Social Security Actuarial Status

The 2018 Annual Report of the Board of Trustees 

of the OASI and DI Trust Funds

Key Results and Implications

Presented by Steve Goss, Chief Actuary, SSA

PWBM First Spring Policy Forum

Capitol Visitors Center 

June 22, 2018
What Is the Legislative Mandate for the Annual R

1) Trust Fund operations of the past year and the 

next five years

2) Actuarial status of the trust funds

– This means the ability to meet the cost of schedule

benefits with scheduled revenue and trust fund reserves

– And the extent to which scheduled revenue will fal

short, forcing cuts or delays in benefits in the abseof legislative change
Primary Changes this Year

1) Continued lower-than-expected disability applications and incide

have extended DI reserve depletion another 4 years, to 2032.

2) OASI reserve depletion is now late 2034 versus early 2035 in las

year’s report. Primarily from lower projected payroll taxes (for OADI, and HI) due to temporarily slower GDP growth and lower earas percent of GDP.

3) OASDI actuarial status is similar to last year. Actuarial deficit 

increased by only 0.02 percent of payroll versus expected increa0.06 percent from change in valuation period alone. Annual deficsmaller between 2025 and 2060, and after 2085.
SOLVENCY: OASDI Trust Fund Reserve Depletion 2034 (same as last 

o Reserve depletion date varied from 2029 to 2042 in reports over the past 26 years (1992-2018) 

o DI Trust Fund — reserve depletion in 2032, four years later than last year

o Due largely to lower recent and near-term disability applications and average benefit levels. 
Applications for Disability Benefits Continue to Fall

At the peak of the last economic cycle in 2007, applications were low, but increase

the recession to over 2 million in 2010. In 2016 and 2017, with the economy still 

sustainable full-employment level, applications have dropped below the 2007 
Disability Incidence Rate Falls to Historic Lows

DI disabled worker incidence rate rose sharply in the recession, and ha

declined since the peak in 2010 to extraordinarily low levels for 2016 and 2
Fewer Disabled Worker Beneficiaries 

Fewer now and in near term based on recent applications and incidence ra
DI Annual Cost and Non-Interest Income as Percent of Taxable Payr

96% of scheduled benefits still payable at trust fund reserve depletion

Annual deficit in 2092: 0.36 percent of payroll — 0.02 percent smaller than las
OASDI Annual Cost and Non-Interest Income as Percent of Taxable Pa

Persistent Negative Annual Cash-Flow Balance Starting in 2010 

79% of scheduled benefits still payable at trust fund reserve depletion

Annual deficit in 2092: 4.32 percent of payroll — 0.21 percent smaller than las
SUSTAINABILITY: Cost as Percent of GDP 

Rises from a 4.2-percent average in 1990-2008, to about 6.1% by 2038, th

declines to 5.9% by 2052, and generally increases to 6.1% by 2092
Aging (change in age distribution)

mainly due to drop in birth rates
Mortality Experience: All Ages

Reductions continue to fall short of expectations
Uncertainty Illustrations

Unrealistically narrow stochastic results due to lack of central tendency 
But, Wait—How About Budget Scori

Don’t entitlements just keep borrowing

Source: Congressional Budget Office, March 2017
Actually, NO. Budget Scoring Is Inconsis

With the Law, and All Past Experience

• See Actuarial Opinion in the 2018 TR (also 2014, 201

and 2017 TR)

1) After reserves deplete, $13.2 trillion unfunded obligation 

2092 cannot be paid under the law.

3⁄4 Budget deems these “expenditures” creating publicly held 

2) Reserve redemptions spend excess “earmarked” revenu

invested in an earlier year.

3⁄4 Budget deems these “a draw on other Federal resources”

3) Trust Fund operations have NO direct effect on total Fed

debt subject to ceiling in any year—and no net effect on 

held debt.

3⁄4 Budget says redemptions increase Federal debt held by th

and often gives no credit for reserve accumulation
So—What If We Project Federal Debt Consistent 

With the Law?
The Bottom Line

• Long-term projections provide information to ass

solvency and changes needed to eliminate shor

• If trust fund reserves were to deplete:

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

• Straightforward solutions:

– Add revenue and/or lower cost for OASDI

• Comprehensive changes implemented by 2034
How to Fix Social Security Long-Term

Make choices addressing OASDI deficits 2034-2

• Raise scheduled revenue by 2033 by about o

third (29%)

• Reduce scheduled benefits by 2033 by about 

fourth (23%)

• Or some combination of the two• Invest trust funds for higher return? 

– Limited help—it is a PAYGO world– So invest in coming generations of workers
Ways to Lower Cost

• Lower benefits for retirees—not disabled?

– Increase normal retirement age (lowers OASDI cost, but 

increases DI cost)

– Can exempt long-career low earners

• Lower benefits mainly for high earners?

– Reduce PIA above some level– Often combined with increasing PIA below some level, subj

work year requirements

• Lower benefits mainly for the oldest old?

– Reduce the COLA– But, some say increase it with the CPI-E (based on purchas

consumers over age 62)
Ways to Increase Revenue

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

– Increase taxable maximum amount– Some tax on all earnings above the maximum

• Tax employer group health insurance premiums

– Affects only middle class if taxable maximum rema
For More Information Go To

http://www.ssa.gov/oact/

• There you will find:

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