Social Security Actuarial Status

The 2018 Annual Report of the Board of Trustees 

of the OASI and DI Trust Funds

Key Results under Intermediate Assumptions

Prepared by the Office of the Chief Actuary, SSA 

National Academy of Social Insurance Event

June 6, 2018
What Is the Legislative Mandate for the Annual R

1) Trust Fund operations of the past year and the 

next five years

2) Actuarial status of the trust funds

– This means the ability to meet the cost of schedule

benefits with scheduled revenue and trust fund reserves

– And the extent to which scheduled revenue will fal

short, forcing cuts or delays in benefits in the abseof legislative change
Primary Changes this Year

1) Continued lower-than-expected disability applications and incide

have extended DI reserve depletion another 4 years, to 2032.

2) OASI reserve depletion is now late 2034 versus early 2035 in las

year’s report. Primarily from lower projected payroll taxes (for OADI, and HI) due to temporarily slower GDP growth and lower earas percent of GDP.

3) OASDI actuarial status is similar to last year. Actuarial deficit 

increased by only 0.02 percent of payroll versus expected increa

0.06 percent from change in valuation period alone. Annual deficsmaller between 2025 and 2060, and after 2085.
SOLVENCY: OASDI Trust Fund Reserve Depletion 2034 (same as last 

o Reserve depletion date varied from 2029 to 2042 in reports over the past 26 years (1992-2018) 

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 2035 

Social Security Trust Fund Ratios

Assets as Percent of Annual Cost

Trustees Report Intermediate Projections

OASDI 2018TROASI 2018TRDI 2018TROASDI 2017TROASI 2017TRDI 2017TR

Historical

Tax Rate

Reallocation

DI

OASDI

OASI
Applications for Disability Benefits Continue to Fall

At the peak of the last economic cycle in 2007, applications were low, but increase

the recession to over 2 million in 2010. In 2016 and 2017, with the economy still 

sustainable full-employment level, applications have dropped below the 2007 

1.41.51.61.71.81.92.02.1

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 

(millions)

Total Social Security Disability Receipts at Disability Determination 

Services by Calendar Year: Historical and Intermediate Assumptions 

for 2012 through 2018 Trustees Reports

2012TR

2017TR

2016TR

2015TR

2014TR

2013TR

2018TR

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.
Disability Incidence Rate Falls to Historic Lows

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

declined since the peak in 2010 to extraordinarily low levels for 2016 and 2

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 Reports

2012TR

2017TR

2016TR

2015TR

2014TR

2013TR

Average 1990-2017 5.23Ultimate Assumption 5.40

2018TR
Fewer Disabled Worker Beneficiaries 

Fewer now and in near term based on recent applications and incidence ra

6,0007,0008,0009,000

10,00011,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 

Disabled Worker Beneficiaries

In Current Payment Status at End of Year (in thousands)

2008 TR (no recession)

2018 TR

2017 TR
Changes in OASDI Annual Balance

Annual income rate minus annual cost rate

-6%-4%-2%

0%2%

2015 2025 2035 2045 2055 2065 2075 2085 

Calendar year

2017 Report2018 Report
• Valuation Period - 0.06 • Legislation etc. 0.00 • Lower recent birth data and lower assumed near-term total 

fertility rate - 0.08 

• Higher recent mortality +0.05 • Immigration and other data updates +0.02 • Lower ultimate level of productivity & GDP - 0.02 • Lower near-term interest rates - 0.02 • Starting values and other near-term economic assumptions +0.03 • Lower recent and near-term disability applications and 

incidence rate, lower average benefit levels +0.01 

• Other new data and methods improvements +0.05 

Net Change for All Reasons -0.02 

Principal Reasons for Actuarial Balance 

Change in 2018 Report 
Labor Productivity Growth Rate

o Recent slowdown in productivity growth is assumed to be temporary o Productivity growth is projected to be in line with the longer-term trend seen 

decades

-1

01234567

1949 1959 1969 1979 1989 1999 2009 2019 2029 2039 2049 2059 2069 2079 2

Percent

Labor Productivity Growth Rate

Historical and Projected (intermediate assumptions)

Historical Projected

Average 1949-2016 1.98%

20-year average
Lower Potential GDP

o Persistently slow growth since the end of recession in 2009, largely due to 

in labor productivity, led to a gradual adjustment of the potential GDP estim

o In 2018 TR, the level of potential GDP is about 1 percent lower than in 201

12,00014,00016,00018,00020,00022,00024,000

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027

Potential GDP (billions of 2009 dollars, intermediate assumptions)

2010 TR

2018 TR

2017 TR

Historical Projected
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
OASDI Annual Cost and Non-Interest Income as Percent of Taxable Pa

Persistent Negative Annual Cash-Flow Balance Starting in 2010 

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 las

0%5%

10%15%20%25%

2005 2015 2025 2035 2045 2055 2065 2075 2085 2

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 = income after trust fund depletion in 2034
SUSTAINABILITY: Cost as Percent of GDP 

Rises from a 4.2-percent average in 1990-2008, to about 6.1% by 2038, th

declines to 5.9% by 2052, and generally increases to 6.1% by 2092

0%2%4%6%8%

10%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

Non-interest Income

Historical Estimated

Cost
OASDI Beneficiaries per 100 Workers

0

102030405060708090

100

1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 209

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 2090 21

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
Uncertainty Illustrations

Unrealistically narrow stochastic results due to lack of central tendency 

10%15%20%25%30%

2018 2033 2048 2063 2078 

Projection year

2018 TR OASDI Annual Cost Rate

Low-CostIntermediateHigh-CostStochastic 2.5%Stochastic 50%Stochastic 97.5%
So—What If We Project Federal Debt Consistent 

With the Law?

0

20406080

100120140160

2000 2005 2010 2015 2020 2025 2030 2035 2040 204

Debt as Percent of GDP

Projected Federal Debt Held by the Public: CBO Baseline (Assuming OASDI & HI Unfunded 

Obligations Are Paid by Borrowing From the Public) vs. Assuming Current Law 

CBO Baseline March 2017Less OASDI Unfunded Obligations (2017 Trustees Projections)Less OASDI&HI Unfunded Obligations (2017 TrusteesProjections)
How to Fix Social Security Long-Term

Make choices addressing OASDI deficits 2034-2

• Raise scheduled revenue after 2033 by about 

third

• Reduce scheduled benefits after 2033 by abo

one-fourth

• 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
For More Information Go To

http://www.ssa.gov/oact/

• There you will find:

– This and all prior OASDI Trustees Reports– Detailed single-year tables for recent reports– Our estimates for comprehensive proposals– Our estimates for the individual provisions– Actuarial notes; including replacement rates– Actuarial studies; including stochastic– Extensive databases– Congressional testimonies– Presentations by OCACT employees