Presentation to the 

2019 Technical Panel

Office of the Chief Actuary

Social Security Administration

November 16, 2018
Overview of Models and Assumptions for 

Projections in the Trustees Report

• Objective: assess the actuarial status of the Trust Funds as required by law

• Ability to pay scheduled benefits with scheduled revenue

• Shortfall if any over the long range (75 years) and after reserve depletion

• Basis for Congressional proposals and changes to the program

• Actuarial model reflecting the population in the Social Security coverage area

• U.S. population and workforce, authorized and unauthorized, and abroad

• Earnings in the economy, and those covered and taxable

• Workers insured for benefit coverage, and numbers becoming entitled

• Average benefit levels by type of benefit and duration since becoming entitled

• Accumulation of starting reserves, income, and outgo for trust fund reserve status

2
Overview of Models and Assumptions for 

Projections in the Trustees Report

• Actuarial valuation depends on design of plan benefits and funding

• OASDI is pay-as-you-go financed by design; not advance funded

• A small “contingency reserve” is needed because of lack of borrowing authority

• Current payroll tax contributions finance benefits for retirees, disabled, survivors

• Each generation transfers life, knowledge, and infrastructure to the next

• In return for financial support from that next generation 

• So age distribution of the population is the most critical factor

• Demographic assumptions shape the age distribution for the future

• Birth rates are most critical factor for age distribution

• Mortality and immigration are also important

• Earnings growth less important because income and outgo are both “indexed”

• Interest rates less important because the program is essentially PAYGO

3
Overview of Models and Assumptions for 

Projections in the Trustees Report

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

4
Overview of Models and Assumptions for 

Projections in the Trustees Report

5

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 2080 2090 2100 Percent of Population at Ages 25+

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

25-44

45-64

65-84

85+

Boomers 

become 

25-44

Boomers 

become 

45-64

Boomers 

become 

65-84
Overview of Models and Assumptions for 

Projections in the Trustees Report

• Assumptions reflect expected long-term future conditions, not just the past

• Population

• Birth rates (fertility) under expected future average conditions

• Mortality reflecting expectations by cause of death, influenced by growth in health 

spending and human limits

• Immigration: authorized generally based on limits in law; unauthorized more difficult 

• Economy

• Complete current economic cycle to full employment and then stabilize 

• Labor productivity reflecting long-term past trend; assume continued technology gains

• Employment by age, sex, and marital status; reflecting education, disability, longevity

• Earnings dispersion has decelerated and is assumed to stabilize

• Interest rates are currently below long-term average 6
Overview of Models and Assumptions for 

Projections in the Trustees Report

• Projection uncertainty illustrated in three different ways

• Basic specified alternatives: intermediate, high-cost, low-cost

• Intermediate reflects most likely expectation

• High-cost and low-cost vary all assumptions in same direction; changing 

relationships

• Stochastic projection

• Complex variations around central tendencies from intermediate alternative

• Useful illustration of ranges but limitations: assumptions applicable for cost or 

trust fund outcome at any percentile are not indicated

• In need of further work as indicated in reports for several years

• Sensitivity analyses

• Reflecting variation in key parameters—one at a time 7
Overview of Models and Assumptions for 

Projections in the Trustees Report

• Additional illustrative information

• In the report:

• Aged dependency ratios (table V.A3)

• Worker to beneficiary ratios (table IV.B3)

• Future benefit levels (table V.C7)

• Effects of changes in current and prior reports (tables IV.B7 and VI.B1)

• Beyond the report:

• Replacement rates, internal rates of return, money’s worth ratios

• Vast documentation of methods, data, and projections

• Estimates for proposals to modify Social Security under each report’s 

assumptions

• https://www.ssa.gov/oact/pubs.html

8
Question 1. Comparison of Past Projections to Actual Results 

How do you evaluate the accuracy of past projections and how is this used to inform consideration of assumptions going 

forward. Does the range of deflections from realized values conform to high and low scenario assumptions?

• Projections reflect explicit assumptions about average future conditions

• Annual variations are unpredictable; “inaccuracy” in near term is guaranteed

• Unexpected variation over even 10 years or more can be cyclic or aberrant

• Accuracy must be evaluated over longer periods of “complete” cycles

• Demographic parameters, as well as economic parameters, show cyclic variation

• Most essential is to understand basis for evolving experience

• Are variations explained? Temporary? New Normal?

• Over the last 26 reports, OASDI Trust Fund reserve depletion has been 

projected between 2029 and 2042 under intermediate assumptions

• 2018 report projected 2034, 2030, never (intermediate, high cost, low cost)

• 2008 report projected 2041, 2031, never (intermediate, high cost, low cost)

• 1998 report projected 2032, 2022, never (intermediate, high cost, low cost)

• 1988 report projected 2048, 2026, never (intermediate, high cost, low cost)

9
Question 1. Comparison of Past Projections to Actual Results 

10

0

50

100

150

200

250

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Reserves as % of Annual Cost

DI Trust Fund Ratio in 1995, 2008, 2017 & 2018 Trustees Reports

1995TR

2008TR

2017TR

2018TR

"New Economy" 

irrational 

exuberance

2008 

Recession 

back to 

reality

Tax-Rate 

Reallocation

• Comparison of DI Trust Fund Ratios in various Trustees Reports
Question 1. Comparison of Past Projections to Actual Results 

• Comparison of 20-Year projected cost rates

11

2 0 Year Projection of Cost Rate --- Actual vs. Projected

Note: For prior to 1991 TR, Intermediate is actually Alt II-B.

Note: The listed data in comment box are linearly interpolated after short-range period.

Year of

Trustees Year Projected Projected Projected

Report Projected Actual Low Cost Actual Intermediate Actual High Cost Actual

1997 2017 12.43 13.69 14.20 16.19

1996 2016 11.89 13.76 13.90 15.76

1995 2015 11.47 13.40 13.89 15.44

1994 2014 10.98 13.14 13.96 15.02

1993 2013 10.56 12.25 13.98 14.39

1992 2012 10.35 12.02 13.82 14.02

1991 2011 9.89 11.47 13.13 13.47

1990 2010 9.36 11.08 12.84 13.47

1989 2009 9.19 10.59 12.29 13.05

1988 2008 8.92 10.39 11.55 11.84

1987 2007 8.48 9.97 11.32 11.36

1986 2006 8.48 10.00 11.06 11.58

1985 2005 8.32 10.13 11.16 11.77

1984 2004 8.22 9.94 11.05 11.51

1983 2003 7.95 9.92 11.03 11.19
Question 1. Comparison of Past Projections to Actual Results 

• Comparison of life expectancy at age 65

12

Comparison of Life Expectancy at Age 65 in the US

Actual Experience vs. OASDI Trustees Report Intermediate Projection

Year of issuance of OASDI Trustees Report

Year Actual 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1971 15.3

1972 15.3

1973 15.4

1974 15.7

1975 16.0

1976 16.1

1977 16.3

1978 16.3

1979 16.5 16.7 16.6 16.6 16.5

1980 16.3 16.6 16.6 16.3

1981 16.5 16.5 16.5

1982 16.7 16.6 16.6 16.8

1983 16.6 16.8 16.8 16.8 16.6

1984 16.6 16.9 16.9 16.9 16.6 16.6

1985 16.6 17.3 17.3 17.0 17.0 17.0 16.7 16.7

1986 16.7 17.1 17.1 17.1 16.8 16.8 16.8

1987 16.7 17.3 17.2 17.2 16.9 16.9 16.9 16.9

1988 16.8 17.4 17.3 17.3 17.0 17.0 17.0 17.0 16.9 16.7

1989 17.0 17.5 17.4 17.4 17.1 17.0 17.1 17.0 17.0 17.1 17.0

1990 17.2 17.6 17.5 17.5 17.2 17.1 17.2 17.1 17.2 17.1 17.0 17.2 16.9 17.0

1991 17.3 17.7 17.6 17.6 17.3 17.2 17.3 17.2 17.1 17.3 17.0 17.1 17.0 17.0

1992 17.4 17.8 17.7 17.7 17.4 17.3 17.3 17.3 17.2 17.4 17.0 17.1 17.2 17.0 17.3

1993 17.2 17.9 17.8 17.8 17.5 17.4 17.4 17.3 17.2 17.4 17.1 17.1 17.2 17.1 17.1

1994 17.3 18.0 17.9 17.9 17.6 17.5 17.5 17.4 17.3 17.5 17.1 17.2 17.3 17.2 17.2

1995 17.3 18.3 18.3 18.1 18.0 18.0 17.7 17.6 17.5 17.5 17.4 17.5 17.2 17.2 17.4 17.3 17.3 17.4

1996 17.3 18.1 18.0 18.1 17.8 17.6 17.6 17.5 17.4 17.6 17.3 17.3 17.4 17.3 17.4 17.4 17.5 17.3

1997 17.4 18.2 18.1 18.1 17.9 17.7 17.7 17.6 17.5 17.6 17.3 17.3 17.5 17.4 17.4 17.5 17.5 17.5 17.3

1998 17.4 18.2 18.1 18.2 17.9 17.8 17.7 17.6 17.5 17.7 17.3 17.4 17.5 17.4 17.5 17.6 17.5 17.5 17.6 17.4

1999 17.4 18.3 18.2 18.2 18.0 17.8 17.8 17.7 17.6 17.7 17.4 17.4 17.5 14.4 17.5 17.6 17.6 17.5 17.5 17.4 17.3

2000 17.5 18.5 18.6 18.6 18.4 18.2 18.3 18.0 17.9 17.8 17.7 17.6 17.8 17.4 17.5 17.6 17.5 17.6 17.6 17.6 17.6 17.6 17.5 17.4 17.4 17.4

2001 17.6 17.5 17.4 17.5 17.6

2002 17.7 17.5 17.5 17.5 17.5 17.7

2003 17.8 17.5 17.5 17.5 17.6 17.6 17.8

2004 18.1 17.6 17.5 17.5 17.6 17.7 17.7 18.1

2005 18.1 18.8 18.8 18.6 18.4 18.5 18.3 18.1 18.0 17.9 17.8 18.0 17.6 17.6 17.7 17.7 17.7 17.8 17.8 17.8 17.8 17.7 17.6 17.6 17.6 17.7 17.7 17.8 17.9 18.1

2006 18.4 17.8 17.9 18.1 18.4

2007 18.6 17.8 18. 18.1 18.3 18.6 18.6

2008 18.6 18.5 18.5

2009 18.9 18.6 18.6 18.9

2010 18.9 18.8 18.9 18.9 18.8 18.6 18.7 18.5 18.3 18.2 18.1 18.0 18.2 17.8 17.8 17.9 17.8 17.9 17.9 17.9 17.9 17.9 17.8 17.9 17.9 17.8 17.9 17.9 18.0 18.1 18.2 18.5 18.7 18.7 18.9 18.9

2011 19.0 18.8 18.8 19.1 19.0 19.0

2012 19.1 18.9 18.9 19.2 19.2 19.1

2013 19.1 19.0 19.0 19.3 19.3 19.2 19.1

2014 19.2 19.1 19.1 19.4 19.4 19.4 19.2 19.2

2015 19.1 19.2 19.2 19.5 19.5 19.5 19.4 19.3 19.1

2020 19.1 19.3 19.3 19.2 19.0 19.1 18.9 18.7 18.6 18.5 18.4 18.6 18.3 18.3 18.4 18.2 18.3 18.3 18.3 18.3 18.4 18.3 18.5 18.5 18.4 18.5 18.5 18.5 18.7 18.8 19.1 19.5 19.5 20.0 20.0 20.0 19.8 19.7 19.7

2030 19.2 19.1 19.0 19.1 19.1 19.1 19.3 19.5 19.7 20.2 20.2 20.6 20.6 20.6 20.5 20.4 20.3

2040 19.8 19.7 19.6 19.6 19.6 19.7 19.8 20.1 20.4 20.8 20.7 21.2 21.2 21.2 21.1 21.0 20.9

2050 20.1 20.4 20.4 20.4 20.2 20.3 20.1 19.9 19.7 19.7 19.7 19.9 19.6 19.6 19.6 19.5 19.5 19.6 19.6 19.5 20.1 19.9 20.3 20.2 20.1 20.2 20.2 20.2 20.4 20.7 21.0 21.3 21.3 21.8 21.8 21.7 21.6 21.6 21.5

2060 20.9 20.8 20.6 20.7 20.7 20.7 20.9 21.2 21.5 21.9 21.8 22.3 22.3 22.3 22.1 22.1 22.0

2070 21.4 21.3 21.2 21.2 21.2 21.2 21.3 21.8 22.1 22.4 22.3 22.8 22.8 22.7 22.6 22.6 22.5

2080 20.9 21.4 21.4 21.6 21.5 21.5 21.4 21.1 20.9 20.8 20.9 21.0 20.8 20.8 20.8 20.7 20.7 20.8 20.7 20.7 21.5 21.4 21.9 21.8 21.6 21.7 21.6 21.7 21.8 22.2 22.6 22.8 22.8 23.2 23.2 23.2 23.1 23.1 23.0

2090 22.4 22.3 22.1 22.1 22.1 22.1 22.3 22.7 23.0 23.3 23.2 23.7 23.7 23.6 23.6 23.5 23.5

2100 22.9 22.7 22.5 22.6 22.5 22.6 22.7 23.2 23.5 23.8 23.7 24.1 24.1 24.1 24.0 24.0 23.9
Question 2. Uncertainty and Stochastic Modeling

Describe how you think about uncertainty and provide an overview of the development of the stochastic 

model and its uses.

• Recall earlier slide: alternatives, stochastic, sensitivity

• Stochastic is useful illustration

• However, legislators tend to focus on the intermediate

• Policymakers are about equally averse to underfinancing and over-taxing

• Automatic adjustments have appeal, but they lack certainty

• Our stochastic model was unveiled in 2003

• We are aware the probability range is too narrow

• No variation in central tendency, or in other parameters

• Developing model with parameter uncertainty

13
Question 2. Uncertainty and Stochastic Modeling

10%

15%

20%

25%

30%

2018 2033 2048 2063 2078 2093

Projection year

2018 TR OASDI Annual Cost Rate

Low-Cost

Intermediate

High-Cost

Stochastic 2.5%

Stochastic 50%

Stochastic 97.5%

14
Question 3. Long-Range Assumptions: (a) Mortality

(a) Describe the thought process and justification for the mortality assumptions in the Trustees Report. What 

is the best case for why mortality improvement will likely be slower than what past technical panels 

recommended?

• Past panels have tended, like most demographers, to extrapolate 

experience from past periods—as in Lee and Carter approach

• Mortality decline comes in waves—must avoid too much weight on recent 

experience

• For example, 1999-2009 was a good period of rapid decline

• But since 2009, decline has been very slow

• Great progress in last century with public health, antibiotics, health care expansion

• Can these improve at same rates in the future?

• Critical to study by cause of death 

• Will medical advances be more difficult and less frequent in the future?

• Are there limits to human longevity that we are slowly approaching?

• As a result, will there be some deceleration in mortality declines?

15
Question 3. Long-Range Assumptions: (a) Mortality

16

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
Question 3. Long-Range Assumptions: (a) Mortality 

17

Survival Curve U.S. Female: Period Data

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 10 20 30 40 50 60 70 80 90 100 110

1900

1925

1950

1975

2000

2013

Survival Curve U.S. Male: Period Data

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 10 20 30 40 50 60 70 80 90 100 110

1900

1925

1950

1975

2000

2013
Question 3. Long-Range Assumptions: (b) Fertility 

(b) Fertility rates have continued to fall even as the economy recovered from the Great Recession. What 

is the best rationale for assuming fertility rates will recover to pre-recession levels?

• Between 1990 and 2008 the total fertility rate averaged over 2.0

• Rates since 2008 have fallen

• Due to: Recession job losses in 2009-11 and low real earnings growth more 

recently

• Birth expectations of younger women are still above 2.0

• Cohort analysis indicates completed cohorts are still tracking 2.0

• But are things changing?

• Need to consider on a holistic basis

• Economic opportunity and outlook for younger individuals 

• Many factors

18
Question 3. Long-Range Assumptions: (b) Fertility

19
Question 3. Long-Range Assumptions: (b) Fertility 

20

Birth Expectations
Question 3. Long-Range Assumptions: (b) Fertility 

21
Question 3. Long-Range Assumptions

(c) Why do the trustees express the long-range net immigration assumptions as absolute number instead 

of a percent of the population? Why are net immigration assumptions constrained by "current law"?

• Lawful Permanent Resident, or LPR, immigration is limited

• Generally, we do not anticipate changes in law

• Other-than-LPR immigration is more difficult to project

• Past panels have suggested rise in proportion to overall population size

• But will “demand” for other-than-LPR change in the future?

• Will the US be viewed as a land of relative opportunity?

• Will other nations become more or less desirable, affecting their emigration?

• Much to be considered 

22
Question 3. Long-Range Assumptions: (d) Disability Incidence

(d) Describe the thought process and justification for the disability incidence assumption in the Trustees 

Report.

• Disability applications and incidence rates peaked in the recession 

around 2010, but have fallen dramatically to historically low levels

• More than just economic opportunity

• Private disability insurers and SSI program are seeing similar drops

• Number of disabled workers receiving benefits is well below earlier 

expectations that fully reflected demographic changes

• How persistent will these changes be?

23
Question 3. Long-Range Assumptions: (d) Disability Incidence 

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)

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

2012TR

2013TR

2014TR

2015TR

2016TR

2017TR

2018TR

Current estimate for CY 2018 based 

on data through mid-June, 2018

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.

24
Question 3. Long-Range Assumptions: (d) Disability Incidence 

25

4

4.5

5

5.5

6

6.5

1990 1995 2000 2005 2010 2015 2020 2025 2030

DI Age-Sex-Adjusted Incidence Rates:

Historical and Intermediate Assumptions for 2012 through 2018 Trustees Reports

2012TR

2017TR

2016TR

2015TR

2014TR

2013TR

Average 1990-2017 5.23

Ultimate Assumption 5.40

2018TR
Question 3. Long-Range Assumptions: (d) Disability Incidence 

26

4.0

4.2

4.4

4.6

4.8

5.0

5.2

5.4

5.6

5.8

6.0

1993 1998 2003 2008 2013 2018

Average Disability Incidence Rates over Prior Periods: 

Disabled Worker Awards per 1,000 Exposed

10-Year Average Ending in Year 20-Year Average Ending in Year 30-Year Average Ending in Year Ultimate in TR Year
Question 3. Long-Range Assumptions 

(e) Describe the thought process and justification for the productivity and real wage gains assumptions in 

the Trustees Report.

• Competing viewpoints on labor productivity:

• Pessimistic view (Gordon and others): historical growth due to unique period of 

innovation unlikely to be repeated, expect slower growth in the future 

• Optimistic view (Brynjolfsson and others): new inventions and the development 

of general-purpose technologies will result in stronger annual growth in 

productivity than in the recent past

• Assumption consistent with long-term historical averages

• Prior technical panels viewed productivity assumption as reasonable, 

as well as assumed linkages to growth in real wages 

27
Question 3. Long-Range Assumptions: (f) Real Interest Rates

(f) In setting assumptions on real interest rates, explain how you weigh the information provided by bond 

markets about expected futures rates? 

• Market “expectations” have changed dramatically in short periods of 

time, and have not proven to be a good predictor of future rates

• OCACT analyzed 10-year forward rates on 10-year TIPS

• 10-year forward rates basically mirror current rates

• Both have changed abruptly, and together

• Forward rates do not anticipate changing conditions or rates

• Real interest rates are now on upward trend, likely to continue due to:

• Federal Reserve “policy normalization”—reducing their holdings

• Rising federal deficits relative to GDP, and historic debt-to-GDP levels

28
Question 3. Long-Range Assumptions: (f) Real Interest Rates

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

10-Year TIPS: Actual and 10-Year Forward Rates from Current Auctions

Actual Predicted

29
Question 3. Long-Range Assumptions: (f) Real Interest Rates

Note the 2015 Technical Panel recommended a 2.5% ultimate rate

-4

-2

0

2

4

6

8

10 Percent

Social Security Trust Fund's Realized Real Interest Rate Using Adjusted CPIW

2.7

Historical Projected

3.17

TR2018 Ultimate Assumption 2.7

Average of last five complete

economic cycles (1966-2007) 3.17

Average for the entire period

(1966 - 2017) 2.74

Average 2008-2017 0.93

30
Question 4. Composition of Population 

(a) Do economic assumptions depend on the demographic composition of the population? For example, 

do assumptions of productivity growth depend on assumed distributions by age, sex, family structure, 

immigration status, education, etc...)?

• Yes, the employment projections are heavily influenced by the 

composition of the population 

• Employment is derived from the OCACT labor force participation rate (LFPR) 

model which explicitly accounts for changes in composition by age, sex, family 

structure, marital status, education, life expectancy, etc. 

• OCACT model assumes lower average earnings for other-than-LPR 

immigrant population 

• Assumed growth in labor productivity does not directly reflect changes 

in the composition of the population

31
Question 4. Composition of Population 

(b) When does the degree of heterogeneity in the population (differential mortality by income, earnings 

inequality, skill level among immigrants) affect other parameter or outcomes of the model?

• Differential mortality by career-average earnings is reflected in the 

growth in average benefits after initial entitlement

• Average benefit rises faster than COLA due to differential mortality as well as 

additional earnings

• Earnings inequality is reflected in the percent of OASDI covered earnings 

that is below the average-wage-indexed taxable maximum amount

• This percent dropped from about 90 percent in 1983 to about 83 percent in recent 

years—this decline has roughly stabilized in the last decade

• Benefit levels are also influenced by inequality

• Contribution of immigrants to the size and quality of labor supply are 

assumed to continue as in the past

32
Question 4. Composition of Population 

(c) Which of the assumptions/parameters in the projection model are explicitly correlated? 

• A few examples:

• Employment is affected by position in the economic cycle, by changing population 

composition (due to fertility, mortality, and immigration), by relative level of 

projected benefits, and by disability prevalence

• Insured status for disability, survivor, and retirement benefits is determined by 

cohort employment rates (microsimulation model)

• Disability incidence and retirement rates are affected by position in economic 

cycle and changes in normal retirement age (NRA)

• Average benefit levels are determined by cohort employment rates, average 

earnings growth, and CPI growth

• Trust fund reserve accumulation and present-value discount rates are determined 

by assumed Treasury market yield rates

33
Question 5. Determination of Benefit Levels

Describe how you model the determination of future benefit levels. What assumptions underlie these 

projections, and how much would these projections be affected by changes in assumptions about 

parameters like the future evolution of lifetime earnings inequality or Social Security claim ages?

• Across generations, benefit formula parameters are indexed to the average wage 

level; benefits rise only with CPI after initial eligibility

• Average benefit levels are projected in a microsimulation model affected heavily by 

employment rates; AIME is high 35 years for retirees

• After initial benefit eligibility, benefit levels reflect COLAs, differential mortality, and 

earnings after initial eligibility

• Continued increase in earnings dispersion (inequality) would lower the percent of 

earnings taxable, and also the growth in benefits across generations

• Effect of changes in start of retiree benefit receipt would depend on selection, but 

generally increase cost due to generous benefit adjustments

34
Question 6. Secular Stagnation

Do the Trustees mostly consider the Great Recession to be a largely cyclical event (with a much longer 

recovery period than typical), or have there been structural changes in the economy that permanently 

affect assumptions of the future?

• Trustees have lowered the levels of labor productivity and potential 

GDP due to the very slow recovery and slow growth in labor 

productivity, but have maintained the ultimate assumptions for the 

future growth rate in productivity and average earnings

• Employment-to-population ratio has mostly recovered to pre-2008 

levels

• Labor force and unemployment rate are both projected to rise in the future 

with little effect on employment-to-population ratio

• Age-sex-adjusted labor force participation rates have been trending upward 

since the time of the last technical panel 

• Labor productivity has lagged, but unclear whether slow growth will 

persist 

35
Question 6. Secular Stagnation: Recovery of Employment

36

0.55

0.60

0.65

0.70

0.75

0.80

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Labor Force Participation Rates

2018 TR

Age 16+, Age-Sex Adjusted

Female 16+, Age Adjusted

Male 16+, Age Adjusted

0.50

0.55

0.60

0.65

0.70

0.75

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Ratio of Employment to Population 

2018 TR

Age 16+, Age-Sex Adjusted

Female 16+, Age Adjusted

Male 16+, Age Adjusted

Employment has recovered: note disparity with measured labor force 
Question 7. Macro (Debt) Feedback Effects 

Explain your approach to macro (debt) feedback effects.

• OCACT does not explicitly model macro (debt) feedback effects when 

developing projections 

• Unclear whether methods used to model feedback effects are useful for longterm OASDI projections, which are based on current Social Security law

• Following a possibly unsustainable path to limitless federal debt may be a 

reasonable approach for Budget projections

• But OASDI Trust Fund actuarial status presumes that unsustainable events due to 

current external laws will be changed in the future

• For example, income tax bracket creep

• Note that OASDHI net redemption of Treasury securities produces a 

commensurate increase in public debt, anticipated by the markets, and no 

effect on total federal debt—no effect after reserve depletion

37
Question 8. Opioid Phenomenon

What are the implications of the opioid epidemic for the projections and in particular assumptions about 

mortality, disability and labor force participation. Has it had a differential effect on the mortality rate of 

(disabled) beneficiaries?

• To this point, we have essentially assumed that opioid abuse will be 

addressed and will diminish, similar to HIV in the past

• We assume a resumption of mortality improvement after the current slowdown 

which began in 2009, for all causes at all ages

• If negative effects from opioid abuse persist and affect largely individuals over 

age 35, this would have a small positive effect on the actuarial status

• To this point we are not seeing significant effects on disability 

beneficiaries; note that drug addition and alcoholism by themselves 

are not bases for disability benefit eligibility

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Comments and Questions from OCACT to the Panel, 

for Assistance and Insight

• A few areas of thought and reflection that will be particularly useful:

• Ponder long-term “state” changes rather than just extension of recent trends

• Are we moving into new conditions as a society and an economy?

• Are succeeding generations still expecting and striving to exceed their elders?

• What will be the U.S. position in the global economy, compared to the past?

• Holistic consideration of possible changes and shifts

• Discussion of and rationales for a range of possible future scenarios (states)

• Is technological innovation going to decelerate slowing investment and 

productivity?

• Effects of decelerating educational attainment and shift in age distribution

39