Longevity Trends and the

Implications

Michael MorrisTiffany BosleyMichael Clingman
Mortality Projections

Michael Morris
Data Sources

• For under age 65: 

• Deaths from the National Center for Health Statistics• Resident population from the Census Bureau

• For ages 65 and over:

• Deaths and enrollments of the Medicare population.

• For all ages:

• Deaths by cause from the National Center for Health Statistics.

3
Projecting Mortality

• Mortality rates are assumed to decline in the future. But • The annual Trustees Report (TR) uses three sets of (determ

projections:

• Low cost (alternative I)• Intermediate (alternative II)• High cost (alternative III)

• Stochastic projections• The 2018 intermediate projections assumed significant m

declines in the future, as shown by:

• Calendar year life expectancy at birth• Calendar year life expectancy at age 65

4
Life Expectancy at Birth

5
Life Expectancy at Age 65

6
2018 TR 2019 TR 2018 TR 2019 TR 

1979 to 2016 2006 to 2016 2042 to 2092 2043 to 2093 1979 to 2016 2006 to 2016 2042 to 2092 2043 to 2093

Under Age 15Cardiovascular Disease 2.72 2.54 2.3 2.3 2.61 2.48 2.3 2.3Cancer 2.21 0.46 1.5 1.5 1.86 1.23 1.5 1.5Violence 2.73 1.59 1.0 1.0 2.28 1.64 1.0 1.0Respiratory Disease 2.41 1.21 2.0 2.0 2.46 1.02 2.0 2.0Other 2.27 2.20 1.7 1.7 2.13 1.98 1.7 1.7Resulting Total ** 2.37 2.00 1.54 1.54 2.17 1.88 1.57 1.57Ages 15 - 49Cardiovascular Disease 1.90 1.36 1.5 1.5 1.15 0.88 1.5 1.5Cancer 1.92 2.34 1.5 1.5 1.67 1.74 1.5 1.5Violence 0.64 -0.40 0.7 0.7 -0.14 -1.21 0.7 0.7Respiratory Disease 0.77 0.19 0.5 0.5 -0.21 -0.14 0.5 0.5Other 0.73 1.51 0.8 0.8 -0.32 0.23 0.8 0.8Resulting Total ** 1.09 0.59 0.87 0.86 0.52 0.21 0.94 0.93Ages 50 - 64Cardiovascular Disease 2.89 0.89 2.2 2.2 2.51 0.80 2.2 2.2Cancer 1.65 1.43 1.5 1.5 1.41 1.31 1.5 1.5Violence -0.22 -2.49 0.5 0.5 -0.90 -3.16 0.5 0.5Respiratory Disease 0.94 -0.80 0.7 0.7 -0.50 -1.57 0.7 0.7Other -0.49 -0.89 0.6 0.6 -0.51 -0.91 0.6 0.6Resulting Total ** 1.51 0.16 1.07 1.06 1.07 0.11 1.06 1.05Ages 65 - 84Cardiovascular Disease 3.19 2.25 2.2 2.2 2.89 2.56 2.2 2.2Cancer 1.00 2.06 0.9 0.9 0.13 1.55 0.9 0.9Violence 0.46 -0.76 0.5 0.5 -0.18 -0.79 0.5 0.5Respiratory Disease 0.73 1.14 0.3 0.3 -1.68 0.29 0.3 0.3Other -0.78 -0.62 0.3 0.3 -1.43 -0.52 0.3 0.3Resulting Total ** 1.57 1.30 0.77 0.78 0.80 1.09 0.72 0.73Ages 85 and olderCardiovascular Disease 1.75 1.92 1.2 1.2 1.96 2.30 1.2 1.2Cancer -0.09 0.97 0.5 0.5 -0.41 0.36 0.5 0.5Violence -0.69 -1.21 0.3 0.3 -1.31 -2.13 0.3 0.3Respiratory Disease -0.29 1.31 0.2 0.2 -1.45 0.44 0.2 0.2Other -2.22 -1.21 0.2 0.2 -3.01 -1.23 0.2 0.2Resulting Total ** 0.36 0.71 0.51 0.52 0.17 0.56 0.49 0.50TotalCardiovascular Disease 2.60 1.87 2.40 2.19Cancer 1.02 1.71 0.56 1.32Violence 0.40 -0.92 -0.30 -1.54Respiratory Disease 0.43 0.98 -1.35 0.10Other -0.82 -0.60 -1.51 -0.71Resulting Total ** 1.20 0.87 0.74 0.75 0.65 0.71 0.69 0.70

Male FemaleMale FemaleMale

**Resulting total represents average annual percent reduction in age-adjusted death rates for the last 50 years of the 75-year projection period.

Male

Female

Historical Historical

Female

Male

* Alternative 1 is 1/2 times Alternative 2; Alternative 3 is 5/3 times Alternative 2.

Average Annual Rates of Reduction in Central Death Rates by Age Group, Sex, and Cause 

Female

Male Female

Alternative II* Alternative II*
Projecting Mortality

• Incorporating future mortality improvement results in a n

year life table each year. 

• Assumptions as to the percent reduction in mortality rate

• Age group• Cause of death

• Central death rates are the key variables used in the proje

• A central death rate is the number of deaths during the 

divided by the mid-year population.

• Central death rates for the starting year• Rate of decline in the central death rates

8
Central Death Rates for the Starting 

• Annual historical central death rates calculated

• For 21 age groups, 2 sexes, and 5 causes of death.

• Last year of final data (2015 NCHS and 2015 Medicare) is 

the starting year.

• Instead, starting year values are determined using the last 

historical central death rates

• Computed as the values for the most recent year falling on a we

square line.

9
Rates of Decline in Central Death R

• Historical average annual declines in central death rates a

calculated:

• Over the most recent 10 year period • For 21 age groups, 2 sexes, and 5 causes of death 

• Ultimate average annual declines in central death rates ar

determined by the Trustees.

• Reached in the 24th year following the year of the Trustees Repo

• For 5 age groups and 5 causes of death.• Male and female rates are the same.

• Formula is used to transition from the average annual dec

the historical period to the ultimate rates of decline

10
Average Annual Rate of Decline in Age-a

Central Death Rates

Based on the intermediate assumptions of the 2018 Trustees 

(Using the 2010 Census Resident Population as the standard population for age adjusting)

11
Historical and Intermediate Projections of 

Percentage Reduction in Central Death 

Ages 65-84

12
Historical and Intermediate Projections of 

Percentage Reduction in Central Death 

Ages 85+

13
Other Considerations

• Death rates by marital status• Differential mortality between the disabled and non-disab• Mortality differential by earnings levels

14
Mortality by Career-Avera

Earnings Level

Tiffany Bosley
Mortality By Career-Average Earning

• Previous research has shown higher income levels are ass

lower mortality rates.

• Higher lifetime earnings are also likely to be associated wi

mortality rates. This relationship is important for analyzinprojecting the costs for the Social Security program.

• Average indexed monthly earnings (AIME) is a useful mea

person’s lifetime earnings.

• We analyzed the relationship between AIME levels and m

for Social Security retired-worker beneficiaries.

16
Mortality By Career-Average Earning

Study

• Compared the death rates among retired-worker benefici

age group, and lifetime career-average earnings level (AIMannual death rate among retired-worker beneficiaries for age group.

• For each sex and age group, we calculated the relative mo

at various AIME levels.

17
Data and Methods
Data

• Data Source: Social Security Administration’s June 2017 M

Beneficiary Record (MBR) file.

• Excluded:

• Windfall Elimination Provision• Totalization agreements• AMW PIA benefit calculation• Previously entitled for a Social Security disability benefit

19
Average Indexed Monthly Earnin

Calculation

• At age 62, index earnings to reflect the change in general 

that occurred during the worker’s years of employment.

• Up to 35 years of earnings are needed to compute the ave

indexed monthly earnings.

• AIME = Average of the highest 35 years of indexed earning

20
AIME Quintiles

Male Quintiles AIME Rangea Percentage of Beneficiaries

Lowest AIME Quintile AIME ≤ $1,866 20%

2nd AIME Quintile $1,866 < AIME ≤ $3,230 20%

3rd AIME Quintile $3,230 < AIME ≤ $4,448 20%

4th AIME Quintile $4,448 < AIME ≤ $5,863 20%

Highest AIME Quintile $5,863 < AIME 20% a The AIME ranges in this example are for male retired-worker beneficiaries who were age 65 in 2015.

Female Quintiles AIME Rangea Percentage of Beneficiaries

Lowest AIME Quintile AIME ≤ $908 20%

2nd AIME Quintile $908 < AIME ≤ $1,640 20%

3rd AIME Quintile $1,640 < AIME ≤ $2,520 20%

4th AIME Quintile $2,520 < AIME ≤ $3,761 20%

Highest AIME Quintile $3,761 < AIME 20% a The AIME ranges in this example are for female retired-worker beneficiaries who were age 65 in 2015.

Male AIME Quintiles

Female AIME Quintiles

21
Calculations

• For each record, we determined:

• Sex and age• AIME level• Exposure: Active, Death, Termination Other Than Death• Deaths

• Group data by sex, age group, and AIME level, and calcula

death rates by dividing the number of death by the years 

• Relative Mortality Ratio – divide the death rates for each A

by the death rate for everyone in the sex and age group at levels.

22
Results by AIME Quintile
Results

• We observed lower death rates for retired-worker benefic

higher-than-average AIME levels, and higher death rates fworker beneficiaries with lower-than-average AIME levels

• At older ages, the differences in death rates across AIME l

diminish.

• Trends from 1995-2015 show the spread in death rates am

AIME levels remaining fairly steady.

24
Age Group 65-69 Relative Mortality Ratios

25
Male / Female Comparison

• Females generally follow the same relative mortality patte

in the higher earners have lower mortality.

• Spreads in the female relative mortality ratios among AIM

are smaller than those for males.

• Questions: Is the socioeconomic status gradient smaller fo

Or are earnings a less accurate measure of socioeconomic women?

26
Age Group 65-69 Relative Mortality Ratios

27
Age Groups

• Spread in relative mortality ratios among the quintiles dec

older ages.

62

62-64 65-69 70-74 75-79 80-84 To

Male Retired-Worker Beneficiaries by AIME Level:

Lowest AIME Quintile 1.77 1.63 1.48 1.33 1.18 1.

Highest AIME Quintile 0.52 0.54 0.58 0.65 0.75 0.

Female Retired-Worker Beneficiaries by AIME Level:

Lowest AIME Quintile 1.54 1.34 1.22 1.13 1.06 1.

Highest AIME Quintile 0.73 0.75 0.78 0.84 0.91 0.

Age

2015 Relative Mortality Ratios by Age Group for Retired-Worker Beneficiaries

28
Age Groups 70-74 and 75-79 Relative Mortality Rat

29
Age Group 62-64 Relative Mortality Ratios

30
Conclusion

• Higher AIME levels correlate with lower mortality rates, w

AIME levels correlate with higher mortality rates.

• The trends from 1995 to 2015 show that the spread in rel

mortality ratios among the AIME quintiles remain fairly stspreads widens, but not significantly, and even slightly comsome age groups in recent years.

31
Age Group 65-69 Relative Mortality Ratios

32
Mortality by Career-Average Earning

• Link to the Mortality by Career-Average Earnings Level Stu

https://www.ssa.gov/OACT/NOTES/pdf_studies/study124

33
Internal Rates of Return a

Moneys Worth Ratios

Possible Application of Mortality Differential

Michael Clingman
Introduction• Most of the work in OCACT involves looking at the Social S

OASDI program as a whole.

• With the Internal Rate of Return (IRR) and Moneys Worth 

programs OCACT analyzes the effects of Social Security on and their families in recurring annual actuarial notes.

• We do these analyses using hypothetical workers with eit

earnings or maximum taxable earnings and across four diffamily combinations.

35
Introduction (continued)

• Scaled earnings are designed to represent typical earnings 

• Lower earnings at younger ages when worker starting out in the 

• Rising earnings as worker gains experience and expertise• Leveling off or drop in earnings at older ages as some workers ta

retirement or move to part time or less demanding work

• Maximum taxable earnings are the maximum amount of e

that are subject to FICA taxes each year -- $132,900 in 201

• This is also the maximum amount of earnings for each year used 

computations
Hypothetical Workers

• Five types of hypothetical worker earnings

• Scaled:

1. Very Low2. Low3. Medium4. High

• Maximum

5. Earnings at taxable maximum

• Earnings in each year

• Scaled earnings = scaled factor for age in year * average wage in 

• Maximum earnings = taxable maximum in year
Hypothetical Workers (continued)

• Scaled Factors

• “Raw” scaled factors are determined for each age using 20 year

actual earnings from a sample of fully entitled workers up to agreceiving Social Security benefits.

• For ages 62 and over the data did not show a consistent pattern 

large number of retirees. We assume that earnings stay constandollars to obtain preliminary factors.

• We apply an adjustment factor to the preliminary factors so tha

hypothetical medium worker, born in 1960 and retiring at age 6would have career average earnings equal to the average wage 

• Scaled factors for very low, low, and high scaled workers are set 

and 160% of the medium scaled factors.
Hypothetical Workers (continued)

• These hypothetical workers give a wide range of typical ea

histories from the very low representing a minimum wage the maximum representing a worker with the highest posbenefits and taxes paid.
Assumptions

• Scaled earnings begin at age 21• Maximum earnings begin at age 22• Workers remain in continuous employment until either re

age 65, death, or disability

• If a worker becomes disabled, he or she may continue rec

benefits until death or may recover before age 65 and retworkforce.

• Family members will receive all benefits for which they ar
Assumptions (continued)

• There are numerous possible family structures. We chose 

four family types.

• Family types are:

1. Single Male Worker2. Single Female Worker3. One-earner Couple with Male Worker4. Two-earner Couple

• Hypothetical couples are assumed to:

• be the same age• marry at age 22 and stay married• have children at ages 27 and 29
Definitions

• Internal Rate of Return (IRR)

• IRR = the real (above inflation) interest rate which results in PV(Benef

PV(Taxes Paid)

• If one thinks of the taxes paid as an investment, then the IRR is the re

investment.

• Moneys Worth (MW)

• MW = PV(Benefit Received) / PV(Taxes Paid)• Measure of whether the worker gets his/her “money’s worth” from t• Effective interest rates of the Trust Funds are used in present value ca

• In this presentation we will focus mainly on IRR. The analysis f

similar.
Time effects on IRR results

• We computed IRR values for different birth cohorts. Resul

over time for various reasons.

• Mortality effects:

• Later cohorts generally have lower mortality rates than earlier o

• Lower mortality leads to longer life, more benefits being paid, a

• This is partially offset for couples where there can be survivor b
Time effects on IRR results (Continued

• Tax rate effect

• Social Security benefit computations are based on taxable earni• The tax rate does not affect the benefit computation.• All other things being equal, lower tax rates increase IRR while h

rates decrease them.

• Tax rates increased from 2% employer/employee combined in 1

in 1990 and have largely stayed steady since then.

• So earlier cohorts have higher IRR.
Time effects on IRR results (Continued

• Other time effects:

• Increases in wage base• Increase in normal retirement age• Changes to benefit formula (more or less generous)• (MW results are also affected by fluctuating interest rates)
Time effects on IRR results (Continued

• Combined results:

• From the 1920 to 1949 cohort there is a large drop in IRR due to 

tax rates.

• For scaled workers there is an increase in IRR from the 1949 to 2

due to improving mortality.

• For maximum earners, the increase in IRR from the 1949 to 196

to mortality improvements is offset by increases in the taxable m
Earnings 

Level

Year of Birth

Year Age 65

Single Male

Single Female

One-Earner Couple

Single Male

Single Female

One-Earner Couple

SinMa

1920 1985 5.41 6.17 9.26 5.41 6.17 9.26 1937 2002 4.45 4.82 7.00 4.45 4.82 7.00 1949 2014 4.36 4.71 6.57 4.36 4.71 6.57 1964 2029 4.44 4.86 6.37 4.44 4.86 6.37 1985 2050 4.73 5.05 6.46 4.52 4.85 6.31 2004 2069 4.85 5.12 6.46 4.17 4.46 5.83 

1920 1985 4.46 5.29 8.09 4.46 5.29 8.09 

1937 2002 3.32 3.74 5.80 3.32 3.74 5.80 1949 2014 3.23 3.63 5.42 3.23 3.63 5.42 1964 2029 3.33 3.77 5.31 3.33 3.77 5.31 1985 2050 3.63 3.97 5.42 3.39 3.74 5.23 2004 2069 3.77 4.05 5.43 3.07 3.37 4.78 

1920 1985 2.91 3.81 6.48 2.91 3.81 6.48 

1937 2002 2.25 2.73 4.78 2.25 2.73 4.78 1949 2014 2.17 2.62 4.41 2.17 2.62 4.41 1964 2029 2.28 2.74 4.31 2.28 2.74 4.31 1985 2050 2.58 2.93 4.42 2.31 2.68 4.21 2004 2069 2.73 3.02 4.44 2.02 2.34 3.78 

1920 1985 2.62 3.53 6.10 2.62 3.53 6.10 

1937 2002 1.66 2.16 4.17 1.66 2.16 4.17 1949 2014 1.53 2.00 3.75 1.53 2.00 3.75 1964 2029 1.64 2.12 3.67 1.64 2.12 3.67 1985 2050 1.94 2.31 3.78 1.65 2.03 3.56 2004 2069 2.10 2.41 3.82 1.39 1.72 3.15 

1920 1985 2.37 3.30 5.85 2.37 3.30 5.85 

1937 2002 1.20 1.75 3.81 1.20 1.75 3.81 1949 2014 0.79 1.29 3.02 0.79 1.29 3.02 1964 2029 0.68 1.16 2.65 0.68 1.16 2.65 1985 2050 0.98 1.36 2.77 0.67 1.07 2.54 2004 2069 1.13 1.46 2.81 0.47 0.81 2.21 

Note: 2017 Trustees Report Intermediate Assumptions

Medium

High

Maximum

Internal Real Rates of Return for Various Earning Level Scaled Workers 

Present Law Scheduled Increased Payroll Tax 

Very Low

Low
Earnings level effects IRR results

• Benefits increase with higher earnings but are also progre

• A worker with higher earnings will obtain a higher absolute ben• A worker with lower earnings will receive a higher benefit relati

pre-retirement income.

• All other things being equal, a worker with lower earnings will h

IRR.

• Highlighted values in the following table show how IRR decrease

cohort single male worker as the earnings level goes up.
Earnings 

Level

Year of Birth

Year Age 65

Single Male

Single Female

One-Earner Couple

Single Male

Single Female

One-Earner Couple

SinMa

1920 1985 5.41 6.17 9.26 5.41 6.17 9.26 1937 2002 4.45 4.82 7.00 4.45 4.82 7.00 1949 2014 4.36 4.71 6.57 4.36 4.71 6.57 1964 2029 4.44 4.86 6.37 4.44 4.86 6.37 1985 2050 4.73 5.05 6.46 4.52 4.85 6.31 2004 2069 4.85 5.12 6.46 4.17 4.46 5.83 

1920 1985 4.46 5.29 8.09 4.46 5.29 8.09 

1937 2002 3.32 3.74 5.80 3.32 3.74 5.80 1949 2014 3.23 3.63 5.42 3.23 3.63 5.42 1964 2029 3.33 3.77 5.31 3.33 3.77 5.31 1985 2050 3.63 3.97 5.42 3.39 3.74 5.23 2004 2069 3.77 4.05 5.43 3.07 3.37 4.78 

1920 1985 2.91 3.81 6.48 2.91 3.81 6.48 

1937 2002 2.25 2.73 4.78 2.25 2.73 4.78 1949 2014 2.17 2.62 4.41 2.17 2.62 4.41 1964 2029 2.28 2.74 4.31 2.28 2.74 4.31 1985 2050 2.58 2.93 4.42 2.31 2.68 4.21 2004 2069 2.73 3.02 4.44 2.02 2.34 3.78 

1920 1985 2.62 3.53 6.10 2.62 3.53 6.10 

1937 2002 1.66 2.16 4.17 1.66 2.16 4.17 1949 2014 1.53 2.00 3.75 1.53 2.00 3.75 1964 2029 1.64 2.12 3.67 1.64 2.12 3.67 1985 2050 1.94 2.31 3.78 1.65 2.03 3.56 2004 2069 2.10 2.41 3.82 1.39 1.72 3.15 

1920 1985 2.37 3.30 5.85 2.37 3.30 5.85 

1937 2002 1.20 1.75 3.81 1.20 1.75 3.81 1949 2014 0.79 1.29 3.02 0.79 1.29 3.02 1964 2029 0.68 1.16 2.65 0.68 1.16 2.65 1985 2050 0.98 1.36 2.77 0.67 1.07 2.54 2004 2069 1.13 1.46 2.81 0.47 0.81 2.21 

Note: 2017 Trustees Report Intermediate Assumptions

Medium

High

Maximum

Internal Real Rates of Return for Various Earning Level Scaled Workers 

Present Law Scheduled Increased Payroll Tax 

Very Low

Low
Family effects on IRR results

• Family effects

• Single females have higher IRR values than single males due to i

female longevity.

• One-earner couples have higher values than single workers due 

child, and survivor benefits.

• Two-earner couples with the same earnings have IRR values app

equal to those for single female workers. The lower male benefapproximately offset by child benefits. (To simplify the presentacategory was left off the charts but is in the written actuarial nosimilar to those for the single female worker.)

• Highlighted values in the following chart show how IRR increase

cohort medium earner category across family types.
Earnings 

Level

Year of Birth

Year Age 65

Single Male

Single Female

One-Earner Couple

Single Male

Single Female

One-Earner Couple

SinMa

1920 1985 5.41 6.17 9.26 5.41 6.17 9.26 1937 2002 4.45 4.82 7.00 4.45 4.82 7.00 1949 2014 4.36 4.71 6.57 4.36 4.71 6.57 1964 2029 4.44 4.86 6.37 4.44 4.86 6.37 1985 2050 4.73 5.05 6.46 4.52 4.85 6.31 2004 2069 4.85 5.12 6.46 4.17 4.46 5.83 

1920 1985 4.46 5.29 8.09 4.46 5.29 8.09 

1937 2002 3.32 3.74 5.80 3.32 3.74 5.80 1949 2014 3.23 3.63 5.42 3.23 3.63 5.42 1964 2029 3.33 3.77 5.31 3.33 3.77 5.31 1985 2050 3.63 3.97 5.42 3.39 3.74 5.23 2004 2069 3.77 4.05 5.43 3.07 3.37 4.78 

1920 1985 2.91 3.81 6.48 2.91 3.81 6.48 

1937 2002 2.25 2.73 4.78 2.25 2.73 4.78 1949 2014 2.17 2.62 4.41 2.17 2.62 4.41 1964 2029 2.28 2.74 4.31 2.28 2.74 4.31 1985 2050 2.58 2.93 4.42 2.31 2.68 4.21 2004 2069 2.73 3.02 4.44 2.02 2.34 3.78 

1920 1985 2.62 3.53 6.10 2.62 3.53 6.10 

1937 2002 1.66 2.16 4.17 1.66 2.16 4.17 1949 2014 1.53 2.00 3.75 1.53 2.00 3.75 1964 2029 1.64 2.12 3.67 1.64 2.12 3.67 1985 2050 1.94 2.31 3.78 1.65 2.03 3.56 2004 2069 2.10 2.41 3.82 1.39 1.72 3.15 

1920 1985 2.37 3.30 5.85 2.37 3.30 5.85 

1937 2002 1.20 1.75 3.81 1.20 1.75 3.81 1949 2014 0.79 1.29 3.02 0.79 1.29 3.02 1964 2029 0.68 1.16 2.65 0.68 1.16 2.65 1985 2050 0.98 1.36 2.77 0.67 1.07 2.54 2004 2069 1.13 1.46 2.81 0.47 0.81 2.21 

Note: 2017 Trustees Report Intermediate Assumptions

Medium

High

Maximum

Internal Real Rates of Return for Various Earning Level Scaled Workers 

Present Law Scheduled Increased Payroll Tax 

Very Low

Low
Alternatives to Present Law Scheduled 

Scenario• The 2017 and 2018 Trustees Reports predict that, if Congr

nothing, the Social Security Trust Fund reserves will depleTo avoid this situation Congress has 3 basic options:

1. Transfer money from general revenues2. Increase taxes3. Reduce benefits

• If Congress were to fully cover the shortfall with general r

then we would get the “Present Law Scheduled” scenario
Alternatives to Present Law Scheduled 

Scenario (continued)• For illustrative purposes our office came up with 2 simple 

that represent possible options for increasing taxes or redbenefits.

1. Increased Payroll Tax Scenario: Payroll tax rates are increased 

that there are sufficient funds to pay present law benefits.

2. Payable Benefits Scenario: Benefits are reduced each year so t

benefits paid plus administrative costs equals the tax income.

• Since any solution chosen by Congress would likely be som

combination of the 3 basic options, these 3 scenarios give reasonable range of future IRR results.
Year

% of 

benefits 

paid

combined 

tax rate

% of 

benefits 

paid

combined 

tax rate

% of 

benefits 

paid

co

ta

2018 100% 12.40 100% 12.40 100% 2033 100% 12.40 100% 12.40 100% 2034 100% 12.40 100% 13.37 94% 

2035 100% 12.40 100% 15.94 78% 

2050 100% 12.40 100% 15.66 79% 

2070 100% 12.40 100% 16.42 75% 

2095 100% 12.40 100% 16.84 74% 

Present Law 

Scheduled

Increased Payroll 

Tax Scenario

Payable Be

Scenar
Alternatives to Present Law Scheduled 

Scenario (continued)• The following 2 tables show the effects of the Increased Payro

Payable Benefits scenarios on IRR and MW values.

• The Increased Payroll Tax Scenario:

• This scenario only affects workers with earnings after 2033 – the 1985 

cohorts in the table.

• Affected values for the Medium Scaled Earner are highlighted in gree

• The Payable Benefits Scenario:

• The scenario affects all cohorts still potentially receiving a benefit in 2

• Reduction is larger than for the Increased Payroll Tax Scenario for all a

• Affected values for the Medium Scaled Earner are highlighted in red.

• For both scenarios, later cohorts are generally more affected t

ones
Earnings 

Level

Year of Birth

Year Age 65

Single Male

Single Female

One-Earner Couple

Single Male

Single Female

One-Earner Couple

SinMa

1920 1985 5.41 6.17 9.26 5.41 6.17 9.26 1937 2002 4.45 4.82 7.00 4.45 4.82 7.00 1949 2014 4.36 4.71 6.57 4.36 4.71 6.57 

1964 2029 4.44 4.86 6.37 4.44 4.86 6.37 

1985 2050 4.73 5.05 6.46 4.52 4.85 6.31 

2004 2069 4.85 5.12 6.46 4.17 4.46 5.83 

1920 1985 4.46 5.29 8.09 4.46 5.29 8.09 1937 2002 3.32 3.74 5.80 3.32 3.74 5.80 

1949 2014 3.23 3.63 5.42 3.23 3.63 5.42 

1964 2029 3.33 3.77 5.31 3.33 3.77 5.31 1985 2050 3.63 3.97 5.42 3.39 3.74 5.23 

2004 2069 3.77 4.05 5.43 3.07 3.37 4.78 1920 1985 2.91 3.81 6.48 2.91 3.81 6.48 1937 2002 2.25 2.73 4.78 2.25 2.73 4.78 1949 2014 2.17 2.62 4.41 2.17 2.62 4.41 

1964 2029 2.28 2.74 4.31 2.28 2.74 4.31 

1985 2050 2.58 2.93 4.42 2.31 2.68 4.21 2004 2069 2.73 3.02 4.44 2.02 2.34 3.78 

1920 1985 2.62 3.53 6.10 2.62 3.53 6.10 1937 2002 1.66 2.16 4.17 1.66 2.16 4.17 1949 2014 1.53 2.00 3.75 1.53 2.00 3.75 

1964 2029 1.64 2.12 3.67 1.64 2.12 3.67 1985 2050 1.94 2.31 3.78 1.65 2.03 3.56 

2004 2069 2.10 2.41 3.82 1.39 1.72 3.15 1920 1985 2.37 3.30 5.85 2.37 3.30 5.85 1937 2002 1.20 1.75 3.81 1.20 1.75 3.81 

1949 2014 0.79 1.29 3.02 0.79 1.29 3.02 

1964 2029 0.68 1.16 2.65 0.68 1.16 2.65 1985 2050 0.98 1.36 2.77 0.67 1.07 2.54 

2004 2069 1.13 1.46 2.81 0.47 0.81 2.21 

Note: 2017 Trustees Report Intermediate Assumptions

Medium

High

Maximum

Internal Real Rates of Return for Various Earning Level Scaled Worke

Present Law Scheduled Increased Payroll Tax 

Very Low

Low
Earnings 

Level

Year of Birth

Year Age 65

Single Male

Single Female

One-Earner Couple

Single Male

Single Female

One-Earner Couple

SinMa

1920 1985 2.50 3.05 5.44 2.50 3.05 5.44 

1937 2002 1.48 1.69 2.94 1.48 1.69 2.94 

1949 2014 1.46 1.67 2.77 1.46 1.67 2.77 

1964 2029 1.86 2.13 3.32 1.86 2.13 3.32 1985 2050 1.95 2.16 3.31 1.79 1.99 3.05 2004 2069 1.87 2.05 3.09 1.52 1.67 2.52 

1920 1985 1.99 2.44 4.31 1.99 2.44 4.31 

1937 2002 1.08 1.23 2.15 1.08 1.23 2.15 

1949 2014 1.06 1.21 2.02 1.06 1.21 2.02 

1964 2029 1.36 1.55 2.43 1.36 1.55 2.43 1985 2050 1.42 1.58 2.43 1.31 1.45 2.24 

2004 2069 1.37 1.50 2.27 1.11 1.22 1.85 1920 1985 1.37 1.67 2.98 1.37 1.67 2.98 1937 2002 0.80 0.91 1.62 0.80 0.91 1.62 1949 2014 0.78 0.90 1.52 0.78 0.90 1.52 

1964 2029 1.00 1.15 1.82 1.00 1.15 1.82 

1985 2050 1.05 1.17 1.81 0.97 1.07 1.67 2004 2069 1.01 1.10 1.69 0.82 0.90 1.38 

1920 1985 1.23 1.50 2.67 1.23 1.50 2.67 1937 2002 0.67 0.77 1.36 0.67 0.77 1.36 1949 2014 0.65 0.75 1.26 0.65 0.75 1.26 

1964 2029 0.83 0.95 1.51 0.83 0.95 1.51 1985 2050 0.87 0.97 1.50 0.80 0.89 1.38 2004 2069 0.84 0.92 1.41 0.68 0.75 1.15 

1920 1985 1.12 1.36 2.42 1.12 1.36 2.42 1937 2002 0.60 0.69 1.21 0.60 0.69 1.21 1949 2014 0.53 0.61 1.02 0.53 0.61 1.02 

1964 2029 0.60 0.69 1.09 0.60 0.69 1.09 1985 2050 0.65 0.73 1.13 0.61 0.67 1.04 

2004 2069 0.62 0.68 1.04 0.51 0.56 0.86 

Note: 2017 Trustees Report Intermediate Assumptions

Medium

High

Maximum

Moneysworth Ratios for Various Earning Level Scaled Workers

Present Law Scheduled Increased Payroll Tax 

Very Low

Low
Differential Mortality

• The IRR and MW results published in December 2017 and 

the same mortality rates for workers at all earnings levels.

• We saw from Tiffany’s presentation that mortality varies w

earnings levels – higher earners have lower mortality.

• Differential mortality would improve IRR and MW results 

earners but worsen them for lower earners.
Differential Mortality (continued)

• We plan to apply differential mortality to the IRR/MW calc

the future.

• We have differential mortality rates after entitlement from 

study.

• We need to estimate differential mortality rates by earnin

prior to entitlement and also differential disability incidentermination rates

• One issue is incomplete death data, especially at younger ages.• There is no requirement to report deaths to SSA if there is no be• May extrapolate the results of Tiffany’s study to younger ages, i

partial data we have.
MW and IRR Actuarial Notes

• Link to the Internal Rate of Return note -

https://www.ssa.gov/OACT/NOTES/ran5/index.html

• Link to the Moneys Worth Ratios note -

https://www.ssa.gov/OACT/NOTES/ran7/index.html

60
Questions?