SOCIAL SECURITY: 

HOW BIG IS THE FINANCIN

CHALLENGE?

National Academy of Social Insurance 2018 Summer Inter

August 1, 2018

Steve Goss

Office of the Chief Actuary

Social Security Administration
SOLVENCY: OASDI Trust Fund Reserve Depletion 2034 (same as last 

o Reserve depletion date varied from 2029 to 2042 in reports over the past 28 years (1991-2018) 

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

0%

50%

100%150%200%250%300%350%400%450%

1990 1995 2000 2005 2010 2015 2020 2025 2030 203

Social Security Trust Fund Ratios

Assets as Percent of Annual Cost

Trustees Report Intermediate Projections

OASDI 2018OASI 2018TDI 2018TROASDI 2017OASI 2017TDI 2017TR

Historical

Tax Rate

Reallocation

DI

OASDI

OASI
Disability Incidence Rate Falls to Historic L

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

declined since the peak in 2010 to extraordinarily low levels for 2016 an

4

4.5

5

5.5

6

6.5

1990 1995 2000 2005 2010 2015 2020 2025 

DI Age-Sex-Adjusted Incidence Rates:

Historical and Intermediate Assumptions for 2012 through 2018 Trustees Re

2012TR

2017TR

2016TR

2015TR

2014TR

2013TR

Average 1990-2017 5.23Ultimate Assumption 5.40

2018TR
OASDI Annual Cost and Non-Interest Income as Percent of Taxable 

Persistent Negative Annual Cash-Flow Balance Starting in 201

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 yea

0%5%

10%15%20%25%

2005 2015 2025 2035 2045 2055 2065 2075 208

Calendar year

Cost: Scheduled and payable benefits

Non-interest Income

Payable benefits as percentof scheduled benefits:2017-33: 100%2034: 79%2092: 74%

Cost: Scheduled but not fully payable benefits

Expenditures: Payable benefits = iafter trust fund depletion in 2034
OASDI Beneficiaries per 100 Workers

0

102030405060708090

100

1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2

Calendar year

Historical Estimated
Aging (change in age distribution)

mainly due to drop in birth rates

0.000.050.100.150.200.250.300.350.400.450.50

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2

Aged Dependency Ratio 2018 TR

Population 65+/(20-64) 

Actual and TR IntermediateTFR remains at 3.0 after 1964TFR remains at 3.3 after 1964
Changing Age Distribution Over Last 20 and Nex

Years Mainly Due to Macro Aging—permanent leve

0%

10%20%30%40%50%60%70%80%90%

100%

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 208

Percent of Population at Ages 25+

Age Distribution of the Population Age 25+, 1940 to 2100 (2018 

Boomers 

become 

25-44

Boomers 

become 

45-64

Boomers 

become 

65-84
Mortality Experience: All Ages

Reductions continue to fall short of expectations

700750800850900950

1,0001,0501,100

1990 1995 2000 2005 2010 2015 

Age-Sex-Adjusted Death Rates

(Total, All Ages)

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

Reductions since 2009 continue to fall short of expectatio

4,0004,2004,4004,6004,8005,0005,2005,4005,6005,8006,000

1990 1995 2000 2005 2010 2015 

Age-Sex-Adjusted Death Rates

(Ages 65 and Older)

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

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

0

10203040506070

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 percent

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

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

Max Earner ($128,400 for 2018; 100th perce
How About at Age 62, Where Most Start Ben

0

10203040506070

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 percenti

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

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

Max Earner ($128,400 in 2018; 100th perce
Payable Benefits Under the Law, After Tr

Fund Reserves Are Depleted, Are Even Lo

0

10203040506070

1960 1980 2000 2020 2040 2060 2

PAYABLE Monthly Benefit Levels as Percent of Career-Average 

Earnings by Year of Retirement at age 62

Low Earner ($23,353 in 2018; 25th pMedium Earner ($51,894 in 2018; 56

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

Max Earner ($128,400 in 2018; 100t
How to Fix Social Security Long-Term

Make choices addressing OASDI deficits 2034-2092:

• Raise scheduled revenue after 2033 by about one-thir

increase revenue from 4.6 to 6.1% of GDP

• Reduce scheduled benefits after 2033 by about one-fo

lower benefits from 6.1 to 4.6% of GDP

• 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