SOCIAL SECURITY: 

HOW BIG IS THE FINANCING 

CHALLENGE?

NASI 2017 Summer Academy for Interns 

August 10, 2017 

Steve Goss

Office of the Chief Actuary

Social Security Administration
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 25 years (1992-2017) 

o DI Trust Fund — reserve depletion in 2028, five years later than last year

o Due largely to lower recent and near-term disability applications and incidence rate 

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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 2017TR

OASI 2017TR

DI 2017TR

OASDI 2016TR

OASI 2016TR

DI 2016TR

Historical

Tax Rate

Reallocation

DI

OASDI

OASI
Disability Incidence Rate Falls to Historic Lows

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

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

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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 2017 Trustees Reports

2012TR

2017TR

2016TR

2015TR

2014TR

2013TR

Average 1990-2016 5.27

Ultimate Assumption 5.40
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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 

77% of scheduled benefits still payable at trust fund reserve depletion

Annual deficit in 2091: 4.48 percent of payroll — 0.13 percent larger 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:

2016-33: 100%

2034: 77%

2091: 73%

Cost: Scheduled but not 

fully payable benefits

Expenditures: Payable benefits = income 

after trust fund depletion in 2034
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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

16

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 2017 TR

Population 65+/(20-64) 

Actual and TR Intermediate

TFR remains at 3.0 after 1964

TFR remains at 3.3 after 1964
Changing Age Distribution Over Last 20 and Next 20 

Years Mainly Due to Macro Aging—permanent level shifts

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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 (2017TR)

25-44

45-64

65-84

85+

Boomers 

become 

25-44

Boomers 

become 

45-64

Boomers 

become 

65-84
Mortality Experience: All Ages

Reductions continue to fall short of expectations

18

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)

2015TR 2016TR 2017TR 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)

2015TR 2016TR 2017TR Actual
Replacement Rates Based on the 2017 TR

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

20

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 ($23,091 for 2017; 25th percentile)

Medium Earner ($51,314 for 2017; 57th percentile)

High Earner ($82,103 for 2017; 82nd percentile)

Max Earner ($127,200 for 2017; 100th percentile)
How About at Age 62, Where Most 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 ($23,091 in 2017; 25th percentile)

Medium Earner ($51,314 in 2017; 57th percentile)

High Earner ($82,103 in 2017; 82nd percentile)

Max Earner ($127,200 in 2017; 100th percentile)
Payable Benefits Under the Law, After Trust 

Fund Reserves Are Depleted, Are Even 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 ($23,091 in 2017; 25th percentile)

Medium Earner ($51,314 in 2017; 57th percentile)

High Earner ($82,103 in 2017; 82nd percentile)

Max Earner ($127,200 in 2017; 100th percentile)
How to Fix Social Security Long-Term

Make choices addressing OASDI deficits 2034-2091:

• Raise scheduled revenue after 2033 by about 33%: 

increase revenue from 4.6 to 6.1% of GDP

• Reduce scheduled benefits after 2033 by about 25%: 

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

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