Anna Kirjusina

anna.kirjusina@ssa.gov

Actuaries 

at the 

Social Security 

Administration

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Actuaries in the Federal Government

■ Social Security Administration (SSA)

■ Centers for Medicare & Medicaid Services

■ Pension Benefit Guaranty Corporation 

■ The Treasury Department (Internal Revenue Service) 

■ Department of Housing and Urban Development

■ Government Accountability Office

■ Office of Personnel Management

■ Department of Veterans‘ Affairs

■ Labor Department

■ Public Health Service

■ Department of Energy

■ Railroad Retirement Board

■ Department of Defense

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Actuaries at SSA

■ The single largest employee benefit plan in the country

– Largest in the world?

■ Overall review of the cash flow balance 

 between benefits paid and taxes collected

■ Short-Term and Long-Term analysis

– demographic and economic trends

– experience in mortality rates 

– preparation of regular reports 

■ Evaluate and estimate operations of the Federal Trust Fund 

■ Special studies on the financial aspects of the SS system 

– address concerns of the Congress and the general public 

– address national and international meetings of actuarial 

organizations

– testify before Congressional committees on the financial 

effect of various suggested amendments to the law

– write articles for various publications on the actuarial status of 

the program 3
Actuaries were there at the beginning

President Roosevelt’s planning for Social Security

1934 Economic Security Committee hired 3 actuaries

• Robert J. Myers - young Actuarial Assistant 

• Masters in Actuarial Science, University of Iowa, 1934

1935 Social Security program enacted into legislation

• Bob Myers prepared actuarial estimates reassuring 

Congress: SS program is practical

1947 Mr. Myers became the Chief Actuary of SSA

2001 Stephen C. Goss 2001– Current Chief Actuary of SSA

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Office of The Chief Actuary (OCACT)

■ Plan and direct actuarial estimates 

■ Perform actuarial and demographic research on social insurance 

■ Conduct studies of program financing 

• Old-Age Survivors and Disability Insurance (OASDI)

• Supplemental security income program (SSI)

■ Evaluate and estimate operations of the Trust Funds in Annual Trustees Report 

■ Provide technical and consultative services to 

• the Commissioner

• the Board of Trustees of the two Trust Funds 

• congressional committees 

■ Appear before congressional committees to provide expert testimony 

on the actuarial aspects of Social Security issues. 

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OCACT - Structure

Insured and 

Beneficiary Projections

The Chief Actuary

The Deputy Chief Actuary 

Short-Range

The Deputy Chief Actuary 

Long-Range

The Office of 

Short-Range 

Actuarial Estimates

The Office of 

Long-Range 

Actuarial Estimates

The 

Immediate 

Office of 

the Chief 

Actuary

Trust Fund Projections

SSI

10-yr Proposal Estimates

Trust Fund Projections 

and Proposals

Revenue Estimates and 

Economic Analysis

Demographic Analysis 

and Alternative Models

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Social Security Income and Cost

INCOME

Payroll taxes

■ Employees and employers each 

pay 6.2% of covered earnings

■ The self-employed pay 12.4% of 

covered earnings

■ On earnings up to $132,900 in 

2019

Taxes on Social Security benefits

■ High-income beneficiaries pay 

federal income tax on their 

benefits

Interest on trust fund reserves

■ Invested in interest-bearing 

securities of the US government

COST

Benefit payments

■ About 63 million people getting 

benefits as of December 2018:

■ 47 million retired workers and 

dependents of retired workers

■ 6 million survivors of deceased 

workers

■ 10 million disabled workers and 

dependents of disabled workers

■ Railroad Interchange

Administrative expenses

■ Only about 0.7 percent of total 

expenditures in 2018

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Social Security Income and Cost

Combined 

OASI & DI 

Trust Funds Administrative 

expenses

$7 billion

4% 

Taxes on benefits

$35 billion

8%

Interest

$83 billion

Benefits

$989 billion Railroad 

exchange

$5 billion

88%

99%

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Social Security Demographic Challenge

 The number of 

retired workers is 

projected to 

double in about 

50 years

 People are living 

longer

 Birth rate is low

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Social Security Demographic Challenge

The Trustees project

 the ratio of workers paying SS taxes to each person collecting benefits 

in 2018 will fall from 2.8 to 2.2 in 2036. 

 redemption of trust fund assets will be sufficient to allow for full 

payment of scheduled benefits until 2035.

In 2010 

 tax and other noninterest income did not fully cover program cost

The 2019 Trustees Report projects 

 the pattern will continue for at least 75 years

 unless changes are made to the program 

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Actuarial Reporting

■ Annual Wage Reporting 

– W-2 data

■ Automatic Increases 

– Cost-Of-Living Adjustment (COLA)

– Average Wage Increase (AWI)

■ Life Tables & Annuity Values 

■ Population in the Social Security Area 

■ Trust fund data 

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Cost-of-Living Adjustments (COLA)

■ Benefit increases to keep pace with inflation

■ Since 1975, general increases based on the CPI

■ COLAs are based on the CPI-W – Consumer Price Index for Urban Wage Earners and Clerical Workers

Year COLA Year COLA Year COLA Year COLA

1975 8.0 1986 1.3 1997 2.1 2008 5.8

1976 6.4 1987 4.2 1998 1.3 2009 0.0

1977 5.9 1988 4.0 1999 2.5 2010 0.0

1978 6.5 1989 4.7 2000 3.5 2011 3.6

1979 9.9 1990 5.4 2001 2.6 2012 1.7

1980 14.3 1991 3.7 2002 1.4 2013 1.5

1981 11.2 1992 3.0 2003 2.1 2014 1.7

1982 7.4 1993 2.6 2004 2.7 2015 0.0

1983 3.5 1994 2.8 2005 4.1 2016 0.3

1984 3.5 1995 2.6 2006 3.3 2017 2.0

1985 3.1 1996 2.9 2007 2.3 2018 2.8

2019 1.6

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 Based on experience of the relevant average household 

 spending habits survey of 7k families

 Used for COLA determination

Proposed CPI concepts – not currently used

CPI-U (for Urban Wage Earners)

C-CPI-U (Chained CPI) 

■ Based on idea that in an inflationary environment, consumers choose less-expensive substitutes

■ By age 85, benefits would be about 6.5% lower

■ OCACT estimates C-CPI-U would reduce the annual COLA by 0.3 percentage point, on average

CPI-E (CPI for the Elderly)

■ OCACT estimates CPI-E would increase the annual COLA by 0.2 percentage point, on average

■ Basket of goods and services for those age 62+

■ Certain expenditure groups are given greater weight (medical care/housing)

■ By age 85, benefits would be about 4.6% higher

CPI-W 

(for Urban Wage Earners and Clerical Workers)

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Historical CPI-W

Bureau of Labor Statistics produces monthly data on changes in prices paid 

for a representative basket of goods and services

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Average Wage Index (AWI)

AWI - used to index earnings and other amounts 

that are important to the operation of Social Security's 

Old-Age, Survivors, and Disability program

Year AWI

Annual 

change

1951 2,799.16 — 

1952 2,973.32 6.22%

1953 3,139.44 5.59%

1954 3,155.64 0.52%

1955 3,301.44 4.62%

1956-2014 skipped skipped

2015 48,098.63 3.48%

2016 48,642.15 1.13%

2017 50,321.89 3.45%

2018 52,145.80 3.62%

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Items updated by the AWI levels 

I. Taxable Maximum

• Limit on earnings that are subject to 

taxation 

• changes each year with changes in AWI

• Also called 

 contribution and benefit base 

II. Quarters of Coverage

III. Bend Points

IV. AIME

Year Amount

2010 106,800

2011 106,800

2012 110,100

2013 113,700

2014 117,000

2015 118,500

2016 118,500

2017 127,200

2018 128,400

2019 132,900

2020 137,700

Contribution & 

benefit bases 

2010-2020

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Quarters of Coverage (QC)

■ A QC - basic unit to determine if a worker is insured 

– No matter how high your earnings may be, you can not 

earn more than 4 QC's in one year.

■ The amount of earnings for 1 QC in 2019 is $1,360. 

1978 earnings for one QC $250.00

1976 average wage index 9,226.48

2017 average wage index 50,321.89

Computation

Higher amount

$250 times 50,321.89 divided by 9,226.48 equals $1,363.52 

$250*50,321.89/9,226.48=$1,363.52, which rounds to $1,360 

$1,360 exceeds the amount for 2018, which is $1,320 - 

the amount needed to earn one QC in 2019 is $1,360

Amounts 

in formula

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Bend Points

The dollar amounts in the basic benefit formula

 when graphed, appears as a series of 

line segments joined at these amounts 

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Average Indexed Monthly Earnings (AIME)

■ Adjust or "index" earnings 

to reflect the change in 

general wage levels 

occurred during 

employment.

■ The highest 35 years of 

indexed earnings are used 

for computation of AIME for 

retired workers. 

■ The national AWI series are 

used to index earnings. 

Year

1979 $10,733 4.3836 $47,050 $22,900 3.9103 $89,546

1980-2009 skipped skipped skipped skipped skipped skipped

2010 42,774 1.2075 51,650 106,800 1.0771 115,038

2011 44,241 1.1708 51,799 106,800 1.0444 111,543

2012 45,754 1.1354 51,948 110,100 1.0128 111,507

2013 46,471 1.1211 52,096 113,700 1 113,700

2014 48,257 1.0826 52,244 117,000 1 117,000

2015 50,078 1.0462 52,393 118,500 1 118,500

2016 50,787 1.0345 52,541 118,500 1 118,500

2017 52,690 1 52,690 127,200 1 127,200

2018 54,753 1 54,753 128,400 1 128,400

Highest-35 total 1,762,951 Highest-35 total 3,906,108

AIME 4,197 AIME 9,300

Case A, born in 1957 Case B, born in 1953

Earnings before and after indexing

Nominal 

Earnings

Indexing 

factor

Indexed 

Earnings

Nominal 

Earnings

Indexing 

factor

Indexed 

Earnings

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Primary Insurance Amount (PIA)

■ The basic Social Security benefit for retired workers

■ A function of AIME

– Determined by applying PIA formula to AIME 

– The formula depends on the year of first eligibility 

 (attained age 62) 

■ The amount paid depends on age when benefits start. 

■ Benefits are 

 reduced if first taken before a person's normal (or full) 

retirement age and 

 increased if first taken after normal retirement age

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■ For an individual who

– first becomes eligible for OASDI benefits in 2019, 

– dies in 2019 before becoming eligible for benefits

We round this amount to the next lower multiple of $.10.

PIA Formula 

90% 

of the first 

$926 

of AIME

32% 

of AIME over

$926 

and through 

$5,583, 

15% 

of AIME over PIA $5,583. 

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PIA calculation example 

Benefit Calculation Examples for Workers Retiring in 2019

Worker A: first eligible for benefits and retires in the same year 2019. 

No applicable COLA. 

PIA: $1,879.80

Worker B: first eligible in 2015 (the year case B reached age 62). 

COLAs apply for 2015 through 2018.

 These COLAs are 0.0%, 0.3%, 2.0%, 2.8%, respectively.

PIA: $2,720.68 adjusted for COLA is $2,861.10

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Actuarial Work – The Trustees Report

The annual trustees report 

on the financial and actuarial status 

of the Social Security system

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Social Security Trust Funds

Two legally distinct trust funds:

OASI = Old-Age and Survivors Insurance

DI = Disability Insurance

Financial operations are overseen by 

the Social Security Board of Trustees

– the Secretary of the Treasury 

– the Secretary of Labor 

– the Secretary of Health and Human Services 

– the Commissioner of Social Security 

– two public trustees

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Social Security Trust Funds

■ The two funds are often looked at on a theoretical combined basis

– As of December 31, 2018:

 the trust funds hold about $2.89 trillion in asset reserves

■ Why do we have trust funds?

– To provide an essential reserve so benefits can be paid even when current 

income alone is not enough

– Social Security (OASI and DI) cannot borrow; 

– can only spend tax revenues and interest earnings on the reserves

■ Trust Funds’ performance

– Surpluses since the early 1980s and through 2018

– For the past 8 years show reserves’ depletion between 2033 and 2035

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Social Security Trust Funds (cont.)

Are the trust funds “real”?

 If reserves deplete, full benefits cannot be paid

 The trust funds force Congress to act 

 to maintain continuous benefit payments 

 Trust Fund reserves are backed by the full faith 

and credit of the U.S. government

If no legislative change is enacted

Scheduled tax revenues will be sufficient to pay 

about 3/4 of the scheduled benefits 

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Trust Fund Reserves

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TF Financing 

 How is the future shortfall expressed?

 To make shortfalls comparable over years, they are often scaled as a 

percent of taxable payroll

– The amount of earnings taxable by the program for a time period

 For example, in 2045:

– Taxable payroll is expected to be about $23.3 trillion in nominal $$

– Income to the program is expected to be about $3.1 trillion

 or 13.27% of taxable payroll

– The cost of the program is expected to be about $3.8 trillion

 or 16.49% of taxable payroll

– So the shortfall is 3.22% (16.49 – 13.27)

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Actuarial Balance

Key measure of the actuarial status of the trust funds under the 

intermediate assumptions 

Actuarial Deficit – Negative Actuarial Balance

 expressed as a percentage of taxable payroll

 currently 2.78% 

 increase payroll tax by just over 2.78% to be solvent for 75 years

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Actuarial Work - Proposals

Policymakers develop proposals and options

■ Financial effects on the OASDI Trust Funds 

■ Intent of addressing the long-range solvency problem

■ Proposal with direct effects on the SS Trust Funds

 The Social Security 2100 Act

o introduced on January 30, 2019

o Committee on Ways and Means

• Congressman Larson

• Senator Blumenthal

• Senator Van Hollen

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The Social Security 2100 Act

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The Social Security 2100 Act

■ Increase benefits (PIA Formula) and the special minimum PIA

■ Use CPI-E increase rather than CPI-W increase to calculate COLA • CPI-E (Consumer Price Index for the Elderly)

• CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers)

• COLA (Cost-Of-Living Adjustment)

– estimated to increase the COLA by an average of 0.2 percentage point per year.

■ Replace current-law thresholds for federal income taxation of OASDI benefits with a 

single set of thresholds 

– at $50k/$100k for single/joint filers 

– up to 85 percent of OASDI benefits, effective for tax year 2020

■ Payroll tax on earnings above $400,000

– While no tax on earnings between $132,900 and $400,000 (donut)

■ 2.4% gradual increase in payroll tax rate to 14.8% (phased in 2020-2043)

■ New Social Security Trust Fund

– combines the reserves of OASI and DI Trust Funds

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The Social Security 2100 Act - LINGO

The special minimum benefit

A special minimum primary insurance amount (PIA) enacted in 1972 to provide adequate 

benefits to long-term low earners. – The first full special minimum PIA in 1973 was $170 per month. – Beginning in 1979, its value has increased with price growth and is about $875 per month in 2018.

 This is the current law 

 By 2018, very few affected by this type of benefit

Minimum PIA for 2020:

• for workers with 30 or more years of coverage 

 125% of the annual poverty guideline*, divided by 12 

• for workers becoming newly eligible or dying after 2020, 

 the minimum PIA for their initial year of eligibility is increased by the growth in the AWI

• for all affected workers

 the minimum PIA is increased after their year of initial eligibility by the COLA 

*for a single individual published by the Department of Health and Human Services for 2019

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Current Law versus 2100 Act

CURRENT LAW

- 80% of scheduled benefits are projected to be payable on a timely 

basis in 2035 after depletion of the combined trust fund reserves 

- Declining to 75% for 2093. 

- 2.78% long-range OASDI actuarial deficit

PROPOSAL

- 75-year solvency projected for OASDI program 

- 100% of scheduled benefits paid for the foreseeable future

- 0.39% positive OASDI actuarial balance

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Trust Fund Ratio (CL vs 2100 Act) 

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Social Security Reform Act of 2016 

 75-year solvency

 Benefit cuts 

 rather than 

revenue increases

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Social Security Reform Act of 2016 

 Representative Sam Johnson

 Introduced on December 8, 2016

 Committee on Ways and Means

• Changes in the benefit formula

• Expand benefits for long term low-wage earners

• Reduction or elimination of COLA for all beneficiaries

• Eventually eliminate income taxation of Social Security benefits

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Sam Johnson Bill

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Sam Johnson Bill

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For More Information, Go To: 

http://www.ssa.gov/OACT

There you will find:

• The 2019 Trustees Report and all prior reports

• Detailed single-year tables for recent reports

• Our estimates for comprehensive proposals

• Our estimates for individual policy provisions

• Actuarial notes, including replacement rates

• Actuarial studies

• Extensive databases

• Congressional testimonies

• Presentations by OCACT employees

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