Social Security Actuarial Status

Recent Experience and Prospects for the Future

Presented by Stephen C. Goss, Chief Actuary, 

and Kyle Burkhalter, Actuary, SSA

Association of Government Accountants

Baltimore Chapter

April 17, 2019
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Three Legged Stool: Basis for Retirement 

Planning

Common Wisdom---Aim for 75-80 percent Replacement Rate

Retirement Income

Social 

Security
Defined Benefit Plans Replaced by DC Plans: 

And Lump Sum options increasing for DB plans

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0%

10%

20%

30%

40%

50%

60%

197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014

Private-Sector Workers Participating in Employment-Based Retirement 

Plans, by Plan Type, 1979-2014

Defined Benefit Total Defined Contribution Total

Both Either

Source: U.S. Department of Labor Form 5500 Summaries 1979-1998, Pension Benefit Guaranty Corporation,

Current Population Survey 1999-2013, EBRI estimates 1999-2014.
4

Social Security: What does it provide?

• Retirement and survivor monthly benefits started 1940

–Never Missed Payment!

• Eligible age lowered from 65 to 62 in 1957F/1962M

– Full retirement age rises from 65 to 67 by 2022

• Disability benefits started in 1957

• Benefits rise with average wage across generations

--- but with just with CPI after eligibility

• Payroll taxes roughly pay-as-you go

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

• Basically “Pay-As-You-Go” 

Current Workers provide for current beneficiaries

Trust Funds are “contingency reserve” because CANNOT borrow

Total spending to date cannot exceed income to date

• Current OASDI Reserves (excess income) $2.9 trillion

Available to augment tax income as needed

• Reserves projected to deplete in 2034 under current law

Expect Congress to Act—as it always has.
What We Do—Office of the Chief Actuary

1) Baseline projections of OASDI cost and revenue 

under current law

a) For the Trustees Reports 

b) For the President’s Budget

c) SSA and Consolidated Financial Statements

2) Estimates for proposals to change law, regulations, 

and policy

For Congress, the Administration, and others

3) Actuarial Notes and Studies

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What We Do– Annual Trustees Reports

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 scheduled 

benefits with scheduled revenue and trust fund 

reserves

– And the extent to which scheduled revenue will fall 

short, forcing cuts or delays in benefits in the absence 

of legislative change

3) Results used for SOSI in Financial Statements

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Full Scope Audit of the 75-year Projections

1) Statement of Social Insurance and Statement of 

Changes in Social Insurance Amounts, in the Agency 

Financial Statement and in the consolidated Financial 

Statement of the U.S. Government

2) Mandated by the FASAB

– For the 2018 audit, GT and GAO actuaries, economists AND 

accountants!

– We received a clean opinion—again! CEAR Award 21 !!

3) Audit starts after Trustees Report release through 

September

– Huge learning experience for all

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Full Scope Audit of the 75-year Projections

1) Audit covers all aspects of the Financial Statement

2) We review all assumptions and methods, and all 

changes

3) Review more than replication due to complexities

4) Extensive review of internal controls

5) Reasonableness of assumptions—as per attestation of 

the Chief Actuary

6) Sensitivity analysis

7) Subsequent events—where applicable

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Current Actuarial Status

Projections from the 2018 

Trustees Report

2019 Trustees Report will be coming soon

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SOLVENCY: OASDI Trust Fund Reserve Depletion 2034 (same as last year)

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. 

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0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Social Security Trust Fund Ratios

Assets as Percent of Annual Cost

Trustees Report Intermediate Projections

OASDI 2018TR

OASI 2018TR

DI 2018TR

OASDI 2017TR

OASI 2017TR

DI 2017TR

Historical

Tax Rate

Reallocation

DI

OASDI

OASI
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OASDI Annual Cost and Non-Interest Income as Percent of Taxable Payroll 

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 last year

0%

5%

10%

15%

20%

25%

2005 2015 2025 2035 2045 2055 2065 2075 2085 2095

Calendar year

Cost: Scheduled and 

payable benefits

Non-interest Income

Payable benefits as percent

of scheduled benefits:

2017-33: 100%

2034: 79%

2092: 74%

Cost: Scheduled but not 

fully payable benefits

Expenditures: Payable benefits = income 

after trust fund depletion in 2034
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SUSTAINABILITY: Cost as Percent of GDP 

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

declines to 5.9% by 2052, and generally increases to 6.1% by 2092

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
14

OASDI Beneficiaries per 100 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
Aging (change in age distribution)

mainly due to drop in birth rates

15

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Aged Dependency Ratio 2018 TR

Population 65+/(20-64) 

Actual and TR Intermediate

TFR remains at 3.0 after 1964

TFR remains at 3.3 after 1964
Birth Rates—from 3 to 2

0

1

2

3

4

5

6

1865 1875 1885 1895 1905 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005 2015

U.S. Total Fertility Rate: With and Without Adjustment for 

Survival to Age 10 

TFR Adjusted TFR

Notes: TFRs prior to 1917 are for whites only and survival rates prior to 1900 use Massachusetts data only.

1865-1895 4.44 3.09

1896-1925 3.36 2.80

1926-1965 2.86 2.71

1966-1990 1.99 1.95

1991-2016 1.99 1.97

Average Average

TFR Adjusted TFR 

16
Mortality Experience: All Ages

Reductions continue to fall short of expectations

17

700

750

800

850

900

950

1,000

1,050

1,100

1990 1995 2000 2005 2010 2015 2020

Age-Sex-Adjusted Death Rates

(Total, All Ages)

2016TR 2017TR 2018TR Actual
Mortality Experience: Ages 65 and Older

Reductions since 2009 continue to fall short of expectations

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4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

5,600

5,800

6,000

1990 1995 2000 2005 2010 2015 2020

Age-Sex-Adjusted Death Rates

(Ages 65 and Older)

2016TR 2017TR 2018TR Actual
Replacement Rates Based on the 2018TR

Source: Annual Recurring Actuarial Note #9 at www.ssa.gov/oact/NOTES/ran9/index.html

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0

10

20

30

40

50

60

70

1940 1960 1980 2000 2020 2040 2060 2080

Scheduled Monthly Benefit Levels as Percent of Career-Average 

Earnings by Year of Retirement at age 65

Low Earner ($23,353 for 2018; 25th percentile)

Medium Earner ($51,894 for 2018; 56th percentile)

High Earner ($83,031 for 2018; 82nd percentile)

Max Earner ($128,400 for 2018; 100th percentile)
How About at Age 62, Where Many Start Benefits?

Source: Annual Recurring Actuarial Note #9 at www.ssa.gov/oact/NOTES/ran9/index.html

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0

10

20

30

40

50

60

70

1960 1980 2000 2020 2040 2060 2080

Scheduled Monthly Benefit Levels as Percent of Career-Average 

Earnings by Year of Retirement at age 62

Low Earner ($23,353 in 2018; 25th percentile)

Medium Earner ($51,894 in 2018; 56th percentile)

High Earner ($83,031 in 2018; 82nd percentile)

Max Earner ($128,400 in 2018; 100th percentile)
Payable Benefits Under the Law, Should Trust 

Fund Reserves Become Depleted, Somewhat Lower

Source: Annual Recurring Actuarial Note #9 at www.ssa.gov/oact/NOTES/ran9/index.html

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0

10

20

30

40

50

60

70

1960 1980 2000 2020 2040 2060 2080

PAYABLE Monthly Benefit Levels as Percent of Career-Average 

Earnings by Year of Retirement at age 62

Low Earner ($23,353 in 2018; 25th percentile)

Medium Earner ($51,894 in 2018; 56th percentile)

High Earner ($83,031 in 2018; 82nd percentile)

Max Earner ($128,400 in 2018; 100th percentile)
Age of Starting Social Security Retirement Benefits

0

10

20

30

40

50

60

70

80

90

100

1975 1980 1985 1990 1995 2000 2005 2010 2015

Male Retired Worker Beneficiaries In Current Payment 

Status as Percent of Insured Population 

(excluding those receiving only some other OASDI benefit)

62.5 63.5 64.5 65.5 66.5 67.5 68.5 69.5 70.5

Recession

Eliminate Earnings 

Test Over NRA

0

10

20

30

40

50

60

70

80

90

100

1975 1980 1985 1990 1995 2000 2005 2010 2015

Female Retired Worker Beneficiaries In Current Payment 

Status as Percent of Insured Population 

(excluding those receiving only some other OASDI benefit)

62.5 63.5 64.5 65.5 66.5 67.5 68.5 69.5 70.5

Recession

Eliminate Earnings 

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Disability-----Applications Continued Dropping in 2018!

1,400

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2003 2006 2009 2012 2015 2018 2021 2024 2027

Total Social Security Disability Receipts at Disability Determination Services by Calendar Year: 

Historical and Intermediate Assumptions for 2012 through 2018 Trustees Reports (thousands)

History 2012TR 2013TR 2014TR 2015TR 2016TR 2017TR 2018TR

Note: All historical and projected series 

include disabled worker, disabled adult 

child, and disabled widow(er) receipts. 

DIBs represent about 94% of total title II 

DDS receipts.

2012TR

2013TR

2014TR

2015TR

2016TR

2017TR

2018TR

Actual for CY 2018

23
DDS Disabled Worker Receipt Rates have Been Dropping 

Since 1990 at Higher Ages, and at all Ages Lately

0

1

2

3

4

5

6

7

1990 1995 2000 2005 2010 2015

Receipts per 1,000 exposed

Fiscal year

Male Title II Disabled Worker DDS Receipt Rates by 5-Year Age Groups

per 1,000 exposed

60-64

55-59

50-54

45-49

35-44

25-34

Under 25

24

0

1

2

3

4

5

6

7

1990 1995 2000 2005 2010 2015

Receipts per 1,000 exposed

Fiscal year

Female Title II Disabled Worker DDS Receipt Rates by 5-Year Age Groups

per 1,000 exposed

60-64

55-59

50-54

45-49

35-44

25-34

Under 25
Disability Incidence Rate Falls to Historic Lows

DI disabled worker incidence rate has declined to extraordinarily low levels since 2015

4.0

4.5

5.0

5.5

6.0

6.5

1990 1995 2000 2005 2010 2015 2020 2025

DI Disabled Worker Age-Sex-Adjusted Incidence Rates: 

Historical and Intermediate Assumptions for 2012 through 2018 Trustees Reports

History 2012TR 2013TR 2014TR 2015TR 2016TR 2017TR 2018TR 2019 TR ReinstateRecon

2012TR

2013TR

2014TR

2015TR

2016TR

2017TR

Average 1990-2017 5.23

Ultimate Assumption 5.20 (for 2008-11TR)

Ultimate Assumption 5.40 (for 2012-18TR)

2018T

Current 

Estimate 

for 2018

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Number of Disabled Workers Dropping

6,000

7,000

8,000

9,000

10,000

11,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Disabled Worker Beneficiaries

In Current Payment Status at End of Year (in thousands)

2008 TR (no recession)

2018 TR

2017 TR

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But, Wait—How About Budget Scoring?

Do entitlements really borrow?

Source: Congressional Budget Office, June 2016
Actually, NO. Budget Scoring Is Inconsistent 

With the Law, and All Past Experience.

• See Actuarial Opinion in the 2018 TR (also 2014—2017 TRs)

1) After reserves deplete, full scheduled benefits cannot be paid 

under the law.

 Budget deems these “expenditures” creating publicly held debt

2) Reserve redemptions spend excess “earmarked” revenues 

invested in an earlier year.

 Budget deems these “a draw on other Federal resources”

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

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

held debt.

 Budget says redemptions increase Federal debt held by the public 

and often gives no credit for reserve accumulation

28
29

So—What If We Project Federal Debt Consistent 

With the Law? Projection to 2090 back in 2015

0

20

40

60

80

100

120

140

160

180

200

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Publicly Held Debt as a Percentage of GDP

Projected Federal Debt Held by the Public: CBO Baseline (Assuming OASDI 

& HI Unfunded Obligations Are Paid by Borrowing From the Public) vs. 

Assuming Current Law 

CBO Baseline July 2015

Less OASDI Unfunded Obligations (CBO Dec 2015)

Less OASDI (CBO Dec 2015) and HI (Trustees 2015)

Unfunded Obligations
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The Bottom Line

• Long-term projections provide information to assess 

solvency and changes needed to eliminate shortfalls

• Adjustments needed:

– Lower scheduled benefits by about 23 percent

– Increase scheduled revenue by about 29 percent

– Or some combination

– So Congress must and WILL act, as always

• Straightforward solutions:

– Comprehensive changes needed by 2034
Some 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, subject to 

work year requirements

• Lower benefits mainly for the oldest old?

– Reduce the COLA

– Some say increase it with the CPI-E (based on purchases of 

consumers over age 62

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Some Ways to Increase Revenue

• 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 remains

• Maintain larger trust fund reserves?

– Added interest can lower needed taxes

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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

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