . . . 157,653 42,385 9,475 51,860 3.0 33

2010 . . . . . . . . . 157,035 43,440 9,958 53,398 2.9 34

2011 . . . . . . . . . 158,573 44,388 10,428 54,816 2.9 35

2012 . . . . . . . . . 160,775 45,377 10,799 56,176 2.9 35

2013 . . . . . . . . . 163,130 46,517 10,954 57,471 2.8 35

2014 . . . . . . . . . 165,586 47,603 10,971 58,574 2.8 35

2015 . . . . . . . . . 168,430 48,663 10,881 59,543 2.8 35

2016 . . . . . . . . . 170,828 49,811 10,728 60,539 2.8 35

Intermediate:

2017 . . . . . . . . . 172,791 51,073 10,577 61,650 2.8 36

2020 . . . . . . . . . 177,690 55,857 10,680 66,537 2.7 37

2025 . . . . . . . . . 182,970 63,767 11,064 74,830 2.4 41

2030 . . . . . . . . . 186,565 70,840 11,432 82,272 2.3 44

2035 . . . . . . . . . 189,738 76,009 11,970 87,979 2.2 46

2040 . . . . . . . . . 194,291 78,422 12,561 90,983 2.1 47

2045 . . . . . . . . . 199,608 79,468 13,359 92,827 2.2 47

2050 . . . . . . . . . 204,692 81,018 13,961 94,979 2.2 46

2055 . . . . . . . . . 209,411 83,343 14,508 97,851 2.1 47

2060 . . . . . . . . . 213,907 86,474 14,782 101,256 2.1 47
Actuarial Estimates

62

Notes: 

1. The number of beneficiaries does not include uninsured individuals who received benefits under

Section 228 of the Social Security Act. The General Fund of the Treasury reimbursed 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

Intermediate (Cont.):

2065 . . . . . . . . . 218,482 89,599 15,197 104,796 2.1 48

2070 . . . . . . . . . 223,560 93,032 15,629 108,661 2.1 49

2075 . . . . . . . . . 229,092 96,297 15,930 112,227 2.0 49

2080 . . . . . . . . . 234,773 98,359 16,453 114,812 2.0 49

2085 . . . . . . . . . 240,457 100,578 17,199 117,776 2.0 49

2090 . . . . . . . . . 245,940 104,061 17,675 121,737 2.0 49

2095 . . . . . . . . . 251,241 107,845 18,030 125,875 2.0 50

Low-cost:

2017 . . . . . . . . . 173,336 51,056 10,530 61,585 2.8 36

2020 . . . . . . . . . 180,126 55,740 10,277 66,017 2.7 37

2025 . . . . . . . . . 186,626 63,399 10,101 73,499 2.5 39

2030 . . . . . . . . . 191,025 70,042 9,978 80,020 2.4 42

2035 . . . . . . . . . 195,146 74,680 10,093 84,773 2.3 43

2040 . . . . . . . . . 201,495 76,529 10,306 86,834 2.3 43

2045 . . . . . . . . . 209,473 77,058 10,777 87,835 2.4 42

2050 . . . . . . . . . 217,511 78,206 11,166 89,372 2.4 41

2055 . . . . . . . . . 225,184 80,294 11,576 91,869 2.5 41

2060 . . . . . . . . . 232,760 83,230 11,840 95,069 2.4 41

2065 . . . . . . . . . 240,843 86,152 12,268 98,420 2.4 41

2070 . . . . . . . . . 250,069 89,311 12,760 102,071 2.4 41

2075 . . . . . . . . . 260,428 92,166 13,211 105,376 2.5 40

2080 . . . . . . . . . 271,357 93,842 13,905 107,747 2.5 40

2085 . . . . . . . . . 282,330 96,161 14,840 111,001 2.5 39

2090 . . . . . . . . . 292,978 100,626 15,549 116,176 2.5 40

2095 . . . . . . . . . 303,529 106,079 16,085 122,164 2.5 40

High-cost:

2017 . . . . . . . . . 172,783 51,089 10,625 61,715 2.8 36

2020 . . . . . . . . . 173,689 55,966 11,073 67,039 2.6 39

2025 . . . . . . . . . 179,232 64,148 11,999 76,147 2.4 42

2030 . . . . . . . . . 182,253 71,722 12,916 84,638 2.2 46

2035 . . . . . . . . . 184,719 77,509 13,898 91,408 2.0 49

2040 . . . . . . . . . 187,640 80,615 14,875 95,490 2.0 51

2045 . . . . . . . . . 190,742 82,310 16,000 98,311 1.9 52

2050 . . . . . . . . . 193,245 84,379 16,790 101,169 1.9 52

2055 . . . . . . . . . 195,135 87,045 17,456 104,501 1.9 54

2060 . . . . . . . . . 196,734 90,447 17,707 108,154 1.8 55

2065 . . . . . . . . . 198,128 93,788 18,046 111,834 1.8 56

2070 . . . . . . . . . 199,556 97,495 18,323 115,818 1.7 58

2075 . . . . . . . . . 201,000 101,155 18,340 119,495 1.7 59

2080 . . . . . . . . . 202,254 103,598 18,512 122,111 1.7 60

2085 . . . . . . . . . 203,422 105,674 18,842 124,516 1.6 61

2090 . . . . . . . . . 204,497 108,103 18,949 127,052 1.6 62

2095 . . . . . . . . . 205,471 110,281 18,955 129,236 1.6 63

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 1945-2095 (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

OASDI beneficiaries per 100 covered workers. Compared to the 2016 level

of 35 beneficiaries per 100 covered workers, the Trustees project that this

ratio rises to 46 by 2035 under the intermediate assumptions because the

growth in beneficiaries greatly exceeds the growth in workers. By 2095, this

projected ratio rises further under the intermediate and high-cost assumptions, reaching 50 under the intermediate assumptions and 63 under the highcost assumptions. Under the low-cost assumptions, this ratio rises to 43 by

2035 and then declines, reaching 40 by 2095. 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 2016. Under the intermediate assumptions,

this ratio declines generally throughout the long-range period, reaching 2.2

 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

for 2035 and 2.0 by 2095. Under the low-cost assumptions, this ratio

declines to 2.3 for 2035, generally rises from 2035 through 2055, and

remains relatively stable at 2.5 through 2095. Under the high-cost assumptions, this ratio decreases steadily to 1.6 by 2095.

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.

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 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 is projected to

decline from 347 percent at the beginning of 2017 until the trust fund

reserves become depleted in 2035 (the same year as projected in last year’s

report), at which time 75 percent of scheduled benefits would be payable.

The DI trust fund ratio is 31 percent at the beginning of 2017. The 0.57-percentage-point reallocation of payroll tax rate (for 2016 through 2018) from

OASI to DI will increase the trust fund ratio to 65 percent at the beginning of

2019. After 2019, the trust fund ratio declines until the trust fund reserves

become depleted in 2028 (5 years later than projected in last year’s report), at

which time 93 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 298 percent at the beginning of

2017 until the combined fund reserves become depleted in 2034 (the same
65

Long-Range Estimates

year as projected in last year’s report), at which time 77 percent of scheduled

benefits would be payable.

Under the low-cost assumptions, the trust fund ratio for the DI program

increases from 32 percent at the beginning of 2017 to 75 percent at the

beginning of 2019, again reflecting the temporary payroll tax rate reallocation. The DI trust fund ratio is then stable through 2021 and thereafter

increases through the end of the long-range projection period, reaching the

extremely high level of 2,015 percent for 2092. For the OASI program, the

trust fund ratio declines steadily, from 347 percent for 2017 until the reserves

become depleted in 2064, at which time 96 percent of scheduled benefits

would be payable. For the combined OASDI program, the trust fund ratio

declines from 299 percent for 2017 to a low of 117 percent in 2048, then

rises thereafter, reaching 188 percent by 2092. Because the trust fund ratio is

positive throughout the projection period and increasing at the end of the

period, under the low-cost assumptions, the DI program and the combined

OASDI program achieve sustainable solvency.

Under the high-cost assumptions, the OASI trust fund ratio declines continually until reserves become depleted in 2030, at which time 68 percent of

scheduled benefits would still be payable. The DI trust fund ratio increases

from 31 percent for 2017 to 53 percent for 2019 because of the payroll tax

rate reallocation, but reserves decline quickly after that and become depleted

in 2021. At that time, 81 percent of scheduled benefits would still be payable. The combined OASI and DI trust fund ratio declines from 297 percent

for 2017 until reserves become depleted in 2029, at which time 70 percent of

scheduled benefits would still be payable.

The Trustees project trust fund reserve depletion within the 75-year projection period with the exceptions of the combined OASDI Trust Funds and the

DI Trust Fund 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 combined OASI and DI

Trust Fund reserves on hand plus their estimated future income are sufficient

to fully cover their combined cost until 2029. Under the intermediate

assumptions, the combined starting fund reserves plus estimated future

income are sufficient to fully cover cost until 2034. In the 2016 report, the

Trustees also projected that the combined trust fund reserves would become

depleted in 2029 and 2034 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 hypothetical.

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 test of short-range 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.

Both the long-range test and the short-range test are applied based on the

intermediate set of assumptions. As discussed in section IV.A, the DI Trust

Fund fails the test of short-range financial adequacy because the trust fund

Table IV.B4.—Trust Fund Ratios, Calendar Years 2017-2095a

[In percent]

a Benefit payments scheduled to be paid on January 3 are actually paid on December 31 as required by the

statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund ratios reflect the 12 months of benefits scheduled for payment each year.

Calendar

year

Intermediate Low-cost High-cost

OASI DI OASDI OASI DI OASDI OASI DI OASDI

2017 . . . . . . . . . . . . . 347 31 298 347 32 299 347 31 297

2018 . . . . . . . . . . . . . 330 47 287 329 51 288 331 44 287

2019 . . . . . . . . . . . . . 309 65 273 308 75 275 306 53 268

2020 . . . . . . . . . . . . . 292 57 259 295 76 265 284 36 248

2021 . . . . . . . . . . . . . 277 49 245 284 78 257 263 18 227

2022 . . . . . . . . . . . . . 260 42 230 273 84 248 239 b

b Trust fund reserves would be depleted at the beginning of this year.

205

2023 . . . . . . . . . . . . . 243 35 215 262 92 240 215 b 182

2024 . . . . . . . . . . . . . 225 29 199 251 102 232 189 b 157

2025 . . . . . . . . . . . . . 206 22 182 240 114 225 163 b 132

2026 . . . . . . . . . . . . . 187 16 165 230 127 218 136 b 106

2030 . . . . . . . . . . . . . 108 b 94 190 202 191 22 b b

2035 . . . . . . . . . . . . . 1 b b 141 322 160 bbb

2040 . . . . . . . . . . . . . bbb 95 457 133 bbb

2045 . . . . . . . . . . . . . bbb 61 585 119 bbb

2050 . . . . . . . . . . . . . bbb 41 719 117 bbb

2055 . . . . . . . . . . . . . bbb 28 857 122 bbb

2060 . . . . . . . . . . . . . bbb 15 1,019 128 bbb

2065 . . . . . . . . . . . . . bbb b 1,182 132 bbb

2070 . . . . . . . . . . . . . bbb b 1,347 135 bbb

2075 . . . . . . . . . . . . . bbb b 1,528 139 bbb

2080 . . . . . . . . . . . . . bbb b 1,683 150 bbb

2085 . . . . . . . . . . . . . bbb b 1,798 168 bbb

2090 . . . . . . . . . . . . . bbb b 1,944 184 bbb

2095 . . . . . . . . . . . . . bbb b 2,126 192 bbb

Trust fund reserves 

permanently 

become 

depleted in . . . . . . 2035 2028 2034 2064 c

c Trust fund reserves would not be depleted within the projection period.

c 2030 2021 2029

Payable benefits as 

percent of scheduled benefits:

At the time of 

permanent 

reserve

depletion . . . . . 75 93 77 96 c c 68 81 70

For 2091 . . . . . 72 82 73 99 c c 51 59 52
67

Long-Range Estimates

ratio does not reach 100 percent at any time during the 10-year period. Under

the intermediate assumptions, the OASI Trust Fund reserves become

depleted in 2035, DI Trust Fund reserves become depleted in 2028, and the

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

test of long-range 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.D6.

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.

 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

Table IV.B5 presents summarized income rates, summarized cost rates, and

actuarial balances for 25-year, 50-year, and 75-year valuation periods. Summarized 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. Note that solvency is possible with a small negative actuarial balance

where reserves are still positive.1

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.

 1 A program is solvent over any period for which the trust fund maintains a positive level of asset reserves.

In contrast, the actuarial balance for a period includes the cost of having a target fund equal to 100 percent of

the following year’s cost at the end of the period. Therefore, if a program ends the period with reserves that

are positive but not sufficient to cover the following year’s costs, it will be solvent at the end of the period

and yet still have a small negative actuarial balance for that period.
69

Long-Range Estimates

For the 25-year valuation period, the OASDI program has an actuarial balance of 0.14 percent of taxable payroll under the low-cost assumptions,

-1.67 percent under the intermediate assumptions, and -3.95 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.

For the 50-year valuation period, the OASDI program has actuarial balances

of 0.08 percent under the low-cost assumptions, -2.42 percent under the

intermediate assumptions, and -5.60 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 0.12 percent of taxable payroll under the low-cost

assumptions, -2.83 percent under the intermediate assumptions, and

-6.63 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 15.16 percent (a relative increase of 22.3 percent), cost

could be reduced in a manner equivalent to an immediate and permanent

reduction in scheduled benefits of about 17 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
Actuarial Estimates

70

to 15.33 percent (a relative increase of 23.6 percent),1 reducing cost in a

manner equivalent to an immediate reduction in scheduled benefits of about

18 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

4.48 percent of payroll for 2091 (see table IV.B1). These large deficits indicate that annual cost continues to exceed non-interest income after 2091, so

continued adequate financing would require larger changes than those

needed to maintain solvency for the 75-year period. Over the period extending through the infinite horizon, the actuarial deficit is 4.2 percent of payroll

under the intermediate assumptions.

 1 The indicated increase in the payroll tax rate of 2.93 percent is somewhat larger than the 2.83 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.

Table IV.B5.—Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2017-2091

[As a percentage of taxable payroll]

Valuation period

Summarized income rate Summarized cost rate

Actuarial

balance

Non-interest

income

Beginning

asset

reservesa Total Costa

Ending

target

funda Total

OASI:

Intermediate:

2017-41. . . . . 11.28 1.47 12.75 13.69 0.56 14.25 -1.51

2017-66. . . . . 11.34 .80 12.15 14.11 .24 14.35 -2.20

2017-91. . . . . 11.38 .60 11.97 14.42 .14 14.56 -2.59

Low-cost:

2017-41. . . . . 11.19 1.33 12.52 12.13 .49 12.61 -.09

2017-66. . . . . 11.22 .70 11.93 11.94 .21 12.14 -.22

2017-91. . . . . 11.23 .50 11.73 11.80 .12 11.92 -.19

High-cost:

2017-41. . . . . 11.38 1.62 13.01 15.65 .66 16.32 -3.31

2017-66. . . . . 11.49 .92 12.41 16.88 .29 17.17 -4.76

2017-91. . . . . 11.56 .70 12.27 17.82 .17 17.99 -5.72

DI:

Intermediate:

2017-41. . . . . 1.88 0.02 1.90 1.99 0.08 2.07 -0.17

2017-66. . . . . 1.86 .01 1.87 2.05 .03 2.09 -.21

2017-91. . . . . 1.86 .01 1.87 2.09 .02 2.11 -.24

Low-cost:

2017-41. . . . . 1.87 .02 1.89 1.60 .06 1.66 .23

2017-66. . . . . 1.85 .01 1.86 1.54 .03 1.57 .29

2017-91. . . . . 1.84 .01 1.85 1.52 .02 1.54 .31

High-cost:

2017-41. . . . . 1.89 .03 1.92 2.46 .10 2.56 -.64

2017-66. . . . . 1.88 .02 1.89 2.68 .05 2.72 -.83

2017-91. . . . . 1.87 .01 1.88 2.77 .02 2.80 -.91
71

Long-Range Estimates

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

5. Open Group Unfunded Obligation

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 2091. The open group

unfunded obligation measures the adequacy of financing over the period as a

whole for a program financed on a pay-as-you-go basis. On this basis, payroll taxes and scheduled benefits for all participants are included through

2091.

The open group unfunded obligation increased from $11.4 trillion shown in

last year's report to $12.5 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 $11.9 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, 2017, rather than to January 1, 2016, which tends to

increase the unfunded obligation by the annual nominal interest rate; and

(2) the unfunded obligation now includes an additional year (2091). However, changes in the law, assumptions, methods, and starting values resulted

in a net $0.6 trillion increase in the unfunded obligation. 

OASDI:

Intermediate:

2017-41. . . . . 13.16 1.49 14.65 15.68 .64 16.32 -1.67

2017-66. . . . . 13.20 .82 14.02 16.16 .28 16.44 -2.42

2017-91. . . . . 13.23 .61 13.84 16.50 .16 16.67 -2.83

Low-cost:

2017-41. . . . . 13.06 1.35 14.41 13.73 .54 14.27 .14

2017-66. . . . . 13.07 .72 13.79 13.48 .23 13.71 .08

2017-91. . . . . 13.07 .51 13.58 13.32 .14 13.46 .12

High-cost:

2017-41. . . . . 13.28 1.65 14.93 18.11 .77 18.88 -3.95

2017-66. . . . . 13.37 .93 14.30 19.56 .33 19.90 -5.60

2017-91. . . . . 13.44 .72 14.15 20.59 .19 20.79 -6.63

a Benefit payments scheduled to be paid on January 3 are actually paid on December 31 as required by the

statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset reserves reflect the 12 months of benefits scheduled for

payment each year.

Table IV.B5.—Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2017-2091 (Cont.)

[As a percentage of taxable payroll]

Valuation period

Summarized income rate Summarized cost rate

Actuarial

balance

Non-interest

income

Beginning

asset

reservesa Total Costa

Ending

target

funda Total
Actuarial Estimates

72

The 75-year unfunded obligation is equivalent to 2.66 percent of future

OASDI taxable payroll and 0.9 percent of GDP through 2091. These percentages were 2.49 and 0.9, respectively, for last year’s report. The 75-year

unfunded obligation as a percentage of taxable payroll is less than the actuarial deficit, because the unfunded obligation excludes the cost of having an

ending target trust fund value.

The actuarial deficit was 2.66 percent of payroll in last year’s report, and was

expected to increase to a deficit of 2.71 percent of payroll solely due to the

change in the valuation period. Changes in the law, assumptions, methods,

and starting values combined to account for a 0.12 percent increase (worsening) in the actuarial deficit to 2.83 percent of payroll. For additional details

on these changes, see section IV.B.6.

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 $12.5 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 -$13.3 trillion for the OASDI program. 

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

Table IV.B6.—Components of 75-Year Actuarial Balance and Unfunded Obligation

Under Intermediate Assumptions

Item OASI DI OASDI

Present value as of January 1, 2017 (in billions):

A. Payroll tax revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,637 $8,526 $58,163

B. Reimbursements from general revenue. . . . . . . . . . . . . . . . . . . a

a Less than $0.5 billion.

a a

C. Taxation of benefits revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,779 188 3,967

D. Non-interest income (A + B + C) . . . . . . . . . . . . . . . . . . . . . . . 53,416 8,715 62,131

E. Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,691 9,796 77,487

F. Cost minus non-interest income (E - D) . . . . . . . . . . . . . . . . . . 14,275 1,082 15,357

G. Trust fund asset reserves at start of period . . . . . . . . . . . . . . . . 2,801 46 2,848

H. Open group unfunded obligation (F - G). . . . . . . . . . . . . . . . . . 11,474 1,035 12,509

I. Ending target trust fundb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

b 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.

671 95 766

J. Income minus cost, plus reserves at start of period, minus

ending target trust fund (D - E + G - I = - H - I) . . . . . . . . . . . . -12,144 -1,131 -13,275

K. Taxable payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469,552 469,552 469,552

Percent of taxable payroll:

Actuarial balance (100 × J ÷ K) . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.59 -.24 -2.83
73

Long-Range Estimates

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 4.2 percent of

taxable payroll or 1.4 percent of GDP. These percentages were 4.0 and 1.4,

respectively, for last year’s report. 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

under the intermediate assumptions, 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 0.05 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, including the change in the valuation period, combined to decrease the long-range OASDI actuarial balance,

from -2.66 percent of taxable payroll in last year’s report to -2.83 percent in

this report.

Since the last report, there have been no new laws, regulations, or policy

changes that are expected to have significant financial effects on the OASDI

program. However, estimates in this report, unlike in last year’s report,

reflect the assumption that parts of President Obama's 2014 executive actions

on immigration will not be implemented. Specifically, the estimates now

assume that the following two provisions will not be implemented: (1) granting legal work and residence status to an expanded group of individuals who

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.96 1.88 13.84

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.36 2.14 16.50

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.39 -.26 -2.66

Changes in actuarial balance due to changes in:

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

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 2091. 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 -.05

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

Economic data and assumptions. . . . . . . . . . . . . . . . . -.07 -.01 -.08

Disability data and assumptions. . . . . . . . . . . . . . . . . -.01 .03 .03

Methods and programmatic data . . . . . . . . . . . . . . . . -.05 .01 -.04

Total change in actuarial balance . . . . . . . . . . . . . . . . . . -.19 .02 -.17

Shown in this report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.59 -.24 -2.83

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.97 1.87 13.84

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.56 2.11 16.67
75

Long-Range Estimates

entered the country as children (deferred action for childhood arrivals, or

DACA) and (2) granting similar status to certain parents of children born in

the U.S. or otherwise living in the country legally (deferred action for parents

of Americans, or DAPA). Last year's report assumed that these two actions

would become effective late in 2016, with individuals gaining authorization

starting around the beginning of 2017. This change is projected to have a

positive but negligible effect on the long-range OASDI actuarial balance,

primarily due to fewer of these individuals ultimately receiving benefits. The

effect on OASI alone is a non-negligible increase in the actuarial balance of

0.01 percent of taxable payroll.

As mentioned above, changing the 75-year valuation period from 2016

through 2090 to 2017 through 2091 decreased the projected long-range

OASDI actuarial balance by 0.05 percent of taxable payroll. This decrease is

mainly the result of including the relatively large negative annual balance for

2091 in this year’s 75-year projection period. Note that the actuarial balance

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,

including 2016.

All changes in demographic data and assumptions combined to decrease the

long-range OASDI actuarial balance by 0.03 percent of taxable payroll. Ultimate demographic assumptions are unchanged from those in last year’s

report. The following paragraph describes four demographic data updates

that had significant effects on the long-range OASDI actuarial balance.

First, final fertility (birth) data for 2015 indicate slightly lower birth rates

than were assumed in last year’s report for 2015. 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 temporarily above the ultimate level and will subsequently decline to the ultimate level by 2027. These updated birth rate data,

which result in slightly lower birth rates during the transition period to the

unchanged ultimate levels, decreased the long-range OASDI actuarial balance by about 0.01 percent of taxable payroll. Second, incorporating 2014

mortality data for ages under 65 from the National Center for Health Statistics and preliminary 2014 mortality data for ages 65 and older from Medicare

experience resulted in higher death rates for all future years than were projected in last year’s report. These higher death rates increased (improved) the

long-range OASDI actuarial balance by about 0.04 percent of taxable payroll. Third, this year’s estimates incorporate updated legal immigration data

from the Department of Homeland Security, which decreased the actuarial

balance by 0.01 percent of taxable payroll. Fourth, updates to historical pop-
Actuarial Estimates

76

ulation data and other minor data updates combined to decrease the longrange OASDI actuarial balance by 0.05 percent of taxable payroll. The

majority of this change was due to updated 2013 and 2014 historical otherthan-legal population estimates. 

Changes in economic data and assumptions combined to decrease the actuarial balance by 0.08 percent of payroll.

One long-term economic assumption in this year’s report was changed from

the value used in last year’s report. The average real-wage differential over

the last 65 years of the projection period (in this year’s report, 2026 to 2091)

is 1.20 percent per year in this report, and is decreased slightly from the

value in last year’s report. In fact, last year’s value was also 1.20 percent,

when rounded to two decimal places, but the difference in the unrounded values from last year to this year is close to a 0.01 percent decrease. There were

also changes to the assumed real-wage differential for the first ten years of

the projection period, which averaged to 0.05 percent lower annual growth

for this year’s report. These lower long-term and near-term real-wage differential assumptions are based on new projections by the Centers for Medicare

and Medicaid Services of faster growth in employer sponsored group health

insurance premiums. Because these premiums are not subject to the payroll

tax, faster growth in these premiums means that a smaller share of employee

compensation will be in the form of wages that are subject to the payroll tax.

These changes to the real-wage differential assumptions decreased the longrange OASDI actuarial balance by 0.03 percent of taxable payroll. About

one-half of this effect is due to changes in the near-term and one-half is due

to changes over the longer term.

In addition, this year’s report assumes that the recovery from the recent

recession will be weaker than previously expected, resulting in a permanently lower level of labor productivity than was projected in last year’s

report. This change reduces the level of actual and potential GDP by about

1 percent for all years after the short-range period. This change to projected

actual and potential GDP decreased the actuarial balance by about

0.02 percent of taxable payroll. Other changes to starting values and nearterm economic assumptions combined for a net decrease in the actuarial balance of 0.03 percent of taxable payroll. 

Although ultimate disability assumptions are unchanged from those in last

year’s report, changes in recent disability data and near-term assumptions

increased the long-range OASDI actuarial balance by 0.03 percent of taxable

payroll. Recent data have shown significantly lower levels of disability

applications and awards than expected in last year’s report. Based on this

experience, estimated disabled worker incidence rates are reduced for this

report over the short-range period. These changes are primarily responsible
77

Long-Range Estimates

for the change in the DI reserve depletion date from 2023 in last year’s report

to 2028 in this year’s report. The short-range effects are noted in

section IV.A.4 and further described in section V.C.5. 

The projections in this report also reflect several methodological improvements and updates of program-specific data. These methodological changes,

programmatic data updates, and interactions combined to decrease the longrange OASDI actuarial balance by 0.04 percent of taxable payroll. Descriptions of seven significant methodological changes and programmatic data

updates follow. 

First, this year’s report includes an improvement to the method for estimating quarters of coverage earned by female workers. This change increased

the female fully insured rates, putting them in better alignment with the historical data, and led to higher numbers of insured female workers in the projection period. This methodological improvement decreased the long-range

OASDI actuarial balance by 0.02 percent of taxable payroll.

Second, an adjustment was made to the method for projecting whether benefits for aged spouses, widows, and widowers would be withheld due to

receipt of a significant government-employee pension based on earnings in

noncovered employment. This change led to a decrease in the beneficiary

population over the projection period, which in turn increased the long-range

OASDI actuarial balance by 0.01 percent of taxable payroll.

The third significant change was an improvement to the method for calculating the probability that aged spouses, widows, and widowers are or are not

insured. Prior year’s reports used the “total fully insured rate”—that is, the

portion of the entire married, divorced, widow, and widower population that

is fully insured—as one of the factors used to determine the fully insured status of aged spouses, widows, and widowers. This year’s report instead uses

the “legal fully insured rate,” thus eliminating the effects of shifts in the

uninsured population due to changes in the other-than-legal population. This

methodology change decreased this beneficiary population significantly over

the next 75 years, increasing the actuarial balance by 0.05 percent of payroll.

Fourth, several enhancements were made to the long-range model for projecting average benefit levels of retired worker and disabled-worker beneficiaries newly entitled for benefits, which is based on a 10 percent sample of

all newly entitled retired-worker beneficiaries in 2013. The most significant

of these enhancements is related to the “shuttling” procedure. Workers will

generally retire at older ages in the future, as life expectancy and the normal

retirement age increase. In order to capture this shift in retirement ages in the

projection, a corresponding proportion of workers are “shuttled” from their

actual age in the 10 percent sample to an older age. For prior years’ reports,
Actuarial Estimates

78

the shuttling procedure did not account for the possibility of additional earnings in the year or years between the actual age and the shuttled age. For this

year’s report, the shuttling procedure was moved to an earlier stage of the

model so that these additional earnings could be incorporated, improving

consistency with revenue projections. Together, the changes to the model for

projecting average benefits for newly-entitled beneficiaries decreased the

actuarial balance by 0.05 percent of payroll. 

The fifth significant change is a programmatic data update that resulted in a

decrease 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 lower levels of revenue from taxation of OASDI benefits than projected in last year’s report. The decrease in the ultimate projected

ratios of income from taxation of benefits to benefits resulted in a decrease in

the long-range OASDI actuarial balance of 0.01 percent of taxable payroll.

Sixth, this year’s report improves the method for projecting dually entitled

widows and widowers. The new method projects both the number of dually

entitled widows and widowers and their average excess benefit amounts

using regressions for three age groups, rather than one regression for the

entire group. Splitting the regressions allows for different independent and

dependent variable relationships for age groups 62 to 74, 75 to 84, and 85

and older. This methodological improvement decreased the long-range

OASDI actuarial balance by 0.02 percent of taxable payroll.

The seventh significant change is updates to two sets of benefit adjustment

factors: the post-entitlement adjustment factors and the Windfall Elimination

Provision (WEP) reduction factors. Post-entitlement factors are used to

account for changes in benefit levels other than the cost-of-living adjustment; WEP reduction factors are used to adjust benefits for individuals who

receive a pension based on specified categories of non-covered employment.

These programmatic data updates combined to decrease the actuarial balance

by 0.03 percent of payroll.

In addition to these seven significant methodological changes and programmatic data updates, changes in projected OASI and DI beneficiaries and benefit levels over the first 10 years of the projection period, updating other

programmatic data, other small methodological improvements, and interactions combined to increase the long-range OASDI actuarial balance by

0.03 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.
79

Long-Range Estimates

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. The annual balances are higher (less negative) through 2027 in this

year’s report, and lower in each year thereafter, averaging 0.12 percentage

point lower over the 75-year projection period. For 2090, the projected

annual deficit is 4.44 percent of taxable payroll in this report, compared to

4.35 percent in last year's report.

 Figure IV.B4.—OASDI Annual Balances: 2016 and 2017 Trustees Reports

[As a percentage of taxable payroll, under Intermediate Assumptions]

-6%

-4%

-2%

0%

2%

2015 2025 2035 2045 2055 2065 2075 2085 2095

Calendar year

2016 Report

2017 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 rates, 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 assumptions for this report were established by the middle of January 2017, and have been accepted by the current members of the

Board.

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, with each input assumption centered around the intermediate alternative (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 provide 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

This section of the report provides a brief overview of the demographic historical data and the assumptions used for the projections.

1. Fertility Assumptions

Birth rates by single year of age, for women aged 14 to 49,2 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. Table V.A1

displays the historical and projected total fertility rates.3

Historically, birth rates in the United States have fluctuated widely. The total

fertility rate decreased from 3.31 children per woman at the end of World

 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.ssa.gov/OACT/NOTES/actstud.html. To obtain copies of such studies or of this

report, please submit a request at www.ssa.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 and additional documentation on assumptions and methods, may be found at

www.ssa.gov/OACT/TR/2017/.

 2 Birth rates at age 14 include births to women aged 14 and under, and birth rates at age 49 include births to

women aged 49 and over.

 3 The total fertility rate may be interpreted as 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, a

specified 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

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 rose above 2.00 by 1990, where it generally

remained through 2009, but dropped below 1.90 for 2011 through 2015. The

recession and slow recovery in employment opportunity are likely contributing reasons for this recent low level.

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 relatively 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 those 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. These ultimate rates are unchanged

from last year’s report.

For the intermediate assumptions, the projected total fertility rate rises until it

reaches 2.05 for 2023. 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 partially 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 2024 and 2032, respectively.

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 and cause of

death. These assumptions were then used to estimate future central death

rates 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 through 2014 for ages

below 65 (and for all ages for years prior to 1968) using data from the

National Center for Health Statistics (NCHS).1 For ages 65 and over, final

 1 These rates reflect NCHS data on deaths and Census estimates of population.
83

Demographic Assumptions and Methods

Medicare data on deaths and enrollments for years 1968 through 2013 and

preliminary data for 2014 are used. Death rates by cause of death are produced for all ages for years 1979-2014 using data from the NCHS.

The total age-sex-adjusted death rate1 declined at an average annual rate of

1.05 percent between 1900 and 2014. Between 1979 and 2014, 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 0.93 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. Many factors are responsible for historical reductions in death rates,

including medical advances, increased availability of health-care services,

and improvements in sanitation and nutrition. Historical death rates generally

declined more slowly for older ages and more rapidly for children and

infants than for the rest of the population. Between 1900 and 2014, the agesex-adjusted death rate for ages 65 and over declined at an average rate of

0.79 percent per year, while declining at an average rate of 3.07 percent per

year for ages under 15.

Mortality assumptions differ for the low-cost, intermediate, and high-cost

scenarios. Throughout the projection, the low-cost scenario contains annual

percentage reductions that are smaller than those in the intermediate scenario, while those in the high-cost scenario are larger. The ultimate annual

percentage reductions are the same as those in last year’s report.

The trends in the annual reductions in central death rates are calculated for

the period from 2004 to 2014 by age group, sex, and cause of death. These

trends are the starting reductions for alternative II. For alternatives I and III,

50 and 150 percent of the starting reductions are used, respectively. These

annual reductions, by alternative, are assumed to transition rapidly from the

starting reductions until they reach the ultimate annual percentage reductions

assumed for 2041 and later.

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, in general, slightly higher than the death rates in last year’s

 1 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

report for both the age group under 65 and the age group 65 and over. These

changes primarily result from incorporating more recent historical data.

The projected average annual rate of decline for the total age-sex-adjusted

death rate is about 0.42 percent, 0.77 percent, and 1.16 percent between 2016

and 2091 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

0.37 percent, 0.68 percent, and 1.01 percent between 2016 and 2091 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 0.81 percent,

1.60 percent, and 2.60 percent between 2016 and 2091 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, new conditions, and expert opinion. 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 2015 Technical Panel on Assumptions and Methods, appointed by the Social Security Advisory

Board, recommended retaining ultimate rates of improvement that vary by age and cause of death as

assumed by the Trustees, but with an overall rate of improvement on an age-sex-adjusted basis of

1.00 percent.
85

Demographic Assumptions and Methods

.

Table V.A1.—Fertility and Mortality Assumptions,a

Calendar Years 1940-2095

Calendar year

Total

fertility

rateb

Age-sex-adjusted death ratec

per 100,000, by age

Total Under 65 65 and over

Historical data:

1940 . . . . . . . . . 2.23 1,919.8 750.1 9,718.8

1945 . . . . . . . . . 2.42 1,716.6 674.8 8,662.9

1950 . . . . . . . . . 3.03 1,561.9 570.2 8,173.7

1955 . . . . . . . . . 3.50 1,453.8 508.2 7,758.4

1960 . . . . . . . . . 3.61 1,454.3 503.2 7,795.4

1965 . . . . . . . . . 2.88 1,428.8 495.2 7,653.3

1970 . . . . . . . . . 2.43 1,340.0 485.7 7,036.3

1975 . . . . . . . . . 1.77 1,204.8 426.6 6,393.6

1980 . . . . . . . . . 1.82 1,136.9 384.3 6,154.3

1985 . . . . . . . . . 1.83 1,081.0 353.3 5,932.9

1990 . . . . . . . . . 2.07 1,021.3 333.6 5,606.3

1995 . . . . . . . . . 1.98 1,001.5 317.9 5,559.5

2000 . . . . . . . . . 2.05 960.7 281.0 5,492.3

2005 . . . . . . . . . 2.06 901.3 270.7 5,105.4

2006 . . . . . . . . . 2.11 876.1 267.6 4,933.5

2007 . . . . . . . . . 2.12 856.8 261.6 4,825.2

2008 . . . . . . . . . 2.07 857.0 258.8 4,845.5

2009 . . . . . . . . . 2.00 827.1 255.3 4,639.7

2010 . . . . . . . . . 1.93 821.3 248.5 4,640.1

2011 . . . . . . . . . 1.89 819.3 249.1 4,621.4

2012 . . . . . . . . . 1.87 811.9 248.5 4,568.2

2013 . . . . . . . . . 1.85 811.9 249.2 4,563.6

2014 . . . . . . . . . 1.86 d805.4 251.1 d4,501.1

2015 . . . . . . . . . 1.84 e787.9 e243.2 e4,419.6

2016 . . . . . . . . . e1.87 e779.8 e240.8 e4,373.7

Intermediate: 

2020 . . . . . . . . . 1.98 750.2 230.7 4,213.9

2025 . . . . . . . . . 2.03 716.9 218.1 4,042.5

2030 . . . . . . . . . 2.00 686.1 205.9 3,887.5

2035 . . . . . . . . . 2.00 657.5 194.6 3,743.9

2040 . . . . . . . . . 2.00 630.8 183.9 3,609.9

2045 . . . . . . . . . 2.00 605.8 174.0 3,484.3

2050 . . . . . . . . . 2.00 582.3 164.8 3,366.3

2055 . . . . . . . . . 2.00 560.4 156.1 3,255.3

2060 . . . . . . . . . 2.00 539.7 148.1 3,150.9

2065 . . . . . . . . . 2.00 520.3 140.5 3,052.3

2070 . . . . . . . . . 2.00 502.0 133.5 2,959.3

2075 . . . . . . . . . 2.00 484.8 126.9 2,871.3

2080 . . . . . . . . . 2.00 468.6 120.7 2,788.0

2085 . . . . . . . . . 2.00 453.2 114.9 2,709.0

2090 . . . . . . . . . 2.00 438.7 109.4 2,634.1

2095 . . . . . . . . . 2.00 425.0 104.3 2,562.8
Assumptions and Methods

86

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 emiLow-cost: 

2020 . . . . . . . . . 2.07 779.0 239.7 4,374.5

2025 . . . . . . . . . 2.20 762.6 233.4 4,290.8

2030 . . . . . . . . . 2.20 745.9 226.8 4,207.1

2035 . . . . . . . . . 2.20 729.6 220.4 4,125.1

2040 . . . . . . . . . 2.20 713.8 214.1 4,045.4

2045 . . . . . . . . . 2.20 698.4 208.0 3,968.2

2050 . . . . . . . . . 2.20 683.6 202.2 3,893.6

2055 . . . . . . . . . 2.20 669.3 196.5 3,821.4

2060 . . . . . . . . . 2.20 655.4 191.1 3,751.5

2065 . . . . . . . . . 2.20 642.0 185.8 3,683.8

2070 . . . . . . . . . 2.20 629.1 180.7 3,618.3

2075 . . . . . . . . . 2.20 616.5 175.8 3,554.8

2080 . . . . . . . . . 2.20 604.4 171.1 3,493.3

2085 . . . . . . . . . 2.20 592.6 166.5 3,433.7

2090 . . . . . . . . . 2.20 581.2 162.1 3,375.8

2095 . . . . . . . . . 2.20 570.2 157.8 3,319.8

High-cost:

2020 . . . . . . . . . 1.90 719.4 220.7 4,044.1

2025 . . . . . . . . . 1.89 667.6 201.0 3,778.7

2030 . . . . . . . . . 1.83 622.2 183.0 3,550.8

2035 . . . . . . . . . 1.80 581.9 166.9 3,348.7

2040 . . . . . . . . . 1.80 545.7 152.5 3,167.1

2045 . . . . . . . . . 1.80 513.1 139.7 3,003.0

2050 . . . . . . . . . 1.80 483.7 128.2 2,853.8

2055 . . . . . . . . . 1.80 457.0 117.9 2,717.7

2060 . . . . . . . . . 1.80 432.7 108.6 2,593.2

2065 . . . . . . . . . 1.80 410.5 100.3 2,478.7

2070 . . . . . . . . . 1.80 390.2 92.7 2,373.3

2075 . . . . . . . . . 1.80 371.5 85.9 2,275.7

2080 . . . . . . . . . 1.80 354.3 79.7 2,185.3

2085 . . . . . . . . . 1.80 338.4 74.1 2,101.1

2090 . . . . . . . . . 1.80 323.7 68.9 2,022.6

2095 . . . . . . . . . 1.80 310.1 64.2 1,949.2

a This table contains basic assumptions along with key summary values that are derived from basic assumptions.

b 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.

c 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.

d Estimated.

e Estimated, intermediate alternative.

Table V.A1.—Fertility and Mortality Assumptions,a

Calendar Years 1940-2095 (Cont.)

Calendar year

Total

fertility

rateb

Age-sex-adjusted death ratec

per 100,000, by age

Total Under 65 65 and over
87

Demographic Assumptions and Methods

gration. “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. Table V.A2

contains historical and projected levels of various immigration flows.

Legal immigration has increased significantly since World War II, due to various events and legislative changes, including the Immigration Act of 1965

and the Immigration Act of 1990.

The intermediate alternative assumes that annual legal immigration, including those who adjust their status to become legal permanent residents, will be

1,060,000 persons for 2016 and later. Alternatives I and III assume that ultimate annual legal immigration will be 1,260,000 persons and 860,000 persons, respectively, for 2017 and later. The ultimate levels of legal

immigration are unchanged from last year’s report.

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 1,008,000 persons and 602,000 persons, respectively.

The estimated number of other immigrants residing in the Social Security

area and the annual level of other immigration have been affected significantly by the recent recession. Net other immigration was greatly reduced

during the economic downturn. Under the intermediate assumptions, annual

other immigration is expected to increase from recent levels, reflecting a

continued recovery from levels experienced during the recession. The ultimate levels of other immigration are unchanged from last year’s report:

1,350,000 persons for alternative II, 1,650,000 persons for alternative I, and

1,050,000 persons for alternative III.
Assumptions and Methods

88

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. As individuals from this population reside in

the country for extended periods of time, they generally become less likely to

leave the country.

Under the intermediate assumptions, the total annual number of other emigrants who leave the Social Security area averages about 418,000 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 is one-third of

the assumed 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 495,000 and 327,000, 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. The ultimate annual number of people adjusting status to

become legal permanent residents is unchanged from last year’s report.

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.

Under the intermediate assumptions, projected net other immigration reaches

a peak in 2018, reflecting the recovering economy, then sharply decreases

over the next few years, primarily due to the decline in the number of other

immigrants entering the country, to a stable long-term level. This is followed

by a gradual decrease in net other immigration after 2022, 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 491,000 persons. For the low-cost and high-cost

assumptions, projected average annual net other immigration is about

615,000 persons and 359,000 persons, respectively.
89

Demographic Assumptions and Methods

The projected average total level of net immigration (legal and other, combined) is about 1,286,000 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

1,623,000 persons and 961,000 persons, respectively.

Demographers express a wide range of views about the future course of

immigration for the United States. Some believe that net immigration will

increase substantially in the future. Others believe that potential immigrants

may be increasingly attracted to other countries, that the number of potential

immigrants may be lower due to lower birth rates in many countries, or that

changes in the law or enforcement of the law could reduce immigration. The

average of the 2015 Technical Panel’s recommended annual levels of total

net immigration for the 75-year projection period is very close to the average

projected in this year’s report.
Assumptions and Methods

90

Table V.A2.—Immigration Assumptions,a Calendar Years 1940-2095

[in thousands]

Calendar 

year

Legal immigration Other-than-legal immigrationb

Total net

immigration

Legal

in

Legal

out

Adjustments

of statusc d Netlegal

Other

in

Other

out

Adjustments

of statusc d Netother

Historical data:

1940 . . . . - - - 46 - - - - -

1945 . . . . 73 18 - 55 - - - - -

1950 . . . . 227 57 - 171 - - - - -

1955 . . . . 280 70 - 210 - - - - -

1960 . . . . 268 67 - 201 - - - - -

1965 . . . . 261 77 49 232 - - 49 - -

1970 . . . . 307 93 65 279 - - 65 - -

1975 . . . . 340 98 53 294 - - 53 - -

1980 . . . . 431 136 112 407 - - 112 208 614

1985 . . . . 458 144 119 432 - - 119 264 696

1990 . . . . 548 166 114 497 - - 114 620 1,116

1995 . . . . 511 192 255 575 - - 255 557 1,132

2000 . . . . 482 224 413 672 1,409 294 413 703 1,374

2005 . . . . 561 290 597 869 1,773 35 597 1,141 2,010

2006 . . . . 639 303 573 909 1,428 54 573 800 1,709

2007 . . . . 584 267 482 800 926 373 482 71 871

2008 . . . . 635 278 478 835 707 985 478 -755 79

2009 . . . . 633 277 475 832 800 221 475 104 935

2010 . . . . 622 262 426 786 683 208 426 50 835

2011 . . . . 647 264 408 791 609 270 408 -69 722

2012 . . . . 621 255 401 766 694 701 401 -407 359

2013 . . . . 589 249 409 748 820 500 409 -88 660

2014 . . . . 627 256 398 769 1,063 353 398 311 1,080

2015e . . . 661 263 390 788 1,200 173 390 637 1,425

2016f . . . 610 265 450 795 1,450 198 450 802 1,597

Intermediate: 

2020 . . . . 610 265 450 795 1,450 283 450 717 1,512

2025 . . . . 610 265 450 795 1,350 332 450 568 1,363

2030 . . . . 610 265 450 795 1,350 363 450 537 1,332

2035 . . . . 610 265 450 795 1,350 390 450 510 1,305

2040 . . . . 610 265 450 795 1,350 413 450 487 1,282

2045 . . . . 610 265 450 795 1,350 428 450 472 1,267

2050 . . . . 610 265 450 795 1,350 438 450 462 1,257

2055 . . . . 610 265 450 795 1,350 446 450 454 1,249

2060 . . . . 610 265 450 795 1,350 452 450 448 1,243

2065 . . . . 610 265 450 795 1,350 457 450 443 1,238

2070 . . . . 610 265 450 795 1,350 461 450 439 1,234

2075 . . . . 610 265 450 795 1,350 464 450 436 1,231

2080 . . . . 610 265 450 795 1,350 466 450 434 1,229

2085 . . . . 610 265 450 795 1,350 467 450 433 1,228

2090 . . . . 610 265 450 795 1,350 468 450 432 1,227

2095 . . . . 610 265 450 795 1,350 469 450 431 1,226
91

Demographic Assumptions and Methods

Low-cost: 

2020 . . . . 710 252 550 1,008 1,750 304 550 896 1,904

2025 . . . . 710 252 550 1,008 1,650 369 550 731 1,739

2030 . . . . 710 252 550 1,008 1,650 412 550 688 1,696

2035 . . . . 710 252 550 1,008 1,650 451 550 649 1,657

2040 . . . . 710 252 550 1,008 1,650 483 550 617 1,625

2045 . . . . 710 252 550 1,008 1,650 506 550 594 1,602

2050 . . . . 710 252 550 1,008 1,650 522 550 578 1,586

2055 . . . . 710 252 550 1,008 1,650 535 550 565 1,573

2060 . . . . 710 252 550 1,008 1,650 544 550 556 1,564

2065 . . . . 710 252 550 1,008 1,650 552 550 548 1,556

2070 . . . . 710 252 550 1,008 1,650 557 550 543 1,551

2075 . . . . 710 252 550 1,008 1,650 561 550 539 1,547

2080 . . . . 710 252 550 1,008 1,650 564 550 536 1,544

2085 . . . . 710 252 550 1,008 1,650 565 550 535 1,543

2090 . . . . 710 252 550 1,008 1,650 566 550 534 1,542

2095 . . . . 710 252 550 1,008 1,650 567 550 533 1,541

High-cost:

2020 . . . . 510 258 350 602 850 226 350 274 876

2025 . . . . 510 258 350 602 1,050 257 350 443 1,045

2030 . . . . 510 258 350 602 1,050 281 350 419 1,021

2035 . . . . 510 258 350 602 1,050 302 350 398 1,000

2040 . . . . 510 258 350 602 1,050 319 350 381 983

2045 . . . . 510 258 350 602 1,050 331 350 369 971

2050 . . . . 510 258 350 602 1,050 340 350 360 962

2055 . . . . 510 258 350 602 1,050 347 350 353 955

2060 . . . . 510 258 350 602 1,050 352 350 348 950

2065 . . . . 510 258 350 602 1,050 356 350 344 946

2070 . . . . 510 258 350 602 1,050 360 350 340 942

2075 . . . . 510 258 350 602 1,050 362 350 338 940

2080 . . . . 510 258 350 602 1,050 364 350 336 938

2085 . . . . 510 258 350 602 1,050 366 350 334 936

2090 . . . . 510 258 350 602 1,050 367 350 333 935

2095 . . . . 510 258 350 602 1,050 368 350 332 934

a This table contains basic assumptions along with key summary values that are derived from basic assumptions.

b Historical other immigration and emigration estimates depend on a residual method, using Department of

Homeland Security (DHS) January 1 stock estimates for 2005 through 2012, and internally developed January 1 stock estimates based on DHS methods for 2013 through 2015.

c 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.

d Adjustments of status are a positive for net legal immigration and a negative for net other immigration.

e Estimated.

f Estimated, intermediate alternative.

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

Table V.A2.—Immigration Assumptions,a Calendar Years 1940-2095 (Cont.)

[in thousands]

Calendar 

year

Legal immigration Other-than-legal immigrationb

Total net

immigration

Legal

in

Legal

out

Adjustments

of statusc d Netlegal

Other

in

Other

out

Adjustments

of statusc d Netother
Assumptions and Methods

92

4. Total Population Estimates

The starting Social Security area population for December 31, 2014, 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 from 2015 through 2095 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. 

This report presents a July 1 (i.e., midyear) population for each year, which

is derived from surrounding December populations. Table V.A3 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).
93

Demographic Assumptions and Methods

Table V.A3.—Social Security Area Population on July 1 and Dependency Ratios,

Calendar Years 1945-2095

Calendar year

Population (in thousands) Dependency ratio

Under 20 20-64

65 and

over Total Ageda Totalb

Historical data:

1945 . . . . . . . . . . . . . . 49,121 88,109 10,900 148,130 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 . . . . . . . . . . . . . . 81,020 112,991 20,895 214,906 .185 .902

1975 . . . . . . . . . . . . . . 78,629 122,642 23,307 224,578 .190 .831

1980 . . . . . . . . . . . . . . 74,835 134,106 26,309 235,250 .196 .754

1985 . . . . . . . . . . . . . . 72,948 144,577 29,151 246,676 .202 .706

1990 . . . . . . . . . . . . . . 74,797 152,768 31,925 259,491 .209 .699

1995 . . . . . . . . . . . . . . 79,278 160,729 34,318 274,325 .214 .707

2000 . . . . . . . . . . . . . . 82,003 170,181 35,503 287,687 .209 .690

2005 . . . . . . . . . . . . . . 83,979 181,065 37,158 302,202 .205 .669

2006 . . . . . . . . . . . . . . 84,568 183,340 37,724 305,632 .206 .667

2007 . . . . . . . . . . . . . . 85,147 184,970 38,479 308,596 .208 .668

2008 . . . . . . . . . . . . . . 85,542 185,797 39,366 310,704 .212 .672

2009 . . . . . . . . . . . . . . 85,766 186,734 40,246 312,746 .216 .675

2010 . . . . . . . . . . . . . . 85,723 188,418 41,039 315,180 .218 .673

2011 . . . . . . . . . . . . . . 85,451 190,046 42,009 317,507 .221 .671

2012 . . . . . . . . . . . . . . 85,159 190,989 43,401 319,549 .227 .673

2013 . . . . . . . . . . . . . . 84,915 191,737 44,876 321,528 .234 .677

2014 . . . . . . . . . . . . . . 84,838 192,744 46,283 323,866 .240 .680

2015 c . . . . . . . . . . . . . 84,910 193,852 47,738 326,499 .246 .684

2016 c . . . . . . . . . . . . . 85,131 194,917 49,264 329,312 .253 .690

Intermediate:

2020 . . . . . . . . . . . . . . 86,917 198,586 56,060 341,562 .282 .720

2025 . . . . . . . . . . . . . . 89,962 201,594 65,315 356,870 .324 .770

2030 . . . . . . . . . . . . . . 92,330 205,002 73,459 370,791 .358 .809

2035 . . . . . . . . . . . . . . 96,076 208,655 78,510 383,242 .376 .837

2040 . . . . . . . . . . . . . . 98,786 214,092 81,342 394,219 .380 .841

2045 . . . . . . . . . . . . . . 99,854 220,951 83,359 404,164 .377 .829

2050 . . . . . . . . . . . . . . 101,366 226,580 85,920 413,865 .379 .827

2055 . . . . . . . . . . . . . . 103,569 231,311 89,200 424,080 .386 .833

2060 . . . . . . . . . . . . . . 106,251 235,374 93,298 434,924 .396 .848

2065 . . . . . . . . . . . . . . 108,959 240,053 97,080 446,092 .404 .858

2070 . . . . . . . . . . . . . . 111,318 244,798 101,117 457,233 .413 .868

2075 . . . . . . . . . . . . . . 113,224 249,690 105,285 468,200 .422 .875

2080 . . . . . . . . . . . . . . 115,033 256,379 107,632 479,044 .420 .869

2085 . . . . . . . . . . . . . . 117,135 262,269 110,566 489,970 .422 .868

2090 . . . . . . . . . . . . . . 119,533 266,576 114,955 501,063 .431 .880

2095 . . . . . . . . . . . . . . 121,974 271,092 119,186 512,251 .440 .890
Assumptions and Methods

94

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 the 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.

Low-cost:

2020 . . . . . . . . . . . . . . 88,020 199,768 55,889 343,677 0.280 0.720

2025 . . . . . . . . . . . . . . 93,238 204,078 64,788 362,104 .317 .774

2030 . . . . . . . . . . . . . . 98,632 208,796 72,411 379,839 .347 .819

2035 . . . . . . . . . . . . . . 105,520 213,740 76,820 396,080 .359 .853

2040 . . . . . . . . . . . . . . 110,974 220,930 78,965 410,868 .357 .860

2045 . . . . . . . . . . . . . . 113,996 230,597 80,356 424,949 .348 .843

2050 . . . . . . . . . . . . . . 117,212 239,853 82,428 439,493 .344 .832

2055 . . . . . . . . . . . . . . 121,818 248,242 85,386 455,446 .344 .835

2060 . . . . . . . . . . . . . . 127,518 255,983 89,275 472,776 .349 .847

2065 . . . . . . . . . . . . . . 133,388 264,579 92,870 490,837 .351 .855

2070 . . . . . . . . . . . . . . 138,630 273,850 96,652 509,131 .353 .859

2075 . . . . . . . . . . . . . . 143,079 284,085 100,474 527,639 .354 .857

2080 . . . . . . . . . . . . . . 147,391 296,774 102,484 546,649 .345 .842

2085 . . . . . . . . . . . . . . 152,310 308,650 105,516 566,476 .342 .835

2090 . . . . . . . . . . . . . . 157,899 318,302 110,934 587,135 .349 .845

2095 . . . . . . . . . . . . . . 163,669 327,822 116,902 608,393 .357 .856

High-cost:

2020 . . . . . . . . . . . . . . 85,228 196,326 56,226 337,780 .286 .721

2025 . . . . . . . . . . . . . . 86,192 197,881 65,869 349,942 .333 .768

2030 . . . . . . . . . . . . . . 86,209 200,096 74,599 360,903 .373 .804

2035 . . . . . . . . . . . . . . 87,045 202,596 80,375 370,016 .397 .826

2040 . . . . . . . . . . . . . . 87,279 206,379 83,979 377,637 .407 .830

2045 . . . . . . . . . . . . . . 86,667 210,607 86,694 383,968 .412 .823

2050 . . . . . . . . . . . . . . 86,415 213,296 89,779 389,489 .421 .826

2055 . . . . . . . . . . . . . . 86,797 214,647 93,350 394,794 .435 .839

2060 . . . . . . . . . . . . . . 87,226 215,312 97,561 400,099 .453 .858

2065 . . . . . . . . . . . . . . 87,536 216,399 101,409 405,343 .469 .873

2070 . . . . . . . . . . . . . . 87,658 217,076 105,583 410,317 .486 .890

2075 . . . . . . . . . . . . . . 87,608 217,257 109,997 414,861 .506 .910

2080 . . . . . . . . . . . . . . 87,578 218,718 112,598 418,894 .515 .915

2085 . . . . . . . . . . . . . . 87,736 219,522 115,260 422,518 .525 .925

2090 . . . . . . . . . . . . . . 88,022 219,429 118,386 425,837 .540 .941

2095 . . . . . . . . . . . . . . 88,277 219,583 121,011 428,872 .551 .953

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, intermediate alternative.

Table V.A3.—Social Security Area Population on July 1 and Dependency Ratios,

Calendar Years 1945-2095 (Cont.)

Calendar year

Population (in thousands) Dependency ratio

Under 20 20-64

65 and

over Total Ageda Totalb
95

Demographic Assumptions and Methods

 • 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.A4 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.A5 presents historical and projected life expectancy calculated

on a cohort basis. Cohort life expectancy is somewhat greater than

period life expectancy for a given year because: (1) death rates at any

age tend to decline over time; and (2) 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. 
Assumptions and Methods

96

Table V.A4.—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

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 . . . . 76.3 81.0 17.8 20.3

2013 . . . . 76.3 81.1 17.8 20.3

2014 b . . .

b Estimated.

76.3 81.1 17.8 20.4

2015 c . . .

c Estimated, intermediate alternative.

76.7 81.4 18.1 20.6

2016 c . . . 76.9 81.5 18.2 20.7

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

2020 . . . . 77.4 81.9 18.5 20.9 76.9 81.5 18.2 20.7 77.9 82.3 18.9 21.2

2025 . . . . 78.0 82.4 18.9 21.3 77.2 81.7 18.4 20.8 78.9 83.1 19.5 21.8

2030 . . . . 78.6 82.9 19.2 21.6 77.5 82.0 18.6 21.0 79.9 83.9 20.0 22.2

2035 . . . . 79.2 83.3 19.6 21.8 77.8 82.2 18.7 21.1 80.7 84.6 20.5 22.7

2040 . . . . 79.7 83.8 19.9 22.1 78.1 82.5 18.9 21.3 81.5 85.3 21.0 23.1

2045 . . . . 80.2 84.2 20.2 22.4 78.4 82.7 19.1 21.4 82.3 85.9 21.4 23.5

2050 . . . . 80.7 84.6 20.5 22.7 78.7 83.0 19.2 21.6 83.0 86.5 21.9 23.9

2055 . . . . 81.2 85.0 20.7 22.9 79.0 83.2 19.4 21.7 83.6 87.0 22.3 24.3

2060 . . . . 81.7 85.4 21.0 23.2 79.2 83.4 19.6 21.8 84.3 87.5 22.7 24.6

2065 . . . . 82.1 85.8 21.3 23.4 79.5 83.6 19.7 22.0 84.9 88.0 23.0 25.0

2070 . . . . 82.5 86.1 21.6 23.6 79.8 83.8 19.9 22.1 85.4 88.5 23.4 25.3

2075 . . . . 83.0 86.5 21.8 23.9 80.0 84.1 20.0 22.3 86.0 88.9 23.8 25.6

2080 . . . . 83.4 86.8 22.1 24.1 80.3 84.3 20.2 22.4 86.5 89.4 24.1 26.0

2085 . . . . 83.7 87.1 22.3 24.3 80.5 84.5 20.3 22.5 87.0 89.8 24.4 26.3

2090 . . . . 84.1 87.4 22.5 24.5 80.8 84.7 20.4 22.7 87.4 90.2 24.7 26.6

2095 . . . . 84.5 87.7 22.8 24.7 81.0 84.9 20.6 22.8 87.9 90.5 25.1 26.8
97

Demographic Assumptions and Methods

Table V.A5.—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, estimated, and projected death rates for birth years 1940 through 2014. For birth years after 2014, these values

depend on estimated and projected death rates.

At age 65 c

c Age 65 cohort life expectancy for those attaining age 65 in calendar years 1940 though 2013 depends on

actual death rates or on a combination of actual, estimated, and projected death rates. After 2013, these values depend on estimated and projected death rates.

At birth b At age 65 c

Male Female Male Female Male Female Male Female Male Female Male Female

1940 . . . . 70.4 76.6 12.7 14.7 70.3 76.4 12.7 14.7 70.6 76.9 12.7 14.7

1945 . . . . 72.3 78.3 13.0 15.4 72.0 78.0 13.0 15.4 72.6 78.8 13.0 15.4

1950 . . . . 73.5 79.7 13.1 16.2 73.0 79.2 13.1 16.2 74.0 80.2 13.1 16.2

1955 . . . . 74.1 80.2 13.1 16.7 73.5 79.6 13.1 16.7 74.8 81.0 13.1 16.7

1960 . . . . 74.8 80.7 13.2 17.4 74.0 79.9 13.2 17.4 75.8 81.6 13.2 17.4

1965 . . . . 75.8 81.2 13.5 18.0 74.8 80.3 13.5 18.0 77.0 82.4 13.5 18.0

1970 . . . . 77.0 82.1 13.8 18.5 75.8 80.9 13.8 18.5 78.4 83.5 13.8 18.5

1975 . . . . 77.9 82.8 14.2 18.7 76.5 81.5 14.2 18.7 79.6 84.4 14.2 18.7

1980 . . . . 78.8 83.5 14.7 18.8 77.2 82.0 14.7 18.8 80.7 85.3 14.7 18.8

1985 . . . . 79.5 84.1 15.4 19.1 77.7 82.4 15.4 19.1 81.7 86.0 15.4 19.1

1990 . . . . 80.2 84.6 16.1 19.4 78.2 82.8 16.1 19.4 82.6 86.7 16.1 19.5

1995 . . . . 81.0 85.2 16.8 19.8 78.7 83.1 16.7 19.7 83.6 87.4 16.8 19.9

2000 . . . . 81.5 85.6 17.5 20.2 79.1 83.4 17.4 20.1 84.3 88.0 17.7 20.4

2005 . . . . 82.0 86.0 18.2 20.7 79.4 83.7 17.9 20.5 84.9 88.5 18.4 21.1

2006 . . . . 82.1 86.0 18.3 20.8 79.4 83.7 18.0 20.5 85.1 88.6 18.6 21.2

2007 . . . . 82.2 86.1 18.4 20.9 79.5 83.8 18.1 20.6 85.2 88.7 18.7 21.3

2008 . . . . 82.3 86.2 18.4 21.0 79.5 83.8 18.1 20.6 85.3 88.8 18.8 21.4

2009 . . . . 82.4 86.3 18.5 21.1 79.6 83.9 18.2 20.7 85.5 88.9 19.0 21.5

2010 . . . . 82.5 86.4 18.6 21.1 79.7 83.9 18.2 20.7 85.6 89.1 19.1 21.6

2011 . . . . 82.6 86.4 18.7 21.2 79.7 84.0 18.3 20.8 85.7 89.1 19.2 21.7

2012 . . . . 82.7 86.5 18.8 21.3 79.8 84.0 18.3 20.8 85.9 89.2 19.3 21.9

2013 . . . . 82.8 86.6 18.9 21.4 79.9 84.1 18.4 20.8 86.0 89.3 19.5 22.0

2014 . . . . 82.9 86.7 18.9 21.4 79.9 84.1 18.4 20.9 86.1 89.4 19.6 22.1

2015 . . . . 83.0 86.7 19.0 21.5 80.0 84.2 18.5 20.9 86.2 89.5 19.7 22.2

2016 . . . . 83.1 86.8 19.1 21.6 80.0 84.2 18.5 21.0 86.4 89.7 19.8 22.3

2020 . . . . 83.4 87.1 19.4 21.8 80.2 84.4 18.6 21.1 86.8 90.0 20.3 22.7

2025 . . . . 83.9 87.5 19.7 22.1 80.5 84.6 18.8 21.2 87.4 90.5 20.8 23.2

2030 . . . . 84.3 87.8 20.0 22.4 80.8 84.8 19.0 21.4 87.9 90.9 21.3 23.6

2035 . . . . 84.7 88.1 20.4 22.7 81.0 85.0 19.2 21.5 88.5 91.4 21.8 24.0

2040 . . . . 85.0 88.4 20.7 22.9 81.3 85.2 19.3 21.7 88.9 91.8 22.3 24.4

2045 . . . . 85.4 88.7 21.0 23.2 81.5 85.4 19.5 21.8 89.4 92.1 22.7 24.8

2050 . . . . 85.8 89.0 21.2 23.5 81.7 85.6 19.6 22.0 89.9 92.5 23.1 25.2

2055 . . . . 86.1 89.3 21.5 23.7 82.0 85.8 19.8 22.1 90.3 92.9 23.5 25.5

2060 . . . . 86.4 89.6 21.8 23.9 82.2 86.0 20.0 22.3 90.7 93.2 23.9 25.9

2065 . . . . 86.8 89.8 22.0 24.2 82.4 86.2 20.1 22.4 91.1 93.5 24.2 26.2

2070 . . . . 87.1 90.1 22.3 24.4 82.6 86.3 20.3 22.5 91.5 93.8 24.6 26.5

2075 . . . . 87.4 90.3 22.5 24.6 82.8 86.5 20.4 22.7 91.8 94.2 24.9 26.8

2080 . . . . 87.7 90.6 22.8 24.8 83.1 86.7 20.5 22.8 92.2 94.4 25.2 27.1

2085 . . . . 88.0 90.8 23.0 25.1 83.3 86.9 20.7 22.9 92.5 94.7 25.6 27.4

2090 . . . . 88.2 91.1 23.2 25.3 83.5 87.0 20.8 23.1 92.9 95.0 25.9 27.7

2095 . . . . 88.5 91.3 23.5 25.5 83.7 87.2 21.0 23.2 93.2 95.3 26.2 28.0
Assumptions and Methods

98

B. ECONOMIC ASSUMPTIONS AND METHODS

The three alternative sets of economic assumptions provide a reasonable

range for estimating the financial status of the trust funds. The intermediate

assumptions reflect the Trustees’ consensus expectation of sustained moderate economic growth and their best estimate for 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, interrupted by a recession, weaker longterm economic growth, and relatively pessimistic levels for other parameters.

Actual economic data were available through the third quarter of 2016 at the

time the assumptions for this report were set. The data indicated that economic activity peaked in the fourth quarter of 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 under the intermediate assumptions, and 2025 under

the high-cost assumptions, the same as in last year’s report. The economy is

projected to return to its sustainable trend level of output by 2021 under the

low-cost assumptions, about 1 year later than in last year’s report. Complete

economic cycles have little effect on the long-range estimates of financial

status, so the assumptions do not include cycles beyond the short-range

period (2017 through 2026).

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.
99

Economic Assumptions and Methods

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 of 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-economy productivity averaged 2.27, 1.10, 1.38, 1.77 and 2.14 percent, respectively. For

the 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

2016 report.

The average annual rate of change in total-economy productivity from 2007

(the end of the last complete economic cycle) to 2016 is estimated to be

0.92 percent. For the intermediate assumptions, the annual change in productivity is assumed to be 1.79 percent for 2017, then increase to 1.92 percent

for 2018, and gradually decline to 1.67 percent for 2023, before reaching its

ultimate value of 1.68 percent after 2026. For the low-cost assumptions, the

assumed annual change in productivity is 2.25 percent for 2017, then

increases to 2.55 percent for 2018, and declines to its ultimate value of

1.98 percent for 2022 and thereafter. For the high-cost assumptions, the

assumed annual change in productivity is 0.78 percent for 2017, 0.56 percent

for 2018 due to the assumed recession, rebounds to 1.81 percent for 2019,

and averages 1.39 percent for 2020 through 2026, before reaching its ultimate value of 1.38 percent after 2026.

2. Price Inflation Assumptions

Changes in the Consumer Price Index for Urban Wage Earners and Clerical

Workers (CPI) directly affect the OASDI program through the automatic

cost-of-living benefit increases. Changes in the GDP price index (GDP defla-

 1 Historical levels of real GDP are from the Bureau of Economic Analysis’ National Income and Product

Accounts. Historical total hours worked are provided by the Bureau of Labor Statistics and cover 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.
Assumptions and Methods

100

tor) affect the nominal levels of GDP, wages, self-employment income, average earnings, and taxable payroll.

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 period 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

2016 is 1.61 percent for the CPI and 1.52 percent for the GDP deflator.

The assumed ultimate annual increases in the CPI are 3.2, 2.6, and

2.0 percent for the low-cost, intermediate, and high-cost assumptions,

respectively.1 These assumptions are unchanged from the 2016 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 Personal Consumption Expenditures (PCE) price index,2 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, to 2.7 percent for the 2014 and 2015 reports, and to

2.6 percent for the 2016 report and for this report.

For the intermediate assumptions, the assumed annual change in the CPI is

2.17 percent for 2017, 2.97 percent for 2018, 2.62 percent for 2019, and

reaches the ultimate growth rate of 2.60 percent for 2020 and later. For the

low-cost assumptions, the assumed annual change in the CPI is 2.76 percent

 1 The Bureau of Labor Statistics (BLS) produces a series called the Consumer Price Index Research Series

Using Current Methods (CPI-U-RS) that approximates the measured rate of inflation over the 1978-2016

period had the method currently used been in effect since 1978. BLS does not revise the CPI values published in earlier years, for which different methods were used. These CPI published values are shown in

table V.B1. The Trustees use an adjusted CPI series based on the CPI-U-RS when setting the ultimate price

inflation assumption because it provides a time series that is consistent with the current method for computing the CPI.

 2 The Trustees’ assumed ultimate annual growth rate for the GDP deflator of 2.2 percent is based on an

assumed 2.3 percent annual growth rate for the PCE price index. The Trustees’ assumption takes into

account the Federal Open Market Committee (FOMC) target, as well as the potential for inflationary shocks

during the 2026-2091 projection period.
101

Economic Assumptions and Methods

for 2017, increases to 3.80 percent for 2018, declines to 3.36 percent in 2019,

and drops to its ultimate annual growth rate of 3.20 percent for 2020 and

later. For the high-cost assumptions, the assumed annual rate of change in the

CPI is 1.72 percent for 2017, increases to 2.42 percent for 2018, declines to

2.16 percent in 2019, and drops to the ultimate annual change of 2.00 percent

for 2020 and later. 

The annual increase in the GDP deflator differs from the annual increase in

the CPI because the two indices are constructed using different computational 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 period including 1966 through 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 2016, the average annual price differential is estimated to be

0.10 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 2.9 (3.2 less 0.3), 2.2 (2.6 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 2016 report.

The price differential was -0.24 percentage point for 2013, -0.29 for 2014,

-1.48 for 2015, is estimated to be -0.36 in 2016, and assumed to be 0.30 for

2017. The negative price differential for 2013 through 2016 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 0.52 percentage

point for 2018 and 0.40 percentage point for 2019 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
Assumptions and Methods

102

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 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. wages and net proprietors’ income to the sum of 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 2016, the average annual change in average

hours worked is estimated to be -0.04 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 highcost assumptions, respectively. These values are unchanged from the 2016

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 the cost of 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

premiums 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. This component is assumed to grow faster than employee
103

Economic Assumptions and Methods

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 2026 to 2091 is assumed to be about 0.02, -0.08, and

-0.18 percent for the low-cost, intermediate, and high-cost assumptions,

respectively. These assumed rates are 0.01 percentage point lower (more

negative) than those assumed in the 2016 report. The change is due to

updated estimates from the Centers for Medicare and Medicaid Services

(CMS) that produce faster growth in the total amount of employer-sponsored

health insurance premiums. Under the intermediate assumptions, the ratio of

wages to employee compensation declines from 0.811 for 2016 to 0.767 for

2091. The assumed ultimate annual rate of this decline, now 0.08 percent,

compares with 0.07 percent assumed for the 2016 report, 0.09 percent

assumed for the 2015 report, 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 selfemployment 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 0.06 percent from 2026 to 2091) 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 0.601 in 2010, and is 0.614 in 2015. This

ratio is assumed to rise as the economy recovers, reaching a level of 0.633

for 2026. For years after 2026, relative sizes of different sectors of the economy are assumed to remain about constant,1 and therefore the ratio of total

compensation to GDP remains at about the 2026 level for each set of

assumptions.

The projected average annual growth rate in average nominal U.S. earnings

from 2026 to 2091 is about 3.80 percent for the intermediate assumptions.

This growth rate reflects the average annual growth rate of approximately

-0.06 percent for the ratio of earnings to total compensation, and also reflects

the assumed ultimate annual growth rates of 1.68, -0.05, and 2.20 percent for

productivity, average hours worked, and the GDP deflator, respectively. Similarly, the projected average annual growth rate in average nominal U.S.

 1 However, employment in the uniformed military sector has declined in size over the last 40 years, but is

assumed to remain at its 2016 level throughout the 75-year projection period.
Assumptions and Methods

104

earnings is 5.01 percent for the low-cost assumptions and 2.60 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. The assumed average annual growth rates in the average covered

wage from 2026 to 2091 are 5.02, 3.80, and 2.58 percent for the low-cost,

intermediate, and high-cost assumptions, respectively. The estimated annual

rate of change in the average covered wage is 2.66 percent for 2016. For the

intermediate assumptions, as the economy continues to recover, the annual

rate of change in the average covered wage averages 4.12 percent from 2016

to 2026. Thereafter, the assumed average annual rate of change in the average covered wage is 3.80 percent.

4. Assumed Real-Wage Differential

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 period from 1966 to 2007, covering the last five complete

economic cycles, the real-wage differential averaged 0.89 percentage point,

the result of averages of 1.47, 0.0, 0.48, 1.56, and 0.59 percentage points

over the economic cycles 1966-73, 1973-79, 1979-89, 1989-2000, and

2000-07, respectively.

For the years 2027-91, the assumed average annual real-wage differentials

for OASDI covered employment average 1.82, 1.20, and 0.58 percentage

points for the low-cost, intermediate, and high-cost assumptions, respectively. The rounded average annual real-wage differentials are unchanged

from the 2016 report, although the exact values are slightly lower and the

pattern of differentials over time is different. While new data from CMS

result in higher projected costs of employer sponsored health insurance, new

data on lower life expectancy result in lower projected costs of employer

pension contributions. The net effect is a slightly lower wage-to-compensation ratio, and thus a slightly lower average annual real wage differential for

the projection period when compared to the 2016 report.

The estimated real-wage differential averaged 0.71 percentage point for 2008

through 2016 (the years since the last complete economic cycle ending in a

peak). For the intermediate assumptions, the real-wage differential decreased

from 4.01 percentage points in 2015 to 1.70 percentage points in 2016, a

decline that reflects higher inflation and slower growth in GDP and productivity. The wage differential is projected to rise from 1.84 in 2017 to 1.92 in
105

Economic Assumptions and Methods

2018, and gradually decline to 1.13 in 2023 before reaching its long-run

average of 1.20 percentage points for 2027 through 2091. For the low-cost

assumptions, the real-wage differential is 2.10 percentage points for 2017,

increases to 2.98 percentage points in 2019, declines to 1.95 percentage

points in 2021, and averages 1.77 for 2022 through 2026 before reaching its

long-run average of 1.82 percentage points for 2027 through 2091. For the

high-cost assumptions, the real-wage differential is 1.01 percentage points

for 2017, drops to -0.69 percentage point in 2018 due to the assumed recession, and rises to 1.45 percentage points in 2020 before gradually declining

to its long-run average of 0.58 percentage point for 2027 through 2091.

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 6.57 6.76 -.23

1975 to 1980 . . . .95 -.32 -.17 7.19 8.90 8.91 -.03

1980 to 1985 . . . 1.74 -.33 .02 5.21 6.53 5.22 1.30

1985 to 1990 . . . 1.37 -.19 -.07 3.11 4.79 3.83 .95

1990 to 1995 . . . 1.25 -.11 .41 2.44 3.55 3.03 .51

1995 to 2000 . . . 2.31 .28 .15 1.67 5.32 2.43 2.89

2000 to 2005 . . . 2.63 -.41 -.80 2.35 2.68 2.49 .20

2005 to 2010 . . . 1.60 -.08 -.46 1.93 2.50 2.30 .22

2010 to 2015 . . . .39 .24 .37 1.68 2.97 1.61 1.35

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 8.54 8.54 d

1979 to 1989 . . . 1.38 -.28 d 4.68 5.83 5.31 .48

1989 to 2000 . . . 1.77 .05 .16 2.20 4.51 2.96 1.56

2000 to 2007 . . . 2.14 -.23 -.63 2.50 3.23 2.65 .59

2007 to 2016 . . . .92 .04 -.04 1.52 2.32 1.61 .71

Single years:

2006 . . . . . . . . . . .83 .49 -.03 3.07 4.74 3.19 1.54

2007 . . . . . . . . . . 1.04 -.05 -.38 2.67 4.50 2.88 1.62

2008 . . . . . . . . . . .75 -.06 -.60 1.93 2.41 4.09 -1.68

2009 . . . . . . . . . . 2.85 -.66 -1.84 .79 -1.58 -.67 -.90

2010 . . . . . . . . . . 2.56 -.10 .55 1.23 2.58 2.07 .51

2011 . . . . . . . . . . .06 .28 .98 2.06 3.14 3.56 -.42

2012 . . . . . . . . . . .49 .40 -.07 1.84 3.32 2.10 1.22

2013 . . . . . . . . . . .44 .01 .24 1.61 1.17 1.37 -.20

2014 . . . . . . . . . . .47 .31 .28 1.80 3.66 1.50 2.16

2015 . . . . . . . . . . .50 .21 .41 1.07 3.59 -.41 4.01

2016e . . . . . . . . . .19 d -.28 1.32 2.66 .96 1.70
Assumptions and Methods

106

5. Labor Force and Unemployment Projections

The model used by the Office of the Chief Actuary projects the civilian labor

force by age, sex, marital status, and presence of children. Projections of the

Intermediate: 

2017 . . . . . . . . . . 1.79 .06 -.04 1.86 4.00 2.17 1.84

2018 . . . . . . . . . . 1.92 -.07 -.01 2.45 4.89 2.97 1.92

2019 . . . . . . . . . . 1.91 -.03 -.01 2.22 4.51 2.62 1.88

2020 . . . . . . . . . . 1.86 .01 -.01 2.20 4.47 2.60 1.87

2021 . . . . . . . . . . 1.80 -.07 -.02 2.20 4.21 2.60 1.61

2022 . . . . . . . . . . 1.69 -.08 -.04 2.20 3.91 2.60 1.31

2023 . . . . . . . . . . 1.67 -.10 -.05 2.20 3.73 2.60 1.13

2024 . . . . . . . . . . 1.69 -.07 -.05 2.20 3.80 2.60 1.20

2025 . . . . . . . . . . 1.71 -.06 -.05 2.20 3.83 2.60 1.23

2026 . . . . . . . . . . 1.65 -.06 -.05 2.20 3.82 2.60 1.22

2026 to 2091 . . . 1.68 -.06 -.05 2.20 3.80 2.60 1.20

Low-cost: 

2017 . . . . . . . . . . 2.25 0.06 0.02 2.09 4.86 2.76 2.10

2018 . . . . . . . . . . 2.55 -.05 .12 3.24 6.72 3.80 2.92

2019 . . . . . . . . . . 2.47 -.01 .11 3.06 6.34 3.36 2.98

2020 . . . . . . . . . . 2.25 .04 .10 2.90 5.89 3.20 2.69

2021 . . . . . . . . . . 2.00 -.03 .06 2.90 5.15 3.20 1.95

2022 . . . . . . . . . . 1.98 -.03 .05 2.90 4.90 3.20 1.70

2023 . . . . . . . . . . 1.98 -.04 .05 2.90 4.90 3.20 1.70

2024 . . . . . . . . . . 1.98 d .05 2.90 4.97 3.20 1.77

2025 . . . . . . . . . . 1.98 .01 .05 2.90 5.01 3.20 1.81

2026 . . . . . . . . . . 1.98 .03 .05 2.90 5.09 3.20 1.89

2026 to 2091 . . . 1.98 .02 .05 2.90 5.02 3.20 1.82

High-cost: 

2017 . . . . . . . . . . .78 .04 -.08 1.68 2.73 1.72 1.01

2018 . . . . . . . . . . .56 -.08 -.25 2.01 1.72 2.42 -.69

2019 . . . . . . . . . . 1.81 -.04 -.17 1.66 2.79 2.16 .63

2020 . . . . . . . . . . 1.58 -.02 -.09 1.50 3.45 2.00 1.45

2021 . . . . . . . . . . 1.36 -.12 -.10 1.50 3.12 2.00 1.12

2022 . . . . . . . . . . 1.36 -.14 -.11 1.50 3.00 2.00 1.00

2023 . . . . . . . . . . 1.34 -.16 -.12 1.50 2.88 2.00 .88

2024 . . . . . . . . . . 1.36 -.15 -.13 1.50 2.85 2.00 .85

2025 . . . . . . . . . . 1.34 -.15 -.14 1.50 2.72 2.00 .72

2026 . . . . . . . . . . 1.36 -.14 -.15 1.50 2.61 2.00 .61

2026 to 2091 . . . 1.38 -.15 -.15 1.50 2.58 2.00 .58

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 real wage differential, beginning with the year

following the first year of the range. 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.

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
107

Economic Assumptions and Methods

labor force participation rates reflect changes in 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 an upward trend in female participation rates across cohorts born through 1948.

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 is expected to follow

from a substantial slowing of growth in the working age population in the

future—a consequence of the baby-boom generation reaching retirement

ages and succeeding lower-birth-rate cohorts reaching working ages. Under

the intermediate assumptions, the labor force is projected to increase by an

average of 0.9 percent per year from 2016 to 2026 and 0.5 percent per year

over the remainder of the 75-year projection period.

Labor force participation rates are projected with a model 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, while demographic assumptions in the

low-cost alternative (such as slower improvement in longevity) are consistent with lower labor force participation rates. These economic and demographic influences have largely offsetting effects. 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
Assumptions and Methods

108

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

in life expectancy. For the intermediate projections, this adjustment increases

the total labor force by 2.9 percent for 2091.

For men age 16 and over, the projected age-adjusted labor force participation

rate1 for 2091 is 73.0, 73.1, and 73.1 percent for the low-cost, intermediate,

and high-cost assumptions, respectively. The low-cost assumptions result in

a larger working-age population and a larger labor force when compared to

the intermediate assumptions, but a slightly lower labor force participation

rate for men. This occurs because the low-cost assumptions include shorter

life expectancies and relatively higher numbers of never-married individuals

in the population. Shorter life expectancies tend to reduce work at older ages,

while labor force participation rates tend to be lower for never-married men

and higher for never-married women compared to their married counterparts.2 For women age 16 and over, the projected age-adjusted labor force

participation rates for 2091 are 61.7, 61.1, and 60.4 percent for the low-cost,

intermediate, and high-cost assumptions, respectively. 

The age-adjusted rates for 2091 are higher under all three alternatives than

the age-adjusted rates for 2015 of 70.2 percent for men and 57.6 percent for

women (based on actual age-specific rates published by the Bureau of Labor

Statistics), primarily due to the Trustees’ projected increases 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 total civilian unemployment rates are presented in table V.B2. For years

through 2026, the table presents total civilian rates without adjustment for

the changing age-sex distribution of the population. For years after 2026, the

table presents 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.

 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 The high-cost labor force participation rate is the same as the intermediate because life expectancy has a

non-linear effect on labor force participation rates in the Office of the Chief Actuary’s model.
109

Economic Assumptions and Methods

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.1 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 2016 report. Improvements in labor market conditions will eventually draw more nonparticipants

back into the labor force and unemployment rate will increase from an estimated 4.9 percent for 2016 to the assumed rate of 5.5 for 2019 under the

intermediate assumptions. Under the low-cost assumptions, the ultimate

unemployment rate is reached in 2017.2 Under the high-cost assumptions,

unemployment will reach the ultimate rate in 2025.

6. Gross Domestic Product Projections

The value of real GDP equals the product of three components: (1) average

weekly total employment,3 (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

2007-2009 recession and the subsequent slow recovery, the real GDP for

2015 was only 10.2 percent above the 2007 level. The estimated real GDP

growth from 2015 to 2016 is 1.6 percent.

For the intermediate assumptions, the average annual growth in real GDP is

2.6 percent from 2016 to 2026, the approximate sum of component growth

rates of 0.8 percent for total employment, 1.8 percent for productivity, and

-0.03 percent for average hours worked. The projected average annual

growth in real GDP of 2.6 percent for this period is 0.4 percentage point

higher than the underlying sustainable trend rate of 2.2 percent. This

 1 Potential GDP is the level of GDP assuming the economy is operating at the underlying sustainable trend

rate of growth.

 2 The assumed ultimate unemployment rate is an age-sex-adjusted rate. 

 3 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.
Assumptions and Methods

110

0.4 percentage point above-trend component reflects a relatively rapid

increase in employment and total economy productivity as the economy

recovers. After 2026, 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 2026, 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 projected

growth rate of real GDP is slower than the past average growth rate mainly

because the working-age population is expected to grow more slowly than in

the past.

For the low-cost assumptions, the annual growth in real GDP averages

3.3 percent over the decade ending in 2026. The relatively faster growth is

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 1.7 percent for the decade ending in 2026.

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 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 3.2 percent,

2.7 percent, and 2.2 percent for the low-cost, intermediate, and high-cost

assumptions, respectively. These rates are the same as in the 2016 report.

The actual average annual nominal interest rate was approximately

2.0 percent for 2015, which means that securities newly issued in 2015

would yield 2.0 percent if held one year. Estimated average prices rose from
111

Economic Assumptions and Methods

2015 to 2016 by approximately 1.0 percent. The annual real interest rate for

2016 is 1.1 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

3.2, 2.6, and 2.0 percent, the assumed ultimate real interest rates produce

ultimate nominal interest rates of 6.4 percent for the low-cost assumptions,

5.3 percent for the intermediate assumptions, and 4.2 percent for the highcost assumptions. These nominal rates for newly issued trust fund securities

reach their ultimate levels by 2026, the end of the short-range period.

Table V.B2.—Additional Economic Factors

Calendar year 

Average annual

unemployment

ratea

Annual percentage changeb in— Average annual interest rate

Labor

forcec Total

employmentd 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 0.7 2.5 4.6 2.4

2005 to 2010. . . . . 6.8 .6 -0.4 0.8 3.8 1.8

2010 to 2015. . . . . 7.2 .4 1.3 2.1 2.0 .5

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 2016. . . . . 7.3 .4 .4 1.3 2.4 1.1

Single years:

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 -.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 2.2 1.5 .3

2013 . . . . . . . . . . . 7.4 .3 1.0 1.7 1.9 .1

2014 . . . . . . . . . . . 6.2 .3 1.6 2.4 2.3 .4

2015 . . . . . . . . . . . 5.3 .8 1.7 2.6 2.0 2.7

2016j. . . . . . . . . . . 4.9 1.3 1.7 1.6 1.8 1.0
Assumptions and Methods

112

Intermediate:

2017 . . . . . . . . . . . 5.0 1.2 1.1 2.9 2.7 -0.3

2018 . . . . . . . . . . . 5.3 1.5 1.1 3.0 3.7 -.3

2019 . . . . . . . . . . . 5.5 1.3 1.1 3.0 4.3 1.1

2020 . . . . . . . . . . . 5.5 1.0 1.0 2.9 4.6 1.7

2021 . . . . . . . . . . . 5.5 .9 .9 2.7 4.8 2.0

2022 . . . . . . . . . . . 5.5 .7 .7 2.4 5.0 2.2

2023 . . . . . . . . . . . 5.5 .6 .5 2.2 5.0 2.4

2024 . . . . . . . . . . . 5.6 .6 .6 2.2 5.2 2.4

2025 . . . . . . . . . . . 5.6 .6 .6 2.2 5.3 2.6

2026 . . . . . . . . . . . 5.6 .5 .5 2.1 5.3 2.7

2030 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2035 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2040 . . . . . . . . . . . 5.5 .6 .6 2.2 5.3 2.7

2045 . . . . . . . . . . . 5.5 .6 .6 2.2 5.3 2.7

2050 . . . . . . . . . . . 5.5 .5 .5 2.2 5.3 2.7

2055 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2060 . . . . . . . . . . . 5.5 .4 .4 2.1 5.3 2.7

2065 . . . . . . . . . . . 5.5 .4 .4 2.1 5.3 2.7

2070 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2075 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2080 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2085 . . . . . . . . . . . 5.5 .4 .4 2.1 5.3 2.7

2090 . . . . . . . . . . . 5.5 .4 .4 2.0 5.3 2.7

2095 . . . . . . . . . . . 5.5 .4 .4 2.0 5.3 2.7

Low-cost:

2017 . . . . . . . . . . . 4.6 1.2 1.5 3.8 3.5 -.9

2018 . . . . . . . . . . . 4.6 1.7 1.7 4.4 5.1 -.3

2019 . . . . . . . . . . . 4.6 1.6 1.6 4.2 5.7 1.7

2020 . . . . . . . . . . . 4.6 1.2 1.2 3.6 5.7 2.5

2021 . . . . . . . . . . . 4.6 .9 .9 3.0 5.8 2.5

2022 . . . . . . . . . . . 4.6 .8 .7 2.8 5.9 2.6

2023 . . . . . . . . . . . 4.6 .8 .7 2.8 6.1 2.7

2024 . . . . . . . . . . . 4.6 .8 .8 2.9 6.3 2.9

2025 . . . . . . . . . . . 4.6 .8 .8 2.9 6.4 3.1

2026 . . . . . . . . . . . 4.6 .7 .7 2.7 6.4 3.2

2030 . . . . . . . . . . . 4.5 .6 .6 2.6 6.4 3.2

2035 . . . . . . . . . . . 4.5 .6 .6 2.7 6.4 3.2

2040 . . . . . . . . . . . 4.5 .8 .7 2.8 6.4 3.2

2045 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2050 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2055 . . . . . . . . . . . 4.5 .7 .7 2.7 6.4 3.2

2060 . . . . . . . . . . . 4.5 .7 .7 2.7 6.4 3.2

2065 . . . . . . . . . . . 4.5 .7 .7 2.7 6.4 3.2

2070 . . . . . . . . . . . 4.5 .8 .7 2.8 6.4 3.2

2075 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2080 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2085 . . . . . . . . . . . 4.5 .7 .7 2.8 6.4 3.2

2090 . . . . . . . . . . . 4.5 .7 .7 2.7 6.4 3.2

2095 . . . . . . . . . . . 4.5 .7 .7 2.7 6.4 3.2

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

Economic Assumptions and Methods

High-cost:

2017 . . . . . . . . . . . 5.0 1.1 0.9 1.7 2.0 0.1

2018 . . . . . . . . . . . 6.3 .9 -.4 -.1 1.8 -.4

2019 . . . . . . . . . . . 7.0 .5 -.3 1.3 3.1 -.4

2020 . . . . . . . . . . . 6.9 .8 .9 2.4 3.8 1.1

2021 . . . . . . . . . . . 6.8 .8 .9 2.2 4.0 1.8

2022 . . . . . . . . . . . 6.8 .7 .8 2.0 4.1 2.0

2023 . . . . . . . . . . . 6.7 .6 .7 1.9 4.2 2.1

2024 . . . . . . . . . . . 6.6 .5 .6 1.9 4.3 2.2

2025 . . . . . . . . . . . 6.5 .5 .6 1.8 4.3 2.3

2026 . . . . . . . . . . . 6.5 .4 .4 1.6 4.2 2.3

2030 . . . . . . . . . . . 6.5 .4 .4 1.6 4.2 2.2

2035 . . . . . . . . . . . 6.5 .4 .4 1.6 4.2 2.2

2040 . . . . . . . . . . . 6.5 .4 .4 1.6 4.2 2.2

2045 . . . . . . . . . . . 6.5 .4 .4 1.6 4.2 2.2

2050 . . . . . . . . . . . 6.5 .3 .3 1.5 4.2 2.2

2055 . . . . . . . . . . . 6.5 .2 .2 1.4 4.2 2.2

2060 . . . . . . . . . . . 6.5 .2 .2 1.4 4.2 2.2

2065 . . . . . . . . . . . 6.5 .2 .2 1.4 4.2 2.2

2070 . . . . . . . . . . . 6.5 .1 .1 1.4 4.2 2.2

2075 . . . . . . . . . . . 6.5 .1 .1 1.4 4.2 2.2

2080 . . . . . . . . . . . 6.5 .1 .1 1.4 4.2 2.2

2085 . . . . . . . . . . . 6.5 .1 .1 1.3 4.2 2.2

2090 . . . . . . . . . . . 6.5 .1 .1 1.3 4.2 2.2

2095 . . . . . . . . . . . 6.5 .1 .1 1.3 4.2 2.2

a The Office of the Chief Actuary adjusts the civilian unemployment rates for 2027 and later to the age-sex

distribution of the civilian labor force in 2011. For years through 2026, 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
Assumptions and Methods

114

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 2026. 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 again affected the

 1 The Federal Register publishes details of these indexation procedures annually. Also see

www.ssa.gov/OACT/COLA/.
115

Program Assumptions and Methods

CPI, resulting in no cost-of-living adjustment for December 2015.

There was a cost-of-living adjustment for December 2016, and all three

sets of assumptions have automatic cost-of-living adjustments for all

future years.

 • 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, 2011, or 2016 because there was no cost-of-living

adjustment for the immediate prior December in each case. Under all

three sets of assumptions, the contribution and benefit base is projected

to increase for all 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

for years prior to the year of attaining normal retirement age. A higher

exempt amount applies beginning with 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 attaining normal

retirement age. 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 for 2010, 2011, or 2016 because there was no cost-of-living

adjustment for the immediate prior December. Under all three sets of

assumptions, the exempt amounts increase for all future years.
Assumptions and Methods

116

Table V.C1.—Cost-of-Living Benefit Increases, Average Wage Index, Contribution and 

Benefit Bases, and Retirement Earnings Test Exempt Amounts, 1975-2026

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

2014 . . . . . . . . . . . 1.7 46,481.52 3.5 117,000 15,480 41,400

2015 . . . . . . . . . . . .0 48,098.63 3.5 118,500 15,720 41,880

Intermediate:

2016 . . . . . . . . . . . g.3 49,364.95 2.6 g118,500 g15,720 g41,880

2017 . . . . . . . . . . . 2.2 51,314.31 3.9 g127,200 g16,920 g44,880

2018 . . . . . . . . . . . 3.1 53,798.38 4.8 130,500 17,280 46,080

2019 . . . . . . . . . . . 2.6 56,223.60 4.5 135,600 18,000 47,880

2020 . . . . . . . . . . . 2.6 58,735.48 4.5 142,200 18,840 50,160

2021 . . . . . . . . . . . 2.6 61,211.89 4.2 148,500 19,680 52,440

2022 . . . . . . . . . . . 2.6 63,609.73 3.9 155,100 20,640 54,840

2023 . . . . . . . . . . . 2.6 65,987.64 3.7 161,700 21,480 57,120

2024 . . . . . . . . . . . 2.6 68,493.99 3.8 168,000 22,320 59,400

2025 . . . . . . . . . . . 2.6 71,119.99 3.8 174,300 23,160 61,560

2026 . . . . . . . . . . . 2.6 73,835.30 3.8 180,900 24,000 63,960
117

Program Assumptions and Methods

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 2017, and also shows

projected values through 2026. 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:

2016 . . . . . . . . . . . g0.3 $49,397.54 2.7 g$118,500 g$15,720 g$41,880

2017 . . . . . . . . . . . 2.9 51,754.23 4.8 g127,200 g16,920 g44,880

2018 . . . . . . . . . . . 4.0 55,183.94 6.6 130,500 17,280 46,080

2019 . . . . . . . . . . . 3.3 58,676.00 6.3 136,800 18,120 48,240

2020 . . . . . . . . . . . 3.2 62,137.45 5.9 145,800 19,320 51,480

2021 . . . . . . . . . . . 3.2 65,352.13 5.2 155,100 20,520 54,720

2022 . . . . . . . . . . . 3.2 68,560.54 4.9 164,100 21,840 57,960

2023 . . . . . . . . . . . 3.2 71,925.67 4.9 172,800 22,920 60,960

2024 . . . . . . . . . . . 3.2 75,501.62 5.0 181,200 24,000 63,960

2025 . . . . . . . . . . . 3.2 79,285.59 5.0 189,900 25,200 67,080

2026 . . . . . . . . . . . 3.2 83,321.83 5.1 199,500 26,520 70,440

High-cost:

2016 . . . . . . . . . . . g.3 49,343.60 2.6 g118,500 g15,720 g41,880

2017 . . . . . . . . . . . 1.5 50,695.11 2.7 g127,200 g16,920 g44,880

2018 . . . . . . . . . . . 2.8 51,598.51 1.8 130,500 17,280 46,080

2019 . . . . . . . . . . . 2.1 53,039.20 2.8 133,800 17,760 47,280

2020 . . . . . . . . . . . 2.0 54,856.54 3.4 136,200 18,120 48,120

2021 . . . . . . . . . . . 2.0 56,567.87 3.1 140,100 18,600 49,440

2022 . . . . . . . . . . . 2.0 58,266.76 3.0 144,900 19,200 51,240

2023 . . . . . . . . . . . 2.0 59,941.26 2.9 149,400 19,800 52,800

2024 . . . . . . . . . . . 2.0 61,647.11 2.8 153,900 20,400 54,360

2025 . . . . . . . . . . . 2.0 63,324.94 2.7 158,400 21,000 55,920

2026 . . . . . . . . . . . 2.0 64,976.83 2.6 162,900 21,600 57,480

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, 1975-2026 (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
Assumptions and Methods

118

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 2017

90% 

32% 

15% 

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000

Primary Insurance Amount 

Average Indexed Monthly Earnings

First

bend point

($885)

Second

bend point

($5,336)
119

Program Assumptions and Methods

 • 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 2017

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

($2,130)

Second

bend point

($1,633)

First

bend point

($1,131)
Assumptions and Methods

120

Table V.C2.—Values for Selected Wage-Indexed Program Parameters, 

Calendar Years 1978-2026

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

2016 . . . . . . . . . 856 5,157 1,093 1,578 2,058 1,260 88,200

2017 . . . . . . . . . 885 5,336 1,131 1,633 2,130 1,300 94,500

Intermediate:

2018 . . . . . . . . . 909 5,477 1,161 1,676 2,186 1,340 96,900

2019 . . . . . . . . . 944 5,693 1,207 1,742 2,272 1,390 100,800

2020 . . . . . . . . . 990 5,969 1,265 1,826 2,382 1,460 105,600

2021 . . . . . . . . . 1,035 6,238 1,322 1,909 2,489 1,520 110,400

2022 . . . . . . . . . 1,081 6,517 1,381 1,994 2,601 1,590 115,200

2023 . . . . . . . . . 1,127 6,791 1,440 2,078 2,710 1,660 120,000

2024 . . . . . . . . . 1,171 7,057 1,496 2,159 2,816 1,720 124,800

2025 . . . . . . . . . 1,215 7,321 1,552 2,240 2,922 1,790 129,600

2026 . . . . . . . . . 1,261 7,599 1,611 2,325 3,033 1,860 134,400
121

Program Assumptions and Methods

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:

2018 . . . . . . . . . $909 $5,481 $1,162 $1,677 $2,187 $1,340 $96,900

2019 . . . . . . . . . 953 5,742 1,217 1,757 2,291 1,400 101,400

2020 . . . . . . . . . 1,016 6,122 1,298 1,873 2,443 1,500 108,300

2021 . . . . . . . . . 1,080 6,510 1,380 1,992 2,598 1,590 115,200

2022 . . . . . . . . . 1,144 6,894 1,461 2,109 2,751 1,680 121,800

2023 . . . . . . . . . 1,203 7,251 1,537 2,219 2,894 1,770 128,100

2024 . . . . . . . . . 1,262 7,607 1,612 2,328 3,036 1,860 134,400

2025 . . . . . . . . . 1,324 7,980 1,692 2,442 3,185 1,950 141,000

2026 . . . . . . . . . 1,390 8,377 1,776 2,563 3,343 2,050 148,200

High-cost:

2018 . . . . . . . . . 908 5,475 1,160 1,675 2,185 1,340 96,900

2019 . . . . . . . . . 933 5,624 1,192 1,721 2,245 1,370 99,600

2020 . . . . . . . . . 950 5,725 1,214 1,752 2,285 1,400 101,100

2021 . . . . . . . . . 976 5,885 1,247 1,801 2,348 1,440 104,100

2022 . . . . . . . . . 1,010 6,086 1,290 1,862 2,429 1,490 107,700

2023 . . . . . . . . . 1,041 6,276 1,330 1,920 2,505 1,530 111,000

2024 . . . . . . . . . 1,072 6,465 1,370 1,978 2,580 1,580 114,300

2025 . . . . . . . . . 1,103 6,650 1,410 2,035 2,654 1,620 117,600

2026 . . . . . . . . . 1,135 6,840 1,450 2,093 2,730 1,670 120,900

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 1978-2026 (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
Assumptions and Methods

122

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. Covered employment for a calendar year is

defined 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 2026, the average

weeks worked for each component is assumed to remain constant. The proTable 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 is

projected as a ratio to the Social Security area population.
123

Program Assumptions and Methods

jection method also accounts for changes in non-OASDI-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 2091 are 69.0, 68.7, and 68.4 percent for

the low-cost, intermediate, and high-cost assumptions, respectively. For

women age 16 and over, the projected age-adjusted covered-worker rates for

2091 are 65.9, 64.7, and 63.4 percent for the low-cost, intermediate, and

high-cost assumptions, respectively. For men, the intermediate projected rate

is slightly lower than the 2015 age-adjusted rate of 68.9 percent primarily

due to the projected increase in the portion of the Social Security area population that consists of other-than-legal permanent residents. For women, the

intermediate projection is higher than the 2015 age-adjusted rate of

62.7 percent because the projected increase in the age-adjusted labor force

participation rate more than offsets the projected increase in the portion of

the population that will be other-than-legal permanent residents.

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 2017 is $1,300.

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 accu-

 1 Age-adjusted covered-worker rates are adjusted to the 2011 age distribution of the Social Security area

population.
Assumptions and Methods

124

mulated 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

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.1 For the other immigrant population, the model generates substantially lower percentages attaining fully insured status. The model con-

 1 Those given legal work authorization through President Obama’s 2012 Deferred Action for Childhood

Arrivals program are included in the simulations.
125

Program Assumptions and Methods

structs 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.

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 85.9 for December 31, 2014, to 86.6, 87.4, and 88.5 for

December 31, 2095, 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,

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 from 93.3 to 86.6, and the percentage for

females increases from 79.7 to 88.1.

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 earn-
Assumptions and Methods

126

ings 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

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.

 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.
127

Program Assumptions and Methods

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 benefits, and (6) the spouse is not eligible to receive a significant government

pension based on earnings in noncovered employment. Due to the Bipartisan

Budget Act of 2015, aged spouses will no longer be eligible to receive an

aged-spouse benefit if the earner suspends their benefit after April 29, 2016.

Additionally, for those turning age 62 in 2016 and later, deemed filing will

now apply to all retired workers and spouses even after initial entitlement,

regardless of age. Thus, spouses who are insured will no longer be eligible to

delay their retired-worker benefit while receiving an aged-spouse benefit. 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 three 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.

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
Assumptions and Methods

128

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

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) benefi-
129

Program Assumptions and Methods

ciaries. 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.

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
Assumptions and Methods

130

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.

Table V.C4.—OASI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1945-2095

[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

2000 . . . . . . . . . . 28,505 2,798 459 4,901 203 1,878 3 38,747

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

2015 . . . . . . . . . . 40,089 2,335 648 4,050 140 1,893 1 49,155

2016 . . . . . . . . . . 41,233 2,370 661 4,004 133 1,893 1 50,296

Intermediate:

2017 . . . . . . . . . . 42,633 2,400 679 3,973 129 1,900 1 51,716

2020 . . . . . . . . . . 47,566 2,336 745 3,899 122 1,921 1 56,590

2025 . . . . . . . . . . 55,590 1,952 870 3,833 117 1,949 1 64,312

2030 . . . . . . . . . . 62,799 1,997 1,010 3,568 127 1,991 1 71,493

2035 . . . . . . . . . . 67,722 1,988 1,136 3,338 137 2,053 1 76,375

2040 . . . . . . . . . . 70,128 1,892 1,168 3,157 136 2,052 1 78,533

2045 . . . . . . . . . . 71,416 1,859 1,153 3,028 131 2,001 1 79,590

2050 . . . . . . . . . . 73,150 1,859 1,178 2,920 127 1,955 1 81,190

2055 . . . . . . . . . . 75,658 1,898 1,210 2,832 123 1,908 1 83,629

2060 . . . . . . . . . . 78,889 1,917 1,238 2,753 120 1,867 1 86,787
131

Program Assumptions and Methods

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.

Intermediate (Cont.):

2065 . . . . . . . . . . 82,056 1,939 1,252 2,709 119 1,846 1 89,922

2070 . . . . . . . . . . 85,461 1,993 1,290 2,690 117 1,839 1 93,391

2075 . . . . . . . . . . 88,623 2,017 1,325 2,670 114 1,827 1 96,578

2080 . . . . . . . . . . 90,603 2,039 1,329 2,642 111 1,807 1 98,533

2085 . . . . . . . . . . 92,878 2,123 1,353 2,624 108 1,784 1 100,872

2090 . . . . . . . . . . 96,349 2,209 1,402 2,613 106 1,767 1 104,447

2095 . . . . . . . . . . 100,044 2,262 1,439 2,610 104 1,755 1 108,216

Low-cost:

2017 . . . . . . . . . . 42,608 2,400 680 3,969 130 1,902 1 51,688

2020 . . . . . . . . . . 47,430 2,337 747 3,888 123 1,933 1 56,459

2025 . . . . . . . . . . 55,166 1,959 879 3,809 121 1,997 1 63,932

2030 . . . . . . . . . . 61,753 1,972 1,040 3,607 125 2,141 1 70,640

2035 . . . . . . . . . . 65,998 1,959 1,189 3,412 135 2,294 1 74,989

2040 . . . . . . . . . . 67,731 1,846 1,242 3,253 135 2,376 1 76,583

2045 . . . . . . . . . . 68,456 1,786 1,242 3,137 132 2,379 1 77,134

2050 . . . . . . . . . . 69,757 1,765 1,288 3,032 131 2,375 1 78,348

2055 . . . . . . . . . . 71,993 1,774 1,348 2,940 131 2,375 1 80,561

2060 . . . . . . . . . . 74,974 1,767 1,406 2,851 133 2,392 1 83,525

2065 . . . . . . . . . . 77,875 1,755 1,445 2,795 137 2,445 1 86,453

2070 . . . . . . . . . . 80,950 1,754 1,513 2,763 141 2,517 1 89,639

2075 . . . . . . . . . . 83,648 1,727 1,577 2,727 143 2,575 1 92,397

2080 . . . . . . . . . . 85,236 1,709 1,599 2,694 144 2,611 1 93,995

2085 . . . . . . . . . . 87,596 1,771 1,648 2,699 146 2,644 1 96,505

2090 . . . . . . . . . . 91,998 1,839 1,745 2,732 148 2,688 1 101,152

2095 . . . . . . . . . . 97,229 1,897 1,830 2,778 151 2,744 1 106,630

High-cost:

2017 . . . . . . . . . . 42,659 2,400 679 3,977 129 1,898 1 51,744

2020 . . . . . . . . . . 47,699 2,334 741 3,910 121 1,904 1 56,711

2025 . . . . . . . . . . 56,050 1,941 855 3,858 113 1,889 1 64,706

2030 . . . . . . . . . . 63,957 2,031 980 3,501 128 1,834 1 72,432

2035 . . . . . . . . . . 69,629 2,043 1,084 3,231 135 1,815 1 77,939

2040 . . . . . . . . . . 72,817 1,968 1,102 3,025 130 1,751 1 80,794

2045 . . . . . . . . . . 74,790 1,961 1,074 2,884 121 1,660 1 82,491

2050 . . . . . . . . . . 77,065 1,988 1,072 2,775 113 1,580 1 84,594

2055 . . . . . . . . . . 79,929 2,047 1,076 2,691 105 1,508 1 87,358

2060 . . . . . . . . . . 83,442 2,115 1,075 2,617 98 1,436 1 90,784

2065 . . . . . . . . . . 86,828 2,193 1,065 2,578 92 1,377 1 94,133

2070 . . . . . . . . . . 90,525 2,305 1,078 2,560 86 1,332 1 97,888

2075 . . . . . . . . . . 94,089 2,380 1,089 2,551 80 1,291 1 101,481

2080 . . . . . . . . . . 96,422 2,441 1,079 2,528 75 1,250 1 103,796

2085 . . . . . . . . . . 98,515 2,541 1,080 2,488 70 1,208 1 105,904

2090 . . . . . . . . . . 100,936 2,638 1,093 2,444 66 1,170 1 108,348

2095 . . . . . . . . . . 103,072 2,698 1,099 2,402 62 1,137 1 110,471

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 1945-2095 (Cont.)

[In thousands]

Calendar year

Retired workers and auxiliaries Survivors

Worker Total a Spouse Child

WidowwidowerMotherfather Child Parent
Assumptions and Methods

132

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

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 2016. 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 becom-

 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.
133

Program Assumptions and Methods

ing 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

disability incidence is lower than in older populations. After 1995, the gross

rate increased relative to 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 than the age-sex-adjusted rate, and reflects the persistently

higher average age of the working-age population, which is largely due to

lower birth rates since 1965, and to the increase in the normal retirement age.

For the first 10 years of the projection period (through 2026), incidence rates

reflect several factors including: (1) aspects of program administration, such

as efforts to reduce the disability determination backlogs and recent changes

in procedures for adjudicating claims; (2) assumed future unemployment

rates; and (3) recent trends in incidence. 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, and have

persisted at levels well below those expected over the long-term. Some of the

elevation of disability incidence rates experienced during the recession and

the lowering of incidence rates experienced during the recovery are likely

due to many individuals applying for disability benefits earlier than they

would have otherwise. For 2016, the actual incidence rate (4.2 per thousand)

was substantially below the level projected in last year’s report (5.1 per thousand). In this year’s report, incidence rates are assumed to rise more gradually toward the ultimate level (5.4 per thousand) during the short-range

period than in last year’s report. Incidence rates are assumed to be somewhat

elevated during the period 2017 through 2020, when the Social Security

Administration is expected to eliminate a backlog of individuals who have

appealed for a hearing on a prior disability claim denial. After 2026, age-sexspecific incidence rates trend toward the ultimate rates assumed for the long-
Assumptions and Methods

134

range projections and reach these ultimate rates by 2036. These ultimate agesex-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 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 2016, reflecting the increase in female

incidence rates over this period. However, a similar comparison using gross

incidence rates gives a very 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 6.4 awards per thousand exposed, or about 17 percent lower and 23 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.

 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.
135

Program Assumptions and Methods

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-2026).

In the short-range period (through 2026), the projected age-sex-adjusted

death rate (adjusted to the 2000 disabled-worker population) under the intermediate assumptions gradually declines from 25.3 deaths per thousand beneficiaries for 2016 to about 22.9 per thousand for 2026. The projected agesex-adjusted recovery rate (medical improvement and return to work) under

the intermediate assumptions evolves from a level of 15.5 per thousand beneficiaries for 2016 to 10.9 per thousand beneficiaries for 2026. Under the

 Figure V.C3.—DI Disability Incidence Rates, 1970-2095

[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

136

low-cost 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-2026), 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 through

2010. The assumed ultimate age-sex-adjusted recovery rate for disabled

workers is about 10.4 per thousand beneficiaries. The assumed ultimate agesex-adjusted recovery rates for the low-cost and high-cost alternatives are

about 12.5 and 8.2 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 (2036) for all three sets of

assumptions. In contrast, death rates by age and sex change throughout the

long-range period at the same rate as death rates in the general population.

From the age-sex-adjusted death rate of 25.3 per thousand beneficiaries in

2016, this rate decreases to 17.7, 11.0, and 6.3 per thousand disabled-worker

beneficiaries for 2095 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 2095.

In the near term, through 2018, recovery terminations are projected to remain

at relatively high levels, 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-sex-adjusted 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.
137

Program Assumptions and Methods

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

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

 Figure V.C4.—DI Disability Termination Rates, 1970-2095

[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

138

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.

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 8.8 million at the end of 2016, to 12.9 million, 14.7 million, and

15.7 million at the end of 2095, under the low-cost, intermediate, and highcost assumptions, respectively. Of course, much of this growth results from

 Figure V.C5.—Comparison of DI Disability Incidence Rates, Termination Rates and 

Conversion Ratios Under Intermediate Assumptions, 1970-2095

[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
139

Program Assumptions and Methods

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 1960-2095

[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

2000. . . . . . . . . . . . 5,036 165 1,466 6,667 36 36

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 60 46

2015. . . . . . . . . . . . 8,909 143 1,756 10,808 58 45

2016. . . . . . . . . . . . 8,809 136 1,667 10,612 57 43

Intermediate:

2017. . . . . . . . . . . . 8,805 132 1,648 10,585 57 43

2020. . . . . . . . . . . . 8,926 127 1,647 10,700 57 43

2025. . . . . . . . . . . . 9,338 142 1,687 11,168 58 43

2030. . . . . . . . . . . . 9,437 149 1,875 11,460 58 43

2035. . . . . . . . . . . . 9,738 158 2,140 12,036 58 45

2040. . . . . . . . . . . . 10,178 163 2,303 12,643 60 46

2045. . . . . . . . . . . . 10,865 177 2,391 13,433 62 47

2050. . . . . . . . . . . . 11,374 183 2,465 14,022 63 47

2055. . . . . . . . . . . . 11,834 190 2,527 14,550 64 48

2060. . . . . . . . . . . . 12,036 186 2,592 14,814 64 48

2065. . . . . . . . . . . . 12,370 192 2,679 15,241 65 49

2070. . . . . . . . . . . . 12,691 201 2,778 15,670 65 49

2075. . . . . . . . . . . . 12,896 200 2,859 15,954 65 49

2080. . . . . . . . . . . . 13,394 206 2,925 16,526 65 49

2085. . . . . . . . . . . . 14,051 221 2,992 17,264 67 50

2090. . . . . . . . . . . . 14,418 224 3,064 17,706 67 50

2095. . . . . . . . . . . . 14,695 226 3,147 18,069 67 50
Assumptions and Methods

140

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

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 termiLow-cost:

2017. . . . . . . . . . . . 8,729 132 1,625 10,486 56 42

2020. . . . . . . . . . . . 8,551 125 1,561 10,237 54 41

2025. . . . . . . . . . . . 8,476 140 1,536 10,153 52 38

2030. . . . . . . . . . . . 8,176 125 1,663 9,964 49 37

2035. . . . . . . . . . . . 8,119 124 1,874 10,117 48 37

2040. . . . . . . . . . . . 8,234 120 1,997 10,351 47 37

2045. . . . . . . . . . . . 8,639 126 2,057 10,823 48 37

2050. . . . . . . . . . . . 8,970 127 2,112 11,209 47 37

2055. . . . . . . . . . . . 9,307 129 2,174 11,610 48 37

2060. . . . . . . . . . . . 9,488 126 2,259 11,873 47 37

2065. . . . . . . . . . . . 9,804 128 2,383 12,315 47 38

2070. . . . . . . . . . . . 10,151 133 2,526 12,810 47 38

2075. . . . . . . . . . . . 10,473 132 2,650 13,255 46 38

2080. . . . . . . . . . . . 11,101 139 2,754 13,994 47 38

2085. . . . . . . . . . . . 11,917 152 2,857 14,926 48 38

2090. . . . . . . . . . . . 12,476 156 2,973 15,605 49 38

2095. . . . . . . . . . . . 12,875 158 3,106 16,139 48 38

High-cost:

2017. . . . . . . . . . . . 8,880 133 1,670 10,683 58 43

2020. . . . . . . . . . . . 9,298 129 1,725 11,151 60 45

2025. . . . . . . . . . . . 10,198 143 1,814 12,155 65 47

2030. . . . . . . . . . . . 10,731 179 2,080 12,990 67 50

2035. . . . . . . . . . . . 11,416 203 2,389 14,008 69 53

2040. . . . . . . . . . . . 12,196 218 2,582 14,996 73 55

2045. . . . . . . . . . . . 13,174 243 2,683 16,100 77 57

2050. . . . . . . . . . . . 13,858 255 2,755 16,868 80 58

2055. . . . . . . . . . . . 14,429 266 2,808 17,503 83 59

2060. . . . . . . . . . . . 14,628 266 2,839 17,733 84 60

2065. . . . . . . . . . . . 14,933 274 2,871 18,078 85 61

2070. . . . . . . . . . . . 15,156 285 2,903 18,344 86 61

2075. . . . . . . . . . . . 15,128 279 2,919 18,327 86 61

2080. . . . . . . . . . . . 15,334 285 2,927 18,547 87 61

2085. . . . . . . . . . . . 15,629 297 2,940 18,866 88 62

2090. . . . . . . . . . . . 15,690 300 2,958 18,948 88 62

2095. . . . . . . . . . . . 15,682 298 2,979 18,959 88 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 1960-2095 (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
141

Program Assumptions and Methods

nation 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

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.

 Figure V.C6.—DI Disability Prevalence Rates, 1970-2095

[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

142

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 43.4 per thousand disability insured at the end

of 2016 to 49.9 per thousand at the end of 2095. 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 38.4 per thousand and increases to 62.0 per

thousand insured workers at the end of 2095, 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

(2017 through 2026), the Office of the Chief Actuary projects incidence and

termination rates for each category of auxiliary beneficiary. After 2026, 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 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
143

Program Assumptions and Methods

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

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
Assumptions and Methods

144

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

88.6 percent for 1984 to 82.6 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 85.7 percent for 2002, declined to 82.4 percent for 2007, rose to

85.2 percent for 2009, and was 82.6 percent for 2015.

For this report, the Trustees assume a level for the taxable ratio at the end of

the short-range period (2026) 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 (2025) for the 2016 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

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

 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.
145

Program Assumptions and Methods

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.1 It also shows the contribution and benefit base for each

year through 2017.

 1 Table VI.G1 shows the payroll tax contribution rates for the Hospital Insurance (HI) program.
Assumptions and Methods

146

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
147

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

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

2016e . . . . . . . . . . . 118,500 12.40 10.03 2.37 12.4000 10.0300 2.3700

2017e . . . . . . . . . . . 127,200 12.40 10.03 2.37 12.4000 10.0300 2.3700

2018e . . . . . . . . . . . f 12.40 10.03 2.37 12.4000 10.0300 2.3700

2019 and later . . . . f 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 Section 833 of the Bipartisan Budget Act of 2015 reallocated payroll tax rates on a temporary basis. For

earnings in calendar years 2016 through 2018, 0.57 percentage point of the 12.40 percent OASDI payroll tax

rate is reallocated from OASI to DI.

f 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

148

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.

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 2013 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
149

Program Assumptions and Methods

these annual scheduled benefits include retroactive payments to newly

awarded beneficiaries and other amounts not reflected in the regular monthly

scheduled benefits.

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 2017 and subsequent

years. The illustrative benefit amounts in table V.C7 are presented in CPIindexed 2017 dollars—that is, adjusted to 2017 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 2017 and subsequent years

in CPI-indexed 2017 dollars.

The normal retirement age was 65 for individuals who reached age 62 before

2000. It increased to age 66 during the period 2000 through 2005, at a rate of

2 months per year as workers attained age 62. Under current law, the normal

retirement age increases to age 67 during the period 2017 through 2022, 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

 1 Actuarial Note 2017.3 has more details on scaled-earnings patterns.

See www.ssa.gov/OACT/NOTES/ran3/.
Assumptions and Methods

150

earnings history of a steady maximum earner starting at age 22. The four

scaled-earnings patterns derive from earnings experienced by insured workers during 1994-2013. These earnings levels differ by age. The career-average level of earnings for each scaled case targets a percent of the AWI. 

For the scaled medium earner, the career-average earnings level is about

equal to the AWI (or $51,314 for 2017). 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 $12,829, $23,091,

and $82,103, respectively, for 2017). 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 $127,200 for 2017).

Table V.C7.—Annual Scheduled Benefit Amounts for Retired Workers 

With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, Calendar Years 2017-2095

Benefits in 2017 dollarsa with retirement at normal retirement age

Year attain 

age 65b Age atretirement

Scaled very

low

earningsc Scaled lowearningsd

Scaled

medium

earningse Scaled highearningsf

Steady

maximum

earningsg

National

Average Wage

Index in 2017

dollarsh

2017 . . . . 66:0 $9,359 $12,256 $20,190 $26,767 $32,644 $51,314

2020 . . . . 66:2 10,011 13,104 21,622 28,628 35,016 54,172

2025 . . . . 67:0 10,750 14,069 23,198 30,731 37,822 57,694

2030 . . . . 67:0 11,452 14,982 24,707 32,720 40,324 61,345

2035 . . . . 67:0 12,174 15,931 26,276 34,794 42,902 65,258

2040 . . . . 67:0 12,952 16,951 27,948 37,010 45,599 69,233

2045 . . . . 67:0 13,744 17,987 29,652 39,269 48,399 73,473

2050 . . . . 67:0 14,582 19,085 31,471 41,672 51,297 78,045

2055 . . . . 67:0 15,494 20,274 33,430 44,269 54,387 82,861

2060 . . . . 67:0 16,451 21,527 35,492 46,999 57,675 87,909

2065 . . . . 67:0 17,451 22,838 37,653 49,862 61,178 93,115

2070 . . . . 67:0 18,484 24,190 39,880 52,811 64,802 98,460

2075 . . . . 67:0 19,545 25,578 42,167 55,844 68,530 104,074

2080 . . . . 67:0 20,663 27,037 44,574 59,027 72,444 109,945

2085 . . . . 67:0 21,826 28,562 47,086 62,358 76,541 116,153

2090 . . . . 67:0 23,060 30,177 49,747 65,880 80,874 122,793

2095 . . . . 67:0 24,379 31,902 52,591 69,646 85,508 129,854

Benefits in 2017 dollarsa with retirement at age 65

2017 . . . . 65:0 $8,800 $11,517 $18,971 $25,150 $30,560 $51,314

2020 . . . . 65:0 9,229 12,079 19,921 26,398 32,177 54,172

2025 . . . . 65:0 9,317 12,195 20,107 26,633 32,536 57,694

2030 . . . . 65:0 9,919 12,983 21,417 28,359 34,700 61,345

2035 . . . . 65:0 10,551 13,811 22,770 30,151 36,921 65,258

2040 . . . . 65:0 11,225 14,690 24,223 32,076 39,252 69,233

2045 . . . . 65:0 11,911 15,589 25,702 34,033 41,665 73,473

2050 . . . . 65:0 12,638 16,541 27,274 36,117 44,165 78,045

2055 . . . . 65:0 13,429 17,571 28,972 38,362 46,822 82,861

2060 . . . . 65:0 14,255 18,657 30,758 40,734 49,653 87,909

2065 . . . . 65:0 15,124 19,792 32,630 43,211 52,674 93,115

2070 . . . . 65:0 16,019 20,964 34,561 45,770 55,793 98,460
151

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 $16,939 $22,167 $36,546 $48,397 $59,005 $104,074

2080 . . . . 65:0 17,907 23,432 38,630 51,156 62,379 109,945

2085 . . . . 65:0 18,916 24,755 40,808 54,042 65,906 116,153

2090 . . . . 65:0 19,985 26,153 43,114 57,096 69,636 122,793

2095 . . . . 65:0 21,128 27,648 45,579 60,360 73,625 129,854

a Annual amounts are the total for the 12-month period starting with the month of retirement, adjusted to be

in 2017 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 2017 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 2017-2095 (Cont.)
Assumptions and Methods

152

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 is about

$5-$6 billion and the long-range summarized net cost for the OASI and DI

Trust Funds is 0.04 percent of taxable payroll.
153

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 hypothetical combined trust funds1 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 through 1982 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

through 1989 by Public Law 98-21; (5) the cost in 2009 through 2017 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.

 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 hypothetical basis.
Appendices

154

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 circumstances. 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

 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.
155

History of Trust Fund Operations

maturity at par value when needed to meet current operating expenses. Given

this separation from market-based valuations, changes in market yield rates

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 annual expenditures of the OASI and DI Trust Funds are:

(1) OASDI benefit payments1, 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, among other items, expenditures for

(1) payroll, (2) construction, rental, lease, or purchase of office buildings and

related facilities for the Social Security Administration, and (3) information

technology systems. 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.

 1 Periodically, benefit payments which were scheduled to be paid on January 3 were actually paid on

December 31 of the preceding year as required by the statutory provision included in the 1977 Social Security Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. Such advance payments have occurred about every 7 years, first for

benefits scheduled for January 3, 1982. The most recent such accelerated payment affected benefits scheduled to be paid on January 3, 2016. For comparability with the values for historical years and the projections

in this report, all trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment each year without regard to the accelerated payments described above.
Appendices

156

Table VI.A1.— Operations of the OASI Trust Fund, Calendar Years 1937-2016

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsad

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

1937f . . $0.8 $0.8 — — gg g — — $0.8 $0.8 —

1938f . . .4 .4 — — gg g — — .4 1.1 7,660

1939f . . .6 .6 — — gg g — — .6 1.7 8,086

1940 . . .4 .3 — — g $0.1 g g — .3 2.0 2,781

1941 . . .8 .8 — — $0.1 .1 $0.1 g — .7 2.8 1,782

1942 . . 1.1 1.0 — — .1 .2 .1 g — .9 3.7 1,737

1943 . . 1.3 1.2 — — .1 .2 .2 g — 1.1 4.8 1,891

1944 . . 1.4 1.3 — — .1 .2 .2 g — 1.2 6.0 2,025

1945 . . 1.4 1.3 — — .1 .3 .3 g — 1.1 7.1 1,975

1946 . . 1.4 1.3 — — .2 .4 .4 g — 1.0 8.1 1,704

1947 . . 1.7 1.6 g — .2 .5 .5 g — 1.2 9.4 1,592

1948 . . 2.0 1.7 g — .3 .6 .6 $0.1 — 1.4 10.7 1,542

1949 . . 1.8 1.7 g — .1 .7 .7 .1 — 1.1 11.8 1,487

1950 . . 2.9 2.7 g — .3 1.0 1.0 .1 — 1.9 13.7 1,156

1951 . . 3.8 3.4 g — .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 g 1.9 20.6 500

1955 . . 6.2 5.7 — — .5 5.1 5.0 .1 g 1.1 21.7 405

1956 . . 6.7 6.2 — — .5 5.8 5.7 .1 g .9 22.5 371

1957 . . 7.4 6.8 — — .6 7.5 7.3 .2 g -.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 h .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 i

20

1985 . . 184.2 175.1 4.0 3.2 1.9 171.2 167.2 1.6 2.3 h8.7 35.8 i

24

1986 . . 197.4 189.1 1.8 3.4 3.1 181.0 176.8 1.6 2.6 h3.2 39.1 i

28

1987 . . 210.7 201.1 1.7 3.3 4.7 187.7 183.6 1.5 2.6 23.1 62.1 i

30

1988 . . 240.8 227.7 2.1 3.4 7.6 200.0 195.5 1.8 2.8 40.7 102.9 i

41

1989 . . 264.7 248.1 2.1 2.4 12.0 212.5 208.0 1.7 2.8 52.2 155.1 i

59

1990 . . 286.7 266.1 -.7 4.8 16.4 227.5 223.0 1.6 3.0 59.1 214.2 i

78

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 g 5.3 27.0 273.1 267.8 2.0 3.4 50.2 369.3 117

1994 . . 328.3 293.3 g 5.0 29.9 284.1 279.1 1.6 3.4 44.1 413.5 130
157

History of Trust Fund Operations

1995 . . $342.8 $304.7 -$0.2 $5.5 $32.8 $297.8 $291.6 $2.1 $4.1 $45.0 $458.5 139

1996 . . 363.7 321.6 g 6.5 35.7 308.2 302.9 1.8 3.6 55.5 514.0 149

1997 . . 397.2 349.9 g 7.4 39.8 322.1 316.3 2.1 3.7 75.1 589.1 160

1998 . . 424.8 371.2 g 9.1 44.5 332.3 326.8 1.9 3.7 92.5 681.6 177

1999 . . 457.0 396.4 g 10.9 49.8 339.9 334.4 1.8 3.7 117.2 798.8 201

2000 . . 490.5 421.4 g 11.6 57.5 358.3 352.7 2.1 3.5 132.2 931.0 223

2001 . . 518.1 441.5 g 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 g 12.5 75.2 406.0 399.8 2.6 3.6 137.8 1,355.3 300

2004 . . 566.3 472.8 g 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 g 15.6 91.8 461.0 454.5 3.0 3.5 181.3 1,844.3 361

2007 . . 675.0 560.9 g 17.2 97.0 495.7 489.1 3.1 3.6 179.3 2,023.6 372

2008 . . 695.5 574.6 g 15.6 105.3 516.2 509.3 3.2 3.6 179.3 2,202.9 392

2009 . . 698.2 570.4 g 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

2015 . . 801.6 679.5 .3 30.6 91.2 750.5 742.9 3.4 4.3 51.0 2,780.3 364

2016 . . 797.5 678.8 .1 31.6 87.0 776.4 768.6 3.5 4.3 21.1 2,801.3 358

a Beginning in 1979, benefit payments scheduled to be paid on January 3 of a given year were paid on

December 31 of the preceding year as required by the statutory provision included in the 1977 Social Security

Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. Such advance payments have occurred about every 7 years, first for benefits scheduled for January 3, 1982. For comparability with other historical years and the projections in this report, all trust

fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year without

regard to the accelerated payments described above.

b 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.

c 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.

d 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.

e 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.

f 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.

g Between -$50 million and $50 million.

h 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).

i 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 1937-2016 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsad

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Appendices

158

Table VI.A2.— Operations of the DI Trust Fund, Calendar Years 1957-2016

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsa d

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

1957 . . $0.7 $0.7 — — f $0.1 $0.1 f — $0.6 $0.6 —

1958 . . 1.0 1.0 — — f .3 .2 f — .7 1.4 249

1959 . . .9 .9 — — f .5 .5 f f .4 1.8 284

1960 . . 1.1 1.0 — — $0.1 .6 .6 f f .5 2.3 304

1961 . . 1.1 1.0 — — .1 1.0 .9 $0.1 f .1 2.4 239

1962 . . 1.1 1.0 — — .1 1.2 1.1 .1 f -.1 2.4 206

1963 . . 1.2 1.1 — — .1 1.3 1.2 .1 f -.1 2.2 183

1964 . . 1.2 1.2 — — .1 1.4 1.3 .1 f -.2 2.0 159

1965 . . 1.2 1.2 — — .1 1.7 1.6 .1 f -.4 1.6 121

1966 . . 2.1 2.0 f — .1 1.9 1.8 .1 f .1 1.7 82

1967 . . 2.4 2.3 f — .1 2.1 1.9 .1 f .3 2.0 83

1968 . . 3.5 3.3 f — .1 2.5 2.3 .1 f 1.0 3.0 83

1969 . . 3.8 3.6 f — .2 2.7 2.6 .1 f 1.1 4.1 111

1970 . . 4.8 4.5 f — .3 3.3 3.1 .2 f 1.5 5.6 126

1971 . . 5.0 4.6 $0.1 — .4 4.0 3.8 .2 f 1.0 6.6 140

1972 . . 5.6 5.1 .1 — .4 4.8 4.5 .2 f .8 7.5 140

1973 . . 6.4 5.9 .1 — .5 6.0 5.8 .2 f .5 7.9 125

1974 . . 7.4 6.8 .1 — .5 7.2 7.0 .2 f .2 8.1 110

1975 . . 8.0 7.4 .1 — .5 8.8 8.5 .3 f -.8 7.4 92

1976 . . 8.8 8.2 .1 — .4 10.4 10.1 .3 f -1.6 5.7 71

1977 . . 9.6 9.1 .1 — .3 11.9 11.5 .4 f -2.4 3.4 48

1978 . . 13.8 13.4 .1 — .3 13.0 12.6 .3 f .9 4.2 26

1979 . . 15.6 15.1 .1 — .4 14.2 13.8 .4 f 1.4 5.6 30

1980 . . 13.9 13.3 .1 — .5 15.9 15.5 .4 f -2.0 3.6 35

1981 . . 17.1 16.7 .2 — .2 17.7 17.2 .4 f -.6 3.0 21

1982 . . 22.7 22.0 .2 — .5 18.0 17.4 .6 f g -.4 2.7 17

1983 . . 20.7 18.0 1.1 — 1.6 18.2 17.5 .6 f 2.5 5.2 15

1984 . . 17.3 15.5 .4 $0.2 1.2 18.5 17.9 .6 f -1.2 4.0 h35

1985 . . 19.3 17.0 1.2 .2 .9 19.5 18.8 .6 f g2.4 6.3 h27

1986 . . 19.4 18.2 .2 .2 .8 20.5 19.9 .6 $0.1 g1.5 7.8 h38

1987 . . 20.3 19.5 .2 f .6 21.4 20.5 .8 .1 -1.1 6.7 h44

1988 . . 22.7 21.8 .2 .1 .6 22.5 21.7 .7 .1 .2 6.9 h38

1989 . . 24.8 23.8 .2 .1 .7 23.8 22.9 .8 .1 1.0 7.9 h38

1990 . . 28.8 28.4 -.6 .1 .9 25.6 24.8 .7 .1 3.2 11.1 h40

1991 . . 30.4 29.1 f .2 1.1 28.6 27.7 .8 .1 1.8 12.9 39

1992 . . 31.4 30.1 f .2 1.1 32.0 31.1 .8 .1 -.6 12.3 40

1993 . . 32.3 31.2 f .3 .8 35.7 34.6 1.0 .1 -3.4 9.0 35

1994 . . 52.8 51.4 f .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 f .4 3.0 45.4 44.2 1.2 f 15.4 52.9 83

1997 . . 60.5 56.0 f .5 4.0 47.0 45.7 1.3 .1 13.5 66.4 113

1998 . . 64.4 59.0 f .6 4.8 49.9 48.2 1.6 .2 14.4 80.8 133

1999 . . 69.5 63.2 f .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 f .8 8.2 61.4 59.6 1.7 f 22.5 141.0 193

2002 . . 87.4 77.3 f .9 9.2 67.9 65.7 2.0 .2 19.5 160.5 208

2003 . . 88.1 77.4 f .9 9.7 73.1 70.9 2.0 .2 15.0 175.4 219

2004 . . 91.4 80.3 f 1.1 10.0 80.6 78.2 2.2 .2 10.8 186.2 218

2005 . . 97.4 86.1 f 1.1 10.3 88.0 85.4 2.3 .3 9.4 195.6 212

2006 . . 102.6 90.8 f 1.2 10.6 94.5 91.7 2.3 .4 8.2 203.8 207

2007 . . 109.9 95.2 f 1.4 13.2 98.8 95.9 2.5 .4 11.1 214.9 206

2008 . . 109.8 97.6 f 1.3 11.0 109.0 106.0 2.5 .4 .9 215.8 197

2009 . . 109.3 96.9 f 2.0 10.5 121.5 118.3 2.7 .4 -12.2 203.5 178
159

History of Trust Fund Operations

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

2015. . . 118.6 115.4 f 1.1 2.1 146.6 143.4 2.8 .4 -28.0 32.3 41

2016. . . 160.0 157.4 f 1.2 1.4 145.9 142.8 2.8 .4 14.1 46.3 22

a Beginning in 1979, benefit payments scheduled to be paid on January 3 of a given year were paid on

December 31 of the preceding year as required by the statutory provision included in the 1977 Social Security

Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. Such advance payments have occurred about every 7 years, first for benefits scheduled for January 3, 1982. For comparability with other historical years and the projections in this report, all trust

fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year without

regard to the accelerated payments described above.

b 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.

c 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.

d 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.

e 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.

f Between -$50 million and $50 million.

g 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).

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.A2.— Operations of the DI Trust Fund, Calendar Years 1957-2016 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsa d

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Appendices

160

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

Calendar Years 1957-2016

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsad

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

1957 . . $8.1 $7.5 — — $0.6 $7.6 $7.4 $0.2 f $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 f 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 g .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 h21

1985 . . 203.5 192.1 5.2 3.4 2.7 190.6 186.1 2.2 2.4 g11.1 42.2 h24

1986 . . 216.8 207.4 1.9 3.7 3.9 201.5 196.7 2.2 2.7 g 4.7 46.9 h29

1987 . . 231.0 220.6 1.9 3.2 5.3 209.1 204.1 2.4 2.6 21.9 68.8 h31

1988 . . 263.5 249.5 2.3 3.4 8.2 222.5 217.1 2.5 2.9 41.0 109.8 h41

1989 . . 289.4 271.9 2.3 2.5 12.7 236.2 230.9 2.4 2.9 53.2 163.0 h57

1990 . . 315.4 294.5 -1.3 5.0 17.2 253.1 247.8 2.3 3.0 62.3 225.3 h75

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 f 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 f 6.8 38.7 353.6 347.0 3.0 3.6 70.9 567.0 140

1997 . . 457.7 406.0 f 7.9 43.8 369.1 362.0 3.4 3.7 88.6 655.5 154

1998 . . 489.2 430.2 f 9.7 49.3 382.3 375.0 3.5 3.8 106.9 762.5 171

1999 . . 526.6 459.6 f 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 f 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 f 13.4 84.9 479.1 470.8 4.6 3.7 152.8 1,530.8 288

2004 . . 657.7 553.0 f 15.7 89.0 501.6 493.3 4.5 3.8 156.1 1,686.8 305

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 f 16.9 102.4 555.4 546.2 5.3 3.8 189.5 2,048.1 335

2007 . . 784.9 656.1 f 18.6 110.2 594.5 584.9 5.5 4.0 190.4 2,238.5 345

2008 . . 805.3 672.1 f 16.9 116.3 625.1 615.3 5.7 4.0 180.2 2,418.7 358

2009 . . 807.5 667.3 f 21.9 118.3 685.8 675.5 6.2 4.1 121.7 2,540.3 353
161

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 2015

and 2016. The tables show reserves by interest rate and year of maturity.

Bonds issued to the trust funds in 2016 had an interest rate of 1.875 percent,

compared with an interest rate of 2.000 percent for bonds issued in 2015.

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

2015 . . . 920.2 794.9 .3 31.6 93.3 897.1 886.3 6.2 4.7 23.0 2,812.5 311

2016 . . . 957.5 836.2 .1 32.8 88.4 922.3 911.4 6.2 4.7 35.2 2,847.7 305

a Beginning in 1979, benefit payments scheduled to be paid on January 3 of a given year were paid on

December 31 of the preceding year as required by the statutory provision included in the 1977 Social Security

Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. Such advance payments have occurred about every 7 years, first for benefits scheduled for January 3, 1982. For comparability with other historical years and the projections in this report, all trust

fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year without

regard to the accelerated payments described above.

b 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.

c 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.

d 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.

e The “Trust fund ratio” column represents asset reserves at the beginning of a year as a percentage of expenditures during the year.

f Between -$50 million and $50 million.

g 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).

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

Calendar Years 1957-2016 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsad

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Appendices

162

Table VI.A4.—OASI Trust Fund Asset Reserves, End of 

Calendar Years 2015 and 2016

[In thousands]

December 31, 2015 December 31, 2016

Obligations sold only to the trust funds (special issues): 

Certificates of indebtedness:

 2.125 percent, 2016 $38,935,438 —

 2.375 percent, 2017 — $50,383,106

Bonds:

 1.375 percent, 2017 6,693,020 —

 1.375 percent, 2018-25 53,544,160 53,544,160

 1.375 percent, 2026 6,693,019 6,693,019

 1.375 percent, 2027 173,240,401 173,240,401

 1.750 percent, 2017 4,908,186 —

 1.750 percent, 2018 4,908,186 4,908,186

 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

 1.875 percent, 2018-19 — 4,641,910

 1.875 percent, 2020-27 — 18,567,648

 1.875 percent, 2028-30 — 6,962,865

 1.875 percent, 2031 — 188,111,583

 2.000 percent, 2017 3,655,629 —

 2.000 percent, 2018-19 7,311,258 7,311,258

 2.000 percent, 2020-25 21,933,768 21,933,768

 2.000 percent, 2026-29 14,622,516 14,622,516

 2.000 percent, 2030 185,790,628 185,790,628

 2.250 percent, 2017 3,986,412 —

 2.250 percent, 2018 3,986,412 3,986,412

 2.250 percent, 2019-25 27,904,891 27,904,891

 2.250 percent, 2026-28 11,959,236 11,959,236

 2.250 percent, 2029 182,134,999 182,134,999

 2.500 percent, 2017 5,971,787 —

 2.500 percent, 2018-25 47,774,296 47,774,296

 2.500 percent, 2026 166,547,382 166,547,382

 2.875 percent, 2017 7,264,432 —

 2.875 percent, 2018-24 50,851,024 50,851,024

 2.875 percent, 2025 160,575,595 160,575,595

 3.250 percent, 2017 10,628,270 —

 3.250 percent, 2018-23 63,769,620 63,769,620

 3.250 percent, 2024 153,311,163 153,311,163

 3.500 percent, 2017 9,513,752 —

 3.500 percent, 2018 86,900,994 86,900,994

 4.000 percent, 2017 12,075,192 —

 4.000 percent, 2018-22 60,375,960 60,375,960

 4.000 percent, 2023 142,682,893 142,682,893

 4.125 percent, 2016 9,936,522 —

 4.125 percent, 2017 10,516,946 6,883,312

 4.125 percent, 2018-19 21,033,892 21,033,892

 4.125 percent, 2020 106,585,700 106,585,700

 4.625 percent, 2016 9,167,663 —

 4.625 percent, 2017-18 18,335,326 18,335,326

 4.625 percent, 2019 96,068,657 96,068,657

 5.000 percent, 2016 12,454,232 —

 5.000 percent, 2017-21 62,271,160 62,271,160

 5.000 percent, 2022 130,607,701 130,607,701

 5.125 percent, 2016 11,567,866 —
163

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.

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. 

Bonds (Cont.):

 5.125 percent, 2017-19 $34,703,598 $34,703,598

 5.125 percent, 2020 11,567,769 11,567,769

 5.125 percent, 2021 118,153,469 118,153,469

 5.250 percent, 2016 9,235,911 —

 5.250 percent, 2017 77,387,242 77,387,242

 5.625 percent, 2016 68,151,331 —

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,760,517,758 2,801,405,593

Undisbursed balancesa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,733,589 -56,915

Total asset reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,780,251,347 2,801,348,678

a A negative amount for a given year represents a situation where actual program cash expenditures exceeded

the amount of invested securities of the OASI Trust Fund that were redeemed to pay for such expenditures. In

this situation, future redemption of additional invested securities will be required to pay for this shortfall. For

2015 and other calendar years where January 3 of the following year is a Sunday, a positive amount is shown

on a liability basis for benefits scheduled to be paid on January 3 of the following year that were, by law, actually paid on the preceding December 31.

Table VI.A5.—DI Trust Fund Asset Reserves, End of Calendar Years 2015 and 2016

[In thousands]

December 31, 2015 December 31, 2016

Obligations sold only to the trust funds (special issues):

Certificates of indebtedness: 

 2.375 percent, 2017 — $8,437,206

Bonds:

 1.875 percent, 2018 — 180,001

 1.875 percent, 2019-22 — 12,045,560

 4.000 percent, 2023 $14,675,554 14,675,554

 5.000 percent, 2022 11,425,890 11,142,596

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,101,444 46,480,917

Undisbursed balancesa . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a A negative amount for a given year represents a situation where actual program cash expenditures

exceeded the amount of invested securities of the DI Trust Fund that were redeemed to pay for such expenditures. In this situation, future redemption of additional invested securities will be required to pay for this

shortfall. For 2015 and other calendar years where January 3 of the following year is a Sunday, a positive

amount is shown on a liability basis for benefits scheduled to be paid on January 3 of the following year that

were, by law, actually paid on the preceding December 31.

6,157,191 -143,066

Total asset reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,258,635 46,337,851

Table VI.A4.—OASI Trust Fund Asset Reserves, End of 

Calendar Years 2015 and 2016 (Cont.)

[In thousands]

December 31, 2015 December 31, 2016
Appendices

164

B. HISTORY OF ACTUARIAL STATUS ESTIMATES

This appendix chronicles the history of the OASDI actuarial balance and the

year of combined OASI and DI Trust Fund reserve depletion since 1982. The

actuarial balance is the principal summary measure of actuarial status for the

long-range period as a whole. The year of trust fund reserve depletion is also

critical, as it indicates the year by which legislative action would be needed

in order to maintain timely payment of scheduled benefits. 

The 1983 report was the last report for which the actuarial balance was positive. 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. Section IV.B.4 defines summarized income

rate, summarized cost rate, and actuarial balance in detail. 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
165

History of Actuarial Status

the present-value method. However, by 1988, neither of these situations still

existed.

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 through 1987 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 through 1987 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 present-value 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 (plus starting

reserves, beginning with the 1988 report) is more than sufficient to meet estimated trust fund obligations for the period as a whole. Even with a positive

actuarial balance, it is possible for reserves to become temporarily depleted

within the long-range period. An actuarial balance of zero indicates that the

estimated income exactly matches 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. 

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

166

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

Table VI.B1.—Long-Range OASDI Actuarial Balances and Trust Fund Reserve 

Depletion Dates as Shown in the Trustees Reports for 1982-2017a

[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 rate

Actuarial

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 2017.8 at www.ssa.gov/OACT/NOTES/ran8/.

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

2016 . . . . . . . . . . . 13.84 16.50 -2.66 +.02 2034

2017 . . . . . . . . . . . 13.84 16.67 -2.83 -.17 2034
167

History of Actuarial Status

For several of the years included in the table, significant legislative changes

or definitional changes affected the estimated actuarial balance. The Social

Security Amendments of 1983 accounted for the largest single change shown

in the table: 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. 
Appendices

168

For the 2001 report, increases 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 changes in
169

History of Actuarial Status

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. In 2012, changes in economic assumptions and starting values accounted for about half of the decrease in actuarial

balance. 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. In 2014, changes in economic data and assumptions

accounted for the majority of the net change in the actuarial balance. Other

factors worsening the actuarial balance were the change in the valuation

period and various methodology improvements and data updates. For the

2015 report, methodological improvements and updates of programmatic

data accounted for the majority of the net increase in the actuarial balance.

Also increasing the actuarial balance were a lower assumed ultimate average

wage differential and changes in near-term economic assumptions. These

increases were offset somewhat by the change in the valuation period and

updates to historical and near-term projected birth rates.

For the 2016 report, the actuarial balance increased primarily due to the

effects of the Bipartisan Budget Act of 2015 and improvements made to

immigration methods. The most notable immigration change was a revision

to the method for projecting emigration of the never-authorized population,

to reflect lower rates of emigration for those who have resided here longer.

These increases in the actuarial balance were largely offset by the effects of

changes in ultimate economic assumptions, including a lower real interest

rate and a lower annual increase in the rate of price inflation. 

Section IV.B.6 describes changes affecting the actuarial balance shown for

the 2017 report.
Appendices

170

C. FISCAL YEAR HISTORICAL AND PROJECTED TRUST FUND 

OPERATIONS THROUGH 2026

Tables VI.C1, VI.C2, and VI.C3 contain details of the fiscal year 2016 operations of the OASI, DI, and the 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 2016 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.
171

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 2016

[In millions]

Total asset reserves, September 30, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,766,554

Receipts:

Net payroll tax contributions:

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

a Includes adjustments for prior years

$682,243

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,676

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679,566

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a . 132

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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

b Between -$0.5 and $0.5 million.

Net General Fund reimbursementsa 138

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 197

All other, not subject to withholdinga. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,924

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,121

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,069

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 . . . . . . . . . . . . . . . . . . . . . . . . 89,067

Gifts b

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 799,892

Disbursements:

Benefit payments:

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

d Includes net reductions for the recovery of overpayments.

762,152

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -33

Payment for costs of vocational rehabilitation services for disabled beneficiaries 4

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 762,122

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,287

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,030

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2

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.

-6

Net administrative expenses 3,417

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769,827

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,066

Total invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,796,712

Undisbursed balancesf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f A negative balance represents a situation where the actual program cash expenditures exceeded the amount

of invested securities of the OASI Trust Fund that were redeemed to pay for such expenditures. In this situation, future redemption of additional invested securities will be required to pay for this shortfall.

-92

Total asset reserves, September 30, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,796,620
Appendices

172

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

Table VI.C2.—Operations of the DI Trust Fund, Fiscal Year 2016

[In millions]

Total asset reserves, September 30, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,656

Receipts:

Net payroll tax contributions:

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

a Includes adjustments for prior years.

$148,031

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -454

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,577

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a. 22

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Income based on taxation of benefit payments:

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

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,177

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,181

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,505

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.

6

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 1,512

Gifts b

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,293

Disbursements:

Benefit payments:

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

d Includes net reductions for the recovery of overpayments.

142,980

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -18

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 92

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,053

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,691

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,779

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,208

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,084

Total invested assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,880

Undisbursed balancesf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f A negative balance represents a situation where the actual program cash expenditures exceeded the amount

of invested securities of the DI Trust Fund that were redeemed to pay for such expenditures. In this situation,

future redemption of additional invested securities will be required to pay for this shortfall.

-140

Total asset reserves, September 30, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,740
173

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 2016

[In millions]

Total asset reserves, September 30, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,808,210

Receipts:

Net payroll tax contributions:

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

a Includes adjustments for prior years.

$830,274

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3,131

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 827,143

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a. 155

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

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

b Between -$0.5 and $0.5 million.

Net General Fund reimbursementsa 161

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 201

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,101

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,302

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,574

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.

4

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 90,578

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

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 950,185

Disbursements:

Benefit payments:

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

d Includes net reductions for the recovery of overpayments.

905,131

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -52

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 96

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 905,175

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,663

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,722

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

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.

-10

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,197

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 916,035

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,150

Total invested assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,842,592

Undisbursed balancesf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f A negative net balance represents a situation where the actual combined program cash expenditures

exceeded the amount of invested securities of the OASI and DI Trust Funds that were redeemed to pay for

such expenditures. In this situation, future net redemption of additional invested securities will be required to

pay for this shortfall.

-232

Total asset reserves, September 30, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,842,360
Appendices

174

Tables VI.C4, VI.C5, and VI.C6 show estimates of the operations and status of

the OASI, DI, and the hypothetical combined OASI and DI Trust Funds,

respectively, during fiscal years 2012 through 2026. 

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

Table VI.C4.—Operations of the OASI Trust Fund, Fiscal Years 2012-2026

[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

benefits to certain uninsured persons who attained age 72 before 1968; (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

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:

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

2015 . 795.3 672.2 .2 29.6 93.2 741.5 733.7 3.5 4.3 53.9 2,766.6 366

2016 . 799.9 679.6 .1 31.1 89.1 769.8 762.1 3.4 4.3 30.1 2,796.6 359

Intermediate:

2017 . 828.4 708.0 d

d Between -$50 million and $50 million.

35.5 84.9 799.0 791.3 3.3 4.4 29.4 2,826.0 350

2018 . 864.3 742.8 d 38.3 83.1 845.7 837.7 3.3 4.7 18.6 2,844.5 334

2019 . 941.0 814.0 d 42.1 84.9 906.6 898.4 3.4 4.8 34.4 2,879.0 314

2020 . 996.9 864.9 d 46.2 85.8 971.2 962.7 3.6 4.9 25.7 2,904.6 296

2021 . 1,054.6 915.0 d 50.7 89.0 1,036.4 1,027.8 3.7 5.0 18.2 2,922.8 280

2022 . 1,107.7 960.9 d 55.2 91.5 1,107.0 1,098.0 3.8 5.2 .6 2,923.4 264

2023 . 1,152.7 999.7 d 60.1 92.9 1,182.1 1,172.8 4.0 5.3 -29.4 2,894.0 247

2024 . 1,204.0 1,043.7 d 65.2 95.0 1,261.4 1,251.8 4.1 5.5 -57.4 2,836.5 229

2025 . 1,254.1 1,086.9 d 70.8 96.4 1,343.2 1,333.5 4.2 5.5 -89.1 2,747.4 211

2026 . 1,308.6 1,135.3 d 76.8 96.4 1,429.2 1,419.3 4.3 5.7 -120.7 2,626.8 192

Low-cost:

2017 . 831.9 710.8 d 35.4 85.7 798.7 791.0 3.3 4.4 33.2 2,829.8 350

2018 . 889.1 764.3 d 38.5 86.4 848.9 840.9 3.3 4.7 40.2 2,870.0 333

2019 . 991.0 856.4 d 42.6 92.0 916.3 908.1 3.4 4.8 74.7 2,944.7 313

2020 . 1,072.9 925.7 d 47.0 100.2 987.3 978.7 3.7 4.9 85.7 3,030.4 298

2021 . 1,152.9 993.0 d 51.8 108.2 1,058.4 1,049.6 3.8 5.0 94.5 3,124.9 286

2022 . 1,229.1 1,056.2 d 56.6 116.3 1,135.3 1,126.1 4.0 5.2 93.8 3,218.7 275

2023 . 1,304.0 1,115.7 d 61.9 126.5 1,217.7 1,208.1 4.2 5.4 86.4 3,305.0 264

2024 . 1,388.4 1,182.9 d 67.5 138.1 1,305.2 1,295.3 4.4 5.5 83.2 3,388.3 253

2025 . 1,474.9 1,251.0 d 73.6 150.3 1,396.5 1,386.4 4.6 5.6 78.4 3,466.6 243

2026 . 1,570.5 1,327.3 d 80.3 162.9 1,493.6 1,483.1 4.8 5.8 76.9 3,543.5 232

High-cost:

2017 . 825.6 705.3 d 35.5 84.8 799.4 791.7 3.3 4.4 26.3 2,822.9 350

2018 . 834.3 715.2 d 38.2 81.0 842.5 834.5 3.3 4.7 -8.2 2,814.7 335

2019 . 876.5 757.8 d 41.9 76.9 900.9 892.6 3.4 4.9 -24.4 2,790.3 312

2020 . 913.2 793.1 d 45.8 74.3 962.1 953.6 3.5 5.0 -49.0 2,741.4 290

2021 . 948.2 826.3 d 50.0 72.0 1,022.3 1,013.6 3.6 5.1 -74.0 2,667.3 268

2022 . 979.3 856.5 d 54.2 68.6 1,087.0 1,078.1 3.7 5.3 -107.7 2,559.6 245

2023 . 1,003.1 881.2 d 58.7 63.1 1,155.4 1,146.3 3.7 5.4 -152.3 2,407.3 222

2024 . 1,031.3 909.3 d 63.4 58.5 1,226.9 1,217.6 3.8 5.5 -195.6 2,211.7 196

2025 . 1,056.4 934.9 d 68.5 53.0 1,299.5 1,290.1 3.9 5.5 -243.1 1,968.6 170

2026 . 1,084.4 963.0 d 73.9 47.6 1,375.0 1,365.4 3.9 5.6 -290.5 1,678.1 143
175

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 2012-2026a

[Dollar amounts in billions]

a The DI Trust Fund becomes depleted in fiscal year 2022 under the high-cost assumptions. 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 payroll tax credits provided to employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21;

(2) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public

Law 110-246; and (3) 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:

2012 . $108.8 $85.1 $16.2 $0.4 $7.2 $138.5 $135.1 $2.9 $0.5 -$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

2015 . 118.0 114.2 e 1.0 2.7 146.2 142.9 2.9 .4 -28.3 41.7 48

2016 . 150.3 147.6 e 1.2 1.5 146.2 143.1 2.8 .4 4.1 45.7 28

Intermediate:

2017 . 170.9 167.3 e 2.0 1.6 147.0 143.8 3.0 .2 23.9 69.6 31

2018 . 180.1 175.5 e 2.1 2.4 151.2 148.2 2.9 .1 28.8 98.5 46

2019 . 157.7 151.9 e 2.3 3.5 157.0 154.0 2.9 .1 .6 99.1 63

2020 . 152.8 146.9 e 2.5 3.5 163.2 159.8 3.3 .1 -10.4 88.7 61

2021 . 161.2 155.4 e 2.7 3.2 169.7 165.9 3.6 .1 -8.5 80.2 52

2022 . 168.8 163.2 e 2.9 2.8 176.8 172.8 3.9 .1 -7.9 72.3 45

2023 . 175.4 169.8 e 3.1 2.5 184.7 180.5 4.2 .1 -9.4 62.9 39

2024 . 182.8 177.2 e 3.3 2.2 192.9 188.4 4.4 .1 -10.1 52.8 33

2025 . 189.9 184.6 e 3.6 1.8 201.9 197.1 4.7 .1 -11.9 40.8 26

2026 . 198.0 192.8 e 3.9 1.3 211.2 206.2 5.0 .1 -13.2 27.6 19

Low-cost:

2017 . 171.6 168.0 e 1.9 1.7 145.6 142.3 3.0 .2 26.0 71.7 31

2018 . 185.6 180.6 e 2.1 3.0 148.4 145.4 2.9 .1 37.2 108.9 48

2019 . 166.8 159.6 e 2.2 5.0 153.4 150.3 2.9 .1 13.4 122.4 71

2020 . 165.2 157.2 e 2.4 5.6 158.6 155.1 3.3 .1 6.6 129.0 77

2021 . 177.5 168.6 e 2.6 6.3 164.0 160.2 3.7 .1 13.5 142.5 79

2022 . 189.4 179.4 e 2.7 7.3 170.1 166.0 4.0 .1 19.3 161.8 84

2023 . 201.2 189.5 e 2.9 8.8 177.1 172.7 4.4 .1 24.1 185.8 91

2024 . 214.5 200.9 e 3.2 10.5 184.5 179.7 4.7 .1 30.1 215.9 101

2025 . 228.5 212.4 e 3.4 12.6 192.8 187.7 5.0 e 35.7 251.6 112

2026 . 244.2 225.4 e 3.7 15.1 201.5 196.1 5.4 e 42.7 294.3 125

High-cost:

2017 . 170.2 166.7 e 2.0 1.6 148.5 145.3 3.0 .2 21.7 67.4 31

2018 . 173.1 169.0 e 2.1 2.0 154.1 151.0 2.9 .2 19.0 86.5 44

2019 . 146.2 141.6 e 2.4 2.3 161.4 158.3 2.9 .1 -15.1 71.4 54

2020 . 139.2 134.7 e 2.6 1.9 168.7 165.3 3.2 .2 -29.5 41.8 42

2021 . 144.3 140.3 e 2.8 1.3 175.8 172.1 3.5 .2 -31.5 10.3 24

2022 . 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.

145.4 e 3.0 f 183.3 179.4 3.7 .1 f f 6

2023 . f 149.6 e 3.2 f 191.6 187.6 3.9 .1 f ff

2024 . f 154.4 e 3.4 f 199.9 195.7 4.1 .1 f ff

2025 . f 158.8 e 3.7 f 209.0 204.6 4.3 .1 f ff

2026 . f 163.5 e 4.0 f 218.3 213.7 4.5 .1 f ff
Appendices

176

Table VI.C6.—Operations of the Combined OASI and DI Trust Funds,

Fiscal Years 2012-2026

[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 benefits to certain uninsured persons who attained age 72 before 1968; (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

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:

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

2015. . 913.3 786.4 .3 30.7 96.0 887.7 876.6 6.4 4.7 25.6 2,808.2 313

2016. . 950.2 827.1 .2 32.3 90.6 916.0 905.2 6.2 4.7 34.1 2,842.4 307

Intermediate:

2017. . 999.3 875.3 d

d Between -$50 million and $50 million.

37.4 86.6 946.1 935.1 6.4 4.6 53.2 2,895.6 300

2018. . 1,044.3 918.4 d 40.4 85.5 996.9 985.9 6.2 4.9 47.4 2,943.0 290

2019. . 1,098.7 965.9 d 44.4 88.4 1,063.7 1,052.4 6.4 4.9 35.0 2,978.0 277

2020. . 1,149.7 1,011.7 d 48.7 89.3 1,134.4 1,122.5 6.9 5.1 15.2 2,993.3 263

2021. . 1,215.8 1,070.4 d 53.3 92.1 1,206.1 1,193.7 7.3 5.1 9.7 3,003.0 248

2022. . 1,276.5 1,124.1 d 58.1 94.3 1,283.8 1,270.7 7.7 5.3 -7.3 2,995.7 234

2023. . 1,328.1 1,169.5 d 63.1 95.4 1,366.9 1,353.3 8.1 5.4 -38.8 2,956.9 219

2024. . 1,386.7 1,221.0 d 68.5 97.2 1,454.3 1,440.2 8.5 5.5 -67.6 2,889.3 203

2025. . 1,444.0 1,271.4 d 74.4 98.2 1,545.0 1,530.6 8.9 5.6 -101.0 2,788.3 187

2026. . 1,506.6 1,328.1 d 80.7 97.8 1,640.4 1,625.4 9.3 5.7 -133.9 2,654.4 170

Low-cost:

2017. . 1,003.5 878.8 d 37.4 87.4 944.3 933.3 6.4 4.6 59.2 2,901.6 301

2018. . 1,074.7 944.8 d 40.5 89.4 997.3 986.3 6.2 4.8 77.4 2,979.0 291

2019. . 1,157.8 1,016.0 d 44.8 97.0 1,069.7 1,058.4 6.4 4.9 88.1 3,067.1 278

2020. . 1,238.2 1,082.9 d 49.4 105.8 1,145.8 1,133.8 7.0 5.1 92.3 3,159.4 268

2021. . 1,330.4 1,161.6 d 54.3 114.4 1,222.4 1,209.8 7.5 5.1 108.0 3,267.4 258

2022. . 1,418.5 1,235.5 d 59.4 123.6 1,305.4 1,292.0 8.0 5.3 113.1 3,380.4 250

2023. . 1,505.2 1,305.2 d 64.8 135.3 1,394.8 1,380.8 8.6 5.5 110.4 3,490.9 242

2024. . 1,603.0 1,383.7 d 70.7 148.6 1,489.7 1,475.0 9.1 5.6 113.3 3,604.2 234

2025. . 1,703.3 1,463.4 d 77.0 162.9 1,589.3 1,574.1 9.6 5.6 114.1 3,718.2 227

2026. . 1,814.7 1,552.7 d 84.0 178.0 1,695.2 1,679.2 10.2 5.8 119.5 3,837.8 219

High-cost:

2017. . 995.9 872.0 d 37.4 86.4 947.9 936.9 6.4 4.6 48.0 2,890.3 300

2018. . 1,007.4 884.2 d 40.3 83.0 996.6 985.5 6.2 4.9 10.8 2,901.2 290

2019. . 1,022.7 899.4 d 44.2 79.1 1,062.2 1,050.9 6.4 5.0 -39.5 2,861.7 273

2020. . 1,052.4 927.7 d 48.3 76.3 1,130.9 1,118.9 6.8 5.2 -78.5 2,783.2 253

2021. . 1,092.6 966.6 d 52.7 73.2 1,198.1 1,185.8 7.1 5.2 -105.5 2,677.7 232

2022. . 1,127.5 1,001.9 d 57.2 68.4 1,270.3 1,257.5 7.4 5.4 -142.8 2,534.9 211

2023. . 1,154.3 1,030.9 d 61.9 61.6 1,347.0 1,333.8 7.7 5.5 -192.7 2,342.2 188

2024. . 1,185.7 1,063.7 d 66.9 55.1 1,426.8 1,413.3 8.0 5.6 -241.1 2,101.1 164

2025. . 1,213.5 1,093.7 d 72.2 47.6 1,508.5 1,494.7 8.2 5.6 -295.0 1,806.1 139

2026. . 1,244.3 1,126.5 d 77.9 39.9 1,593.2 1,579.1 8.5 5.7 -348.9 1,457.2 113
177

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 three different 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 2024 under alternatives III, II, and I, respectively.
Appendices

178

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 17.07 to 16.25 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

-3.19 to -2.45 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 0.19 percent

of taxable payroll.

2. Death Rates

Table VI.D2 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with three different assumptions about future

Table VI.D1.—Sensitivity of OASDI Measures to 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 2024 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: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.65 14.65 14.65

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.04 14.02 14.00

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.88 13.84 13.80

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.31 16.32 16.33

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.59 16.44 16.27

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.07 16.67 16.25

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.66 -1.67 -1.69

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.55 -2.42 -2.27

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.19 -2.83 -2.45

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -5.97 -4.48 -3.17

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2034
179

Long-Range Sensitivity Analysis

reductions in death rates for the period from 2016 to 2091. These assumptions are described in section V.A.2. The Trustees assume that the age-sexadjusted death rates will decline at average annual rates of 0.42 percent,

0.77 percent, and 1.16 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 16.16 percent (for an average

annual death-rate reduction of 0.42 percent) to 16.50 percent (for an average

annual death-rate reduction of 1.16 percent). The 75-year cost rate increases

from 16.16 to 17.20 percent. The actuarial balance decreases from -1.51 to

-1.85 percent for the 25-year period, and from -2.34 to -3.34 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

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

Table VI.D2.—Sensitivity of OASDI Measures to 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 2016 and 2091. The overall age-sex-adjusted death rate decreases from 2016 to

2091 by 27 percent, 44 percent, and 58 percent for alternatives I, II, and III, respectively.

b The average annual death-rate reductions used for this analysis are: 0.42 percent from the alternative I

assumptions, 0.77 percent from the alternative II assumptions, and 1.16 percent from the alternative III

assumptions. All other assumptions used for this analysis are from alternative II.

0.42 percent 0.77 percent 1.16 percent

Summarized income rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.65 14.65 14.64

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.01 14.02 14.03

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.82 13.84 13.86

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.16 16.32 16.50

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.08 16.44 16.83

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.16 16.67 17.20

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.51 -1.67 -1.85

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.07 -2.42 -2.80

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.34 -2.83 -3.34

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -3.48 -4.48 -5.47

Year of combined trust fund reserve depletion . . . . . . . . 2035 2034 2034
Appendices

180

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

0.14 percent of taxable payroll.

3. Immigration

Table VI.D3 shows OASDI income rates, cost rates, and actuarial balances

under alternative II with three different assumptions about the magnitude of

net immigration (immigration minus emigration). The Trustees assume

annual levels of immigration and emigration, with net annual immigration

averaging 961,000 persons, 1,286,000 persons, and 1,623,000 persons over

the long-range period under alternatives III, II, and I, respectively.

For all three periods, when net immigration increases, the cost rate decreases.

For the 25-year period, the cost rate decreases from 16.52 percent of taxable

Table VI.D3.—Sensitivity of OASDI Measures to 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: 961,000 from the alternative III

assumptions, 1,286,000 from the alternative II assumptions, and 1,623,000 from the alternative I assumptions. All other assumptions used for this analysis are from alternative II.

961,000 1,286,000 1,623,000

Summarized income rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.68 14.65 14.62

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.06 14.02 13.99

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.88 13.84 13.80

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.52 16.32 16.15

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.71 16.44 16.20

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.98 16.67 16.39

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.84 -1.67 -1.53

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.65 -2.42 -2.21

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.11 -2.83 -2.59

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.97 -4.48 -4.08

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2035
181

Long-Range Sensitivity Analysis

payroll (for average annual net immigration of 961,000 persons) to

16.15 percent (for average annual net immigration of 1,623,000 persons).

For the 50-year period, it decreases from 16.71 percent to 16.20 percent, and

for the 75-year period, it decreases from 16.98 percent to 16.39 percent. The

actuarial balance increases from -1.84 to -1.53 percent for the 25-year

period, from -2.65 to -2.21 percent for the 50-year period, and from -3.11 to

-2.59 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 0.08 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 three different assumptions about the realwage differential. The Trustees assume the ultimate real-wage differential

will be 0.58 percentage point, 1.20 percentage points, and 1.82 percentage

points under alternatives III, II, and I, respectively. In each case, the ultimate

annual increase in the CPI is 2.60 percent (consistent with alternative II).

Therefore, the ultimate percentage increases in average annual wages in covered employment are 3.18, 3.80, and 4.42 percent.

For the 25-year period, the cost rate decreases from 17.10 percent (for a realwage differential of 0.58 percentage point) to 15.56 percent (for a differential

of 1.82 percentage points). For the 50-year period, it decreases from 17.58 to

15.34 percent, and for the 75-year period it decreases from 17.92 to

15.45 percent. The actuarial balance increases from -2.32 to -1.04 percent for

the 25-year period, from -3.39 to -1.48 percent for the 50-year period, and

from -3.90 to -1.78 percent for the 75-year period.
Appendices

182

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 0.1-percentage-point increase in the real-wage differential increases the long-range actuarial balance by about 0.17 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 three different assumptions about the rate

of increase for the Consumer Price Index (CPI). The Trustees assume the

annual increase in the CPI will be 3.20 percent, 2.60 percent, and

2.00 percent under alternatives I, II, and III, respectively.1 In each case, the

ultimate real-wage differential is 1.20 percentage points (consistent with

alternative II), yielding ultimate percentage increases in average annual

wages in covered employment of 4.40, 3.80, and 3.20 percent.

Table VI.D4.—Sensitivity of OASDI Measures to 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 0.58, 1.20, and 1.82 percentage points are the same as in alternatives III, II, and I, respectively. All other assumptions used for this analysis are from alternative II.

3.18-2.60 3.80-2.60 4.42-2.60

Summarized income rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.78 14.65 14.52

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.19 14.02 13.86

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.02 13.84 13.67

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 16.32 15.56

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.58 16.44 15.34

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.92 16.67 15.45

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.32 -1.67 -1.04

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.39 -2.42 -1.48

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.90 -2.83 -1.78

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -6.43 -4.48 -2.79

Year of combined trust fund reserve depletion . . . . . . . . 2033 2034 2037

 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.
183

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 16.22 (for CPI increases of 3.20 percent) to 16.42 percent (for CPI

increases of 2.00 percent). For the 50-year period, it increases from 16.30 to

16.57 percent, and for the 75-year period, it increases from 16.52 to

16.81 percent. The actuarial balance decreases from -1.59 to -1.75 percent

for the 25-year period, from -2.30 to -2.53 percent for the 50-year period,

and from -2.70 to -2.96 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 0.1-percentage-point decrease in the rate of the change

in the CPI decreases the long-range actuarial balance by about 0.02 percent

of taxable payroll.

Table VI.D5.—Sensitivity of OASDI Measures to 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 3.20, 2.60, and 2.00 percent are the same as in alternatives I, II, and III,

respectively. The ultimate real-wage differential of 1.20 percentage points is the same as in alternative II. All

other assumptions used for this analysis are also from alternative II.

4.40-3.20 3.80-2.60 3.20-2.00

Summarized income rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.62 14.65 14.67

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.00 14.02 14.04

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.82 13.84 13.85

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.22 16.32 16.42

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.30 16.44 16.57

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.52 16.67 16.81

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.59 -1.67 -1.75

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.30 -2.42 -2.53

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.70 -2.83 -2.96

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.31 -4.48 -4.65

Year of combined trust fund reserve depletion . . . . . . . . 2035 2034 2034
Appendices

184

6. Real Interest Rate

Table VI.D6 shows OASDI income rates, cost rates, and actuarial balances

under alternative II with three different 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 2.2 percent, 2.7 percent, and 3.2 percent under alternatives III, II, and I, respectively. In each case, the ultimate annual increase in

the CPI is 2.60 percent, which is consistent with alternative II. Therefore, the

ultimate annual yields are 4.9, 5.4, and 5.9 percent, respectively.

For the 25-year period, the cost rate decreases with increasing real interest

rates from 16.39 percent (for an ultimate real interest rate of 2.2 percent) to

16.25 percent (for an ultimate real interest rate of 3.2 percent). For the

50-year period, it decreases from 16.53 to 16.35 percent and, for the 75-year

period, it decreases from 16.79 to 16.55 percent. The actuarial balance

increases from -1.80 to -1.54 percent for the 25-year period, from -2.58 to

-2.26 percent for the 50-year period, and from -3.03 to -2.63 percent for the

75-year period. Each 0.1-percentage-point increase in the real interest rate

increases the long-range actuarial balance by about 0.04 percent of taxable

payroll.

Table VI.D6.—Sensitivity of OASDI Measures to 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: 2.2 percent from the alternative III

assumptions, 2.7 percent from the alternative II assumptions, and 3.2 percent from the alternative I assumptions. All other assumptions used for this analysis are from alternative II.

2.2 percent 2.7 percent 3.2 percent

Summarized income rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.59 14.65 14.70

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.95 14.02 14.09

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.76 13.84 13.92

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.39 16.32 16.25

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.53 16.44 16.35

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.79 16.67 16.55

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.80 -1.67 -1.54

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.58 -2.42 -2.26

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.03 -2.83 -2.63

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.48 -4.48 -4.48

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2035
185

Long-Range Sensitivity Analysis

7. Taxable Ratio

Table VI.D7 shows OASDI income rates, cost rates, and actuarial balances

under alternative II with three different assumptions about the ratio of taxable payroll to covered earnings (the taxable ratio). Note that covered earnings are the sum of wages and net self-employment earnings covered by

Social Security, and taxable payroll is essentially the amount of covered

earnings subject to the Social Security payroll tax up to the contribution and

benefit base ($127,200 for 2017). The Trustees assume that the ultimate taxable ratio will be 81.0 percent, 82.5 percent, and 84.0 percent under alternatives III, II, and I, respectively.

Because the combined employee-employer tax rate of 12.4 percent is

unchanged across all alternatives, the income rate changes a relatively small

amount as the taxable ratio increases, due to changes in taxation of benefits

and the initial fund as a percentage of taxable payroll.

For the 25-year period, the cost rate decreases with increasing taxable ratios,

from 16.55 percent (for an ultimate taxable ratio of 81.0 percent) to

16.10 percent (for an ultimate taxable ratio of 84.0 percent). For the 50-year

period, it decreases from 16.65 to 16.23 percent and, for the 75-year period,

it decreases from 16.86 to 16.48 percent. The actuarial balance increases

from -1.86 to -1.48 percent for the 25-year period, from -2.59 to

Table VI.D7.—Sensitivity of OASDI Measures to Taxable Ratio Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate taxable ratioa b

a The taxable ratio is the ratio of taxable payroll to covered earnings. These concepts are described in further

detail in section V.C.6 of this report.

b The ultimate taxable ratios used for this analysis are: 81.0 percent from the alternative III assumptions,

82.5 percent from the alternative II assumptions, and 84.0 percent from the alternative I assumptions. All

other assumptions used for this analysis are from alternative II. 

81.0 percent 82.5 percent 84.0 percent

Summarized income rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.69 14.65 14.62

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.06 14.02 14.00

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.87 13.84 13.83

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.55 16.32 16.10

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.65 16.44 16.23

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.86 16.67 16.48

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.86 -1.67 -1.48

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.59 -2.42 -2.23

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.99 -2.83 -2.65

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.59 -4.48 -4.36

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2035
Appendices

186

-2.23 percent for the 50-year period, and from -2.99 to -2.65 for the 75-year

period.

The cost rate decreases with an increase in taxable payroll because the

increase in taxable payroll occurs immediately. The increase in benefit

amounts occurs much more gradually as new beneficiaries become entitled.

In addition, the change in the taxable ratio does not affect COLAs or AWIs.

Each 1.0 percentage-point increase in the ultimate taxable ratio increases

(improves) the long-range actuarial balance by about 0.11 percent of taxable

payroll.

8. Disability Incidence Rates

Table VI.D8 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with three different 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 2016, the ultimate age-sex-adjusted incidence

rate is about 17 percent lower for alternative I, 4 percent higher for alternative II, and 23 percent higher for alternative III.

For the 25-year period, the cost rate increases with increasing disability incidence rates, from 16.12 percent (for the relatively low rates assumed for

alternative I) to 16.52 percent (for the relatively high rates assumed for alternative III). For the 50-year period, it increases from 16.18 to 16.69 percent,

and for the 75-year period, it increases from 16.40 to 16.93 percent. The

actuarial balance decreases from -1.47 to -1.87 percent for the 25-year

Table VI.D8.—Sensitivity of OASDI Measures to 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: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.64 14.65 14.65

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.02 14.02 14.02

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.83 13.84 13.84

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.12 16.32 16.52

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.18 16.44 16.69

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.40 16.67 16.93

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.47 -1.67 -1.87

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.16 -2.42 -2.67

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.56 -2.83 -3.09

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.17 -4.48 -4.78

Year of combined trust fund reserve depletion . . . . . . . . 2035 2034 2034
187

Long-Range Sensitivity Analysis

period, from -2.16 to -2.67 percent for the 50-year period, and from -2.56 to

-3.09 percent for the 75-year period.

9. Disability Termination Rates

Table VI.D9 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with three different assumptions about future

disability 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 I, the age-sex-adjusted1 disability death rate declines to a level in

2091 that is about 28 percent lower than the level in 2016. For alternative II,

the age-sex-adjusted disability death rate declines to a level in 2091 that is

about 55 percent lower than the level in 2016. For alternative III, the agesex-adjusted disability death rate declines to a level in 2091 that is about

74 percent lower than the level in 2016.

For all three alternatives, ultimate recovery rates by age, sex, and duration

are attained in the twentieth year of the projection period. For alternative I,

the age-sex-adjusted1 recovery rate for 2036 is about 13 recoveries per thousand disabled-worker beneficiaries. For alternative II, the age-sex-adjusted

recovery rate for 2036 is about 10 recoveries per thousand disabled-worker

beneficiaries. For alternative III, the age-sex-adjusted recovery rate for 2036

is about 8 recoveries per thousand disabled-worker beneficiaries.

 1 Age adjusted to the total disabled workers in current-payment status as of the year 2000.
Appendices

188

For the 25-year period, the cost rate increases with decreasing disability termination rates, from 16.29 percent (for the relatively high termination rates

assumed for alternative I) to 16.35 percent (for the relatively low termination

rates assumed for alternative III). For the 50-year period, it increases from

16.40 to 16.47 percent, and for the 75-year period, it increases from 16.64 to

16.68 percent. The actuarial balance decreases from -1.64 to -1.70 percent

for the 25-year period, from -2.38 to -2.45 percent for the 50-year period,

and from -2.80 to -2.85 percent for the 75-year period.

Table VI.D9.—Sensitivity of OASDI Measures to 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: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.65 14.65 14.65

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.02 14.02 14.02

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.84 13.84 13.84

Summarized cost rate:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.29 16.32 16.35

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.40 16.44 16.47

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.64 16.67 16.68

Actuarial balance:

25-year: 2017-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.64 -1.67 -1.70

50-year: 2017-66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.38 -2.42 -2.45

75-year: 2017-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.80 -2.83 -2.85

Annual balance for 2091 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.47 -4.48 -4.46

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2034
189

Stochastic Projections 

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 combined OASI and DI Trust Funds. This model, which was first

included in the 2003 report, is subject to further development in the future,

most notably by incorporating parameter uncertainty. This will allow the stochastic model to reflect persistent uncertainties that are now reflected in the

low-cost and high-cost alternatives.

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. Gener-
Appendices

190

ally, each variable is modeled using an equation that: (1) captures a relationship between current and prior years’ values of the variable; and

(2) introduces year-by-year random variation as observed in the historical

period. For some variables, the equations also reflect relationships with other

variables. The equations contain parameters that are estimated using historical data for periods from 10 years to over 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 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 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. Many experts predict, and history

suggests, that the future will likely bring substantial shifts 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

This section illustrates the results for the stochastic simulations of two fundamental measures of actuarial status: the annual cost rates and the trust fund

ratio. The latter measure is highlighted in the Overview of this report.

Section 4 follows with a comparison of stochastic results to results from the

 1 More detail on this model, and stochastic modeling in general, is available at

www.ssa.gov/OACT/stochastic/index.html.
191

Stochastic Projections 

alternative scenarios for these and other measures, and an analysis of the differences. 

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 annual 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 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 for a given

year will exceed the upper end of this range and a 2.5 percent probability that

it will fall below the lower end of this range. 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 annual cost rates based on all stochastic simulations for that year. 
Appendices

192

Figure VI.E2 presents the simulated probability distribution of the annual

trust fund ratios for the 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 trust fund ratios.

Again, none of these lines represents the time path of a single simulation. 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 2030 to 2043, 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 at the beginning of 2025 ranges from 240 to 132 percent

of annual cost. 

 Figure VI.E1.—Long-Range OASDI Cost Rates From Stochastic Modeling

5%

10%

15%

20%

25%

30%

2017 2032 2047 2062 2077 2092

Projection year

50%

97.5%

2.5%

90%

10%

Income Rate
193

Stochastic Projections 

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

High-Cost Alternatives

This section compares results from two different approaches for illustrating

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 distributions of results from 5,000 independent stochastic simulations. Each of these approaches provides insights into uncertainty. Comparison of the results requires an understanding of fundamental

differences in the approaches. 

One fundamental difference relates to the presentation of distributional

results. Figure VI.E3 shows projected OASDI annual cost rates for the lowcost, 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

 Figure VI.E2.—Long-Range OASDI Trust Fund Ratios From Stochastic Modeling

0%

100%

200%

300%

400%

2017 2032 2047 2062 2077 2092

Projection year

50%

97.5%

2.5%

90%

10%
Appendices

194

percentile for one projected year may yield results that are distant from that

percentile in another projected year. 

Because each stochastic simulation shows substantial variability from year to

year, the range shown between the 97.5th and 2.5th percentiles is broader

than would be seen if simulations followed a smooth trend like in the alternatives. In spite of this effect, the range from high-cost to low-cost annual rates

for the stochastic distribution is generally contained slightly within the range

for the high-cost and low-cost alternatives. With introduction of parameter

uncertainty for the stochastic simulations expected in future reports, the

range for the 95-percent confidence interval is expected to expand.

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 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.

 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%

2017 2032 2047 2062 2077 2092

Projection year

Low-Cost

Intermediate

High-Cost

Stochastic 2.5%

Stochastic 50%

Stochastic 97.5%
195

Stochastic Projections 

Another fundamental difference between the alternatives and the stochastic

simulations is the method of assigning values for assumptions. For the alternatives, specific values are assigned for each of the key demographic and

economic variables. Values for all parameters that affect annual cost or payroll are assigned to the high-cost alternative in order to raise estimated

annual cost as a percent of payroll, and values are assigned to the low-cost

alternative in order to reduce it. (One parameter, the interest rate, has no

effect on annual cost as a percent of payroll.) In contrast, the stochastic

method essentially randomly assigns values for each of 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 different variables result in varying and often offsetting

effects on projected cost as a percent of payroll, with some tending toward

higher cost and some tending toward lower cost. This difference tends to

reduce the range of cost as a percent of payroll across the 95-percent confidence interval. Again, the future introduction of parameter uncertainty is

expected to broaden this range.

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 highcost alternatives.

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.

An unfunded obligation ratio is the ratio of the unfunded obligation accumulated through the beginning of the year to the cost for that year.
Appendices

196

As mentioned above, a summary measure that accumulates annual values

tends to smooth the kind of annual fluctuations that occur in stochastic simulations. Therefore, one might expect the range across the stochastic confidence interval for trust fund (unfunded obligation) ratios to be narrower and

fall within the range seen across the high-cost and low-cost alternatives, as it

does for the actuarial balance measure. But this is not the case, largely due to

the way interest rates are assigned. 

For the stochastic model, real interest rates for each simulation are assigned

essentially randomly, so the rate for compounding of trust fund reserves

(unfunded obligations) is essentially uncorrelated with the level of cost as a

percent of payroll. On the other hand, real interest rates are assigned to be

higher for the low-cost alternative and lower for the high-cost alternative.

High interest rates raise the level of the positive trust fund ratio in the lowcost alternative somewhat, but this effect is limited because the magnitude of

reserves is small. However, low interest rates substantially reduce the magnitude of the unfunded obligation ratio for the high-cost alternative because the

 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.

-6000%

-5500%

-5000%

-4500%

-4000%

-3500%

-3000%

-2500%

-2000%

-1500%

-1000%

-500%

0%

500%

1000%

2017 2032 2047 2062 2077 2092

Projection year

Low-Cost

Intermediate

High-Cost

Stochastic 2.5%

Stochastic 50%

Stochastic 97.5%

Trust fund asset reserves (positive)

Unfunded obligation (negative)
197

Stochastic Projections 

magnitude of unfunded obligations is relatively large. As a result, the trust

fund (unfunded obligation) ratios are shifted, albeit unevenly, higher (or less

negative) for both the high-cost and low-cost alternatives. 

This interest rate effect on the alternatives is not as evident for some other

summary measures of actuarial status, such as the actuarial balance. Because

the actuarial balance reflects the cumulative effects of interest in both its

numerator and denominator, the interest rate effect is much less pronounced.

In contrast, cumulative interest affects only the numerator of the trust fund

(unfunded obligation) ratio. There is also no significant interest rate effect on

the trust fund depletion date.

Other factors also contribute, to varying degrees, to the difference in ranges

between the results of the alternative scenarios and the stochastic simulations. The contrasts in results and methods do not mean that either approach

to illustrating ranges of uncertainty 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: alternative scenarios and 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 values 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 similar to the

intermediate scenario-based estimates. The median estimate of the longrange actuarial balance is -2.81 percent of taxable payroll, about

0.02 percentage point higher than projected under the intermediate assumptions. The median first projected year that cost exceeds non-interest income

(as it did in 2010 through 2016), and remains in excess of non-interest

income throughout the remainder of the long-range period, is 2017. 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 18.13 percent

of taxable payroll and 6.24 percent of gross domestic product (GDP). The

comparable estimates under the intermediate assumptions are 17.80 percent

of payroll and 6.12 percent of GDP.
Appendices

198

For three measures in table VI.E1 (the actuarial balance, the first year cost

exceeds non-interest income and remains in excess through 2091, and the

first projected year asset reserves become depleted), 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 three measures (the open group unfunded obligation, the annual cost in the 75th year

as a percent of taxable payroll, 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 high-cost

alternatives.

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 . . . . . . -2.83 0.12 -6.63 -2.81 -4.19 -1.67 -5.01 -1.07

Open group unfunded 

obligation 

(in trillions) . . . . . . . . . $12.5 -$1.5 $25.6 $12.5 $6.2 $23.0 $3.9 $31.4

First projected year cost 

exceeds non-interest 

income and remains

in excess 

through 2091a . . . . . . .

a Cost also exceeded non-interest income in 2010 through 2016.

2017 b

b The annual balance is projected to be negative for a temporary period, returning to positive levels before the

end of the projection period.

2017 2017 2017 2028 2017 2089

First year asset reserves 

become depletedc . . . .

c For some stochastic simulations, the first year in which trust fund reserves become depleted does not indicate a permanent depletion of reserves.

2034 d

d Trust fund reserves are not estimated to be depleted within the projection period.

2029 2034 2031 2039 2030 2043

Annual cost in 75th year 

(percent of taxable

payroll) . . . . . . . . . . . . 17.80 12.91 25.05 18.13 14.91 22.53 13.44 25.36

Annual cost in 75th year 

(percent of GDP). . . . . 6.12 4.84 7.92 6.24 5.16 7.67 4.66 8.61
199

Infinite Horizon Projections 

F. INFINITE HORIZON PROJECTIONS

Another measure of trust fund financial status 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 $34.2 trillion in present value, which is $21.7 trillion

larger than for the 75-year period. The $21.7 trillion increment reflects a significant financing gap projected for OASDI for years after 2091 into perpetuity. Of course, the degree of uncertainty associated with estimates increases

substantially for years further in the future.

The $34.2 trillion infinite horizon open group unfunded obligation is equivalent to 4.2 percent of taxable payroll or 1.4 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. As a result, the

summarized shortfalls over the infinite horizon, as percentages of taxable

payroll and GDP, are larger than the shortfalls for the 75-year period.

To illustrate the magnitude of the projected infinite horizon shortfall, consider that it could be eliminated with additional revenue equivalent to an

immediate increase in the combined payroll tax rate from 12.4 percent to

about 16.7 percent,1 or with cost reductions equivalent to an immediate and

permanent reduction in benefits for all current and future beneficiaries by

about 25 percent. 

 1 The indicated increase in the payroll tax rate of 4.3 percent is somewhat larger than the 4.2 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.
Appendices

200

Notes:

1. The present values of future taxable payroll for 2017-91 and for 2017 through the infinite horizon are

$469.6 trillion and $822.4 trillion, respectively.

2. The present values of GDP for 2017-91 and for 2017 through the infinite horizon are $1,317.0 trillion and

$2,445.0 trillion, respectively. Present values of GDP shown in the Medicare Trustees Report differ slightly

due to the use of discount rates that are specific to each program’s trust fund holdings.

Last year, the Trustees projected that the infinite horizon unfunded obligation

was $32.1 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 $1.0 trillion, to

$33.1 trillion. The net effects of changes in assumptions, methods, law, and

starting values increased the infinite horizon unfunded obligation by an additional $1.1 trillion. 

The infinite horizon unfunded obligation is 0.2 percentage point higher than

in last year’s report when expressed as a share of taxable payroll, and is

unchanged from last year when expressed as a share of GDP. 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.

Past participants are defined as those no longer alive as of the valuation date.

Current participants are those age 15 and older as of 2017. Future participants are those under age 15 or not yet born. 

Table VI.F1.—Unfunded OASDI Obligations Through the Infinite Horizon,

Based on Intermediate Assumptions

[Present values as of January 1, 2017; 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 2017. Expressed as a percentage of payroll and GDP for the period 2017 through

the infinite horizon.

$34.2 4.2 1.4

Unfunded obligation through 2091b . . . . . . . . . . . . . . . . . . . . . . . 

b Present value of future cost less future non-interest income through 2091, reduced by the amount of trust

fund reserves at the beginning of 2017. Expressed as a percentage of payroll and GDP for the period 2017

through 2091.

12.5 2.7 0.9
201

Infinite Horizon Projections 

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

$31.4 trillion. Table VI.F2 also shows an unfunded obligation of

$30.8 trillion for past and current participants, including past and future General Fund reimbursements. Future participants are scheduled to pay dedicated taxes of $3.4 trillion less into the system than the cost of their

scheduled benefits ($77.8 trillion of dedicated tax income as compared to

$81.2 trillion of cost). The unfunded obligation for all participants through

the infinite horizon thus equals $34.2 trillion.

Making Social Security solvent over the infinite horizon requires some combination of increased revenue or reduced benefits for current and future participants amounting to $34.2 trillion in present value, 4.2 percent of future

taxable payroll, or 1.4 percent of future GDP.
Appendices

202

Notes:

1. The present value of future taxable payroll for 2017 through the infinite horizon is $822.4 trillion.

2. The present value of GDP for 2017 through the infinite horizon is $2,445.0 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, 2017; dollar amounts in trillions]

Present

value

Expressed as a 

percentage of future 

payroll and GDP

Taxable

payroll GDP

Present value of past cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59.1 7.2 2.4

Less present value of past dedicated tax income . . . . . . . . . . . . . . . . . . 61.3 7.5 2.5

Plus present value of future cost for current participants . . . . . . . . . . . 65.3 7.9 2.7

Less present value of future dedicated tax income for current 

participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.7 3.9 1.3

Equals unfunded obligation for past and current participants 

excluding General Fund reimbursements . . . . . . . . . . . . . . . . . . . . . 31.4 3.8 1.3

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 . . . . . . . . . . . . . . . . . . . . . 30.8 3.7 1.3

Plus present value of cost for future participants over the infinite 

horizon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.2 9.9 3.3

Less present value of dedicated tax income for future participants 

over the infinite horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.8 9.5 3.2

Equals unfunded obligation for all participants through the infinite 

horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.2 4.2 1.4

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.
203

OASDI and HI: Percent of Payroll

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 2017 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 26 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.
Appendices

204

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 $127,200 for 2017.

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
205

OASDI and HI: Percent of Payroll

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 the portion of

total payroll to which the 0.9-percent rate applies; (2) premium revenues;

(3) monies from fraud and abuse control activities; and (4) reimbursements

from the General Fund of the Treasury, if any. 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 from 2018 to 2035 under both sets of

assumptions for OASDI and under the intermediate assumptions for HI.

Under the intermediate assumptions, the OASDI cost rate increases by

33 percent from its current level by 2091, while under the high-cost assumptions, the cost rate increases by 84 percent by 2091. For HI, cost rates

increase 49 percent and 209 percent from 2017 to 2091 under the intermediate and high-cost assumptions, respectively. Under the low-cost assumptions,

the OASDI and HI cost rates decrease from 2017 to 2091 by 2 percent and

29 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 the HI program. Under the intermediate assumptions, HI annual balances are positive for 2017 through 2020,

and negative thereafter. Under the low-cost assumptions, OASDI annual balances are negative through 2052, positive for 2053 through 2058, negative

for 2059 through 2074, and then positive through the remainder of the 75-

year projection period. HI annual balances are positive throughout the projection period.
Appendices

206

Table VI.G2.—OASDI and HI Annual Income Rates, Cost Rates, and Balances,

Calendar Years 2017-2095

[As a percentage of taxable payrolla]

Calendar year

OASDI HI

Income

rate

Cost

rateb Balanceb Incomerate

Cost

rate Balance

Intermediate:

2017 . . . . . . . . . . 13.03 13.41 -0.38 3.37 3.33 0.04

2018 . . . . . . . . . . 12.93 13.49 -.56 3.38 3.28 .10

2019 . . . . . . . . . . 12.95 13.70 -.75 3.40 3.32 .08

2020 . . . . . . . . . . 12.96 13.85 -.89 3.42 3.38 .04

2021 . . . . . . . . . . 12.99 14.02 -1.03 3.44 3.45 -.01

2022 . . . . . . . . . . 13.02 14.26 -1.23 3.46 3.54 -.07

2023 . . . . . . . . . . 13.05 14.54 -1.50 3.49 3.63 -.15

2024 . . . . . . . . . . 13.08 14.83 -1.74 3.51 3.71 -.20

2025 . . . . . . . . . . 13.10 15.10 -2.00 3.53 3.77 -.23

2026 . . . . . . . . . . 13.14 15.37 -2.24 3.56 3.92 -.36

2030 . . . . . . . . . . 13.20 16.27 -3.07 3.64 4.18 -.54

2035 . . . . . . . . . . 13.24 16.93 -3.69 3.73 4.50 -.77

2040 . . . . . . . . . . 13.25 16.96 -3.71 3.79 4.68 -.89

2045 . . . . . . . . . . 13.24 16.72 -3.48 3.84 4.78 -.93

2050 . . . . . . . . . . 13.23 16.57 -3.34 3.90 4.79 -.89

2055 . . . . . . . . . . 13.24 16.62 -3.38 3.96 4.75 -.79

2060 . . . . . . . . . . 13.25 16.83 -3.58 4.03 4.75 -.72

2065 . . . . . . . . . . 13.27 17.07 -3.80 4.10 4.79 -.69

2070 . . . . . . . . . . 13.28 17.33 -4.04 4.16 4.87 -.71

2075 . . . . . . . . . . 13.30 17.50 -4.21 4.22 4.94 -.72

2080 . . . . . . . . . . 13.30 17.51 -4.21 4.27 4.97 -.70

2085 . . . . . . . . . . 13.30 17.55 -4.25 4.31 4.96 -.65

2090 . . . . . . . . . . 13.31 17.75 -4.44 4.35 4.96 -.61

2095 . . . . . . . . . . 13.33 17.97 -4.65 4.39 4.96 -.56

Low-cost:

2017 . . . . . . . . . . 12.96 13.20 -.24 3.36 3.21 .15

2018 . . . . . . . . . . 12.90 13.06 -.15 3.37 3.06 .31

2019 . . . . . . . . . . 12.91 13.06 -.15 3.39 3.03 .36

2020 . . . . . . . . . . 12.92 13.03 -.11 3.40 3.02 .38

2021 . . . . . . . . . . 12.94 13.05 -.11 3.42 3.03 .39

2022 . . . . . . . . . . 12.97 13.14 -.18 3.44 3.05 .39

2023 . . . . . . . . . . 12.98 13.26 -.27 3.46 3.07 .39

2024 . . . . . . . . . . 13.01 13.36 -.35 3.48 3.07 .40

2025 . . . . . . . . . . 13.02 13.45 -.43 3.50 3.06 .44

2026 . . . . . . . . . . 13.04 13.55 -.51 3.52 3.12 .40

2030 . . . . . . . . . . 13.08 14.01 -.93 3.60 3.08 .52

2035 . . . . . . . . . . 13.11 14.25 -1.14 3.69 2.99 .70

2040 . . . . . . . . . . 13.10 13.94 -.85 3.76 2.82 .94

2045 . . . . . . . . . . 13.07 13.45 -.38 3.83 2.61 1.21

2050 . . . . . . . . . . 13.06 13.13 -.07 3.89 2.43 1.46

2055 . . . . . . . . . . 13.05 13.03 .03 3.96 2.28 1.68

2060 . . . . . . . . . . 13.06 13.08 -.02 4.03 2.21 1.82

2065 . . . . . . . . . . 13.06 13.11 -.05 4.09 2.20 1.89

2070 . . . . . . . . . . 13.07 13.13 -.06 4.14 2.24 1.91

2075 . . . . . . . . . . 13.06 13.05 .01 4.19 2.27 1.91

2080 . . . . . . . . . . 13.05 12.83 .22 4.22 2.29 1.93

2085 . . . . . . . . . . 13.04 12.72 .32 4.25 2.29 1.96

2090 . . . . . . . . . . 13.05 12.86 .19 4.29 2.29 2.00

2095 . . . . . . . . . . 13.06 13.09 -.02 4.33 2.29 2.05
207

OASDI and HI: Percent of Payroll

Notes:

1. The income rate excludes interest income.

2. The Trustees show income and cost estimates generally on a cash basis for the OASDI program and on an

incurred basis for the HI program.

3. 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:

2017 . . . . . . . . . . 13.09 13.62 -0.53 3.37 3.44 -0.07

2018 . . . . . . . . . . 12.97 14.13 -1.16 3.40 3.53 -.13

2019 . . . . . . . . . . 13.00 14.75 -1.75 3.43 3.64 -.22

2020 . . . . . . . . . . 13.03 15.13 -2.11 3.45 3.77 -.32

2021 . . . . . . . . . . 13.06 15.47 -2.40 3.48 3.92 -.45

2022 . . . . . . . . . . 13.10 15.86 -2.76 3.50 4.10 -.60

2023 . . . . . . . . . . 13.13 16.30 -3.16 3.53 4.29 -.76

2024 . . . . . . . . . . 13.18 16.73 -3.56 3.56 4.46 -.91

2025 . . . . . . . . . . 13.21 17.18 -3.97 3.58 4.62 -1.04

2026 . . . . . . . . . . 13.25 17.64 -4.39 3.62 4.90 -1.29

2030 . . . . . . . . . . 13.33 19.03 -5.70 3.70 5.66 -1.96

2035 . . . . . . . . . . 13.40 20.22 -6.82 3.80 6.71 -2.92

2040 . . . . . . . . . . 13.43 20.75 -7.31 3.87 7.72 -3.85

2045 . . . . . . . . . . 13.44 20.91 -7.46 3.92 8.65 -4.74

2050 . . . . . . . . . . 13.46 21.08 -7.62 3.97 9.34 -5.37

2055 . . . . . . . . . . 13.48 21.43 -7.95 4.02 9.80 -5.78

2060 . . . . . . . . . . 13.51 21.94 -8.43 4.09 10.12 -6.04

2065 . . . . . . . . . . 13.55 22.52 -8.97 4.15 10.34 -6.19

2070 . . . . . . . . . . 13.59 23.19 -9.60 4.22 10.50 -6.28

2075 . . . . . . . . . . 13.63 23.81 -10.19 4.29 10.64 -6.35

2080 . . . . . . . . . . 13.65 24.25 -10.60 4.34 10.68 -6.33

2085 . . . . . . . . . . 13.67 24.61 -10.94 4.40 10.65 -6.25

2090 . . . . . . . . . . 13.70 24.98 -11.29 4.45 10.63 -6.18

2095 . . . . . . . . . . 13.72 25.29 -11.57 4.50 10.61 -6.11

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 OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years

were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset

reserves reflect the 12 months of benefits scheduled for payment each year.

Table VI.G2.—OASDI and HI Annual Income Rates, Cost Rates, and Balances,

Calendar Years 2017-2095 (Cont.)

[As a percentage of taxable payrolla]

Calendar year

OASDI HI

Income

rate

Cost

rateb Balanceb Incomerate

Cost

rate Balance
Appendices

208

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 positive actuarial balances for all three valuation periods.

Table VI.G3.—Summarized OASDI and HI Income Rates and Cost Rates for Valuation 

Periods,a Calendar Years 2017-2091

[As a percentage of taxable payrollb]

Valuation

period 

OASDI HI

Income

rate

 Cost

ratec Actuarialbalance

Income

rate

 Cost

rate

Actuarial

balance

Intermediate:

25-year:

2017-41 . . . . . . 14.65 16.32 -1.67 3.69 4.22 -0.53

50-year:

2017-66 . . . . . . 14.02 16.44 -2.42 3.81 4.45 -.64

75-year:

2017-91 . . . . . . 13.84 16.67 -2.83 3.92 4.56 -.64

Low-cost:

25-year:

2017-41 . . . . . . 14.41 14.27 .14 3.66 3.13 .53

50-year:

2017-66 . . . . . . 13.79 13.71 .08 3.79 2.76 1.03

75-year:

2017-91 . . . . . . 13.58 13.46 .12 3.91 2.62 1.29

High-cost:

25-year:

2017-41 . . . . . . 14.93 18.88 -3.95 3.75 5.73 -1.98

50-year:

2017-66 . . . . . . 14.30 19.90 -5.60 3.86 7.33 -3.47

75-year:

2017-91 . . . . . . 14.15 20.79 -6.63 3.97 8.05 -4.08

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.

c OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years

were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset

reserves reflect the 12 months of benefits scheduled for payment each year.
209

OASDI and HI: Percent of GDP

2. Estimates as a Percentage of Gross Domestic Product

This section contains long-range projections of the operations of the 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, premium revenues,

monies from fraud and abuse control activities, and reimbursements from the

General Fund of the Treasury, if any. Cost consists of outlays (benefits and

administrative expenses) for beneficiaries. The Trustees show income and

cost estimates generally on a cash basis for the OASDI program1 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. Under the low-cost

assumptions, the OASDI annual deficit as a percentage of GDP decreases

through 2021. After 2021, deficits increase to a peak in 2035 and then

decrease through 2052. The annual balances are positive for 2053 through

2058, negative for 2059 through 2074, and positive for 2075 through the

remainder of the 75-year projection period. Under the intermediate assump-

 1 OASDI benefits paid for entitlement for a particular month are generally paid in the succeeding month.

There are two primary exceptions to this general rule. First, payments can occur with a greater delay when a

benefit award is made after the month of initial benefit entitlement. At the time of benefit award, benefits

owed for months of prior entitlement are then also paid to the beneficiary. For the projections in this report,

such retroactive payments are included in the period where they are paid (at time of award). Second, when

benefit payments scheduled for January 3 are paid on the prior December 31, because January 3 falls on a

Sunday, such payments are shown in this report for the period they were scheduled to be paid.
Appendices

210

tions, annual deficits increase through 2037, decrease through 2052, and

mostly increase thereafter. Under the high-cost assumptions, annual deficits

increase throughout the projection period.

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 positive for 2017 through

2020, and then negative thereafter. Annual deficits increase through 2045,

and then generally decline thereafter. Under the high-cost assumptions, the

HI balance is negative for all years of the projection period. Annual deficits

reach a peak in 2073 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 for 2017, positive for 2018 through 2025, negative for 2026 through 2037, and then positive and mostly rising thereafter.

Under the intermediate assumptions, combined OASDI and HI annual deficits increase through 2038, decrease through 2054, and generally rise thereafter, reaching 1.80 percent of GDP by 2091. Under the high-cost

assumptions, combined annual deficits rise throughout the 75-year projection

period.

By 2091, the combined OASDI and HI annual balances as percentages of

GDP range from a positive balance of 0.98 percent for the low-cost assumptions to a deficit of 6.09 percent for the high-cost assumptions. Balances differ by a much smaller amount for the tenth projection year, 2026, ranging

from a deficit of 0.01 percent for the low-cost assumptions to a deficit of

2.16 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 0.64 percent under

the low-cost assumptions to a deficit of 4.07 percent under the high-cost

assumptions. The 25-year summarized balance varies by a smaller amount,

from a positive balance of 0.29 percent to a deficit of 2.30 percent. Summarized rates are calculated on a present-value basis. They include the trust

fund balances on January 1, 2017 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.)
211

OASDI and HI: Percent of GDP

Table VI.G4.—OASDI and HI Annual and Summarized Income, Cost, and Balance

as a Percentage of GDP, Calendar Years 2017-2095

Calendar year

Percentage of GDP GDP in

dollars

(billions)

OASDI HI Combined

Incomea Costb Balanceb Incomea Cost Balance Incomea Costb Balanceb

Intermediate:

2017 . . . . . 4.77 4.91 -0.14 1.54 1.52 0.02 6.31 6.43 -0.12 $19,455

2018 . . . . . 4.72 4.93 -.20 1.55 1.50 .05 6.27 6.43 -.16 20,531

2019 . . . . . 4.73 5.00 -.28 1.56 1.52 .04 6.29 6.53 -.24 21,618

2020 . . . . . 4.74 5.07 -.33 1.57 1.55 .02 6.32 6.62 -.31 22,734

2021 . . . . . 4.76 5.13 -.38 1.58 1.59 c 6.34 6.72 -.38 23,865

2022 . . . . . 4.77 5.22 -.45 1.59 1.63 -.03 6.36 6.85 -.49 24,974

2023 . . . . . 4.78 5.32 -.55 1.60 1.67 -.07 6.38 6.99 -.61 26,078

2024 . . . . . 4.78 5.42 -.64 1.61 1.70 -.09 6.39 7.12 -.73 27,242

2025 . . . . . 4.78 5.51 -.73 1.62 1.73 -.11 6.40 7.24 -.84 28,458

2026 . . . . . 4.79 5.60 -.82 1.63 1.79 -.17 6.42 7.40 -.98 29,707

2030 . . . . . 4.78 5.90 -1.11 1.66 1.90 -.25 6.44 7.80 -1.36 35,314

2035 . . . . . 4.77 6.10 -1.33 1.69 2.03 -.35 6.45 8.13 -1.68 43,718

2040 . . . . . 4.75 6.08 -1.33 1.71 2.11 -.40 6.45 8.18 -1.73 54,260

2045 . . . . . 4.73 5.97 -1.24 1.72 2.14 -.42 6.45 8.11 -1.66 67,488

2050 . . . . . 4.71 5.90 -1.19 1.74 2.14 -.40 6.46 8.04 -1.58 83,787

2055 . . . . . 4.70 5.90 -1.20 1.77 2.12 -.35 6.47 8.03 -1.55 103,729

2060 . . . . . 4.69 5.96 -1.27 1.79 2.11 -.32 6.49 8.07 -1.59 128,183

2065 . . . . . 4.68 6.02 -1.34 1.82 2.12 -.31 6.50 8.14 -1.65 158,326

2070 . . . . . 4.66 6.08 -1.42 1.84 2.15 -.31 6.50 8.23 -1.73 195,725

2075 . . . . . 4.65 6.12 -1.47 1.85 2.17 -.32 6.50 8.29 -1.79 242,244

2080 . . . . . 4.62 6.09 -1.46 1.86 2.17 -.31 6.48 8.25 -1.77 299,875

2085 . . . . . 4.60 6.07 -1.47 1.87 2.16 -.28 6.47 8.23 -1.75 370,790

2090 . . . . . 4.59 6.11 -1.53 1.88 2.15 -.26 6.47 8.26 -1.79 457,775

2095 . . . . . 4.57 6.17 -1.59 1.90 2.14 -.24 6.47 8.30 -1.84 564,614

Summarized rates: d

25-year:

 2017-41 . . 5.31 5.92 -.61 1.68 1.92 -.24 6.99 7.84 -.85

50-year:

 2017-66 . . 5.04 5.91 -.87 1.72 2.01 -.29 6.76 7.92 -1.16

75-year:

 2017-91 . . 4.93 5.94 -1.01 1.76 2.04 -.29 6.69 7.98 -1.30

Low-cost:

2017 . . . . . 4.75 4.84 -.09 1.54 1.47 .07 6.28 6.30 -.02 19,694

2018 . . . . . 4.71 4.77 -.06 1.54 1.40 .14 6.26 6.17 .09 21,235

2019 . . . . . 4.72 4.78 -.05 1.56 1.39 .16 6.28 6.17 .11 22,803

2020 . . . . . 4.75 4.79 -.04 1.57 1.39 .18 6.32 6.19 .13 24,306

2021 . . . . . 4.78 4.82 -.04 1.58 1.40 .18 6.36 6.22 .14 25,761

2022 . . . . . 4.80 4.87 -.07 1.58 1.40 .18 6.39 6.27 .11 27,248

2023 . . . . . 4.82 4.92 -.10 1.59 1.41 .18 6.41 6.33 .08 28,822

2024 . . . . . 4.83 4.96 -.13 1.60 1.41 .19 6.43 6.37 .06 30,509

2025 . . . . . 4.84 5.00 -.16 1.60 1.40 .20 6.44 6.40 .04 32,293

2026 . . . . . 4.86 5.05 -.19 1.61 1.43 .18 6.47 6.48 -.01 34,137

2030 . . . . . 4.86 5.20 -.34 1.65 1.41 .24 6.51 6.61 -.11 42,546

2035 . . . . . 4.85 5.28 -.42 1.68 1.37 .32 6.54 6.64 -.10 55,906

2040 . . . . . 4.84 5.16 -.31 1.72 1.29 .43 6.56 6.44 .12 73,815

2045 . . . . . 4.84 4.98 -.14 1.75 1.19 .55 6.59 6.17 .41 97,938

2050 . . . . . 4.85 4.87 -.03 1.78 1.11 .67 6.63 5.98 .64 129,868

2055 . . . . . 4.86 4.85 .01 1.82 1.05 .77 6.67 5.89 .78 171,688

2060 . . . . . 4.87 4.87 -.01 1.85 1.01 .84 6.72 5.89 .83 226,527

2065 . . . . . 4.88 4.89 -.02 1.88 1.01 .87 6.76 5.91 .85 298,962

2070 . . . . . 4.88 4.90 -.02 1.91 1.03 .88 6.79 5.93 .85 395,425

2075 . . . . . 4.88 4.88 .01 1.93 1.05 .88 6.81 5.92 .89 524,333

2080 . . . . . 4.88 4.80 .08 1.94 1.05 .89 6.82 5.85 .97 695,701

2085 . . . . . 4.88 4.76 .12 1.96 1.05 .90 6.84 5.82 1.02 921,310

2090 . . . . . 4.89 4.82 .07 1.98 1.06 .92 6.87 5.88 .99 1,216,718

2095 . . . . . 4.90 4.91 -.01 2.00 1.06 .94 6.91 5.97 .94 1,604,573
Appendices

212

Notes:

1. The Trustees show income and cost estimates generally on a cash basis for the OASDI program and on an

incurred basis for the HI program.

2. Totals do not necessarily equal the sums of rounded components.

Low-cost (Cont.):

Summarized rates: d

25-year:

 2017-41 . . 5.34 5.29 0.05 1.67 1.43 0.24 7.01 6.72 0.29

50-year:

 2017-66 . . 5.12 5.09 .03 1.74 1.26 .47 6.85 6.35 .50

75-year:

 2017-91 . . 5.05 5.01 .05 1.79 1.20 .59 6.85 6.21 .64

High-cost:

2017 . . . . . 4.80 4.99 -.19 1.54 1.57 -.03 6.34 6.57 -.22 $19,182

2018 . . . . . 4.75 5.17 -.42 1.55 1.61 -.06 6.30 6.78 -.48 19,540

2019 . . . . . 4.73 5.37 -.64 1.56 1.66 -.10 6.29 7.02 -.73 20,132

2020 . . . . . 4.73 5.49 -.76 1.57 1.72 -.14 6.30 7.21 -.91 20,917

2021 . . . . . 4.73 5.60 -.87 1.59 1.79 -.20 6.32 7.39 -1.07 21,699

2022 . . . . . 4.74 5.74 -1.00 1.60 1.88 -.27 6.34 7.61 -1.27 22,467

2023 . . . . . 4.74 5.88 -1.14 1.62 1.97 -.35 6.36 7.85 -1.49 23,239

2024 . . . . . 4.74 6.02 -1.28 1.63 2.05 -.42 6.37 8.07 -1.70 24,027

2025 . . . . . 4.74 6.16 -1.42 1.64 2.12 -.47 6.38 8.28 -1.90 24,816

2026 . . . . . 4.74 6.31 -1.57 1.65 2.24 -.59 6.39 8.55 -2.16 25,603

2030 . . . . . 4.73 6.75 -2.02 1.68 2.57 -.89 6.41 9.31 -2.91 29,038

2035 . . . . . 4.70 7.09 -2.39 1.70 3.01 -1.31 6.41 10.11 -3.70 33,894

2040 . . . . . 4.67 7.21 -2.54 1.72 3.43 -1.71 6.39 10.65 -4.26 39,552

2045 . . . . . 4.64 7.21 -2.57 1.73 3.82 -2.09 6.37 11.03 -4.67 46,144

2050 . . . . . 4.61 7.22 -2.61 1.74 4.10 -2.36 6.35 11.31 -4.96 53,658

2055 . . . . . 4.58 7.28 -2.70 1.75 4.27 -2.51 6.33 11.55 -5.22 62,148

2060 . . . . . 4.55 7.39 -2.84 1.76 4.37 -2.61 6.32 11.77 -5.45 71,831

2065 . . . . . 4.52 7.52 -3.00 1.78 4.42 -2.65 6.30 11.94 -5.64 82,918

2070 . . . . . 4.49 7.66 -3.17 1.79 4.45 -2.66 6.28 12.11 -5.83 95,660

2075 . . . . . 4.45 7.79 -3.33 1.80 4.46 -2.66 6.25 12.24 -5.99 110,347

2080 . . . . . 4.41 7.84 -3.43 1.80 4.43 -2.63 6.22 12.27 -6.05 127,202

2085 . . . . . 4.37 7.87 -3.50 1.81 4.37 -2.57 6.18 12.25 -6.07 146,490

2090 . . . . . 4.34 7.91 -3.58 1.81 4.33 -2.52 6.15 12.24 -6.09 168,587

2095 . . . . . 4.30 7.93 -3.63 1.81 4.28 -2.46 6.12 12.21 -6.09 193,948

Summarized rates: d

25-year:

 2017-41 . . 5.31 6.72 -1.41 1.70 2.59 -.90 7.01 9.31 -2.30

50-year:

 2017-66 . . 4.99 6.95 -1.95 1.72 3.27 -1.54 6.71 10.21 -3.50

75-year:

 2017-91 . . 4.85 7.13 -2.28 1.74 3.53 -1.79 6.59 10.66 -4.07

a Income for individual years excludes interest on the trust funds. Interest is implicit in all summarized values.

b OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years were

actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset reserves reflect the

12 months of benefits scheduled for payment each year.

c Between -0.005 and 0 percent of GDP.

d Summarized rates are calculated on a present-value basis. They include the value of the trust funds on

January 1, 2017 and the cost of reaching a target trust fund level equal to 100 percent of annual cost at the end

of the period.

Table VI.G4.—OASDI and HI Annual and Summarized Income, Cost, and Balance

as a Percentage of GDP, Calendar Years 2017-2095 (Cont.)

Calendar year

Percentage of GDP GDP in

dollars

(billions)

OASDI HI Combined

Incomea Costb Balanceb Incomea Cost Balance Incomea Costb Balanceb
213

OASDI and HI: Percent of GDP

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 26 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 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 2091, the ratio of wages to

employee compensation is projected to decline at an average annual rate of

0.08 and 0.18 percent for the intermediate and high-cost assumptions,

respectively, and to increase at an average annual rate of 0.02 percent for the

low-cost assumptions.

Table VI.G5.—Ratio of OASDI Taxable Payroll to GDP, Calendar Years 2017-2095 

Calendar year Intermediate Low-cost High-cost

2017 . . . . . . . . . . . . . . . . . . . . . . . . . 0.366 0.366 0.367

2018 . . . . . . . . . . . . . . . . . . . . . . . . . .365 .365 .366

2019 . . . . . . . . . . . . . . . . . . . . . . . . . .365 .366 .364

2020 . . . . . . . . . . . . . . . . . . . . . . . . . .366 .368 .363

2021 . . . . . . . . . . . . . . . . . . . . . . . . . .366 .369 .362

2022 . . . . . . . . . . . . . . . . . . . . . . . . . .366 .370 .362

2023 . . . . . . . . . . . . . . . . . . . . . . . . . .366 .371 .361

2024 . . . . . . . . . . . . . . . . . . . . . . . . . .366 .371 .360

2025 . . . . . . . . . . . . . . . . . . . . . . . . . .365 .372 .359

2026 . . . . . . . . . . . . . . . . . . . . . . . . . .365 .372 .357

2030 . . . . . . . . . . . . . . . . . . . . . . . . . .363 .371 .354

2035 . . . . . . . . . . . . . . . . . . . . . . . . . .360 .370 .351

2040 . . . . . . . . . . . . . . . . . . . . . . . . . .358 .370 .348

2045 . . . . . . . . . . . . . . . . . . . . . . . . . .357 .370 .345

2050 . . . . . . . . . . . . . . . . . . . . . . . . . .356 .371 .342

2055 . . . . . . . . . . . . . . . . . . . . . . . . . .355 .372 .340

2060 . . . . . . . . . . . . . . . . . . . . . . . . . .354 .373 .337

2065 . . . . . . . . . . . . . . . . . . . . . . . . . .353 .373 .334

2070 . . . . . . . . . . . . . . . . . . . . . . . . . .351 .374 .330

2075 . . . . . . . . . . . . . . . . . . . . . . . . . .349 .374 .327

2080 . . . . . . . . . . . . . . . . . . . . . . . . . .348 .374 .323

2085 . . . . . . . . . . . . . . . . . . . . . . . . . .346 .374 .320

2090 . . . . . . . . . . . . . . . . . . . . . . . . . .344 .375 .317

2095 . . . . . . . . . . . . . . . . . . . . . . . . . .343 .375 .314
Appendices

214

3. Estimates in Dollars

This section contains long-range projections, in dollars, of the operations of

the 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 3.2, 2.6, 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 5.0, 3.8, and 2.6 percent under the

low-cost, intermediate, and high-cost assumptions, respectively, between

2026 and 2091. Wage-indexed values indicate the level of a series relative to

the changing 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.
215

OASDI and HI: Estimates in Dollars

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.

The compound new-issue interest factor shown in table VI.G6 increases each

year by the assumed annualized nominal yield for special public-debt obligations issuable to the trust funds in the 12 months of the prior year. The compound effective trust-fund interest factor shown in table VI.G6 uses the

effective annual yield on all currently-held securities in the combined OASI

and DI Trust Funds. The reciprocal of the compound effective trust-fund

interest factor approximates the cumulative discount factor used to convert

nominal dollar values to present values as of the start of the valuation period

in order to create summarized values for this report.
Appendices

216

Table VI.G6.—Selected Economic Variables, Calendar Years 2016-2095

[GDP and taxable payroll in billions]

Calendar year

Adjusted

CPIa Averagewage index

Taxable

payrollb

Gross

domestic

product

Compound

new-issue

interest

factorc

Compound

effective

trust-fund

interest

factord

Intermediate:

2016. . . . . . . . 97.88 $49,364.95 $6,730 $18,568 0.9821 0.9845

2017. . . . . . . . 100.00 51,314.31 7,125 19,455 1.0000 1.0150

2018. . . . . . . . 102.97 53,798.38 7,499 20,531 1.0272 1.0454

2019. . . . . . . . 105.68 56,223.60 7,896 21,618 1.0655 1.0768

2020. . . . . . . . 108.42 58,735.48 8,319 22,734 1.1123 1.1096

2021. . . . . . . . 111.24 61,211.89 8,736 23,865 1.1644 1.1439

2022. . . . . . . . 114.13 63,609.73 9,145 24,974 1.2215 1.1800

2023. . . . . . . . 117.10 65,987.64 9,543 26,078 1.2832 1.2182

2024. . . . . . . . 120.15 68,493.99 9,958 27,242 1.3486 1.2589

2025. . . . . . . . 123.27 71,119.99 10,387 28,458 1.4192 1.3025

2026. . . . . . . . 126.48 73,835.30 10,830 29,707 1.4947 1.3495

2030. . . . . . . . 140.15 85,975.35 12,802 35,314 1.8426 1.6010

2035. . . . . . . . 159.34 103,983.22 15,743 43,718 2.3934 2.0764

2040. . . . . . . . 181.16 125,424.18 19,443 54,260 3.1089 2.6971

2045. . . . . . . . 205.97 151,333.65 24,099 67,488 4.0382 3.5034

2050. . . . . . . . 234.18 182,762.47 29,842 83,787 5.2454 4.5507

2055. . . . . . . . 266.24 220,611.01 36,850 103,729 6.8135 5.9111

2060. . . . . . . . 302.70 266,101.95 45,403 128,183 8.8503 7.6781

2065. . . . . . . . 344.15 320,460.29 55,852 158,326 11.4960 9.9734

2070. . . . . . . . 391.28 385,257.44 68,718 195,725 14.9327 12.9548

2075. . . . . . . . 444.86 462,986.37 84,644 242,244 19.3966 16.8276

2080. . . . . . . . 505.78 556,082.90 104,211 299,875 25.1951 21.8580

2085. . . . . . . . 575.04 667,931.06 128,235 370,790 32.7269 28.3922

2090. . . . . . . . 653.79 802,807.74 157,681 457,775 42.5103 36.8798

2095. . . . . . . . 743.32 965,223.22 193,712 564,614 55.2183 47.9046

Low-cost:

2016. . . . . . . . 97.31 49,397.54 6,734 18,581 .9821 .9845

2017. . . . . . . . 100.00 51,754.23 7,216 19,694 1.0000 1.0153

2018. . . . . . . . 103.80 55,183.94 7,756 21,235 1.0353 1.0468

2019. . . . . . . . 107.29 58,676.00 8,341 22,803 1.0887 1.0810

2020. . . . . . . . 110.72 62,137.45 8,941 24,306 1.1512 1.1183

2021. . . . . . . . 114.27 65,352.13 9,517 25,761 1.2182 1.1589

2022. . . . . . . . 117.92 68,560.54 10,093 27,248 1.2892 1.2030

2023. . . . . . . . 121.70 71,925.67 10,693 28,822 1.3664 1.2513

2024. . . . . . . . 125.59 75,501.62 11,330 30,509 1.4509 1.3048

2025. . . . . . . . 129.61 79,285.59 12,004 32,293 1.5430 1.3641

2026. . . . . . . . 133.76 83,321.83 12,713 34,137 1.6428 1.4300

2030. . . . . . . . 151.72 101,768.17 15,800 42,546 2.1143 1.7782

2035. . . . . . . . 177.60 130,580.71 20,700 55,906 2.8971 2.4333

2040. . . . . . . . 207.89 166,884.87 27,307 73,815 3.9698 3.3343

2045. . . . . . . . 243.35 213,272.82 36,268 97,938 5.4395 4.5687

2050. . . . . . . . 284.86 273,042.76 48,198 129,868 7.4535 6.2603

2055. . . . . . . . 333.45 349,618.54 63,872 171,688 10.2131 8.5781

2060. . . . . . . . 390.33 447,370.18 84,457 226,527 13.9944 11.7540

2065. . . . . . . . 456.91 571,412.52 111,604 298,962 19.1757 16.1058

2070. . . . . . . . 534.84 728,475.85 147,724 395,425 26.2753 22.0689

2075. . . . . . . . 626.07 928,334.51 196,049 524,333 36.0035 30.2397

2080. . . . . . . . 732.86 1,182,372.93 260,182 695,701 49.3334 41.4357

2085. . . . . . . . 857.87 1,506,091.40 344,830 921,310 67.5987 56.7769

2090. . . . . . . . 1,004.20 1,919,536.93 456,077 1,216,718 92.6265 77.7980

2095. . . . . . . . 1,175.49 2,447,034.97 602,367 1,604,573 126.9206 106.6020
217

OASDI and HI: Estimates in Dollars

Table VI.G7 shows the operations of the combined OASI and DI Trust Funds

in CPI-indexed 2017 dollars—that is, adjusted by the CPI indexing series as

discussed above. The following items are presented in the table: (1) noninterest 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:

2016. . . . . . . . 98.31 $49,343.60 $6,728 $18,559 0.9821 0.9845

2017. . . . . . . . 100.00 50,695.11 7,034 19,182 1.0000 1.0149

2018. . . . . . . . 102.42 51,598.51 7,151 19,540 1.0203 1.0443

2019. . . . . . . . 104.63 53,039.20 7,325 20,132 1.0385 1.0733

2020. . . . . . . . 106.72 54,856.54 7,588 20,917 1.0705 1.1024

2021. . . . . . . . 108.85 56,567.87 7,857 21,699 1.1113 1.1318

2022. . . . . . . . 111.03 58,266.76 8,125 22,467 1.1558 1.1610

2023. . . . . . . . 113.25 59,941.26 8,384 23,239 1.2038 1.1901

2024. . . . . . . . 115.52 61,647.11 8,646 24,027 1.2552 1.2192

2025. . . . . . . . 117.83 63,324.94 8,903 24,816 1.3091 1.2482

2026. . . . . . . . 120.18 64,976.83 9,151 25,603 1.3653 1.2776

2030. . . . . . . . 130.09 72,106.19 10,292 29,038 1.6121 1.4249

2035. . . . . . . . 143.63 82,170.66 11,890 33,894 1.9844 1.7553

2040. . . . . . . . 158.58 93,527.24 13,750 39,552 2.4428 2.1608

2045. . . . . . . . 175.09 106,468.14 15,915 46,144 3.0071 2.6600

2050. . . . . . . . 193.31 121,279.10 18,370 53,658 3.7017 3.2744

2055. . . . . . . . 213.43 138,017.54 21,116 62,148 4.5568 4.0307

2060. . . . . . . . 235.64 156,890.98 24,207 71,831 5.6093 4.9618

2065. . . . . . . . 260.17 178,068.56 27,680 82,918 6.9050 6.1079

2070. . . . . . . . 287.25 201,776.47 31,605 95,660 8.5001 7.5188

2075. . . . . . . . 317.14 228,565.08 36,076 110,347 10.4635 9.2556

2080. . . . . . . . 350.15 258,790.36 41,122 127,202 12.8805 11.3936

2085. . . . . . . . 386.59 293,059.28 46,859 146,490 15.8558 14.0255

2090. . . . . . . . 426.83 332,099.81 53,406 168,587 19.5183 17.2652

2095. . . . . . . . 471.26 376,451.76 60,854 193,948 24.0269 21.2534

a CPI-W indexed to calendar year 2017.

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 For each alternative, incorporates the average of the assumed annual yield for special public-debt obligations issuable to the trust funds in the 12 months of the prior year.

d For each alternative, incorporates the annual effective yield for all outstanding special public-debt obligations held by the trust fund, with a half-year’s interest effect in each row. The effective yield for a period

equals total interest earned during the period divided by the total exposure to interest on asset reserves and

all income and outgo items during the period. The reciprocals of the factors approximate the discounting/

accumulation factors that are used to calculate summarized rates and balances in this report.

Table VI.G6.—Selected Economic Variables, Calendar Years 2016-2095 (Cont.)

[GDP and taxable payroll in billions]

Calendar year

Adjusted

CPIa Average

wage index

Taxable

payrollb

Gross

domestic

product

Compound

new-issue

interest

factorc

Compound

effective

trust-fund

interest

factord
Appendices

218

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 2017 Dollars,a Calendar Years 2017-2095

[In billions]

a CPI-indexed 2017 dollars equal current dollars adjusted by the CPI indexing series in table VI.G6.

Calendar year

Non-interest

income

Interest

income

Total

income Costb

b Benefit payments which were scheduled to be paid on January 3 for some past and future years were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the

values for historical years and the projections in this report, all trust fund operations and asset reserves

reflect the 12 months of benefits scheduled for payment each year.

Asset

reserves at

end of yearb

Intermediate:

2017 . . . . . . . . . . . . . $928.1 $85.7 $1,013.8 $955.2 $2,906.2

2018 . . . . . . . . . . . . . 941.7 84.0 1,025.7 982.3 2,865.7

2019 . . . . . . . . . . . . . 967.2 84.0 1,051.2 1,023.5 2,820.2

2020 . . . . . . . . . . . . . 994.5 84.0 1,078.5 1,062.9 2,764.2

2021 . . . . . . . . . . . . . 1,020.2 83.5 1,103.7 1,100.7 2,697.1

2022 . . . . . . . . . . . . . 1,043.4 82.8 1,126.3 1,142.2 2,612.8

2023 . . . . . . . . . . . . . 1,063.4 82.3 1,145.7 1,185.3 2,507.0

2024 . . . . . . . . . . . . . 1,084.3 81.5 1,165.8 1,228.8 2,380.5

2025 . . . . . . . . . . . . . 1,104.1 79.8 1,183.9 1,272.2 2,231.8

2026 . . . . . . . . . . . . . 1,124.8 77.8 1,202.5 1,316.2 2,061.6

2030c . . . . . . . . . . . .

c The combined OASI and DI Trust Funds become depleted in 2034 under the intermediate assumptions and

in 2029 under the high-cost assumptions, so estimates for later years are not shown.

1,205.3 64.7 1,270.0 1,485.8 1,180.7

Low-cost: 

2017 . . . . . . . . . . . . . 935.0 87.1 1,022.2 952.7 2,917.2

2018 . . . . . . . . . . . . . 964.3 89.4 1,053.7 975.7 2,888.3

2019 . . . . . . . . . . . . . 1,003.8 94.4 1,098.2 1,015.1 2,877.4

2020 . . . . . . . . . . . . . 1,043.2 99.3 1,142.5 1,052.3 2,878.4

2021 . . . . . . . . . . . . . 1,078.0 104.0 1,181.9 1,086.9 2,884.1

2022 . . . . . . . . . . . . . 1,109.9 109.6 1,219.5 1,125.0 2,889.2

2023 . . . . . . . . . . . . . 1,140.8 116.4 1,257.2 1,164.9 2,892.0

2024 . . . . . . . . . . . . . 1,173.6 123.9 1,297.5 1,205.3 2,894.5

2025 . . . . . . . . . . . . . 1,205.8 131.5 1,337.3 1,246.0 2,896.0

2026 . . . . . . . . . . . . . 1,239.5 139.8 1,379.3 1,287.6 2,897.9

2030 . . . . . . . . . . . . . 1,362.5 172.2 1,534.7 1,459.2 2,864.9

2035 . . . . . . . . . . . . . 1,527.6 171.0 1,698.6 1,660.5 2,696.7

2040 . . . . . . . . . . . . . 1,720.2 157.3 1,877.5 1,831.2 2,479.4

2045 . . . . . . . . . . . . . 1,948.2 156.2 2,104.4 2,005.0 2,483.1

2050 . . . . . . . . . . . . . 2,209.2 172.3 2,381.5 2,220.8 2,763.6

2055 . . . . . . . . . . . . . 2,500.5 202.7 2,703.2 2,495.4 3,262.7

2060 . . . . . . . . . . . . . 2,825.8 239.0 3,064.8 2,829.2 3,845.5

2065 . . . . . . . . . . . . . 3,190.8 278.6 3,469.4 3,202.4 4,479.8

2070 . . . . . . . . . . . . . 3,608.6 322.6 3,931.2 3,625.9 5,188.5

2075 . . . . . . . . . . . . . 4,090.1 376.0 4,466.1 4,085.9 6,061.1

2080 . . . . . . . . . . . . . 4,632.7 454.7 5,087.4 4,555.1 7,375.0

2085 . . . . . . . . . . . . . 5,242.3 571.7 5,814.0 5,113.7 9,302.7

2090 . . . . . . . . . . . . . 5,927.0 710.7 6,637.8 5,842.7 11,541.5

2095 . . . . . . . . . . . . . 6,694.4 847.9 7,542.3 6,706.6 13,720.9

High-cost:

2017 . . . . . . . . . . . . . 920.6 84.8 1,005.4 957.9 2,895.2

2018 . . . . . . . . . . . . . 905.7 79.2 984.8 986.4 2,825.3

2019 . . . . . . . . . . . . . 909.9 74.3 984.1 1,032.3 2,717.4

2020 . . . . . . . . . . . . . 926.1 70.2 996.3 1,075.8 2,584.6

2021 . . . . . . . . . . . . . 942.8 64.9 1,007.7 1,116.4 2,425.3

2022 . . . . . . . . . . . . . 958.6 58.4 1,017.0 1,160.7 2,234.1

2023 . . . . . . . . . . . . . 972.3 51.8 1,024.1 1,206.6 2,007.8

2024 . . . . . . . . . . . . . 986.2 44.8 1,031.0 1,252.5 1,747.0

2025 . . . . . . . . . . . . . 997.9 37.2 1,035.1 1,297.9 1,449.9

2026c . . . . . . . . . . . . 1,008.9 30.3 1,039.2 1,343.5 1,117.2
219

OASDI and HI: Estimates in Dollars

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 2017 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 2017 through 2021; and (3) total annual income is not sufficient to cover annual cost for years beginning in 2022. For 2022 through

2033 (the year preceding the year of trust fund reserve depletion), annual

cost is covered by drawing down 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 2017 Dollars,

Based on Intermediate Assumptions

[In billions]

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

2015 2020 2025 2030 2035

Calendar year

Cost

Total income

Non-interest income
Appendices

220

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 2017-2095

[In billions]

Calendar year

Non-interest

income

Interest

income

Total

income Costa

a Benefit payments which were scheduled to be paid on January 3 for some past and future years were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the

values for historical years and the projections in this report, all trust fund operations and asset reserves

reflect the 12 months of benefits scheduled for payment each year.

Asset

reserves at

end of yeara

Intermediate:

2017 . . . . . . . . . . . . . $928.1 $85.7 $1,013.8 $955.2 $2,906.2

2018 . . . . . . . . . . . . . 969.7 86.5 1,056.2 1,011.5 2,950.9

2019 . . . . . . . . . . . . . 1,022.1 88.8 1,110.9 1,081.6 2,980.2

2020 . . . . . . . . . . . . . 1,078.2 91.1 1,169.3 1,152.5 2,997.1

2021 . . . . . . . . . . . . . 1,134.9 92.8 1,227.7 1,224.5 3,000.3

2022 . . . . . . . . . . . . . 1,190.9 94.6 1,285.4 1,303.6 2,982.2

2023 . . . . . . . . . . . . . 1,245.2 96.4 1,341.6 1,388.0 2,935.8

2024 . . . . . . . . . . . . . 1,302.8 97.9 1,400.7 1,476.3 2,860.1

2025 . . . . . . . . . . . . . 1,361.0 98.3 1,459.3 1,568.3 2,751.2

2026 . . . . . . . . . . . . . 1,422.6 98.4 1,520.9 1,664.7 2,607.4

2030b . . . . . . . . . . . .

b The combined OASI and DI Trust Funds become depleted in 2034 under the intermediate assumptions and

in 2029 under the high-cost assumptions, so estimates for later years are not shown.

1,689.2 90.7 1,779.9 2,082.3 1,654.8

Low-cost:

2017 . . . . . . . . . . . . . 935.0 87.1 1,022.2 952.7 2,917.2

2018 . . . . . . . . . . . . . 1,001.0 92.8 1,093.7 1,012.8 2,998.1

2019 . . . . . . . . . . . . . 1,077.0 101.3 1,178.2 1,089.1 3,087.2

2020 . . . . . . . . . . . . . 1,155.1 109.9 1,265.0 1,165.1 3,187.0

2021 . . . . . . . . . . . . . 1,231.7 118.8 1,350.6 1,242.0 3,295.6

2022 . . . . . . . . . . . . . 1,308.8 129.2 1,438.0 1,326.7 3,407.0

2023 . . . . . . . . . . . . . 1,388.4 141.7 1,530.0 1,417.6 3,519.4

2024 . . . . . . . . . . . . . 1,474.0 155.6 1,629.5 1,513.7 3,635.2

2025 . . . . . . . . . . . . . 1,562.8 170.4 1,733.2 1,614.9 3,753.5

2026 . . . . . . . . . . . . . 1,657.9 187.0 1,844.9 1,722.2 3,876.2

2030 . . . . . . . . . . . . . 2,067.1 261.2 2,328.4 2,213.9 4,346.5

2035 . . . . . . . . . . . . . 2,713.0 303.7 3,016.7 2,949.0 4,789.2

2040 . . . . . . . . . . . . . 3,576.1 327.1 3,903.2 3,806.9 5,154.4

2045 . . . . . . . . . . . . . 4,741.0 380.2 5,121.2 4,879.1 6,042.7

2050 . . . . . . . . . . . . . 6,293.2 490.9 6,784.1 6,326.2 7,872.3

2055 . . . . . . . . . . . . . 8,338.0 675.9 9,013.9 8,320.8 10,879.3

2060 . . . . . . . . . . . . . 11,029.9 933.1 11,962.9 11,043.1 15,010.0

2065 . . . . . . . . . . . . . 14,579.1 1,272.8 15,851.8 14,631.7 20,468.6

2070 . . . . . . . . . . . . . 19,300.1 1,725.6 21,025.7 19,392.7 27,750.2

2075 . . . . . . . . . . . . . 25,607.0 2,353.7 27,960.7 25,580.3 37,946.5

2080 . . . . . . . . . . . . . 33,951.3 3,332.3 37,283.5 33,382.3 54,048.3

2085 . . . . . . . . . . . . . 44,972.4 4,904.3 49,876.7 43,868.7 79,805.1

2090 . . . . . . . . . . . . . 59,519.1 7,137.3 66,656.4 58,671.9 115,899.0

2095 . . . . . . . . . . . . . 78,691.2 9,967.5 88,658.8 78,835.0 161,287.6

High-cost:

2017 . . . . . . . . . . . . . 920.6 84.8 1,005.4 957.9 2,895.2

2018 . . . . . . . . . . . . . 927.6 81.1 1,008.7 1,010.2 2,893.6

2019 . . . . . . . . . . . . . 952.0 77.7 1,029.7 1,080.1 2,843.2

2020 . . . . . . . . . . . . . 988.3 74.9 1,063.3 1,148.1 2,758.3

2021 . . . . . . . . . . . . . 1,026.3 70.7 1,097.0 1,215.2 2,640.1

2022 . . . . . . . . . . . . . 1,064.4 64.8 1,129.2 1,288.7 2,480.5

2023 . . . . . . . . . . . . . 1,101.2 58.6 1,159.8 1,366.4 2,273.9

2024 . . . . . . . . . . . . . 1,139.3 51.7 1,191.0 1,446.8 2,018.1

2025 . . . . . . . . . . . . . 1,175.8 43.8 1,219.6 1,529.3 1,708.4

2026b . . . . . . . . . . . . 1,212.6 36.4 1,249.0 1,614.7 1,342.7
221

OASDI and HI: Estimates in Dollars

Table VI.G9 shows values in CPI-indexed 2017 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, premium revenues, monies from

fraud and abuse control activities, and reimbursements from the General

Fund of the Treasury, if any. Total cost consists of outlays (scheduled benefits and administrative expenses) for beneficiaries. The Trustees show

income and cost estimates generally on a cash basis for the OASDI program1 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.

 1 OASDI benefits paid for entitlement for a particular month are generally paid in the succeeding month.

There are two primary exceptions to this general rule. First, payments can occur with a greater delay when a

benefit award is made after the month of initial benefit entitlement. At the time of benefit award, benefits

owed for months of prior entitlement are then also paid to the beneficiary. For the projections in this report,

such retroactive payments are included in the period where they are paid (at time of award). Second, when

benefit payments scheduled for January 3 are paid on the prior December 31, because January 3 falls on a

Sunday, such payments are shown in this report for the period they were scheduled to be paid.
Appendices

222

Table VI.G9.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2017-2095

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Costa Balancea

Noninterest

income Cost Balance

Noninterest

income Costa Balancea

Intermediate:

2017 . . . . . $928 $955 -$27 $299 $296 $3 $1,227 $1,251 -$24

2018 . . . . . 942 982 -41 309 300 9 1,250 1,282 -31

2019 . . . . . 967 1,023 -56 319 312 8 1,287 1,335 -49

2020 . . . . . 994 1,063 -68 330 326 4 1,324 1,389 -64

2021 . . . . . 1,020 1,101 -81 340 340 -1 1,360 1,441 -81

2022 . . . . . 1,043 1,142 -99 349 356 -7 1,392 1,498 -106

2023 . . . . . 1,063 1,185 -122 357 372 -15 1,420 1,557 -137

2024 . . . . . 1,084 1,229 -144 365 386 -21 1,449 1,615 -165

2025 . . . . . 1,104 1,272 -168 374 399 -25 1,478 1,671 -193

2026 . . . . . 1,125 1,316 -191 383 422 -39 1,507 1,738 -230

2030 . . . . . 1,205 1,486 -280 418 480 -62 1,623 1,966 -342

2035 . . . . . 1,308 1,672 -364 463 558 -95 1,771 2,230 -460

2040 . . . . . 1,422 1,820 -399 511 631 -120 1,933 2,451 -519

2045 . . . . . 1,549 1,956 -407 565 702 -137 2,113 2,658 -545

2050 . . . . . 1,686 2,111 -425 624 766 -142 2,310 2,877 -567

2055 . . . . . 1,832 2,300 -468 689 826 -138 2,521 3,127 -606

2060 . . . . . 1,988 2,524 -536 760 895 -135 2,747 3,419 -671

2065 . . . . . 2,153 2,770 -616 836 977 -141 2,989 3,747 -758

2070 . . . . . 2,333 3,043 -710 919 1,074 -156 3,252 4,117 -866

2075 . . . . . 2,530 3,330 -800 1,009 1,181 -172 3,539 4,511 -972

2080 . . . . . 2,740 3,608 -868 1,105 1,286 -181 3,845 4,893 -1,049

2085 . . . . . 2,966 3,914 -948 1,207 1,390 -183 4,173 5,304 -1,131

2090 . . . . . 3,210 4,280 -1,070 1,319 1,503 -184 4,530 5,784 -1,254

2095 . . . . . 3,473 4,683 -1,211 1,440 1,623 -184 4,912 6,307 -1,395

Low-cost:

2017 . . . . . 935 953 -18 303 289 14 1,238 1,241 -4

2018 . . . . . 964 976 -11 316 287 29 1,280 1,262 18

2019 . . . . . 1,004 1,015 -11 331 296 35 1,335 1,311 24

2020 . . . . . 1,043 1,052 -9 344 306 39 1,388 1,358 30

2021 . . . . . 1,078 1,087 -9 356 315 41 1,434 1,402 32

2022 . . . . . 1,110 1,125 -15 366 325 42 1,476 1,450 27

2023 . . . . . 1,141 1,165 -24 377 334 42 1,518 1,499 18

2024 . . . . . 1,174 1,205 -32 388 343 45 1,562 1,548 13

2025 . . . . . 1,206 1,246 -40 400 350 50 1,606 1,596 10

2026 . . . . . 1,239 1,288 -48 412 365 46 1,651 1,653 -2

2030 . . . . . 1,362 1,459 -97 462 395 67 1,824 1,854 -30

2035 . . . . . 1,528 1,661 -133 530 430 100 2,058 2,091 -33

2040 . . . . . 1,720 1,831 -111 609 457 152 2,329 2,288 41

2045 . . . . . 1,948 2,005 -57 702 480 222 2,651 2,485 166

2050 . . . . . 2,209 2,221 -12 811 506 305 3,020 2,727 294

2055 . . . . . 2,501 2,495 5 935 539 396 3,435 3,034 401

2060 . . . . . 2,826 2,829 -3 1,074 588 486 3,900 3,417 483

2065 . . . . . 3,191 3,202 -12 1,230 662 569 4,421 3,864 557

2070 . . . . . 3,609 3,626 -17 1,409 761 648 5,018 4,387 631

2075 . . . . . 4,090 4,086 4 1,614 876 737 5,704 4,962 742

2080 . . . . . 4,633 4,555 78 1,843 999 843 6,476 5,554 921

2085 . . . . . 5,242 5,114 129 2,102 1,131 971 7,344 6,245 1,099

2090 . . . . . 5,927 5,843 84 2,397 1,279 1,118 8,324 7,122 1,203

2095 . . . . . 6,694 6,707 -12 2,733 1,443 1,290 9,427 8,149 1,278
223

OASDI and HI: Estimates in Dollars

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:

2017 . . . . . $921 $958 -$37 $296 $302 -$6 $1,217 $1,260 -$43

2018 . . . . . 906 986 -81 296 307 -11 1,201 1,293 -92

2019 . . . . . 910 1,032 -122 300 319 -19 1,210 1,351 -141

2020 . . . . . 926 1,076 -150 309 337 -28 1,235 1,413 -178

2021 . . . . . 943 1,116 -174 317 358 -41 1,260 1,474 -214

2022 . . . . . 959 1,161 -202 325 380 -55 1,283 1,541 -257

2023 . . . . . 972 1,207 -234 332 403 -72 1,304 1,610 -306

2024 . . . . . 986 1,252 -266 339 426 -87 1,325 1,678 -353

2025 . . . . . 998 1,298 -300 346 446 -100 1,344 1,744 -400

2026 . . . . . 1,009 1,344 -335 352 478 -125 1,361 1,821 -460

2030 . . . . . 1,055 1,506 -451 375 573 -198 1,430 2,079 -649

2035 . . . . . 1,109 1,674 -565 402 711 -309 1,512 2,385 -874

2040 . . . . . 1,165 1,799 -634 429 856 -427 1,594 2,656 -1,062

2045 . . . . . 1,222 1,901 -679 456 1,007 -551 1,678 2,908 -1,230

2050 . . . . . 1,279 2,003 -724 483 1,137 -654 1,762 3,140 -1,378

2055 . . . . . 1,333 2,120 -786 510 1,242 -732 1,843 3,362 -1,519

2060 . . . . . 1,388 2,254 -866 538 1,332 -795 1,926 3,586 -1,661

2065 . . . . . 1,441 2,396 -955 566 1,410 -844 2,007 3,806 -1,799

2070 . . . . . 1,495 2,551 -1,057 595 1,481 -886 2,090 4,032 -1,942

2075 . . . . . 1,550 2,709 -1,159 625 1,552 -926 2,175 4,261 -2,085

2080 . . . . . 1,603 2,848 -1,244 655 1,609 -954 2,258 4,456 -2,198

2085 . . . . . 1,657 2,983 -1,326 684 1,657 -973 2,341 4,640 -2,299

2090 . . . . . 1,714 3,126 -1,412 715 1,708 -993 2,429 4,834 -2,405

2095 . . . . . 1,771 3,265 -1,494 746 1,759 -1,013 2,518 5,025 -2,507

a OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years

were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset

reserves reflect the 12 months of benefits scheduled for payment each year.

Table VI.G9.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2017-2095 (Cont.)

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Costa Balancea

Noninterest

income Cost Balance

Noninterest

income Costa Balancea
Appendices

224

Table VI.G10.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in Current Dollars, Calendar Years 2017-2095

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Costa Balancea

Noninterest

income Cost Balance

Noninterest

income Costa Balancea

Intermediate:

2017 . . . . . $928 $955 -$27 $299 $296 $3 $1,227 $1,251 -$24

2018 . . . . . 970 1,012 -42 318 308 10 1,288 1,320 -32

2019 . . . . . 1,022 1,082 -59 337 329 8 1,360 1,411 -51

2020 . . . . . 1,078 1,152 -74 358 353 4 1,436 1,506 -70

2021 . . . . . 1,135 1,224 -90 378 379 -1 1,513 1,603 -90

2022 . . . . . 1,191 1,304 -113 398 407 -8 1,589 1,710 -121

2023 . . . . . 1,245 1,388 -143 418 435 -18 1,663 1,823 -160

2024 . . . . . 1,303 1,476 -174 439 464 -25 1,742 1,940 -199

2025 . . . . . 1,361 1,568 -207 461 491 -31 1,822 2,060 -238

2026 . . . . . 1,423 1,665 -242 484 533 -49 1,907 2,198 -291

2030 . . . . . 1,689 2,082 -393 586 672 -87 2,275 2,755 -480

2035 . . . . . 2,084 2,665 -580 737 889 -152 2,821 3,554 -733

2040 . . . . . 2,576 3,298 -722 925 1,143 -218 3,501 4,441 -940

2045 . . . . . 3,190 4,029 -839 1,163 1,445 -283 4,353 5,474 -1,122

2050 . . . . . 3,949 4,944 -995 1,461 1,793 -332 5,410 6,737 -1,328

2055 . . . . . 4,878 6,124 -1,246 1,834 2,200 -366 6,712 8,324 -1,613

2060 . . . . . 6,017 7,641 -1,624 2,299 2,708 -409 8,317 10,349 -2,033

2065 . . . . . 7,411 9,532 -2,121 2,876 3,362 -486 10,287 12,894 -2,607

2070 . . . . . 9,129 11,906 -2,777 3,595 4,204 -610 12,724 16,110 -3,387

2075 . . . . . 11,255 14,816 -3,561 4,490 5,254 -764 15,745 20,070 -4,325

2080 . . . . . 13,858 18,248 -4,390 5,587 6,502 -915 19,445 24,750 -5,305

2085 . . . . . 17,055 22,506 -5,452 6,942 7,994 -1,053 23,996 30,501 -6,504

2090 . . . . . 20,989 27,985 -6,996 8,624 9,828 -1,204 29,614 37,813 -8,200

2095 . . . . . 25,813 34,811 -8,999 10,700 12,067 -1,367 36,513 46,878 -10,366

Low-cost:

2017 . . . . . 935 953 -18 303 289 14 1,238 1,241 -4

2018 . . . . . 1,001 1,013 -12 328 298 30 1,329 1,310 19

2019 . . . . . 1,077 1,089 -12 355 317 38 1,432 1,407 25

2020 . . . . . 1,155 1,165 -10 381 339 43 1,536 1,504 33

2021 . . . . . 1,232 1,242 -10 407 360 47 1,638 1,602 37

2022 . . . . . 1,309 1,327 -18 432 383 49 1,741 1,709 31

2023 . . . . . 1,388 1,418 -29 459 407 52 1,847 1,825 22

2024 . . . . . 1,474 1,514 -40 487 431 57 1,961 1,944 17

2025 . . . . . 1,563 1,615 -52 518 453 65 2,081 2,068 13

2026 . . . . . 1,658 1,722 -64 551 489 62 2,209 2,211 -2

2030 . . . . . 2,067 2,214 -147 701 599 102 2,768 2,813 -45

2035 . . . . . 2,713 2,949 -236 942 764 178 3,655 3,713 -58

2040 . . . . . 3,576 3,807 -231 1,266 949 317 4,842 4,756 86

2045 . . . . . 4,741 4,879 -138 1,709 1,168 541 6,450 6,047 403

2050 . . . . . 6,293 6,326 -33 2,311 1,442 869 8,604 7,768 836

2055 . . . . . 8,338 8,321 17 3,117 1,796 1,320 11,455 10,117 1,337

2060 . . . . . 11,030 11,043 -13 4,192 2,295 1,897 15,222 13,338 1,884

2065 . . . . . 14,579 14,632 -53 5,622 3,023 2,599 20,201 17,655 2,546

2070 . . . . . 19,300 19,393 -93 7,536 4,071 3,465 26,836 23,463 3,373

2075 . . . . . 25,607 25,580 27 10,102 5,486 4,617 35,709 31,066 4,643

2080 . . . . . 33,951 33,382 569 13,505 7,324 6,182 47,457 40,706 6,751

2085 . . . . . 44,972 43,869 1,104 18,031 9,706 8,326 63,004 53,574 9,429

2090 . . . . . 59,519 58,672 847 24,072 12,843 11,230 83,591 71,514 12,077

2095 . . . . . 78,691 78,835 -144 32,122 16,959 15,163 110,813 95,794 15,019
225

OASDI and HI: Estimates in Dollars

High-cost:

2017 . . . . . $921 $958 -$37 $296 $302 -$6 $1,217 $1,260 -$43

2018 . . . . . 928 1,010 -83 303 314 -11 1,230 1,325 -94

2019 . . . . . 952 1,080 -128 314 334 -20 1,266 1,414 -148

2020 . . . . . 988 1,148 -160 329 360 -30 1,318 1,508 -190

2021 . . . . . 1,026 1,215 -189 345 389 -44 1,371 1,605 -233

2022 . . . . . 1,064 1,289 -224 361 422 -62 1,425 1,711 -286

2023 . . . . . 1,101 1,366 -265 376 457 -81 1,477 1,823 -346

2024 . . . . . 1,139 1,447 -308 392 492 -100 1,531 1,938 -408

2025 . . . . . 1,176 1,529 -353 408 525 -118 1,583 2,054 -471

2026 . . . . . 1,213 1,615 -402 423 574 -151 1,636 2,189 -553

2030 . . . . . 1,372 1,959 -587 488 746 -258 1,860 2,704 -844

2035 . . . . . 1,593 2,404 -811 578 1,021 -444 2,171 3,426 -1,255

2040 . . . . . 1,847 2,853 -1,006 680 1,358 -678 2,528 4,211 -1,684

2045 . . . . . 2,140 3,328 -1,188 799 1,763 -965 2,938 5,091 -2,153

2050 . . . . . 2,472 3,872 -1,400 933 2,197 -1,264 3,405 6,069 -2,664

2055 . . . . . 2,846 4,524 -1,678 1,088 2,651 -1,563 3,934 7,175 -3,241

2060 . . . . . 3,271 5,311 -2,041 1,267 3,140 -1,872 4,538 8,451 -3,913

2065 . . . . . 3,749 6,233 -2,484 1,472 3,668 -2,196 5,222 9,902 -4,680

2070 . . . . . 4,294 7,329 -3,035 1,709 4,253 -2,544 6,003 11,582 -5,579

2075 . . . . . 4,915 8,591 -3,675 1,983 4,921 -2,938 6,899 13,512 -6,613

2080 . . . . . 5,614 9,971 -4,357 2,292 5,633 -3,341 7,906 15,604 -7,698

2085 . . . . . 6,407 11,532 -5,125 2,645 6,406 -3,762 9,052 17,938 -8,886

2090 . . . . . 7,315 13,342 -6,027 3,051 7,291 -4,240 10,366 20,633 -10,267

2095 . . . . . 8,347 15,389 -7,042 3,517 8,291 -4,774 11,864 23,680 -11,816

a OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years

were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset

reserves reflect the 12 months of benefits scheduled for payment each year.

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 2017-2095 (Cont.)

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Costa Balancea

Noninterest

income Cost Balance

Noninterest

income Costa Balancea
Appendices

226

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.

At the end of 2016, the OASI Trust Fund was providing monthly benefit payments to about 1,109,000 people 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 retired-worker

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 2016, the OASI Trust Fund paid

a total of $11,0251 million to the people described above. Table VI.H1

shows OASI scheduled benefits for disability for selected calendar years

during 1960 through 2016 and estimates for 2017 through 2026 based on the

intermediate set of assumptions.

 1 Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or public holiday. For comparability with the values for

historical years and the projections in this report, all benefit amounts in this section reflect the 12 months of

benefits scheduled for payment in each year.
227

OASI Expenditures for the Disabled

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

Under the intermediate assumptions, estimated total scheduled benefits from

the OASI Trust Fund with respect to disabled beneficiaries will increase

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 b

a Beginning in 1966, includes payments for vocational rehabilitation services.

b Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly

scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as

required by the statutory provision for early benefit payments when the normal delivery date is on a Saturday, Sunday, or public holiday. Such shifts in payments across calendar years occur periodically whenever

January 3rd falls on a Sunday. In order to provide a consistent perspective on scheduled benefits over time,

scheduled benefits in each year reflect the 12 months of benefits that are regularly scheduled for payment in

that year.

Total Children c

c Also includes certain mothers and fathers (see text).

Widowswidowers d

d 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 Childrenc Widowswidowers e

e 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 d).

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

1995 . . . . . . . . . 772 681 91 4,202 3,672 531

2000 . . . . . . . . . 811 707 104 5,203 4,523 680

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

2015 . . . . . . . . . 1,096 972 124 10,736 9,624 1,109

2016 . . . . . . . . . 1,109 988 121 11,025 9,933 1,087

Estimates under the intermediate assumptions:

2017 . . . . . . . . . 1,123 1,005 117 11,227 10,167 1,048

2018 . . . . . . . . . 1,136 1,022 114 11,708 10,659 1,038

2019 . . . . . . . . . 1,149 1,039 110 12,297 11,251 1,034

2020 . . . . . . . . . 1,161 1,055 107 12,853 11,811 1,031

2021 . . . . . . . . . 1,174 1,070 104 13,410 12,364 1,034

2022 . . . . . . . . . 1,186 1,085 101 13,986 12,934 1,038

2023 . . . . . . . . . 1,199 1,100 99 14,573 13,520 1,039

2024 . . . . . . . . . 1,211 1,114 97 15,208 14,141 1,053

2025 . . . . . . . . . 1,223 1,128 95 15,889 14,810 1,063

2026 . . . . . . . . . 1,235 1,141 94 16,602 15,500 1,085
Appendices

228

from $11,227 million in calendar year 2017 to $16,602 million in calendar

year 2026.

In calendar year 2016, 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

$153,824 million. Of this amount, $11,025 million, or 7.2 percent, represented payments from the OASI Trust Fund. Table VI.H2 contains these and

similar figures for selected calendar years during 1960 through 2016 and

estimates for calendar years 2017 through 2026.
229

OASI Expenditures for the Disabled

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

Table VI.H2.—Scheduled Benefit Disbursementsa Under the OASDI Program

With Respect to Disabled Beneficiaries

[Amounts in millions]

a Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly

scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as

required by the statutory provision for early benefit payments when the normal delivery date is on a Saturday, Sunday, or public holiday. Such shifts in payments across calendar years occur periodically whenever

January 3rd falls on a Sunday. In order to provide a consistent perspective on scheduled benefits over time,

scheduled benefits in each year reflect the 12 months of benefits that are regularly scheduled for payment in

that year.

Calendar year Totalb

b Beginning in 1966, includes payments for vocational rehabilitation services.

DI Trust Fund c

c Scheduled benefits for disabled workers and their children and spouses.

OASI Trust Fund

Amount d

d Scheduled benefits for disabled children aged 18 and over, for certain mothers and fathers (see text), and

for disabled widows and widowers (see footnote e, 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

1995 . . . . . . . . . 45,140 40,937 4,202 9.3

2000 . . . . . . . . . 60,204 55,001 5,203 8.6

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

2015 . . . . . . . . . 154,124 143,388 10,736 7.0

2016 . . . . . . . . . 153,824 142,800 11,025 7.2

Estimates under the intermediate assumptions:

2017 . . . . . . . . . 155,892 144,665 11,227 7.2

2018 . . . . . . . . . 161,196 149,488 11,708 7.3

2019 . . . . . . . . . 167,924 155,627 12,297 7.3

2020 . . . . . . . . . 174,038 161,185 12,853 7.4

2021 . . . . . . . . . 180,969 167,559 13,410 7.4

2022 . . . . . . . . . 188,632 174,646 13,986 7.4

2023 . . . . . . . . . 197,180 182,607 14,573 7.4

2024 . . . . . . . . . 205,774 190,565 15,208 7.4

2025 . . . . . . . . . 215,147 199,258 15,889 7.4

2026 . . . . . . . . . 225,008 208,405 16,602 7.4
Appendices

230

I. GLOSSARY

Actuarial balance. The difference between the summarized income rate and

the summarized cost rate as a percentage of taxable payroll 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.A2, V.B1, and V.B2.
231

Glossary

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.”
Appendices

232

Benefit conversion. See “Disability conversion.”

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 “Hospital

Insurance (HI) contribution base.”

Contributions. See “Payroll tax contributions.”

Conversion. See “Disability conversion.”

Cost. The cost shown for a year includes benefits scheduled for payment in

the year, 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. Wages or earnings from self-employment covered by the

OASDI program.
233

Glossary

Covered employment. All employment for which earnings are creditable

for Social Security purposes. The program covers almost all employment.

Some exceptions are:

 • 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 filing. Under certain circumstances, a person applying for or receiving either an aged-spouse benefit or a retired-worker benefit is required to

also file for the other of these two types of benefits. For those first eligible

for benefits before 2016, this requirement applies to any person under normal

retirement age who is eligible for the other benefit as of the starting month

for the first benefit. For those first eligible for benefits in 2016 and later, this

requirement applies whenever the person is eligible for the other benefit.

This can occur at any age, and in months after the starting month of the first

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
Appendices

234

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.

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.
235

Glossary

Dual entitlement. A person may be entitled to more than one benefit at the

same time. For example, a person may be entitled as a retired worker on his

or her own record and as a spouse on another record. However, a person's

benefit amount can never exceed the highest single benefit to which that person is entitled. Some benefits are calculated independently with the larger

benefit being paid or the smaller benefit being paid plus the excess amount of

the larger one.

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

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.

File and suspend. The ability to apply for a retired-worker benefit at or after

normal retirement age, then voluntarily suspend it, allowing the worker to

earn delayed retirement credits and a spouse or child to receive benefits on

the worker’s record. Voluntary suspensions which are requested after

April 29, 2016 will no longer allow spouses (other than divorced spouses)

and children to receive benefits while the worker’s benefit is suspended. 

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

2017 began October 1, 2016, and will end September 30, 2017.

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 amortiza-
Appendices

236

tion 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.

 • 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.

Hospital Insurance (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.”
237

Glossary

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 indefinitely into the 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

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.
Appendices

238

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 covers approximately the maximum remaining lifetime for virtually all 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

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
239

Glossary

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

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.
Appendices

240

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.

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.
241

Glossary

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 2017, a worker receives one quarter of coverage (up to a total of

four) for each $1,300 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

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.
Appendices

242

Short-range. The next 10 years. The Trustees prepare short-range actuarial

estimates for this period because of the test of short-range 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.

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.

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
243

Glossary

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 income rate

and the summarized cost rate, expressed as a percentage of GDP. The difference between the summarized income rate and cost rate as a percentage of

taxable payroll is referred to as the actuarial balance.

Summarized cost rate. The ratio of the present value of cost to the present

value of the taxable payroll (or GDP) 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

(or GDP) during the projection period.

Summarized income rate. The ratio of the present value of scheduled noninterest income to the present value of taxable payroll (or GDP) 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 noninterest income during the period to (2) the present value of the taxable payroll (or GDP) 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 is 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.
Appendices

244

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

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,

an individual may cease one benefit and this is not a termination because

they 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 test of short-range financial adequacy; and 

 • 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:
245

Glossary

 • 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.”

Total fertility rate. The sum of the single year of age birth rates for women

aged 14 through 49, where the rate for age 14 includes births to women

aged 14 and under, and the rate for age 49 includes births to women aged 49

and over. The total fertility rate may be interpreted as 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, 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
Appendices

246

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 hypothetical 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.”

Undisbursed balances. In general, refers to the cumulative differences

between the actual cash expenditures that the Social Security Administration

(SSA) made each month compared to security redemptions from the Trust

Fund reserves made on a preliminary basis to cover such cash expenditures

during the same month. On a monthly basis, SSA pays benefits and makes

payments for other programmatic expenses associated with the Trust Funds.

During each month, SSA draws cash from the Trust Funds on a preliminary

basis, which results in Treasury redeeming invested securities to cover these

expenditures. This monthly difference can be either positive or negative

depending on net monthly activity, and is added to the balance at the end of

the prior month. 

A net positive undisbursed balance represents a situation where cumulative

redemptions from the Trust Fund’s securities are more than was needed to

cover actual program cash expenditures through the end of the month. A net

negative balance represents a situation where cumulative program cash

expenditures exceeded the amount redeemed from the invested securities. A

negative value requires future redemption of additional invested securities. 

In addition, about every seven years, when January 3 falls on a Sunday, benefit payments scheduled to be paid on January 3rd are actually paid on

December 31 of the preceding year, as required by the statutory provision

included in the 1977 Social Security Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday,

or legal public holiday. Consistent with practice in prior reports and for comparability with other historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits

scheduled for payment in each year. Therefore, such advance payments are

included as positive values in the undisbursed balance at the end of the calendar years in which the advance payments are made.
247

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 can be expressed in present value dollars, discounted to the beginning of the valuation period, by computing 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 accumulated through

the beginning of a year expressed as a percentage 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 canceled, 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

248

LIST OF TABLES

II. OVERVIEW

II.B1 Summary of 2016 Trust Fund Financial Operations . . . . . . . . 7

II.B2 Payroll Tax Contribution Rates for 2016 . . . . . . . . . . . . . . . . 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. . . . . . . . . . . 15

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

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 21

III. FINANCIAL OPERATIONS OF THE TRUST FUNDS AND

LEGISLATIVE CHANGES IN THE LAST YEAR

III.A1 Operations of the OASI Trust Fund, Calendar Year 2016 . . . . 28

III.A2 Operations of the DI Trust Fund, Calendar Year 2016 . . . . . . . 32

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

Calendar Year 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

III.A4 Comparison of Actual Calendar Year 2016 Trust Fund 

Operations With Estimates Made in Prior Reports, Based on 

Intermediate Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 35

III.A5 Distribution of Benefit Payments by Type of Beneficiary or 

Payment, Calendar Years 2015 and 2016 . . . . . . . . . . . . . . . . 36

III.A6 Administrative Expenses as a Percentage of Non-interest Income 

and of Total Expenditures, Calendar Years 2012-2016 . . . . . . 37

III.A7 Trust Fund Investment Transactions, Calendar Year 2016 . . . . 37

IV. ACTUARIAL ESTIMATES

IV.A1 Operations of the OASI Trust Fund, 

Calendar Years 2012-2026 . . . . . . . . . . . . . . . . . . . . . . . . . . 41

IV.A2 Operations of the DI Trust Fund, Calendar Years 2012-2026 . . 45

IV.A3 Operations of the Combined OASI and DI Trust Funds,

Calendar Years 2012-2026 . . . . . . . . . . . . . . . . . . . . . . . . . . 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 1990-2095 . . . . . . . . . . . . . . . . . . . . . . . . . . 54

IV.B2 Components of Annual Income Rates, 

Calendar Years 1990-2095 . . . . . . . . . . . . . . . . . . . . . . . . . . 59
List of Tables

249

IV.B3 Covered Workers and Beneficiaries, 

Calendar Years 1945-2095 . . . . . . . . . . . . . . . . . . . . . . . . . . 61

IV.B4 Trust Fund Ratios, Calendar Years 2017-2095 . . . . . . . . . . . . 66

IV.B5 Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2017-2091 . . . . . . . . . . . . . . . . . . . . . . . . . . 70

IV.B6 Components of 75-Year Actuarial Balance 

and Unfunded Obligation 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 Fertility and Mortality Assumptions, 

Calendar Years 1940-2095 . . . . . . . . . . . . . . . . . . . . . . . . . . 85

V.A2 Immigration Assumptions, Calendar Years 1940-2095 . . . . . . 90

V.A3 Social Security Area Population on July 1 and 

Dependency Ratios, Calendar Years 1945-2095 . . . . . . . . . . . 93

V.A4 Period Life Expectancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

V.A5 Cohort Life Expectancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

V.B1 Principal Economic Assumptions . . . . . . . . . . . . . . . . . . . . . 105

V.B2 Additional Economic Factors . . . . . . . . . . . . . . . . . . . . . . . . 111

V.C1 Cost-of-Living Benefit Increases, Average Wage Index, 

Contribution and Benefit Bases, and Retirement 

Earnings Test Exempt Amounts, 1975-2026 . . . . . . . . . . . . . 116

V.C2 Values for Selected Wage-Indexed Program Parameters, 

Calendar Years 1978-2026 . . . . . . . . . . . . . . . . . . . . . . . . . . 120

V.C3 Legislated Changes in Normal Retirement Age and Delayed 

Retirement Credits for Persons Reaching Age 62 in 

Each Year 1986 and Later . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

V.C4 OASI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1945-2095 . . . . . . . . . . . . . . . . 130

V.C5 DI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1960-2095 . . . . . . . . . . . . . . . . 139

V.C6 Contribution and Benefit Base and 

Payroll Tax Contribution Rates . . . . . . . . . . . . . . . . . . . . . . 146

V.C7 Annual Scheduled Benefit Amounts for Retired Workers 

With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, 

Calendar Years 2017-2095 . . . . . . . . . . . . . . . . . . . . . . . . . . 150
List of Tables

250

VI. APPENDICES

A. HISTORY OF OASI AND DI TRUST FUND OPERATIONS

VI.A1 Operations of the OASI Trust Fund, 

Calendar Years 1937-2016 . . . . . . . . . . . . . . . . . . . . . . . . . . 156

VI.A2 Operations of the DI Trust Fund, Calendar Years 1957-2016 . . 158

VI.A3 Operations of the Combined OASI and DI Trust Funds,

Calendar Years 1957-2016 . . . . . . . . . . . . . . . . . . . . . . . . . . 160

VI.A4 OASI Trust Fund Asset Reserves, End of 

Calendar Years 2015 and 2016 . . . . . . . . . . . . . . . . . . . . . . . 162

VI.A5 DI Trust Fund Asset Reserves, End of 

Calendar Years 2015 and 2016 . . . . . . . . . . . . . . . . . . . . . . . 163

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 1982-2017 . . . . . . . . . . . . . . . . . . . . . . 166

C. FISCAL YEAR HISTORICAL AND PROJECTED 

TRUST FUND OPERATIONS THROUGH 2026

VI.C1 Operations of the OASI Trust Fund, Fiscal Year 2016 . . . . . . . 171

VI.C2 Operations of the DI Trust Fund, Fiscal Year 2016 . . . . . . . . . 172

VI.C3 Operations of the Combined OASI and DI Trust Funds, 

Fiscal Year 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

VI.C4 Operations of the OASI Trust Fund, Fiscal Years 2012-2026 . . 174

VI.C5 Operations of the DI Trust Fund, Fiscal Years 2012-2026 . . . . 175

VI.C6 Operations of the Combined OASI and DI Trust Funds,

Fiscal Years 2012-2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

D. LONG-RANGE SENSITIVITY ANALYSIS

VI.D1 Sensitivity of OASDI Measures to Fertility Assumptions . . . . 178

VI.D2 Sensitivity of OASDI Measures to Death-Rate Assumptions . . 179

VI.D3 Sensitivity of OASDI Measures to 

Net-Immigration Assumptions . . . . . . . . . . . . . . . . . . . . . . . 180

VI.D4 Sensitivity of OASDI Measures to Real-Wage Assumptions . . 182

VI.D5 Sensitivity of OASDI Measures to 

CPI-Increase Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 183

VI.D6 Sensitivity of OASDI Measures to 

Real-Interest Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 184

VI.D7 Sensitivity of OASDI Measures to 

Taxable Ratio Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . 185
List of Tables

251

VI.D8 Sensitivity of OASDI Measures to 

Disability Incidence Assumptions . . . . . . . . . . . . . . . . . . . . . 186

VI.D9 Sensitivity of OASDI Measures to 

Disability Termination Assumptions . . . . . . . . . . . . . . . . . . . 188

E. STOCHASTIC PROJECTIONS AND UNCERTAINTY

VI.E1 Long-Range Estimates Relating to the Actuarial Status of

the Combined OASDI Program. . . . . . . . . . . . . . . . . . . . . . . 198

F. INFINITE HORIZON PROJECTIONS

VI.F1 Unfunded OASDI Obligations Through the Infinite Horizon,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 200

VI.F2 Present Values of OASDI Cost Less Non-interest Income

and Unfunded Obligations for Program Participants,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 202

G. ESTIMATES FOR OASDI AND HI, 

SEPARATE AND COMBINED

VI.G1 Payroll Tax Contribution Rates for the OASDI and 

HI Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204

VI.G2 OASDI and HI Annual Income Rates, Cost Rates, and 

Balances, Calendar Years 2017-2095 . . . . . . . . . . . . . . . . . . . 206

VI.G3 Summarized OASDI and HI Income Rates and Cost Rates 

for Valuation Periods, Calendar Years 2017-2091 . . . . . . . . . . 208

VI.G4 OASDI and HI Annual and Summarized Income, 

Cost, and Balance as a Percentage of GDP, 

Calendar Years 2017-2095 . . . . . . . . . . . . . . . . . . . . . . . . . . 211

VI.G5 Ratio of OASDI Taxable Payroll to GDP, 

Calendar Years 2017-2095 . . . . . . . . . . . . . . . . . . . . . . . . . . 213

VI.G6 Selected Economic Variables, Calendar Years 2016-2095 . . . . 216

VI.G7 Operations of the Combined OASI and DI Trust Funds,

in CPI-indexed 2017 Dollars, Calendar Years 2017-2095 . . . . 218

VI.G8 Operations of the Combined OASI and DI Trust Funds, 

in Current Dollars, Calendar Years 2017-2095 . . . . . . . . . . . . 220

VI.G9 OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2017-2095 . . 222

VI.G10 OASDI and HI Annual Non-interest Income, Cost, and

Balance in Current Dollars, Calendar Years 2017-2095. . . . . . 224
List of Tables

252

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 . . . . . . . . . . . . . . . . . 227

VI.H2 Scheduled Benefit Disbursements Under the OASDI Program

With Respect to Disabled Beneficiaries . . . . . . . . . . . . . . . . . 229
List of Figures

253

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 Number of Covered Workers Per OASDI Beneficiary. . . . . . . 14

II.D4 OASDI Cost and Non-interest Income as a Percentage 

of GDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

II.D5 Cumulative Scheduled OASDI Income Less Cost,

From Program Inception Through Years 2016-2091 . . . . . . . . 17

II.D6 Long-Range OASI and DI Combined Trust Fund Ratios 

Under Alternative Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . 19

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

From Stochastic Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . 20

II.D8 OASDI Annual Balances: 2016 and 2017 Trustees Reports. . . 22

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

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: 2016 and 2017 Trustees Reports. . . 79

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES

V.C1 Primary-Insurance-Amount Formula for 

Those Newly Eligible in 2017. . . . . . . . . . . . . . . . . . . . . . . . 118

V.C2 OASI Maximum-Family-Benefit Formula 

for Those Newly Eligible in 2017 . . . . . . . . . . . . . . . . . . . . . 119

V.C3 DI Disability Incidence Rates, 1970-2095 . . . . . . . . . . . . . . . 135

V.C4 DI Disability Termination Rates, 1970-2095 . . . . . . . . . . . . . 137

V.C5 Comparison of DI Disability Incidence Rates, 

Termination Rates and Conversion Ratios Under 

Intermediate Assumptions, 1970-2095 . . . . . . . . . . . . . . . . . . 138

V.C6 DI Disability Prevalence Rates, 1970-2095 . . . . . . . . . . . . . . 141
List of Figures

254

VI. APPENDICES

VI.E1 Long-Range OASDI Cost Rates From Stochastic Modeling . . 192

VI.E2 Long-Range OASDI Trust Fund Ratios From 

Stochastic Modeling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

VI.E3 OASDI Cost Rates: Comparison of Stochastic to Low-Cost, 

Intermediate, and High-Cost Alternatives . . . . . . . . . . . . . . . 194

VI.E4 OASDI Trust Fund (Unfunded Obligation) Ratios: 

Comparison of Stochastic to Low-Cost, Intermediate, 

and High-Cost Alternatives. . . . . . . . . . . . . . . . . . . . . . . . . . 196

VI.G1 Estimated OASDI Income and Cost in CPI-indexed 

2017 Dollars, Based on Intermediate Assumptions . . . . . . . . . 219
255

Index

INDEX

A

Actuarial balance 11, 16, 51, 164, 177

Actuarial deficit 4, 16, 23, 69, 208

Actuarial estimates, LR 51

Actuarial estimates, SR 39

Adjusted program amounts 114

Administrative expenses 7, 37, 52, 151, 155, 171, 209, 217

Advance tax transfers 39, 64, 157

Amendments 38

Annual balance 21, 51, 74

Asset reserves 2, 7, 10, 30, 171, 184, 203

Assumptions 10, 80, 98, 114, 164, 177, 204, 209, 214, 226

Automatic cost-of-living benefit increase 44, 99, 114

Auxiliary benefits 124

Average benefits 148

Average earnings assumptions 101

Average indexed monthly earnings (AIME) 117

Average wage index 114, 214

Award 126

B

Baby-boom generation 4, 23, 52, 61, 107, 133

Bend points 117

Beneficiaries, DI 132

Beneficiary 13, 44, 60, 80, 115, 167, 178, 209, 217, 226

Beneficiary, OASI 125

Benefit payments 7, 52, 148, 155, 171

Benefit termination 9

Best estimate 9, 39, 80

Board of Trustees 39, 98, 153

C

Constant dollars 219

Consumer Price Index 99, 182, 214, 231

Contribution and benefit base 43, 102, 115, 231

Contributions 7, 153, 171, 203, 209, 217, 230

Cost 3, 47

Cost rate 4, 52, 203

Cost-of-living adjustment 114

Covered earnings 7, 114, 213

Covered employment 9, 43, 101, 122, 153, 181

Covered worker 63, 179

Creditable earnings 233

Current dollars 214
Index

256

Current-payment status 46, 137, 138, 139, 231

D

Deemed wage credit 52

Delayed retirement credit 121

Demographic assumptions 9, 21, 39, 81, 107, 114, 164, 215, 230

Deterministic model 189, 198

DI beneficiaries 132

Disability 153, 180, 226

Disability conversion ratio 137

Disability incidence rate 80, 132, 135, 180, 186, 230

Disability Insurance Trust Fund 232

Disability prevalence rate 139, 141

Disability termination rate 187

Disabled-worker benefit 135, 234

Disbursements 26, 28, 29, 31, 32, 34, 39, 171, 172, 173, 227, 229

E

Earnings 2, 7, 43, 52, 101, 115, 153, 165, 203, 213, 214, 230

Earnings test 102, 115, 231

Economic assumptions 9, 21, 39, 49, 98, 107, 114, 164, 215, 230

Excess wages 52, 214

Expenditures 7, 9, 30, 37, 39, 155, 234

F

Federal Insurance Contributions Act 203, 240

Fertility assumptions 81

Financial interchange 7, 151, 155

Fiscal year 157, 170

Full advance funding 235

G

General Fund of the Treasury 42, 44, 46, 48, 157, 159, 161, 174, 175, 176,

230

General fund reimbursement 236

Gross domestic product 4, 11, 58, 80, 99, 109, 209

Gross domestic product projections 109

H

High-cost assumptions 9, 18, 39, 53, 80, 98, 136, 177, 197, 204, 210, 214,

230

Hospital Insurance program 145, 203, 238

Hospital Insurance Trust Fund 209

I

Immigration 9, 80, 86, 180, 189, 230, 237
257

Index

Immigration assumptions 86

Income rate 4, 12, 52, 203

Infinite horizon 11

Inflation 9, 80, 99, 214, 230

Inflation assumptions 99

Insured population 9, 123

Insured status 119

Interest 43, 110, 154, 164, 171, 205, 230

Interest rate 80, 164, 184, 230

Interest rate projections 110

Interest rates 9

Interfund borrowing 157, 237

Intermediate assumptions 9, 39, 45, 53, 80, 135, 177, 205, 209, 214, 218,

219, 220, 226, 230

L

Labor force projections 106

Legal immigration 87, 237, 238

Life expectancy 4, 23, 80, 95, 107, 238

Life expectancy estimates 94

Long range 11, 51, 81, 126, 164, 203, 209

Low-cost assumptions 9, 18, 39, 53, 80, 98, 136, 177, 197, 204, 214, 230

Lump-sum death payment 149

M

Medicare 83, 238

Military service 52, 153, 157, 159, 161

N

National average wage index 214

Normal retirement age 115, 132, 149, 233

O

OASI beneficiaries 125

Old-Age and Survivors Insurance Trust Fund 153, 232

Old-law base 119

Other immigration 87, 180, 239

P

Par value 155

Partial advance funding 240

Pay-as-you-go financing 164

Payroll taxes 2, 114, 142, 167, 199, 203, 217

Population estimates 92

Population in the Social Security area 43, 63, 92, 122, 180

Present value 164
Index

258

Primary insurance amount (PIA) 117

Productivity assumptions 99

Q

Quarters of coverage 123

R

Railroad Retirement 52, 68, 119, 151, 155, 171, 172, 173, 203, 209, 217,

232

Reallocation of tax rates 241

Real-wage differential 104, 181

Retired-worker benefit 126, 179, 226

Retirement age 115, 149, 233

Retirement earnings test 102, 115

Retirement eligibility age 179

S

Scenario-based model 241

Scheduled benefits 183, 209, 217, 227, 241

scheduled benefits 40

Self-employment 52, 100, 204, 240

Self-Employment Contributions Act 240, 241

Sensitivity analysis 177

Short range 10, 39, 126

Social Security Act 114, 154, 214, 226, 232

Social Security amendments 38

Solvency 242

Special public-debt obligation 113, 154, 184

Stochastic projections 189

Substantial gainful activity 132, 234

Summarized balance 210

Summarized income and cost rates 68, 164, 177, 207, 230

Supplemental Security Income 171

Supplementary Medical Insurance program 203, 238

Survivor benefit 2, 8, 129, 231

Sustainable solvency 64, 65

T

Taxable earnings 43, 63, 115, 165, 231

Taxable payroll 4, 23, 52, 100, 123, 164, 178, 203, 209, 214, 232

Taxable ratio 185

Taxable self-employment income 244

Taxable wages 147, 204, 244

Taxation of benefits 7, 147, 209, 217, 237

Taxes 7, 114, 204
259

Index

Termination 80

Termination rate 9, 126, 187, 230

Test of short-range financial adequacy 40, 41, 242

Total fertility rate 81, 177

Trust fund financial operations 7, 26, 40, 153

Trust fund ratio 10, 39, 51, 64, 157, 174, 246

Trust fund reserves 39

U

Unemployment projections 106

Unfunded obligation 4, 11, 16, 18, 51, 71, 72, 200, 201, 202, 239, 246, 247

Unnegotiated check 171

V

Valuation period 16, 49, 51, 164, 177, 207, 230

Vocational rehabilitation 52, 155, 172, 209, 217, 228, 232

Y

Year of depletion 12, 15, 51, 66
260

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 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 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 an Associate of the Society

of Actuaries, 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,

as required by law. It 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 44 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,

$12.5 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.
261

In addition, unified budget accounting treats redemptions of trust fund

reserves as an addition to annual Federal deficits, referring to these redemptions 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