114th Congress, 2nd Session – – – – – – – – – – – – – House Document 114-145

THE 2016 ANNUAL REPORT OF THE BOARD OF 

TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS 

INSURANCE AND FEDERAL DISABILITY INSURANCE 

TRUST FUNDS

COMMUNICATION

FROM

THE BOARD OF TRUSTEES, FEDERAL OLD-AGE AND 

SURVIVORS INSURANCE AND FEDERAL DISABILITY 

INSURANCE TRUST FUNDS

TRANSMITTING

THE 2016 ANNUAL REPORT OF THE BOARD OF TRUSTEES OF THE 

FEDERAL OLD-AGE AND SURVIVORS INSURANCE AND FEDERAL 

DISABILITY INSURANCE TRUST FUNDS

June 22, 2016—Referred to the Committee on Ways and Means

and ordered to be printed

U.S. GOVERNMENT PUBLISHING OFFICE

20-505 WASHINGTON: 2016
.
(III)

CONTENTS

(V)

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

A. HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

B. TRUST FUND FINANCIAL OPERATIONS IN 2015 . . . . . . . 7

C. ASSUMPTIONS ABOUT THE FUTURE . . . . . . . . . . . . . . . . 9

D. PROJECTIONS OF FUTURE FINANCIAL STATUS . . . . . . . 10

E. CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

III. FINANCIAL OPERATIONS OF THE TRUST FUNDS AND

LEGISLATIVE CHANGES IN THE LAST YEAR . . . . . . . . . . 26

A. OPERATIONS OF THE OLD-AGE AND SURVIVORS 

INSURANCE (OASI) AND DISABILITY INSURANCE (DI) 

TRUST FUNDS, IN CALENDAR YEAR 2015 . . . . . . . . . . . . 26

1. OASI Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

2. DI Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

3. OASI and DI Trust Funds, Combined . . . . . . . . . . . . . . . . . . 33

B. SOCIAL SECURITY AMENDMENTS SINCE THE 

2015 REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

IV. ACTUARIAL ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

A. SHORT-RANGE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . 40

1. Operations of the OASI Trust Fund. . . . . . . . . . . . . . . . . . . . 41

2. Operations of the DI Trust Fund . . . . . . . . . . . . . . . . . . . . . . 45

3. Operations of the Combined OASI and DI Trust Funds . . . . . 48

4. Factors Underlying Changes in 10-Year Trust Fund Ratio 

Estimates From the 2015 Report . . . . . . . . . . . . . . . . . . . . . . 50

B. LONG-RANGE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . 52

1. Annual Income Rates, Cost Rates, and Balances . . . . . . . . . . 53

2. Comparison of Workers to Beneficiaries. . . . . . . . . . . . . . . . 62

3. Trust Fund Ratios and Test of Long-Range 

Close Actuarial Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

4. Summarized Income Rates, Summarized Cost Rates, 

and Actuarial Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

5. Open Group Unfunded Obligation . . . . . . . . . . . . . . . . . . . . 73

6. Reasons for Change in Actuarial Balance From Last Report . . 76
(VI)

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

A. DEMOGRAPHIC ASSUMPTIONS AND METHODS . . . . . . . 83

1. Fertility Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

2. Mortality Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

3. Immigration Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 88

4. Total Population Estimates. . . . . . . . . . . . . . . . . . . . . . . . . . 94

5. Life Expectancy Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . 96

B. ECONOMIC ASSUMPTIONS AND METHODS . . . . . . . . . . . 100

1. Productivity Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 101

2. Price Inflation Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . 101

3. Average Earnings Assumptions . . . . . . . . . . . . . . . . . . . . . . 103

4. Assumed Real-Wage Differential . . . . . . . . . . . . . . . . . . . . . 106

5. Labor Force and Unemployment Projections . . . . . . . . . . . . . 108

6. Gross Domestic Product Projections . . . . . . . . . . . . . . . . . . . 111

7. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

C. PROGRAM-SPECIFIC ASSUMPTIONS AND METHODS . . . 116

1. Automatically Adjusted Program Parameters. . . . . . . . . . . . . 116

2. Covered Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

3. Insured Population. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

4. Old-Age and Survivors Insurance Beneficiaries. . . . . . . . . . . 127

5. Disability Insurance Beneficiaries. . . . . . . . . . . . . . . . . . . . . 134

6. Covered and Taxable Earnings, Taxable Payroll, and 

Payroll Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 144

7. Income From Taxation of Benefits . . . . . . . . . . . . . . . . . . . . 149

8. Average Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

9. Scheduled Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

10. Illustrative Scheduled Benefit Amounts . . . . . . . . . . . . . . . . 151

11. Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

12. Railroad Retirement Financial Interchange . . . . . . . . . . . . . . 153

13. Military Service Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . 154

VI. APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

A. HISTORY OF OASI AND DI TRUST FUND OPERATIONS. . 155

B. HISTORY OF ACTUARIAL STATUS ESTIMATES . . . . . . . . 166

C. FISCAL YEAR HISTORICAL AND PROJECTED 

TRUST FUND OPERATIONS THROUGH 2025 . . . . . . . . . . . 173

D. LONG-RANGE SENSITIVITY ANALYSIS . . . . . . . . . . . . . . 180

1. Total Fertility Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

2. Death Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181

3. Immigration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

4. Real-Wage Differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184

5. Consumer Price Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
(VII)

6. Real Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

7. Disability Incidence Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 188

8. Disability Termination Rates . . . . . . . . . . . . . . . . . . . . . . . . 188

E. STOCHASTIC PROJECTIONS AND UNCERTAINTY . . . . . . 191

1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

2. Stochastic Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

3. Stochastic Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

4. Comparison of Results: Stochastic to Low-Cost, 

Intermediate, and High-Cost Alternatives . . . . . . . . . . . . . . . 195

F. INFINITE HORIZON PROJECTIONS . . . . . . . . . . . . . . . . . . 201

G. ESTIMATES FOR OASDI AND HI, SEPARATE AND 

COMBINED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

1. Estimates as a Percentage of Taxable Payroll. . . . . . . . . . . . . 205

2. Estimates as a Percentage of Gross Domestic Product . . . . . . 211

3. Estimates in Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216

H. ANALYSIS OF BENEFIT DISBURSEMENTS FROM THE 

OASI TRUST FUND WITH RESPECT TO DISABLED 

BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228

I. GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232

LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250

LIST OF FIGURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

STATEMENT OF ACTUARIAL OPINION . . . . . . . . . . . . . . . 262

THE 2016 ANNUAL REPORT OF THE BOARD OF

TRUSTEES OF THE FEDERAL OLD-AGE AND

SURVIVORS INSURANCE AND FEDERAL DISABILITY

INSURANCE TRUST FUNDS

I. INTRODUCTION

The Old-Age, Survivors, and Disability Insurance (OASDI) program makes

monthly income available to insured workers and their families at retirement,

death, or disability. The OASDI program consists of two parts. Retired workers, their families, and survivors of deceased workers receive monthly benefits under the Old-Age and Survivors Insurance (OASI) program. Disabled

workers and their families receive monthly benefits under the Disability

Insurance (DI) program.

The Social Security Act established the Board of Trustees to oversee the

financial operations of the OASI and DI Trust Funds. The Board is composed of six members. Four members serve by virtue of their positions in the

Federal Government: the Secretary of the Treasury, who is the Managing

Trustee; the Secretary of Labor; the Secretary of Health and Human Services; and the Commissioner of Social Security. The President appoints and

the Senate confirms the other two members to serve as public representatives. These two positions are currently vacant. The Deputy Commissioner

of the Social Security Administration serves as Secretary of the Board.

The Social Security Act requires that the Board, among other duties, report

annually to the Congress on the actuarial status and financial operations of

the OASI and DI Trust Funds. The 2016 report is the 76th such report.
Overview

2

II. OVERVIEW

A. HIGHLIGHTS

This section summarizes the report’s major findings.

In 2015

At the end of 2015, the OASDI program was providing benefit payments1 to

about 60 million people: 43 million retired workers and dependents of retired

workers, 6 million survivors of deceased workers, and 11 million disabled

workers and dependents of disabled workers. During the year, an estimated

169 million people had earnings covered by Social Security and paid payroll

taxes on those earnings. Total expenditures in 2015 were $897 billion. Total

income was $920 billion, which consisted of $827 billion in non-interest

income and $93 billion in interest earnings. Asset reserves held in special

issue U.S. Treasury securities grew from $2,789 billion at the beginning of

the year to $2,813 billion at the end of the year. Consistent with practice in

prior reports, asset reserves at the end of 2015 reflect the 12 months of benefits scheduled for payment, and exclude from operations shown for 2015 the

benefits scheduled for payment on January 3, 2016, which were actually paid

on December 31, 2015 as required by the law.2

Short-Range Results

Under the Trustees’ intermediate assumptions, Social Security’s total income

is projected to exceed its total cost through 2019, as it has since 1982. The

2015 surplus of total income relative to cost was $23 billion. However, when

interest income is excluded, Social Security’s cost is projected to exceed its

non-interest income throughout the projection period, as it has since 2010.

The 2015 deficit of non-interest income relative to cost was $70 billion. For

2016, the program is projected to have a total-income surplus of $16 billion,

and a non-interest-income deficit of $73 billion.3

The Trustees project that the asset reserves of the OASI Trust Fund, together

with continuing program income, will be adequate to cover program costs

over the next 10 years under the intermediate assumptions. However, the

 1 The definitions of “benefit payment” and other terms appear in the Glossary.

 2 Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment each year.

 3 Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly

scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015.
3

Highlights

projected reserves of the DI Trust Fund increase from 21 percent of annual

cost at the beginning of 2016 to 48 percent at the beginning of 2019, largely

due to the temporary payroll tax rate reallocation described below, and then

decline steadily until the trust fund reserves become depleted in the third

quarter of 2023. At the time reserves become depleted, continuing income to

the DI Trust Fund would be sufficient to pay 89 percent of scheduled DI benefits. The DI Trust Fund does not satisfy the test of short-range financial adequacy.1 Figure II.D3 illustrates the implications of reserve depletion for the

DI Trust Fund.

The Bipartisan Budget Act of 2015 provides for a temporary reallocation of a

portion of the 12.40 percent payroll tax rate between the OASI and the DI

Trust Funds. For 2016 through 2018, the tax rate directed to the DI Trust

Fund increases from 1.80 percent to 2.37 percent, with a corresponding

decrease in the rate directed to the OASI Trust Fund. Beginning in 2019, the

allocations return to 1.80 percent for DI and 10.60 percent for OASI. The

reallocation alone extends the projected date of DI reserve depletion by

about 6 years. The projected year of DI reserve depletion in this report is

2023. The reallocation does not affect the operations of the combined

OASDI Trust Funds.

To illustrate the actuarial status of the Social Security program as a whole,

the operations of the OASI and DI funds are often shown on a combined

basis as OASDI. However, by law, the two funds are separate entities and

therefore the combined fund operations and reserves are hypothetical. Importantly, combined trust fund reserves are clearly hypothetical after one fund

becomes depleted, because under current law the funds cannot borrow from

each other.2

The projected reserves of the hypothetical combined OASI and DI Trust

Funds are adequate over the next 10 years under the intermediate assumptions. The ratio of reserves to cost remains above 100 percent through 2025,

declining from 303 percent of annual cost at the beginning of 20163 to

165 percent at the beginning of 2025. For last year’s report, the Trustees pro-

 1 The test of short-range financial adequacy for a trust fund is met if (1) the estimated trust fund ratio is at

least 100 percent at the beginning of the period and remains at or above 100 percent throughout the 10-year

short-range period or (2) the ratio is initially less than 100 percent, reaches at least 100 percent within

5 years (without reserve depletion at any time during this period) and remains at or above 100 percent

throughout the remainder of the 10-year short-range period. 

 2 For example, if the DI Trust Fund reserves were to become depleted in 2023 as is currently projected, the

operations of the OASDI Trust Funds, shown in this report on a hypothetical combined basis, would not

reflect the aggregated operation of the OASI and DI Trust Funds because part of the DI benefits could not be

paid without a change in the law. Implicitly, the values shown for the hypothetical combined trust funds

assume the law will have been changed to permit the transfer of resources between funds as needed. 

 3 Amounts for 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled

in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015.
Overview

4

jected that combined reserves would be 298 percent of annual cost at the

beginning of 2016 and 157 percent at the beginning of 2025. 

The combined reserves are projected to increase from $2,813 billion at the

beginning of 20161 to $2,892 billion at the beginning of 2020. Reserves

increase through 2019 because annual cost is less than total income for 2016

through 2019. At the same time, however, the ratio of reserves to cost

declines, from 303 percent of annual cost for 2016 to 246 percent for 2020.

Beginning in 2020, annual cost exceeds total income, and therefore the combined reserves begin to decline, reaching $2,527 billion at the end of 2025. 

Long-Range Results

Under the Trustees’ intermediate assumptions, projected OASDI cost will

exceed total income by increasing amounts starting in 2020, and the dollar

level of the combined trust fund reserves declines until reserves become

depleted in 2034. Figure II.D2 shows the implications of reserve depletion

for the combined OASDI Trust Funds. Considered separately, the DI Trust

Fund reserves become depleted in the third quarter of 2023 and the OASI

Trust Fund reserves become depleted in 2035. In last year’s report, the projected reserve depletion years were 2034 for OASDI, 2016 for DI, and 2035

for OASI. The change in the depletion date for DI is largely due to the temporary tax rate reallocation enacted in the Bipartisan Budget Act of 2015.

Projected OASDI cost generally increases more rapidly than projected noninterest income through 2038 primarily because the retirement of the babyboom generation will increase the number of beneficiaries much faster than

the number of covered workers increases, as subsequent lower-birth-rate

generations replace the baby-boom generation at working ages. From 2039

to 2050, the cost rate (the ratio of program cost to taxable payroll) generally

declines because the aging baby-boom generation is gradually replaced at

retirement ages by historically low-birth-rate generations. Thereafter,

increases in life expectancy cause OASDI cost to increase generally relative

to non-interest income, but more slowly than between 2010 and 2038.

The projected OASDI annual cost rate increases from 14.05 percent of taxable payroll for 20161 to 16.61 percent for 2038 and to 17.68 percent for

2090, a level that is 4.35 percent of taxable payroll more than the projected

income rate (the ratio of non-interest income to taxable payroll) for 2090.

For last year’s report, the Trustees estimated the OASDI cost for 2090 at

18.01 percent, or 4.69 percent of payroll more than the annual income rate

 1 Amounts for 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled

in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015.
5

Highlights

for that year. Expressed in relation to the projected gross domestic product

(GDP), OASDI cost generally rises from 5.0 percent of GDP for 2016 to

about 6.0 percent by 2035, then declines to 5.9 percent by 2050, and then

generally increases to 6.1 percent by 2090.

For the 75-year projection period, the actuarial deficit is 2.66 percent of taxable payroll, 0.02 percentage point smaller than in last year’s report. The

closely-related open group unfunded obligation for OASDI over the 75-year

period is 2.49 percent of taxable payroll, which is 0.04 percentage point

smaller than in last year’s report. However, the open group unfunded obligation for OASDI over the 75-year period is $11.4 trillion in present value and

is $0.7 trillion more than the measured level of $10.7 trillion a year ago. If

the assumptions, methods, starting values, and the law had all remained

unchanged, the actuarial deficit would have increased to 2.74 percent of taxable payroll and the unfunded obligation would have risen to about

2.53 percent of taxable payroll and $11.2 trillion in present value due to the

change in the valuation date. The remaining changes in the actuarial deficit

and the unfunded obligation are due to changes in the law, methods, starting

values, and assumptions. 

To illustrate the magnitude of the 75-year actuarial deficit, consider that for

the combined OASI and DI Trust Funds to remain fully solvent throughout

the 75-year projection period: (1) revenues would have to increase by an

amount equivalent to an immediate and permanent payroll tax rate increase

of 2.58 percentage points1 to 14.98 percent, (2) scheduled benefits would

have to be reduced by an amount equivalent to an immediate and permanent

reduction of about 16 percent applied to all current and future beneficiaries,

or about 19 percent if the reductions were applied only to those who become

initially eligible for benefits in 2016 or later; or (3) some combination of

these approaches would have to be adopted. 

If substantial actions are deferred for several years, the changes necessary to

maintain Social Security solvency would be concentrated on fewer years and

fewer generations. Much larger changes would be necessary if action is

deferred until the combined trust fund reserves become depleted in 2034. For

example, maintaining 75-year solvency with policies that begin in 2034

would require: (1) an increase in revenues by an amount equivalent to a

 1 The necessary tax rate of 2.58 percent differs from the 2.66 percent actuarial deficit for two reasons. First,

the necessary tax rate is the rate required to maintain solvency throughout the period that does not result in

any trust fund reserve at the end of the period, whereas the actuarial deficit incorporates an ending trust fund

reserve equal to 1 year’s cost. Second, the necessary tax rate reflects a behavioral response to tax rate

changes, whereas the actuarial deficit does not. In particular, the calculation of the necessary tax rate

assumes that an increase in payroll taxes results in a small shift of wages and salaries to forms of employee

compensation that are not subject to the payroll tax.
Overview

6

3.58 percentage point payroll tax rate increase starting in 2034, (2) a reduction in scheduled benefits by an amount equivalent to a 21 percent reduction

in all benefits starting in 2034, or (3) some combination of these approaches

would have to be adopted.

Conclusion

Under the intermediate assumptions, DI Trust Fund asset reserves are projected to become depleted in the third quarter of 2023, at which time continuing income to the DI Trust Fund would be sufficient to pay 89 percent of DI

scheduled benefits. Therefore, legislative action is needed soon to address

the DI program’s financial imbalance. The OASI Trust Fund reserves are

projected to become depleted in 2035, at which time OASI income would be

sufficient to pay 77 percent of OASI scheduled benefits.

The Trustees also project that annual cost for the OASDI program will

exceed non-interest income throughout the projection period, and will

exceed total income beginning in 2020 under the intermediate assumptions.

The projected hypothetical combined OASI and DI Trust Fund asset reserves

increase through 2019, begin to decline in 2020, and become depleted and

unable to pay scheduled benefits in full on a timely basis in 2034. At the time

of depletion of these combined reserves, continuing income to the combined

trust funds would be sufficient to pay 79 percent of scheduled benefits. Lawmakers have a broad continuum of policy options that would close or reduce

Social Security's long-term financing shortfall. Cost estimates for many such

policy options are available at www.ssa.gov/OACT/solvency/provisions/. 

The Trustees recommend that lawmakers address the projected trust fund

shortfalls in a timely way in order to phase in necessary changes gradually

and give workers and beneficiaries time to adjust to them. Implementing

changes sooner rather than later would allow more generations to share in the

needed revenue increases or reductions in scheduled benefits and could preserve more trust fund reserves to help finance future benefits. Social Security

will play a critical role in the lives of 61 million beneficiaries and

171 million covered workers and their families in 2016. With informed discussion, creative thinking, and timely legislative action, Social Security can

continue to protect future generations.
7

Calendar Year 2015 Operations

B. TRUST FUND FINANCIAL OPERATIONS IN 2015

Table II.B1 shows the income, expenditures, and asset reserves for the OASI,

the DI, and the combined OASI and DI Trust Funds in calendar year 2015.

Note: Totals do not necessarily equal the sums of rounded components.

In 2015, net payroll tax contributions accounted for 86 percent of total trust

fund income. Net payroll tax contributions consist of taxes paid by employees, employers, and the self-employed on earnings covered by Social Security. These taxes are paid on covered earnings up to a specified maximum

annual amount, which was $118,500 in 2015. Table II.B2 shows the tax rates

for 2015.

In 2015, approximately 0.04 percent of OASI and DI combined Trust Fund

income came from reimbursements from the General Fund of the Treasury.

Public Laws 111-312, 112-78, and 112-96 account for most of the reimbursement for the year. These acts specified General Fund reimbursement for temporary reductions in revenue due to reduced payroll tax rates for employees

and for self-employed workers for 2011 and 2012.

Three percent of OASI and DI combined Trust Fund income in 2015 came

from subjecting up to 50 percent of Social Security benefits to Federal perTable II.B1.—Summary of 2015 Trust Fund Financial Operations

[In billions]

OASI DI OASDI

Asset reserves at the end of 2014. . . . . . . . . . . . . . . . . . . . $2,729.2 $60.2 $2,789.5

Total income in 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801.6 118.6 920.2

Net payroll tax contributions . . . . . . . . . . . . . . . . . . . . . 679.5 115.4 794.9

Reimbursement from General Fund of the Treasury . . . .3 a

a Less than $50 million.

.3

Taxation of benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.6 1.1 31.6

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.2 2.1 93.3

Total expenditures in 2015b . . . . . . . . . . . . . . . . . . . . . . . .

b Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment each year.

750.5 146.6 897.1

Benefit paymentsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742.9 143.4 886.3

Railroad Retirement financial interchange . . . . . . . . . . 4.3 .4 4.7

Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . 3.4 2.8 6.2

Net increase in asset reserves in 2015b . . . . . . . . . . . . . . . 51.0 -28.0 23.0

Asset reserves at the end of 2015b . . . . . . . . . . . . . . . . . . . 2,780.3 32.3 2,812.5
Overview

8

sonal income taxation for beneficiaries with income (including half of benefits and all non-taxable interest) exceeding specified levels. Interest earned

on invested trust fund asset reserves accounted for 10 percent of OASDI

income. The Department of the Treasury invests trust fund reserves in interest-bearing securities issued by the U.S. Government. In 2015, the combined

trust fund reserves earned interest at an effective annual rate of 3.4 percent. 

Almost 99 percent of expenditures from the combined OASI and DI Trust

Funds in 2015 were retirement, survivor, and disability benefits totaling

$886.3 billion. A net payment of $4.7 billion was made to the Railroad

Retirement Social Security Equivalent Benefit Account from the combined

OASI and DI Trust Funds, which was about 0.5 percent of total OASDI

expenditures. The administrative expenses of the Social Security program

were $6.2 billion, which was about 0.7 percent of total expenditures. 

The trust fund investments provide a reserve to pay benefits whenever total

program cost exceeds income. Trust fund reserves increased by $23.0 billion

for 2015 because total income to the combined funds, including interest

earned on trust fund reserves, exceeded total expenditures.1 At the end of

2015, the combined reserves of the OASI and the DI Trust Funds were

$2,813 billion, or 303 percent of estimated expenditures2 for 2016. In comparison, the combined reserves at the end of 2014 were 311 percent of expenditures for 2015.

 1 As noted in footnote b of table II.B1 and elsewhere in this report, asset reserves shown for the end of 2015

reflect the 12 months of benefits scheduled for payment in 2015 and thus exclude the benefits scheduled for

payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the law.

 2 Estimated expenditures are based on the intermediate set of assumptions.

Table II.B2.—Payroll Tax Contribution Rates for 2015

[In percent]

OASI DI OASDI

Payroll tax contribution rate for employees. . . . . . . . . . . . . . . . . . . . . . . 5.30 0.90 6.20

Payroll tax contribution rate for employers . . . . . . . . . . . . . . . . . . . . . . . 5.30 .90 6.20

Payroll tax contribution rate for self-employed persons . . . . . . . . . . . . . 10.60 1.80 12.40
9

Future Assumptions

C. ASSUMPTIONS ABOUT THE FUTURE

The future income and expenditures of the OASI and DI Trust Funds will

depend on many factors, including the size and characteristics of the population receiving benefits, the level of monthly benefit amounts, the size of the

workforce, and the level of covered workers’ earnings. These factors will

depend in turn on future birth rates, death rates, immigration, marriage and

divorce rates, retirement-age patterns, disability incidence and termination

rates, employment rates, productivity gains, wage increases, inflation, interest rates, and many other demographic, economic, and program-specific factors.

Table II.C1 presents key demographic and economic assumptions for three

alternative scenarios. The intermediate assumptions reflect the Trustees’ best

estimates of future experience. Therefore, most of the figures in this overview present outcomes under the intermediate assumptions only. Any projection of the future is, of course, uncertain. For this reason, the Trustees also

present results under low-cost and high-cost alternatives to provide a range

of possible future experience. The actual future costs are unlikely to be as

extreme as those portrayed by the low-cost or high-cost projections. A separate section on the uncertainty of the projections, beginning on page 19,

highlights the implications of these alternative scenarios.

The Trustees reexamine the assumptions each year in light of recent experience and new information. This annual review helps to ensure that the Trustees’ assumptions provide the best estimate of future possibilities.

Table II.C1.—Long-Range Valuesa of Key Assumptions for the 75-year Projection Period

a See chapter V for details, including historical and projected values.

Long-range assumptions Intermediate Low-cost High-cost

Demographic:

Total fertility rate (children per woman), for 2032 and later . . . . 2.0 2.2 1.8

Average annual percentage reduction in total age-sex-adjusted 

death rates from 2015 to 2090. . . . . . . . . . . . . . . . . . . . . . . . . . .78 .42 1.16

Average annual net immigration (in thousands) for 2016 

to 2090. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,291 1,629 961

Economic:

Average annual percentage change in:

Productivity (total U.S. economy), for 2026 and later . . . . . . . 1.68 1.98 1.38

Average wage in covered employment from 2026 to 2090 . . . 3.80 5.03 2.59

Consumer Price Index (CPI-W), for 2019 and later. . . . . . . . . 2.60 3.20 2.00

Average annual real-wage differential (percent) for 2026 

to 2090. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20 1.83 .59

Unemployment rate (percent, age-sex-adjusted), for 2022 and 

later . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 4.5 6.5

Annual trust fund real interest rate (percent), for 2026 and later. 2.7 3.2 2.2

Programmatic:

Disability incidence rate (per 1,000 exposed, age-sex-adjusted) 

in 2090. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 4.3 6.4

Disability recovery rate (per 1,000 beneficiaries, age-sexadjusted) in 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 12.6 8.3
Overview

10

D. PROJECTIONS OF FUTURE FINANCIAL STATUS

Short-Range Actuarial Estimates

For the short-range period (2016 through 2025), the Trustees measure financial adequacy by comparing projected asset reserves at the beginning of each

year to projected program cost for that year under the intermediate set of

assumptions. Maintaining a trust fund ratio of 100 percent or more—that is,

reserves at the beginning of each year at least equal to projected cost for the

year—is a good indication that the trust fund can cover most short-term contingencies. The projected trust fund ratios under the intermediate assumptions for OASI alone, and for OASI and DI combined, exceed 100 percent

throughout the short-range period. Therefore, OASI and OASDI satisfy the

Trustees’ short-term test of financial adequacy. However, the DI Trust Fund

fails the Trustees’ short-term test of financial adequacy. The Trustees estimate that the DI trust fund ratio was at 21 percent at the beginning of 2016.

The projected DI trust fund ratio increases to 48 percent at the beginning of

2019, largely due to the temporary payroll tax rate reallocation for 2016

through 2018 from OASI to DI enacted in the Bipartisan Budget Act of

2015, and then declines until the trust fund reserves become depleted in the

third quarter of 2023. Figure II.D1 shows that the trust fund ratio for the

combined OASI and DI Trust Funds declines consistently after 2010.

Figure II.D2 illustrates some of the implications of reserve depletion for the

combined OASI and DI Trust Funds; figure II.D3 illustrates similar information for the DI Trust Fund alone.

Projected OASDI cost is less than total income until 2020, when cost begins

to exceed total income. While trust fund reserves continue to grow through

2019, they grow more slowly than cost, causing the trust fund ratio to

decline, as shown in figure II.D1. OASDI cost exceeds non-interest income

throughout the short-range period.
11

Future Financial Status

Long-Range Actuarial Estimates

The Trustees use three types of measures to assess the actuarial status of the

program over the next 75 years: (1) annual cash-flow measures, including

income rates, cost rates, and balances; (2) trust fund ratios; and (3) summary

measures such as actuarial balances and open group unfunded obligations.

The Trustees express these measures as percentages of taxable payroll, as

percentages of gross domestic product (GDP), or in dollars. The Trustees

also present summary measures over the infinite horizon in appendix F. The

infinite horizon values, which are subject to much greater uncertainty, provide an additional indication of Social Security’s very-long-run financial

condition.

The Trustees also apply a test of long-range close actuarial balance each

year. To satisfy the test, a trust fund must meet two conditions: (1) the trust

fund satisfies the test of short-range financial adequacy, and (2) the trust fund

ratio stays above zero throughout the 75-year projection period, such that

benefits would be payable in a timely manner throughout the period. The

 Figure II.D1.—Short-Range OASI and DI Combined Trust Fund Ratio

[Asset reserves as a percentage of annual cost, under Intermediate Assumptions]

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Calendar year

Historical Estimated

Minimum level for "short-term financial adequacy"
Overview

12

OASI, DI, and combined OASI and DI Trust Funds all fail the test of longrange close actuarial balance under the intermediate assumptions.

Annual Income Rates, Cost Rates, and Balances

Figure II.D2 illustrates the year-by-year relationship among OASDI income

(excluding interest), cost (including scheduled benefits), and expenditures

(including payable benefits) for the full 75-year period (2016 through 2090).

The figure shows all values as percentages of taxable payroll. Under the

intermediate assumptions, demographic factors would by themselves cause

the projected cost rate to rise rapidly for the next two decades before leveling

off in about 2035. However, the recent recession led to lower taxable earnings than expected and more beneficiaries than expected, which in turn

sharply, but temporarily, increased the cost rate starting in 2009. From a peak

in 2015, the cost rate declines through 2017 under the economic recovery

and thereafter returns to a gradually rising trend. The projected income rate

is stable at about 13 percent throughout the 75-year period.

Annual OASDI cost exceeded non-interest income in 2010 for the first time

since 1983. The Trustees project that cost will continue to exceed non-interest income throughout the 75-year valuation period. Nevertheless, total trust

fund income, including interest income, is more than sufficient to cover costs

through 2019, so trust fund asset reserves continue to grow. Beginning in

2020, cost exceeds total income, and combined OASI and DI Trust Fund

reserves diminish until they become depleted in 2034. After trust fund

reserve depletion, continuing income is sufficient to support expenditures at

a level of 79 percent of program cost for the rest of 2034, declining to

74 percent for 2090. Figure II.D2 depicts OASDI operations as a combined

whole. However, under current law, the differences between scheduled and

payable benefits would begin at different times for the program’s two trust

funds: in 2023 for DI and in 2035 for OASI.
13

Future Financial Status

To illustrate the more immediate challenges specific to the DI program,

figure II.D3 presents the year-by-year relationship among income, cost, and

expenditures for the 75-year projection period. The temporary increase in the

income rate shown in the figure for 2016 through 2018 reflects the tax rate

reallocation enacted in the Bipartisan Budget Act of 2015. The DI Trust

Fund reserves are expected to become depleted in the third quarter of 2023 if

no legislative action is taken before then. After DI Trust Fund reserve depletion, continuing income is sufficient to support expenditures at a level of

89 percent of program cost for the rest of 2023, rising to a somewhat higher

level for 2024 through 2040, then declining to 82 percent by 2090. 

 Figure II.D2.—OASDI Income, Cost, and Expenditures as Percentages of Taxable Payroll

[Under Intermediate Assumptions]

0%

5%

10%

15%

20%

25%

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

Cost: Scheduled and 

payable benefits 

Non-interest Income 

Payable benefits as percent 

of scheduled benefits: 

2015-33: 100% 

2034: 79% 

2090: 74% 

Cost: Scheduled but not 

fully payable benefits 

Expenditures: Payable benefits = 

income after trust fund depletion in 2034
Overview

14

Figure II.D4 shows the estimated number of covered workers per OASDI

beneficiary. Figures II.D2 and II.D4 illustrate the inverse relationship

between cost rates and the number of workers per beneficiary. In particular,

the projected future increase in the cost rate reflects a projected decline in the

number of covered workers per beneficiary. There were about 2.8 workers

for every OASDI beneficiary in 2015. This ratio had been extremely stable,

remaining between 3.2 and 3.4 from 1974 through 2008, and has declined

since then due to the economic recession and the beginning of the demographic shift that will drive this ratio down over the next 20 years. The Trustees project that the ratio of workers to beneficiaries will continue to decline,

even as the economy recovers, due to this demographic shift—as workers of

lower-birth-rate generations replace workers of the baby-boom generation.

The ratio of workers to beneficiaries reaches 2.2 by 2035 when the babyboom generation will have largely retired, with a further gradual decline

thereafter due to increasing longevity.

 Figure II.D3.—DI Income, Cost, and Expenditures as Percentages of Taxable Payroll

[Under Intermediate Assumptions]

0%

1%

2%

3%

4%

5%

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

Cost: Scheduled and 

payable benefits 

Non-interest 

Income 

Payable benefits as percent 

of scheduled benefits: 

2015-22: 100% 

2023: 89% 

2090: 82% 

Cost: Scheduled but not 

fully payable benefits 

Expenditures: Payable benefits = 

income after trust fund depletion in 2023 
15

Future Financial Status

Another important way to look at Social Security’s future is to view its

annual cost and non-interest income as a share of U.S. economic output

(GDP). As shown in figure II.D5, the Trustees project that Social Security’s

cost as a percent of GDP will grow from 5.0 percent in 2016 to about

6.0 percent by 2035, then decline to 5.9 percent by 2050, and generally

increase to 6.1 percent by 2090. As the economy recovers, Social Security’s

non-interest income, which reflects scheduled tax rates, increases from its

current level of about 4.6 percent of GDP to about 4.8 percent of GDP for

2025. Thereafter, non-interest income as a percent of GDP declines gradually, to about 4.6 percent by 2090, because the Trustees expect the share of

employee compensation provided as noncovered fringe benefits to increase

gradually.

 Figure II.D4.—Number of Covered Workers Per OASDI Beneficiary

[Under Intermediate Assumptions]

0

1

2

3

4

1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

Historical Estimated 
Overview

16

Trust Fund Ratios

The trust fund ratio is defined as the asset reserves at the beginning of a year

expressed as a percentage of the cost during the year. The trust fund ratio

thus represents the proportion of a year’s cost which could be paid solely

with the reserves at the beginning of the year. Table II.D1 displays the projected maximum trust fund ratios during the long-range period for the OASI,

DI, and combined OASI and DI funds. The table also shows the year of maximum projected trust fund ratio during the long-range projection period

(2016 through 2090) and the year of trust fund reserve depletion. Each trust

fund ratio has been generally declining in recent years. OASI reached a peak

level of 402 in 2011, DI reached a peak level of 219 in 2003, and OASDI

reached a peak level of 358 in 2008.

 Figure II.D5.—OASDI Cost and Non-interest Income as a Percentage of GDP

[Under Intermediate Assumptions]

Table II.D1.—Projected Maximum Trust Fund Ratios During the Long-Range Period

and Trust Fund Reserve Depletion Dates

[Under the Intermediate Assumptions]

OASI DI OASDI

Maximum projected trust fund ratio (percent). . . . . . 357 48 303

Year attained. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 2019 2016

Projected year of trust fund reserve depletion . . . . . . 2035 2023 2034

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 
17

Future Financial Status

Summary Measures

The actuarial balance is a summary measure of the program’s financial status

through the end of the 75-year valuation period. The actuarial balance measure includes the trust fund asset reserves at the beginning of the period, all

cost and income during the valuation period, and the cost of reaching a target

trust fund reserve of one year’s cost by the end of the period. Therefore, the

actuarial balance is essentially the difference between the present values of

income and cost from 1937 through the end of the valuation period. Actuarial balance is expressed as a percentage of the taxable payroll for the 75-year

valuation period. A negative actuarial balance is called an actuarial deficit.

The actuarial deficit represents the average amount of change in income or

cost that is needed throughout the valuation period in order to achieve actuarial balance. 

In this report, the actuarial deficit for the combined OASI and DI Trust

Funds under the intermediate assumptions is 2.66 percent of taxable payroll.

The actuarial deficit was 2.68 percent in the 2015 report. If the assumptions,

methods, starting values, and the law had all remained unchanged from last

year, the actuarial deficit would have increased to 2.74 percent of payroll

solely due to advancing the valuation period by 1 year. 

Another way to illustrate the projected financial shortfall of the OASDI program is to examine the cumulative present value of scheduled income less

cost. Figure II.D6 shows the present value of cumulative OASDI income less

cost from the inception of the program through each of the years from 2015

to 2090. A positive value represents the present value of trust fund reserves

at the end of the selected year. A negative value is the unfunded obligation

through the selected year. The asset reserves of the combined trust funds

were $2.8 trillion at the end of 2015. The trust fund reserves decline on a

present value basis after 2015, but remain positive through 2033. However,

after 2033 this cumulative amount becomes negative, which means that the

combined OASI and DI Trust Funds have a net unfunded obligation through

each year after 2033. Through the end of 2090, the combined funds have a

present-value unfunded obligation of $11.4 trillion. If the assumptions, methods, starting values, and the law had all remained unchanged from last year,

the unfunded obligation would have risen to about $11.2 trillion due to the

change in the valuation date.

This unfunded obligation represents 2.49 percent of taxable payroll (reduced

from 2.53 percent in last year’s report) and 0.9 percent of GDP (unchanged

from last year’s report) for the 75-year valuation period. The unfunded obligation as a share of taxable payroll (2.49 percent) and the actuarial deficit
Overview

18

(2.66 percent) are similar measures, but differ because the actuarial deficit

includes the cost of having an ending trust fund reserve equal to 1 year’s

cost.

Figures II.D2, II.D5, and II.D6 show that the program’s financial condition is

worsening at the end of the projection period. Trends in annual balances and

cumulative values toward the end of the 75-year period provide an indication

of the program’s ability to maintain solvency beyond 75 years. Consideration

of summary measures alone for a 75-year period can lead to incorrect perceptions and to policy prescriptions that do not achieve sustainable solvency.1

Appendix F presents summary measures over the infinite horizon. The

infinite horizon values provide an additional indication of Social Security’s

financial condition for the period beginning with the inception of the program and extending indefinitely into the future, but results are subject to

 1 Sustainable solvency for the financing of the program under a specified set of assumptions has been

achieved when the projected trust fund ratio is positive throughout the 75-year projection period and is either

stable or rising at the end of the period.

 Figure II.D6.—Cumulative Scheduled OASDI Income Less Cost,

From Program Inception Through Years 2015-2090

[Present value as of January 1, 2016, in trillions, under Intermediate Assumptions]

-$12

-$11

-$10

-$9

-$8

-$7

-$6

-$5

-$4

-$3

-$2

-$1

$0

$1

$2

$3

2015 2030 2045 2060 2075 2090

Ending year of accumulation 

Unfunded 

obligation 

(negative) 

Trust fund 

reserves 

(positive) 

2034 
19

Future Financial Status

much greater uncertainty. Extending the horizon beyond 75 years increases

the measured unfunded obligation. Through the infinite horizon, the

unfunded obligation, or shortfall, is equivalent to 4.0 percent of future taxable payroll or 1.4 percent of future GDP.

Uncertainty of the Projections

Significant uncertainty surrounds the intermediate assumptions. The Trustees

use several methods to help illustrate that uncertainty.

A first approach uses alternative scenarios reflecting low-cost (alternative I)

and high-cost (alternative III) sets of assumptions. Figure II.D7 shows the

projected trust fund ratios for the combined OASI and DI Trust Funds under

the intermediate, low-cost, and high-cost assumptions. The low-cost alternative includes a higher ultimate total fertility rate, slower improvement in

mortality, a higher real-wage differential, a higher ultimate real interest rate,

a higher ultimate annual change in the CPI, and a lower unemployment rate.

The high-cost alternative, in contrast, includes a lower ultimate total fertility

rate, more rapid improvement in mortality, a lower real-wage differential, a

lower ultimate real interest rate, a lower ultimate annual change in the CPI,

and a higher unemployment rate. These alternatives are not intended to suggest that all parameters would be likely to differ from the intermediate values

in the specified directions, but are intended to illustrate the effect of clearly

defined scenarios that are, on balance, very favorable or unfavorable for the

program’s financial status. Actual future costs are unlikely to be as extreme

as those portrayed by the low-cost or high-cost projections. The method for

constructing the low-cost and high-cost projections does not lend itself to

estimating the probability that actual experience will lie within or outside the

range they define.
Overview

20

Appendix D of this report presents long-range sensitivity analysis for the

OASDI program. By varying one parameter at a time, sensitivity analysis

provides a second approach for illustrating the uncertainty surrounding projections into the future.

A third approach uses 5,000 independently generated stochastic simulations

that reflect randomly assigned annual values for most of the key parameters.

These simulations produce a distribution of projected outcomes and corresponding probabilities that future outcomes will fall within or outside a given

range. The results of the stochastic simulations, discussed in more detail in

appendix E, suggest that trust fund reserve depletion (i.e., the point at which

the trust fund ratio reaches zero) is very likely by mid-century. In particular,

figure II.D8 suggests that based on these stochastic simulations, trust fund

asset reserves will become depleted between 2029 and 2045 with a 95-percent probability.

The stochastic results suggest that trust fund ratios as high as the low-cost

alternative are very unlikely. However, the relationship between the stochastic results and the low-cost and high-cost alternatives may change as the

methodology for the stochastic simulations is further developed. As noted in

 Figure II.D7.—Long-Range OASI and DI Combined Trust Fund Ratios Under 

Alternative Scenarios

[Asset reserves as a percentage of annual cost]

0%

100%

200%

300%

400%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

Historical Estimated 

III 

II 

I 
21

Future Financial Status

appendix E, future improvements and refinements are expected to be more

likely to expand than to reduce the indicated range of uncertainty.

Changes From Last Year’s Report

The projected long-range OASDI actuarial deficit decreased from

2.68 percent of taxable payroll for last year’s report to 2.66 percent of taxable payroll for this year’s report. The change in the 75-year projection

period alone would have increased the actuarial deficit to 2.74 percent. For a

detailed description of the specific changes identified in table II.D2, see

section IV.B.6.

 Figure II.D8.—Long-Range OASI and DI Combined Trust Fund Ratios 

From Stochastic Modeling

0%

100%

200%

300%

400%

2016 2031 2046 2061 2076 2091

Projection year

50%

97.5%

2.5%

90%

10%
Overview

22

Note: Totals do not necessarily equal the sums of rounded components.

Figure II.D9 compares this year’s projections of annual balances (non-interest income minus cost) to those in last year’s report. The annual balances in

this year’s report are significantly higher (less negative) for most of the projection period. See page 81 for details.

Table II.D2.—Reasons for Change in the 75-Year Actuarial Balance,

Based on Intermediate Assumptions

[As a percentage of taxable payroll]

Item OASI DI OASDI

Shown in last year’s report:

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.00 1.86 13.86

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.37 2.17 16.55

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.37 -.31 -2.68

Changes in actuarial balance due to changes in:

Legislation / Regulation . . . . . . . . . . . . . . . . . . . . . . . -.01 .04 .03

Valuation perioda . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a The change in the 75-year valuation period from last year’s report to this report means that the 75-year

actuarial balance now includes the relatively large negative annual balance for 2090. This change in the valuation period results in a larger long-range actuarial deficit. The actuarial deficit includes the trust fund

reserve at the beginning of the projection period.

-.05 -.01 -.06

Demographic data and assumptions. . . . . . . . . . . . . . .00 .00 .00

Economic data and assumptions. . . . . . . . . . . . . . . . . -.06 -.01 -.07

Disability data and assumptions. . . . . . . . . . . . . . . . . .00 .00 .00

Methods and programmatic data . . . . . . . . . . . . . . . . .08 .03 .11

Total change in actuarial balance . . . . . . . . . . . . . . . . . . -.02 .05 .02

Shown in this report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.39 -.26 -2.66

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.96 1.88 13.84

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.36 2.14 16.50
23

Future Financial Status

 Figure II.D9.—OASDI Annual Balances: 2015 and 2016 Trustees Reports

[As a percentage of taxable payroll, under the intermediate assumptions]

-6%

-4%

-2%

0%

2%

2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

2015 Report

2016 Report
Overview

24

E. CONCLUSION

Under current law, the projected cost of Social Security increases faster than

projected income through 2038 primarily because the ratio of workers paying taxes to beneficiaries receiving benefits will decline as the baby-boom

generation ages and is replaced at working ages with subsequent lower birthrate generations. While the effects of the aging baby boom and subsequent

lower birth rates will have stabilized after 2038, annual cost will continue to

grow faster than income, but to a lesser degree, reflecting continuing

increases in life expectancy. Based on the Trustees’ intermediate assumptions, Social Security’s total income exceeds its total cost in 2016, and surpluses continue through 2019. However, cost exceeds non-interest income

for 2016, as it has since 2010, and remains higher than non-interest income

throughout the remainder of the 75-year projection period. 

The OASI Trust Fund and DI Trust Fund are projected to have sufficient

reserves to pay full benefits on time until 2035 and 2023, respectively. Legislative action will be needed soon to prevent depletion of the DI Trust Fund

reserves in the third quarter of 2023, at which time continuing income to the

DI Trust Fund would be sufficient to pay 89 percent of DI benefits. 

Social Security’s combined trust funds increase with the help of interest

income through 2019 and allow full payment of scheduled benefits on a

timely basis until the trust fund asset reserves become depleted in 2034. (Full

payment of benefits implicitly assumes that the law will have been changed

to permit the transfer of funds between OASI and DI as needed.) At that

time, projected continuing income to the combined trust funds equals about

79 percent of the program cost. By 2090, continuing income equals about

74 percent of the program cost.

The 75-year actuarial deficit for the combined trust funds under the intermediate assumptions is 2.66 percent of taxable payroll—0.02 percentage point

smaller than the 2.68 percent deficit in last year’s report. To illustrate the

magnitude of the deficit, consider that for the combined OASI and DI Trust

Funds to remain fully solvent throughout the 75-year projection period:

(1) revenues would have to be increased by an amount equivalent to an

immediate and permanent payroll tax rate increase of 2.58 percentage points

to 14.98 percent; (2) scheduled benefits would have to be reduced by an

amount equivalent to an immediate and permanent reduction of about

16 percent applied to all current and future beneficiaries, or about 19 percent

if the reductions were applied only to those who become initially eligible for

benefits in 2016 or later; or (3) some combination of these approaches would

have to be adopted. If actions are deferred for several years, the changes nec-
25

Conclusion

essary to maintain Social Security solvency become concentrated on fewer

years and fewer generations.

If lawmakers design legislative solutions only to eliminate the overall actuarial deficit without consideration of year-by-year patterns, then a substantial

financial imbalance could remain at the end of the period, and the long-range

sustainability of program financing could still be in doubt. Sustainable solvency for the financing of the program under a specified set of assumptions

is achieved when the projected trust fund ratio is positive throughout the

long-range period and is either stable or rising at the end of the period. Making changes now that achieve sustainable solvency could avoid the need for

later legislative changes.

Lawmakers have a broad continuum of policy options that would close or

reduce Social Security's long-term financing shortfall. Cost estimates for

many such policy options are available at www.ssa.gov/OACT/solvency/

provisions/. Broadly speaking, the approaches that lawmakers can take

include increasing revenues from workers and employers by raising the tax

rate or the maximum level of taxable earnings, or by dedicating revenues

from other sources; lowering benefits for some or all beneficiaries by changing certain program parameters; or a combination of these approaches. There

are countless variations on these options, including those that vary the timing, magnitude, and other specifics of the change(s) under consideration.

The Trustees recommend that lawmakers address the projected trust fund

shortfalls in a timely way in order to phase in necessary changes gradually

and give workers and beneficiaries time to adjust to them. Implementing

changes sooner rather than later would allow more generations to share in the

needed revenue increases or reductions in scheduled benefits and could preserve more trust fund reserves to help finance future benefits. Social Security

will play a critical role in the lives of 61 million beneficiaries and

171 million covered workers and their families in 2016. With informed discussion, creative thinking, and timely legislative action, Social Security can

continue to protect future generations.

For further information related to the contents of this report, see the following websites:

 • www.ssa.gov/OACT/tr/2016/

 • www.ssa.gov/OACT/solvency/provisions/

 • www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trendsand-Reports/ReportsTrustFunds/

 • www.treasury.gov/resource-center/economic-policy/ss-medicare/Pages/

social_security.aspx
Financial Operations and Legislative Changes

26

III. FINANCIAL OPERATIONS OF THE TRUST FUNDS AND

LEGISLATIVE CHANGES IN THE LAST YEAR

A. OPERATIONS OF THE OLD-AGE AND SURVIVORS 

INSURANCE (OASI) AND DISABILITY INSURANCE (DI) TRUST 

FUNDS, IN CALENDAR YEAR 2015

This section presents detailed information on the operations of the OASI and

DI Trust Funds1 during calendar year 2015. Chapter IV provides projections

for calendar years 2016 through 2090.

1. OASI Trust Fund

Table III.A1 presents a statement of the income and disbursements of the

Federal Old-Age and Survivors Insurance Trust Fund in calendar year 2015,

and of the asset reserves in the fund at the beginning and end of the calendar

year. As shown in this table, total trust fund receipts in 2015 amounted to

$801.6 billion, while disbursements totaled $750.5 billion, an increase in

trust fund reserves during 2015 of $51.0 billion.2

Total receipts during calendar year 2015 included $681.9 billion in payroll

tax contributions. These contributions include initial appropriations of payroll taxes, made on an estimated basis, and adjustments to appropriations for

prior years to reflect actual tax receipts. The OASI fund paid the General

Fund $2.4 billion for the estimated amount of employee payroll-tax refunds,

partially offsetting these gross contributions. Employees who work for more

than one employer during a year and pay contributions on total earnings in

excess of the contribution and benefit base are eligible for such refunds. Net

payroll tax contributions were therefore $679.5 billion in 2015.

Net reimbursements from the General Fund of the Treasury amounted to

$0.3 billion in 2015. As shown in the table, adjustments to prior year receipts

based on Public Law 111-312, the Tax Relief, Unemployment Insurance

Reauthorization, and Job Creation Act of 2010, Public Law 112-78, the

Temporary Payroll Tax Cut Continuation Act of 2011, and Public

Law 112-96, the Middle Class Tax Relief and Job Creation Act of 2012,

account for almost all of the reimbursement for the year, or about

$266 million. These acts specified General Fund reimbursement for tempo-

 1 See www.ssa.gov/oact/ProgData/fundsQuery.html.

 2 In order to provide values that are comparable with other years, asset reserves shown for the end of 2015

reflect the 12 months of benefits scheduled for payment in 2015 and thus exclude the benefits scheduled for

payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the law.
27

Calendar Year 2015 Operations

rary reductions in employee and self-employment payroll taxes for earnings

in 2011 and 2012.

The remainder was a reimbursement of $12 million in 2015 under the provisions of Public Law 110-246, the Food, Conservation, and Energy Act

of 2008.

Income based on taxation of OASI benefits amounted to $30.6 billion in

2015. About 99 percent of this income represents amounts credited to the

trust funds, generally in advance of the actual receipt of taxes by the Treasury. These credited amounts represent the net amount of initial estimated

taxes transferred for tax liabilities in 2015 and adjustments to initial amounts

transferred for prior periods. The remaining one percent of the total income

from taxation of benefits represents amounts withheld from the benefits paid

to nonresident aliens.

In 2015, the OASI Trust Fund earned $91.2 billion in net interest, which consisted of: (1) interest earned on the investments held by the trust fund,

(2) interest on adjustments in the allocation of administrative expenses

between the trust fund and the General Fund account for the Supplemental

Security Income program, (3) interest arising from the revised allocation of

administrative expenses among the trust funds, and (4) interest on certain

reimbursements to the trust fund.

The Social Security Act authorizes the deposit of monetary gifts or bequests

in the trust funds. In 2015, there were no such receipts by the OASI Trust

Fund.
Financial Operations and Legislative Changes

28

Note: Totals do not necessarily equal the sums of rounded components.

Table III.A1.—Operations of the OASI Trust Fund, Calendar Year 2015

[In millions]

Total asset reserves, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,729,233

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior calendar years.

$681,896

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,393

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679,503

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L. 111-312, P.L. 112-78, 

and P.L. 112-96a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net General Fund reimbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 191

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,363

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,554

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,225

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust fund and

the General Fund account for the Supplemental Security Income program, (2) interest arising from the revised

allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the

trust fund.

2

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 91,227

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801,561

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsd e. . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

e Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset reserves reflect the 12 months of

benefits scheduled for payment in each year.

742,939

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -33

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 2

Net benefit paymentsd e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742,908

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,258

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,996

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4

Miscellaneous reimbursements from the General Fund f. . . . . . . . . . . . . . . . . . . . .

f Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the OASI program.

-6

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,376

Total disbursementse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,542

Net increase in asset reservese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,019

Total invested assetse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,760,518

Undisbursed balancese g. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

g Primarily consists of benefit payments designated to be paid on January 3, 2016 that were actually paid on

December 31, 2015, as well as a relatively small amount of cash held by the Department of Treasury for payment of benefits.

19,734

Total asset reserves, December 31, 2015e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,780,251
29

Calendar Year 2015 Operations

Of the $750.5 billion in total OASI disbursements in 2015, $742.9 billion

was for net benefit payments,1 including recovered overpayments, reimbursements from the General Fund for unnegotiated checks, and the reimbursable costs of vocational rehabilitation services.2 Net benefit payments

increased by 5.1 percent from calendar year 2014 to calendar year 2015. This

increase is due primarily to: (1) an increase in the total number of beneficiaries and (2) an increase in the average benefit amount. The increase in the

average benefit amount in 2015 was due in large part to the automatic costof-living benefit increase of 1.7 percent which became effective for

December 2014 under the automatic-adjustment provisions in section 215(i)

of the Social Security Act. In addition, new beneficiaries tend to have higher

benefits than previous cohorts.

The Railroad Retirement Act requires an annual financial interchange

between the Railroad Retirement program and the OASDI program. The purpose of the interchange is to put the OASI and DI Trust Funds in the same

financial position in which they would have been had railroad employment

always been covered directly by Social Security. The Railroad Retirement

Board and the Social Security Administration calculated an interchange of

$4.3 billion from the OASI Trust Fund to the Social Security Equivalent

Benefit Account for June 2015.

The remaining $3.4 billion of disbursements from the OASI Trust Fund represents net administrative expenses. The Social Security Administration

charges administrative expenses incurred to administer the OASI program

directly to the trust fund on an estimated basis. Periodically, as actual

expenses are recorded, they adjust the allocations of administrative expenses

for prior periods. These adjustments affect the OASI Trust Fund, the

DI Trust Fund, the HI Trust Fund, the SMI Trust Fund, and the General Fund

account for the Supplemental Security Income program, and include appropriate interest adjustments. As described earlier, the trust fund accounting

records such interest adjustments under investment income.

For 2015, the cost incurred by the Social Security Administration to administer the OASI program was 89 percent of OASI net administrative expenses.

The Social Security Administration charges such costs to the trust fund

($3.0 billion in 2015). In addition, the Department of the Treasury charges to

 1 As noted in footnote e of table III.A1 and elsewhere in this report, benefit payments shown for 2015 reflect

the 12 months of benefits scheduled for payment in 2015 and thus exclude the benefits scheduled for payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the law.

 2 Vocational rehabilitation services are furnished to disabled widow(er) beneficiaries and to those children

of retired or deceased workers who receive benefits based on disabilities that began before age 22. The trust

funds reimburse the providers of such services only in those cases where the services contributed to the successful rehabilitation of the beneficiary.
Financial Operations and Legislative Changes

30

the trust fund expenses ($0.4 billion in 2015) for services provided in administering the OASI program. A relatively small offset ($4 million in 2015) to

administrative expenses represents income from miscellaneous receipts due

to the trust fund, which may include refunds, penalties, fees, and other

receipts.

Finally, the General Fund of the Treasury makes net reimbursements for

administrative costs incurred by the Social Security Administration in performing legislatively mandated activities that are not directly related to the

OASI program. These reimbursements include the costs associated with

union activities related to administering the OASI program ($4 million in

2015) and with the provision of information to participants in certain pension

plans ($2 million in 2015). These miscellaneous reimbursements totaled

$6 million in 2015.

The asset reserves shown for the OASI Trust Fund at the end of calendar

year 2015 totaled $2,780.3 billion, consisting of $2,760.5 billion in U.S.

Government obligations and cash totaling $19.7 billion that would have been

invested at the end of the year except for the advance payment of benefits

scheduled for payment on January 3, 2016.1 The effective annual rate of

interest earned by the reserves in the OASI Trust Fund during calendar year

2015 was 3.3 percent, slightly lower than the 3.6 percent earned during calendar year 2014. Table VI.A4, presented in appendix A, shows a detailed

listing of OASI Trust Fund holdings by type of security, interest rate, and

year of maturity at the end of calendar years 2014 and 2015.

By law, the Department of the Treasury must invest trust fund reserves in

interest-bearing securities backed by the full faith and credit of the United

States Government. Those securities currently held by the OASI Trust Fund

are special issues, that is, securities sold only to the trust funds. These special

issues are of two types: short-term certificates of indebtedness and longerterm bonds. Daily receipts are invested in the short-term certificates of

indebtedness which mature on the next June 30 following the date of issue.

The trust fund normally acquires long-term special-issue bonds when special

issues of either type mature on June 30 and must be reinvested. The amount

of long-term bonds acquired on June 30 is equal to the amount of special

issues maturing (including accrued interest earnings), plus tax receipts for

that day, less amounts required to meet expenditures on that day.

 1 As noted in footnotes e and g of table III.A1 and elsewhere in this report, asset reserves shown for the end

of 2015 reflect the 12 months of benefits scheduled for payment in 2015 and thus exclude the benefits scheduled for payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the

law.
31

Calendar Year 2015 Operations

Section 201(d) of the Social Security Act provides that the obligations issued

for purchase by the OASI and DI Trust Funds shall have maturities fixed

with due regard for the needs of the funds. The usual practice has been to

reinvest the maturing special issues, as of each June 30, so that the value of

the securities maturing in each of the next 15 years are approximately equal.

Accordingly, the Department of the Treasury, in consultation with the Chief

Actuary of the Social Security Administration, selected the amounts and

maturity dates of the special-issue bonds purchased on June 30, 2015, so that

the maturity dates of the total portfolio of special issues were spread evenly

over the 15-year period 2016 through 2030. The bonds purchased on that

date have an interest rate of 2.000 percent, reflecting the average market

yield, as of the last business day of the prior month, on all of the outstanding

marketable U.S. obligations that are due or callable more than 4 years in the

future. Table III.A7 shows additional details on the investment transactions

during 2015, including the amounts of bonds purchased on June 30, 2015.

2. DI Trust Fund

Table III.A2 presents a statement of the income and disbursements of the

Federal Disability Insurance Trust Fund in calendar year 2015, and of the

asset reserves in the fund at the beginning and end of the calendar year.

Line entries in the DI statement are similar to those in the OASI statement.

The explanations of the OASI entries generally apply to DI as well.

Of the $118.6 billion in total receipts, $115.4 billion was net payroll tax contributions.

Of the $146.6 billion of total disbursements, $143.4 billion was net benefit

payments.1 Net benefit payments increased by 1.2 percent from calendar

year 2014 to calendar year 2015. This increase in DI benefit payments was

due to the same factors described earlier for OASI benefit payments. Total

DI disbursements exceeded non-interest income in years 2005 through 2015

and exceeded total income in years 2009 through 2015.

 1 As noted in footnote e of table III.A2, and elsewhere in this report, benefit payments shown for 2015

reflect the 12 months of benefits scheduled for payment in 2015 and thus exclude the benefits scheduled for

payment on January 3, 2016, which were actually paid on December 31, 2015 as required by the law.
Financial Operations and Legislative Changes

32

Note: Totals do not necessarily equal the sums of rounded components.

Table III.A2.—Operations of the DI Trust Fund, Calendar Year 2015

[In millions]

Total asset reserves, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,244

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior calendar years.

$115,796

Payments from the General Fund of the Treasury for payroll tax contributions 

subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -406

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,389

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L. 111-312, P.L. 112-78, 

and P.L. 112-96a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net General Fund reimbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 4

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,071

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,087

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust fund and

the General Fund account for the Supplemental Security Income program, (2) interest arising from the

revised allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the trust fund.

1

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 2,088

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,595

Disbursements:

Benefit payments:

Monthly benefitsd e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

e Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $6.1 billion. For comparability with the values for historical

years and the projections in this report, all trust fund operations and asset reserves reflect the 12 months of

benefits scheduled for payment in each year.

143,282

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -19

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 107

Net benefit paymentsd e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,370

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,715

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Miscellaneous reimbursements from the General Fundf . . . . . . . . . . . . . . . . . . . . .

f Reimbursements for costs incurred in performing legislatively mandated activities not directly related to

administering the DI program.

-4

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,792

Total disbursementse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,581

Net increase in asset reservese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27,985

Total invested assetse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,101

Undisbursed balancese g. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

g Primarily consists of benefit payments designated to be paid on January 3, 2016 that were actually paid on

December 31, 2015, as well as a relatively small amount of cash held by the Department of Treasury for payment of benefits.

6,157

Total asset reserves, December 31, 2015e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,259
33

Calendar Year 2015 Operations

During 2015, the reserves in the DI Trust Fund decreased by $28.0 billion,

from $60.2 billion at the end of 2014 to $32.3 billion at the end of 2015. The

$32.3 billion reserves in the DI Trust Fund at the end of calendar year 2015

consisted of $26.1 billion in U.S. Government obligations and cash totaling

$6.2 billion. The effective annual rate of interest earned by the asset reserves

in the DI Trust Fund during calendar year 2015 was 4.6 percent, slightly

higher than the 4.5 percent earned during calendar year 2014. Table VI.A5,

presented in appendix A, shows a detailed listing of DI Trust Fund holdings

by type of security, interest rate, and year of maturity at the end of calendar

years 2014 and 2015.

Section 201(d) of the Social Security Act provides that the Treasury securities issued for purchase by the OASI and DI Trust Funds shall have maturities fixed with due regard for the needs of the funds. The usual practice has

been to reinvest the maturing special issues, as of each June 30, so that the

values of the securities maturing in each of the next 15 years are approximately equal. However, as of June 2015, the Trustees projected that the

reserves in the DI Trust Fund would be depleted within 15 years. Therefore,

the Department of the Treasury, in consultation with the Chief Actuary of the

Social Security Administration, selected the amounts and maturity dates of

the DI special-issue bonds purchased on June 30, 2015, so that the amount of

special issues would mature on June 30, 2016. The bonds purchased have an

interest rate of 2.000 percent, reflecting the average market yield, as of the

last business day of the prior month, on all of the outstanding marketable

U.S. obligations that are due or callable more than 4 years in the future. As of

June 30, 2015, the DI Trust Fund had already redeemed all of the bonds coming due on June 30, 2016, so this investment approach required that all bond

purchases on June 30, 2015 be invested in bonds with a maturity date of

June 30, 2016. Table III.A7 shows additional details on the investment transactions during 2015.

3. OASI and DI Trust Funds, Combined

Table III.A3 presents a statement of the operations of the OASI and DI Trust

Funds on a hypothetical combined basis.1 The entries in this table represent

the sums of the corresponding values from tables III.A1 and III.A2. The two

preceding subsections that cover OASI and DI provide a description of the

nature of these income and expenditure transactions.

 1 The OASI and DI Trust Funds are distinct legal entities which operate independently. To illustrate the

actuarial status of the program as a whole, the fund operations are often combined on a hypothetical basis.
Financial Operations and Legislative Changes

34

Note: Totals do not necessarily equal the sums of rounded components.

Table III.A3.—Operations of the Combined OASI and DI Trust Funds, 

Calendar Year 2015

[In millions]

Total asset reserves, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,789,476

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior calendar years.

$797,691

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,800

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 794,892

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L. 111-312, P.L. 112-78, 

and P.L. 112-96a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net General Fund reimbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 195

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,430

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,625

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,312

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust funds

and the General Fund account for the Supplemental Security Income program, (2) interest arising from the

revised allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the trust funds.

3

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 93,314

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 920,157

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsd e. . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

e Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $25.9 billion. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset reserves reflect the 12 months

of benefits scheduled for payment in each year.

886,221

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -52

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 109

Net benefit paymentsd e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 886,278

Financial interchange with the Railroad Retirement “Social Security Equivalent 

Benefit Account” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,677

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,711

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Miscellaneous reimbursements from the General Fundf . . . . . . . . . . . . . . . . . . . . .

f Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the OASI and DI programs.

-9

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,169

Total disbursementse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 897,123

Net increase in asset reservese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,034

Total invested assetse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,786,619

Undisbursed balancese g. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .

g Primarily consists of benefit payments designated to be paid on January 3, 2016 that were actually paid on

December 31, 2015, as well as a relatively small amount of cash held by the Department of Treasury for payment of benefits.

25,891

Total asset reserves, December 31, 2015e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,812,510
35

Calendar Year 2015 Operations

Table III.A4 compares estimates of total income and total expenditures for

calendar year 2015 from the 2011 through 2015 Trustees Reports to the corresponding actual amounts for 2015.

Note: Totals do not necessarily equal the sums of rounded components.

A number of factors contribute to differences between estimates and subsequent actual amounts, including: (1) actual values for key demographic, economic, and other variables that differ from earlier assumed levels; and

(2) legislation that was enacted or other administrative initiatives that were

finalized after the Trustees completed their estimates.

At the end of calendar year 2015, the OASDI program was providing

monthly benefits to about 60.0 million people. The OASI Trust Fund was

Table III.A4.—Comparison of Actual Calendar Year 2015 Trust Fund Operations

With Estimates Made in Prior Reports, Based on Intermediate Assumptionsa

[Amounts in billions]

a Percentage differences are calculated prior to rounding.

Total income b

b “Actual” income for 2015 reflects adjustments to payroll tax contributions for prior calendar years (see

appendix A for description of these adjustments). “Estimated” income also includes such adjustments, but on

an estimated basis.

Total expendituresc

c Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year.

Amount

Difference

from actual

(percent) Amount

Difference

from actual

(percent)

OASI Trust Fund:

Estimate in 2011 report . . . . . . . . . . . . . . $893.7 11.5 $757.2 0.9

Estimate in 2012 report . . . . . . . . . . . . . . 851.6 6.2 773.8 3.1

Estimate in 2013 report . . . . . . . . . . . . . . 826.9 3.2 770.3 2.6

Estimate in 2014 report . . . . . . . . . . . . . . 816.8 1.9 758.7 1.1

Estimate in 2015 report . . . . . . . . . . . . . . 796.3 -.7 754.7 .6

Actual amount . . . . . . . . . . . . . . . . . . . . . 801.6 — 750.5 —

DI Trust Fund:

Estimate in 2011 report . . . . . . . . . . . . . . 129.7 9.4 153.8 5.0

Estimate in 2012 report . . . . . . . . . . . . . . 124.7 5.2 159.3 8.7

Estimate in 2013 report . . . . . . . . . . . . . . 123.1 3.8 155.2 5.9

Estimate in 2014 report . . . . . . . . . . . . . . 121.2 2.2 151.0 3.0

Estimate in 2015 report . . . . . . . . . . . . . . 117.6 -.8 149.9 2.3

Actual amount . . . . . . . . . . . . . . . . . . . . . 118.6 — 146.6 —

OASI and DI Trust Funds, combined:

Estimate in 2011 report . . . . . . . . . . . . . . 1,023.4 11.2 911.0 1.5

Estimate in 2012 report . . . . . . . . . . . . . . 976.3 6.1 933.2 4.0

Estimate in 2013 report . . . . . . . . . . . . . . 950.0 3.2 925.5 3.2

Estimate in 2014 report . . . . . . . . . . . . . . 938.0 1.9 909.7 1.4

Estimate in 2015 report . . . . . . . . . . . . . . 913.9 -.7 904.7 .8

Actual amount . . . . . . . . . . . . . . . . . . . . . 920.2 — 897.1 —
Financial Operations and Legislative Changes

36

providing benefits to about 49.2 million people and the DI Trust Fund was

providing benefits to about 10.8 million people. The number of people

receiving benefits from the OASI Trust Fund grew by 2.2 percent while the

number of people receiving DI benefits fell by 1.1 percent during calendar

year 2015. These changes reflect the gradual aging of the population, with

the baby-boom generation moving above normal retirement age, where DI

benefits are no longer applicable. Table III.A5 shows the estimated distributions of benefit payments in calendar years 2014 and 2015, by type of beneficiary, for each trust fund separately.

Note: Benefits are monthly benefits and lump-sum death payments. Totals do not necessarily equal the sums

of rounded components.

Net administrative expenses of the OASI and DI Trust Funds in calendar

year 2015 totaled $6.2 billion. This amount is equal to 0.7 percent of total

expenditures and 0.7 percent of non-interest income. Table III.A6 shows corTable III.A5.—Distribution of Benefit Paymentsa by Type of Beneficiary or Payment, 

Calendar Years 2014 and 2015

[Amounts in millions]

a Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year.

Calendar year 2014 Calendar year 2015

Amount

Percentage

of total Amount

Percentage

of total

Total OASDI benefit payments . . . . . . . . . . $848,443 100.0 $886,221 100.0

OASI benefit payments . . . . . . . . . . . . . . 706,821 83.3 742,939 83.8

DI benefit payments . . . . . . . . . . . . . . . . . 141,622 16.7 143,282 16.2

OASI benefit payments, total. . . . . . . . . . . . 706,821 100.0 742,939 100.0

Monthly benefits:

Retired workers and auxiliaries . . . . . . 592,578 83.8 626,378 84.3

Retired workers . . . . . . . . . . . . . . . . 560,120 79.2 592,423 79.7

Spouses . . . . . . . . . . . . . . . . . . . . . . . 27,484 3.9 28,760 3.9

Children . . . . . . . . . . . . . . . . . . . . . . 4,974 .7 5,195 .7

Survivors of deceased workers. . . . . . . 114,044 16.1 116,352 15.7

Aged widows and widowers. . . . . . . 90,862 12.9 92,748 12.5

Disabled widows and widowers . . . . 2,330 .3 2,368 .3

Parents . . . . . . . . . . . . . . . . . . . . . . . 21 b

b Less than 0.05 percent.

21 b

Children . . . . . . . . . . . . . . . . . . . . . . 19,192 2.7 19,597 2.6

Widowed mothers and fathers 

caring for child beneficiaries . . . . 1,638 .2 1,618 .2

Lump-sum death payments . . . . . . . . . . . 199 b 209 b

DI benefit payments, total . . . . . . . . . . . . . . 141,622 100.0 143,282 100.0

Disabled workers . . . . . . . . . . . . . . . . . 132,154 93.3 133,945 93.5

Spouses. . . . . . . . . . . . . . . . . . . . . . . . . 598 .4 588 .4

Children . . . . . . . . . . . . . . . . . . . . . . . . 8,870 6.3 8,749 6.1
37

Calendar Year 2015 Operations

responding percentages for each trust fund separately and for the OASDI

program as a whole for each of the last 5 years.

The acquisition and disposition of securities during calendar year 2015

changed the invested reserves of the OASI Trust Fund and the DI Trust

Fund. Table III.A7 presents these investment transactions for each trust fund

separately and for the trust funds combined.

Note: All investments are shown at par value. Totals do not necessarily equal the sums of rounded components.

Table III.A6.—Administrative Expenses as a Percentage of Non-interest Income and of 

Total Expenditures, Calendar Years 2011-2015

Calendar year 

OASI Trust Fund DI Trust Fund

OASI and DI

Trust Funds,

combined

Non-interest

income

Total

expenditures

Non-interest

income

Total

expenditures

Non-interest

income

Total

expenditures

2011 . . . . . . . . . . . 0.6 0.6 3.0 2.2 0.9 0.9

2012 . . . . . . . . . . . .5 .5 2.8 2.1 .9 .8

2013 . . . . . . . . . . . .5 .5 2.6 1.9 .8 .7

2014 . . . . . . . . . . . .5 .4 2.6 2.0 .8 .7

2015 . . . . . . . . . . . .5 .4 2.4 1.9 .7 .7

Table III.A7.—Trust Fund Investment Transactions, Calendar Year 2015

[In millions]

OASI

Trust Fund

DI

Trust Fund

OASI and DI

Trust Funds,

combined

Invested asset reserves, 

December 31, 2014a . . . . . . . . . . . . . . . . . .

a Invested asset reserves differ from total asset reserves by the amount of undisbursed balances. See

tables VI.A4 and VI.A5 for details.

$2,729,270 $60,311 $2,789,582

Acquisitions:

Special issues:

Certificates of indebtedness . . . . . . . . . . . 741,358 117,740 859,098

Bondsb . . . . . . . . . . . . . . . . . . . . . . . . . . .

b Purchased on June 30, 2015. The interest rate on these purchases was 2.00 percent.

236,969 4,502 241,471

Total acquisitions . . . . . . . . . . . . . . . . . . . 978,328 122,242 1,100,570

Dispositions:

Special issues:

Certificates of indebtednessc . . . . . . . . . .

c Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or legal public holiday. The amount of these payments

made on an accelerated basis was approximately $19.7 billion for the OASI Trust Fund and $6.1 billion for

the DI Trust Fund. For comparability with the values for historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year.

Redemptions of special issues and invested asset reserves reflect the early redemption required in order to

pay benefits on a timely basis as required by law.

759,732 121,234 880,966

Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187,349 35,218 222,566

Total dispositionsc . . . . . . . . . . . . . . . . . . 947,080 156,452 1,103,532

Net increase in invested asset reservesc . . . . . . 31,247 -34,210 -2,962

Invested asset reserves, 

December 31, 2015a c . . . . . . . . . . . . . . . . . 2,760,518 26,101 2,786,619
Financial Operations and Legislative Changes

38

B. SOCIAL SECURITY AMENDMENTS SINCE THE 2015 REPORT

Since the Trustees submitted the 2015 report to Congress, one law has been

enacted that is expected to have notable effects on the OASDI program.

On November 2, 2015, the President signed into law Public Law 114-74, the

Bipartisan Budget Act of 2015. Several sections of the law directly affect the

actuarial status of the Social Security program:

 • Section 811. Expansion of cooperative disability investigations (CDI)

units. This section requires the establishment of CDI units to cover each

of the 50 States, the District of Columbia, Puerto Rico, Guam, the

Northern Mariana Islands, the Virgin Islands, and American Samoa by

2022. The additional units established under this provision would

roughly double CDI capacity and will enhance the Social Security

Administration's (SSA) efforts to reduce fraud and overpayments.

 • Section 824. Use of electronic payroll data to improve program administration. Access to more timely data on earnings from commercial databases will allow SSA to reduce improper payments.

 • Section 831. Closure of unintended loopholes. This provision eliminates (1) the ability to receive only a retired-worker benefit or an agedspouse benefit when eligible for both, for those attaining age 62 in 2016

and later, and (2) the ability of a family member other than a divorced

spouse to receive a benefit based on the earnings of a worker with a voluntarily suspended benefit, for voluntary suspensions requested after

April 29, 2016. This provision is expected to have negligible net cost

effect through 2025, with increasing net cost reductions thereafter.

 • Section 832. Requirement for medical review. This section requires that

the medical portion of the case review and any applicable residual functional capacity assessment for an initial disability determination be

completed by an appropriate physician, psychiatrist, or psychologist.

This provision is projected to reduce DI program cost.

 • Section 833. Reallocation of payroll tax rates. For earnings in calendar

years 2016 through 2018, this section increases from 1.80 percent to

2.37 percent the portion of the total 12.40 percent OASDI payroll tax

that is directed to the DI Trust Fund. There is a corresponding decrease

in the portion of the tax rate directed to the OASI Trust Fund. This reallocation of the payroll tax rates is projected to extend the date for DI

reserve depletion by about 6 years.

 • Section 834. Access to financial information for waivers and adjustments of recovery. This provision provides for access to information

that would allow SSA to better determine an individual's ability to repay

any past overpayment.
39

Social Security Amendments in 2015

 • Section 842. Elimination of quinquennial determinations relating to

wage credits for military service prior to 1957. This provision eliminates the requirement that the Commissioner make quinquennial determinations for pre-1957 military service wage credits after the 2010

determination. 

In total, this law is expected to have a small but significant net positive

financial impact over both the short-range and long-range projection periods.

In addition, it significantly improves the status of the DI Trust Fund in the

short term, largely due to a temporary tax rate reallocation from the OASI

Trust Fund to the DI Trust Fund.

In addition to the change in law, estimates in this report reflect an assumed

delay in implementation of portions of the President's 2014 executive actions

on immigration. Specifically, the courts have held up implementation of the

provision of legal work and residence status for certain individuals who

entered the country as children (deferred action for childhood arrivals, or

DACA) and the provision for similar status for certain parents of children

born in the U.S. or otherwise living in the country legally (deferred action for

parents of Americans, or DAPA). As of the time this report was drafted, the

Administration is pursuing remedy through the Supreme Court. Last year's

report assumed that these actions would become effective late in 2015, with

individuals gaining authorization starting around the beginning of 2016. This

report assumes that these actions will be implemented one year later, with

authorizations beginning at the start of 2017. This assumed delay in

implementation has a negligible effect on the financial status of the OASDI

program.

Sections IV.A.4 and IV.B.6 of this report provide further description of the

magnitude of the effects of these changes on the financial status of the

OASDI program.
Actuarial Estimates

40

IV. ACTUARIAL ESTIMATES

This chapter presents actuarial estimates of the future financial condition of

the Social Security program. These estimates show the income, cost, and

asset reserves or unfunded obligation of the OASI and DI Trust Funds: (1) in

dollars over the 10-year short-range period; and (2) as a percentage of taxable payroll, as a percentage of gross domestic product, and in present-value

dollars over the 75-year long-range period. In addition, the chapter discusses

a variety of measures of the adequacy of current program financing. This

report distinguishes between: (1) the cost (obligations) of the program, which

includes all future benefits scheduled under current law; and (2) expenditures

(disbursements), which include actual payments for the past plus only the

portion of projected program cost that would be payable with the financing

provisions in current law.

This chapter presents the estimates and measures of trust fund financial adequacy for the short-range period (2016 through 2025) first, followed by estimates and measures of actuarial status for the long-range period (2016

through 2090). Summary measures are also provided for trust fund status

over the infinite horizon. As described in chapter II of this report, these estimates depend upon a broad set of demographic, economic, and programmatic factors. This chapter presents estimates under three sets of assumptions

to show a wide range of possible outcomes, because assumptions related to

these factors are subject to uncertainty. The intermediate set of assumptions,

designated as alternative II, reflects the Trustees’ best estimate of future

experience; the low-cost alternative I is significantly more optimistic and the

high-cost alternative III is significantly more pessimistic for the trust funds’

future financial outlook. The tables of this report show the intermediate estimates first, followed by the low-cost and high-cost estimates. Chapter V

describes these three sets of assumptions, along with the actuarial methods

used to produce the estimates. Appendix D and appendix E present two additional methods to illustrate the uncertainty of the projections. Appendix D

presents sensitivity analyses of the effects of variation in individual factors

and appendix E presents probability distributions generated by a stochastic

model.

A. SHORT-RANGE ESTIMATES

The Trustees consider the trust funds to be solvent at any point in time if the

funds can pay scheduled benefits in full on a timely basis. A standard measure for assessing solvency is the “trust fund ratio,” which is the reserves in a

fund at the beginning of a year (not including advance tax transfers)

expressed as a percentage of the cost during the year. A positive trust fund

ratio indicates that the trust fund was solvent at the end of the prior year. The
41

Short-Range Estimates

trust fund ratio represents the proportion of a year’s cost which the reserves

available at the beginning of that year can cover. The Trustees assume that a

trust fund ratio of 100 percent of annual program cost provides a reasonable

“contingency reserve.” Maintaining a reasonable contingency reserve is

important because the trust funds do not have borrowing authority. After

reserves are depleted, the trust funds would be unable to pay benefits in full

on a timely basis if annual revenue were less than annual cost. Unexpected

events, such as severe economic recessions, can quickly diminish reserves.

In such cases, a reasonable contingency reserve can maintain the ability to

pay scheduled benefits while giving lawmakers time to address possible

changes to the program.

The test of short-range financial adequacy applies to the OASI and DI Trust

Funds individually and combined on a hypothetical basis.1 If the estimated

trust fund ratio is at least 100 percent at the beginning of the projection

period, the test requires that it remain at or above 100 percent throughout the

10-year period. If the ratio is initially less than 100 percent, then it must

reach at least 100 percent within 5 years (without reserve depletion at any

time during this period) and then remain at or above 100 percent throughout

the remainder of the 10-year period. This test is applied using the estimates

based on the intermediate assumptions. If either trust fund fails this test, then

program solvency in the next 10 years is in question, and lawmakers should

take prompt action to improve short-range financial adequacy.

1. Operations of the OASI Trust Fund

This subsection presents estimates, based on the assumptions described in

chapter V, of the operations and financial status of the OASI Trust Fund for

the period 2016 through 2025. These estimates assume that there are no further changes in the statutory provisions and regulations under which the

OASDI program currently operates beyond the changes since last year’s

report indicated in section III.B.2

Estimates of the OASI Trust Fund operations presented in Table IV.A1 indicate that the asset reserves of the OASI Trust Fund increase through 2021

under the intermediate assumptions, increase throughout the next 10 years

under the low-cost assumptions, and decrease throughout the next 10 years

under the high-cost assumptions. However, trust fund ratios decline throughout the 10-year period under all three sets of assumptions. Based on the intermediate assumptions, the reserves of the OASI Trust Fund continue to

 1 The OASI and DI Trust Funds are distinct legal entities which operate independently. To illustrate the

actuarial status of the program as a whole, the fund operations are often combined on a hypothetical basis.

 2 The estimates shown in this subsection reflect 12 months of scheduled benefits in each year of the shortrange projection period. In practice, the actual payment dates have at times shifted over calendar year

boundaries as a result of the statutory requirement for early delivery of benefit payments when the normal

check delivery date is a Saturday, Sunday, or legal public holiday.
Actuarial Estimates

42

exceed 100 percent of annual cost by a large amount through the end of

2025. Consequently, the OASI Trust Fund satisfies the test of short-range

financial adequacy by a wide margin. Table IV.A1 also indicates that the

OASI Trust Fund would satisfy the short-range test even under the high-cost

assumptions. See figure IV.A1 for an illustration of these results.

Table IV.A1.—Operations of the OASI Trust Fund, Calendar Years 2011-2025a

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation of

benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

Historical data:

2011. . . $698.8 $482.4 $87.8 $22.2 $106.5 $603.8 $596.2 $3.5 $4.1 $95.0 $2,524.1 402

2012. . . 731.1 503.9 97.7 26.7 102.8 645.5 637.9 3.4 4.1 85.6 2,609.7 391

2013. . . 743.8 620.8 4.2 20.7 98.1 679.5 672.1 3.4 3.9 64.3 2,674.0 384

2014. . . 769.4 646.2 .4 28.0 94.8 714.2 706.8 3.1 4.3 55.2 2,729.2 374

2015. . . 801.6 679.5 .3 30.6 91.2 750.5 742.9 3.4 4.3 51.0 2,780.3 364

Intermediate:

2016. . . 786.7 667.3 .1 32.0 87.4 778.6 771.0 3.4 4.2 8.1 2,788.4 357

2017. . . 826.3 703.5 f 37.2 85.6 812.9 805.4 3.3 4.1 13.5 2,801.8 343

2018. . . 873.2 746.0 f 40.8 86.4 873.2 865.3 3.4 4.5 .1 2,801.9 321

2019. . . 963.4 830.7 f 44.7 88.0 935.5 927.4 3.5 4.6 27.9 2,829.8 300

2020. . . 1,017.1 878.2 f 48.7 90.3 1,001.8 993.4 3.6 4.7 15.4 2,845.1 282

2021. . . 1,069.2 924.8 f 52.8 91.6 1,067.9 1,059.5 3.8 4.7 1.2 2,846.4 266

2022. . . 1,121.7 971.3 f 57.5 92.9 1,141.9 1,133.0 3.9 5.0 -20.2 2,826.2 249

2023. . . 1,174.1 1,016.8 f 62.6 94.6 1,221.9 1,212.7 4.0 5.1 -47.8 2,778.4 231

2024. . . 1,229.3 1,065.3 f 68.1 95.9 1,307.0 1,297.6 4.2 5.2 -77.7 2,700.7 213

2025. . . 1,283.4 1,113.4 f 73.9 96.0 1,395.1 1,385.6 4.3 5.2 -111.7 2,589.0 194

Low-cost:

2016. . . 792.3 672.0 .1 32.0 88.2 778.1 770.5 3.4 4.2 14.1 2,794.4 357

2017. . . 851.5 724.2 f 37.3 90.0 815.6 808.2 3.3 4.1 35.9 2,830.3 343

2018. . . 917.3 781.3 f 41.2 94.8 881.8 873.9 3.4 4.5 35.5 2,865.8 321

2019. . . 1,030.0 884.1 f 45.3 100.6 949.0 940.8 3.6 4.6 81.0 2,946.8 302

2020. . . 1,105.5 948.0 f 49.6 107.9 1,020.7 1,012.2 3.8 4.7 84.8 3,031.6 289

2021. . . 1,180.0 1,010.6 f 54.1 115.2 1,093.0 1,084.3 3.9 4.7 87.0 3,118.6 277

2022. . . 1,258.8 1,075.3 f 59.2 124.3 1,173.8 1,164.6 4.1 5.0 85.0 3,203.6 266

2023. . . 1,342.0 1,142.1 f 64.6 135.2 1,261.7 1,252.3 4.3 5.2 80.2 3,283.8 254

2024. . . 1,431.7 1,214.1 f 70.6 147.0 1,356.0 1,346.3 4.5 5.3 75.7 3,359.5 242

2025. . . 1,523.6 1,287.7 f 77.1 158.9 1,454.8 1,444.8 4.7 5.3 68.9 3,428.3 231
43

Short-Range Estimates

High-cost:

2016. . . $777.7 $659.2 $0.1 $32.0 $86.4 $779.1 $771.5 $3.4 $4.2 -$1.4 $2,778.9 357

2017. . . 781.2 662.6 f 37.2 81.4 812.4 805.0 3.3 4.2 -31.3 2,747.6 342

2018. . . 814.6 695.8 f 40.4 78.4 865.2 857.3 3.3 4.6 -50.6 2,697.0 318

2019. . . 884.5 764.3 f 44.1 76.1 923.4 915.3 3.4 4.7 -39.0 2,658.0 292

2020. . . 919.3 797.8 f 47.8 73.8 984.3 976.0 3.5 4.8 -65.0 2,593.1 270

2021. . . 951.4 829.8 f 51.7 70.0 1,044.4 1,036.1 3.6 4.7 -93.0 2,500.1 248

2022. . . 983.3 862.1 f 56.0 65.2 1,111.5 1,102.8 3.7 5.0 -128.2 2,371.9 225

2023. . . 1,014.9 893.8 f 60.6 60.5 1,183.5 1,174.6 3.8 5.1 -168.6 2,203.3 200

2024. . . 1,047.2 926.3 f 65.6 55.3 1,259.3 1,250.3 3.9 5.2 -212.1 1,991.2 175

2025. . . 1,077.1 956.8 f 70.8 49.4 1,336.8 1,327.8 3.9 5.1 -259.7 1,731.5 149

a Appendix A presents a detailed description of the components of income and cost, along with complete historical values.

b Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as required by the

statutory provision for early benefit payments when the normal delivery date is on a weekend or holiday. Such

shifts in payments across calendar years have occurred in the past and will occur periodically in the future

whenever January 3rd falls on a Sunday. In order to provide a consistent perspective on trust fund operations

over time, all trust fund operations in each year reflect the 12 months of benefits that are regularly scheduled for

payment in that year. 

c Includes reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of

noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984 and selfemployed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

d Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

e The “Trust fund ratio” column represents reserves at the beginning of a year (which are identical to reserves at

the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.

f Between -$50 million and $50 million.

Note: Totals do not necessarily equal the sums of rounded components.

Table IV.A1.—Operations of the OASI Trust Fund, Calendar Years 2011-2025a (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation of

benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Actuarial Estimates

44

After slightly decreasing in 2016 due to the temporary tax rate reallocation

from OASI to DI, the estimated income shown in table IV.A1 increases

annually under each set of assumptions throughout the short-range projection

period. The estimated increases in income reflect increases in estimated

OASDI taxable earnings and growth in interest earnings on the invested

reserves in the trust fund, as well as a return to pre-reallocation tax rates in

2019. Employment increases in every year through 2025 for all three alternatives: the number of persons with taxable earnings increases on the basis of

alternatives I, II, and III from 169 million during calendar year 2015 to about

189 million, 185 million, and 180 million, respectively, in 2025. The total

annual amount of taxable earnings increases in every year through 2025 for

each alternative. Total earnings increase from $6,395 billion in 2015 to

$12,228 billion, $10,569 billion, and $9,080 billion in 2025, on the basis of

alternatives I, II, and III, respectively. These increases in taxable earnings are

due primarily to: (1) projected increases in employment levels as the working age population increases; (2) trend increases in average earnings in covered employment (reflecting both real growth and price inflation);

(3) increases in the contribution and benefit base under the automatic-adjustment provisions; and (4) growth in employment and average earnings, temporarily higher than trend, as the economy continues to recover from the

severe economic downturn that began in late 2007.

 Figure IV.A1.—Short-Range OASI and DI Trust Fund Ratios

[Asset reserves as a percentage of annual cost]

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Calendar year

DI

OASI

Historical Estimated

Minimumlevelfor "short-term financial adequacy"

I

II III

I

II

III
45

Short-Range Estimates

Interest earnings contribute to the overall projected increase in trust fund

income during this period. In the first few years of the projection period,

annual interest earnings decline slightly under all three sets of assumptions

due to historically low interest rates assumed for newly-issued bonds. Thereafter, interest income increases under the intermediate and low-cost assumptions due to the net effects of changes in reserve levels and the patterns of

projected interest rates. Under the high-cost assumptions, declining reserves

cause interest income to continue to decrease throughout the short-range

period. Although interest earnings generally increase over the short-range

period, interest declines as a share of total OASI Trust Fund income under

the intermediate assumptions. By 2025, OASI interest income under the

intermediate assumptions is about 7 percent of total trust fund income, as

compared to 11 percent in 2015.

Rising OASI cost during 2016 through 2025 reflects automatic benefit

increases as well as the upward trend in the number of beneficiaries and in

the average monthly earnings underlying benefits. The growth in the number

of beneficiaries since 2009 and the expected future growth result both from

the increase in the aged population and from the increase in the proportion of

the population that is eligible for benefits.

The Treasury invests OASI income in financial securities, generally special

public-debt obligations of the U.S. Government. The revenue used to make

these purchases flows to the General Fund of the Treasury. The trust fund

earns interest on these securities, and the Treasury invests maturing securities

in new securities if not immediately needed to pay program costs. Program

expenditures require the redemption of trust fund securities, generally prior

to maturity, to cover the payments made by the General Fund of the Treasury

on behalf of the trust fund.1

2. Operations of the DI Trust Fund

Table IV.A2 shows the estimated operations and financial status of the DI

Trust Fund during calendar years 2016 through 2025 under the three sets of

assumptions, together with values for actual experience during 2011 through

2015. Non-interest income for DI is much higher in 2016 through 2018 than

in 2015, due to the temporary payroll tax rate reallocation from OASI to DI.

As a result, DI Trust Fund reserves increase through 2018 under each alternative. After returning to the ultimate allocation of tax rates in 2019, noninterest income is again less than DI cost except under the low-cost alternative. Non-interest income increases steadily thereafter under each alternative,

due to most of the same factors described previously for the OASI Trust

Fund. DI cost grows steadily throughout the period under each alternative.

 1 For an explanation of the interrelationship between the Medicare and Social Security trust funds and the

overall Federal budget, see appendix F of the 2016 Medicare Trustees Report.
Actuarial Estimates

46

Under the intermediate assumptions, reserves decline after 2018 until their

projected depletion in the third quarter of 2023. Under the high-cost assumptions, DI reserves decline until depletion in the first quarter of 2020. Under

the low-cost assumptions, after decreasing slightly in 2019, reserves increase

through the remainder of the short-range period.

Table IV.A2.—Operations of the DI Trust Fund, Calendar Years 2011-2025a

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation of

benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

Historical data:

2011 . . .$106.3 $81.9 $14.9 $1.6 $7.9 $132.3 $128.9 $2.9 $0.5 -$26.1 $153.9 136

2012 . . . 109.1 85.6 16.5 .6 6.4 140.3 136.9 2.9 .5 -31.2 122.7 110

2013 . . . 111.2 105.4 .7 .4 4.7 143.4 140.1 2.8 .6 -32.2 90.4 86

2014 . . . 114.9 109.7 .1 1.7 3.4 145.1 141.7 2.9 .4 -30.2 60.2 62

2015 . . . 118.6 115.4 f 1.1 2.1 146.6 143.4 2.8 .4 -28.0 32.3 41

Intermediate:

2016 . . . 157.9 155.2 f 1.2 1.4 150.2 146.7 3.2 .3 7.6 39.9 21

2017 . . . 170.3 166.2 f 2.1 1.9 152.7 149.4 3.1 .2 17.6 57.5 26

2018 . . . 181.4 176.3 f 2.3 2.9 159.4 156.1 3.2 .1 22.1 79.6 36

2019 . . . 149.0 143.5 f 2.5 3.1 166.1 162.5 3.6 f -17.1 62.4 48

2020 . . . 154.2 149.1 f 2.7 2.3 172.7 168.8 3.9 .1 -18.6 43.9 36

2021 . . . 161.4 157.0 f 2.9 1.5 180.5 176.2 4.2 .1 -19.0 24.8 24

2022 . . . 168.7 164.9 f 3.1 .7 188.6 184.1 4.5 .1 -19.9 4.9 13

2023 . . . g 172.7 f 3.3 g 197.0 192.2 4.7 f g g 2

2024 . . . g 180.9 f 3.6 g 205.3 200.2 5.0 f g g g

2025 . . . g 189.1 f 3.8 g 214.1 208.8 5.3 f g g g

Low-cost:

2016 . . . 159.1 156.3 f 1.2 1.5 148.2 144.7 3.2 .3 10.9 43.1 22

2017 . . . 175.8 171.1 f 2.1 2.6 149.5 146.2 3.1 .2 26.3 69.4 29

2018 . . . 191.1 184.6 f 2.2 4.2 155.1 151.8 3.2 .1 36.0 105.4 45

2019 . . . 160.2 152.6 f 2.4 5.2 160.6 156.9 3.6 f -.3 105.0 66

2020 . . . 168.8 161.0 f 2.6 5.3 166.0 161.9 4.0 .1 2.8 107.9 63

2021 . . . 180.0 171.6 f 2.7 5.6 172.5 168.1 4.4 .1 7.4 115.3 63

2022 . . . 191.9 182.6 f 2.9 6.4 179.6 174.9 4.7 f 12.3 127.6 64

2023 . . . 204.6 193.9 f 3.1 7.6 187.0 181.9 5.1 f 17.7 145.3 68

2024 . . . 218.5 206.2 f 3.4 9.0 194.4 189.0 5.4 f 24.1 169.4 75

2025 . . . 233.1 218.7 f 3.6 10.8 202.5 196.8 5.8 f 30.5 199.9 84
47

Short-Range Estimates

In the future, DI cost increases in part due to increases in average benefit levels resulting from: (1) automatic benefit increases and (2) projected increases

in the amounts of average monthly earnings on which benefits are based. The

number of DI beneficiaries in current-payment status increases but at a much

slower rate during the short-range projection period than over the past

20 years, largely due to long-anticipated demographic trends and expected

economic conditions. In addition, certain provisions in the Bipartisan Budget

Act of 2015 are expected to reduce the number of future new DI beneficiaries by slightly less than 1 percent.

At the beginning of calendar year 2015, the reserves of the DI Trust Fund

represented 41 percent of annual cost. During 2015, DI cost exceeded

income, and the trust fund ratio for the beginning of 2016 decreased to about

High-cost:

2016 . . . $155.9 $153.3 f $1.3 $1.3 $152.2 $148.6 $3.2 $0.3 $3.7 $36.0 21

2017 . . . 160.2 156.6 f 2.2 1.4 156.7 153.4 3.1 .2 3.4 39.4 23

2018 . . . 168.4 164.4 f 2.4 1.6 165.1 161.7 3.2 .1 3.3 42.8 24

2019 . . . 135.7 132.1 f 2.6 1.0 173.3 169.7 3.5 .1 -37.5 5.2 25

2020 . . . g 135.5 f 2.8 g 180.3 176.4 3.8 .1 g g 3

2021 . . . g 140.9 f 3.0 g 188.1 184.0 4.0 .1 g g g

2022 . . . g 146.4 f 3.2 g 196.5 192.3 4.2 .1 g g g

2023 . . . g 151.8 f 3.5 g 205.1 200.6 4.4 .1 g g g

2024 . . . g 157.3 f 3.7 g 213.5 208.9 4.6 f g g g

2025 . . . g 162.5 f 4.0 g 222.5 217.7 4.8 f g g g

a The DI Trust Fund becomes depleted in the third quarter of 2023 and the first quarter of 2020 under the intermediate and high-cost assumptions, respectively. For any period during which reserves would be depleted,

scheduled benefits could not be paid in full on a timely basis, income from taxing benefits would be less than

would apply to scheduled benefits, and interest on trust fund reserves would be negligible. Appendix A presents

a detailed description of the components of income and cost, along with complete historical values.

b Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as required by

the statutory provision for early benefit payments when the normal delivery date is on a weekend or holiday.

Such shifts in payments across calendar years have occurred in the past and will occur periodically in the future

whenever January 3rd falls on a Sunday. In order to provide a consistent perspective on trust fund operations

over time, all trust fund operations in each year reflect the 12 months of benefits that are regularly scheduled for

payment in that year. 

c Includes reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of noncontributory wage credits for military service before 1957; (2) the cost of payroll tax credits provided to

employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; (3) the cost in 2009-17 of

excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (4) payroll tax

revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

d Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

e The “Trust fund ratio” column represents reserves at the beginning of a year (which are identical to reserves at

the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.

f Between -$50 million and $50 million.

g While the fund is depleted, values under current law would reflect permissible expenditures only, which are

inconsistent with the cost of scheduled benefits shown in this table.

Note: Totals do not necessarily equal the sums of rounded components.

Table IV.A2.—Operations of the DI Trust Fund, Calendar Years 2011-2025a (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation of

benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Actuarial Estimates

48

21 percent. Under the intermediate assumptions, the reallocation of the payroll tax rate from OASI to DI causes DI total income to exceed cost through

2018, and reserves to increase to a level of 48 percent of annual cost at the

beginning of 2019. Thereafter, cost exceeds total income throughout the

short-range projection period. The projected cost in excess of income results

in the estimated depletion of the DI Trust Fund reserves in the third quarter

of 2023.

Because the reserves of the DI Trust Fund at the beginning of 2016 were less

than the estimated annual cost for 2016, and they are projected to remain

below annual cost throughout the short-range period, the DI Trust Fund fails

the Trustees’ test of short-range financial adequacy under all three alternatives.

3. Operations of the Combined OASI and DI Trust Funds

Table IV.A3 shows the estimated operations and status of the combined

OASI and DI Trust Funds for calendar years 2016 through 2025 under the

three alternatives, together with actual experience in 2011 through 2015.

Income and cost for the OASI Trust Fund represent over 80 percent of the

corresponding amounts for the combined OASI and DI Trust Funds. Therefore, based on the relative strength of the OASI Trust Fund over the next 10

years, the combined OASI and DI Trust Funds would have sufficient financial resources to pay all scheduled benefits through the end of the short-range

period, although it is important to note that under current law, one trust fund

cannot share financial resources with another trust fund. In addition, the

combined OASI and DI Trust Funds would satisfy the test of short-range

financial adequacy under the intermediate and low-cost assumptions. However, under the high-cost assumptions, reserves are projected to drop to about

86 percent of annual cost by the end of 2025, and hence the combined funds

would not satisfy the test of short-range financial adequacy. 

Table IV.A3.—Operations of the Combined OASI and DI Trust Funds,

Calendar Years 2011-2025a

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation

of benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

Historical data:

2011 . . $805.1 $564.2 $102.7 $23.8 $114.4 $736.1 $725.1 $6.4 $4.6 $69.0 $2,677.9 354

2012 . . 840.2 589.5 114.3 27.3 109.1 785.8 774.8 6.3 4.7 54.4 2,732.3 341

2013 . . 855.0 726.2 4.9 21.1 102.8 822.9 812.3 6.2 4.5 32.1 2,764.4 332

2014 . . 884.3 756.0 .5 29.6 98.2 859.2 848.5 6.1 4.7 25.0 2,789.5 322

2015 . . 920.2 794.9 .3 31.6 93.3 897.1 886.3 6.2 4.7 23.0 2,812.5 311
49

Short-Range Estimates

Intermediate:

2016 . . 944.6 822.5 .1 33.2 88.8 928.9 917.7 6.6 4.6 15.7 2,828.2 303

2017 . . 996.6 869.8 f 39.3 87.6 965.5 954.8 6.4 4.3 31.1 2,859.3 293

2018 . . 1,054.7 922.3 f 43.1 89.2 1,032.5 1,021.4 6.6 4.6 22.1 2,881.5 277

2019 . . 1,112.4 974.1 f 47.2 91.1 1,101.6 1,089.9 7.1 4.7 10.7 2,892.2 262

2020 . . 1,171.3 1,027.4 f 51.3 92.6 1,174.5 1,162.2 7.5 4.8 -3.2 2,889.0 246

2021 . . $1,230.6$1,081.8 f $55.7 $93.1 $1,248.4$1,235.7 $8.0 $4.8 $-17.8 $2,871.2 231

2022 . . 1,290.4 1,136.2 f 60.6 93.6 1,330.5 1,317.1 8.4 5.1 -40.1 2,831.1 216

2023 . . 1,349.8 1,189.5 f 65.9 94.4 1,418.8 1,404.9 8.8 5.1 -69.0 2,762.1 200

2024 . . 1,412.4 1,246.2 f 71.6 94.6 1,512.2 1,497.8 9.1 5.2 -99.9 2,662.2 183

2025 . . 1,473.7 1,302.5 f 77.8 93.5 1,609.2 1,594.4 9.5 5.2 -135.5 2,526.7 165

Low-cost:

2016 . . 951.4 828.4 .1 33.2 89.7 926.3 915.2 6.6 4.6 25.0 2,837.5 304

2017 . . 1,027.3 895.4 f 39.4 92.5 965.1 954.4 6.4 4.3 62.2 2,899.7 294

2018 . . 1,108.4 965.9 f 43.5 99.0 1,036.9 1,025.8 6.6 4.6 71.5 2,971.2 280

2019 . . 1,190.2 1,036.8 f 47.7 105.8 1,109.6 1,097.7 7.2 4.7 80.7 3,051.9 268

2020 . . 1,274.3 1,109.0 f 52.2 113.2 1,186.7 1,174.1 7.8 4.8 87.6 3,139.5 257

2021 . . 1,359.9 1,182.3 f 56.8 120.8 1,265.5 1,252.4 8.3 4.8 94.4 3,233.9 248

2022 . . 1,450.7 1,257.9 f 62.1 130.7 1,353.4 1,339.5 8.8 5.1 97.3 3,331.2 239

2023 . . 1,546.6 1,336.0 f 67.8 142.8 1,448.7 1,434.2 9.4 5.2 97.9 3,429.1 230

2024 . . 1,650.2 1,420.2 f 74.0 156.0 1,550.4 1,535.3 9.9 5.3 99.8 3,528.9 221

2025 . . 1,756.7 1,506.4 f 80.7 169.6 1,657.3 1,641.5 10.5 5.3 99.4 3,628.3 213

High-cost:

2016 . . 933.6 812.5 .1 33.3 87.7 931.2 920.1 6.6 4.6 2.4 2,814.9 302

2017 . . 941.3 819.2 f 39.3 82.8 969.2 958.4 6.4 4.3 -27.8 2,787.1 290

2018 . . 983.0 860.2 f 42.8 80.0 1,030.3 1,019.0 6.5 4.7 -47.3 2,739.8 271

2019 . . 1,020.2 896.3 f 46.7 77.2 1,096.7 1,085.0 6.9 4.8 -76.5 2,663.3 250

2020 . . 1,057.0 933.2 f 50.6 73.2 1,164.5 1,152.4 7.3 4.9 -107.6 2,555.7 229

2021 . . 1,093.0 970.7 f 54.7 67.7 1,232.6 1,220.1 7.6 4.8 -139.6 2,416.2 207

2022 . . 1,128.6 1,008.5 f 59.2 60.9 1,308.1 1,295.1 7.9 5.1 -179.4 2,236.7 185

2023 . . 1,163.6 1,045.6 f 64.1 53.9 1,388.6 1,375.2 8.2 5.1 -225.0 2,011.8 161

2024 . . 1,199.2 1,083.7 f 69.3 46.2 1,472.8 1,459.1 8.5 5.2 -273.7 1,738.1 137

2025 . . 1,231.8 1,119.3 f 74.8 37.6 1,559.4 1,545.4 8.7 5.2 -327.6 1,410.5 111

a Appendix A presents a detailed description of the components of income and cost, along with complete historical values.

b Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as required by the

statutory provision for early benefit payments when the normal delivery date is on a weekend or holiday. Such

shifts in payments across calendar years have occurred in the past and will occur periodically in the future whenever January 3rd falls on a Sunday. In order to provide a consistent perspective on trust fund operations over time,

all trust fund operations in each year reflect the 12 months of benefits that are regularly scheduled for payment in

that year. 

c Includes reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1) the

cost of noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured

persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984 and

self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

d Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

e The “Trust fund ratio” column represents reserves at the beginning of a year (which are identical to reserves at

the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.

f Between -$50 million and $50 million.

Note: Totals do not necessarily equal the sums of rounded components.

Table IV.A3.—Operations of the Combined OASI and DI Trust Funds,

Calendar Years 2011-2025a (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Costb Asset Reservesb

Total

Net payroll tax

contributions

GF

reimbursementsc

Taxation

of benefitsd Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Actuarial Estimates

50

4. Factors Underlying Changes in 10-Year Trust Fund Ratio Estimates

From the 2015 Report

Table IV.A4 presents an analysis of the factors underlying the changes in the

intermediate estimates over the short-range projection period for the OASI,

DI, and the combined funds from last year’s report to this report.

In the 2015 report under intermediate assumptions, the trust fund ratio for

OASI reached 216 percent at the beginning of 2024—the tenth projection

year for that report. The change in the short-range valuation period alone,

from 2015 through 2024 to 2016 through 2025, lowered the estimated trust

fund ratio for the tenth year by 17 percentage points, to 199 percent. All

other changes to reflect modifications in law and regulations since last year’s

report, the most recent data, adjustments to the assumptions for future years,

and changes in projection methods combined for a net decrease in the ratio

for the tenth projection year of 5 percentage points. Therefore, the total

change for this report is a reduction of 22 percentage points to 194 percent.

The Bipartisan Budget Act of 2015 is projected to decrease the tenth year

OASI trust fund ratio by 12 percentage points, primarily due to the temporary reallocation of payroll tax rates from OASI to DI for 2016 through 2018.

Changes in demographic assumptions over the short-range period increased

the projected tenth-year trust fund ratio for OASI by 4 percentage points.

Changes in economic data and assumptions, primarily the combined effects

of lower cost-of-living adjustments, lower interest rates, and lower payroll

tax revenues over the ten year period, caused a net reduction in the OASI

trust fund ratio of 3 percentage points by the beginning of 2025. Incorporating recent programmatic data resulted in an increase of 10 percentage points

in the tenth year OASI trust fund ratio. This increase was primarily due to

recent data showing that retired workers have been starting benefits at later

ages, which in turn led to lower beneficiary counts, somewhat offset by

higher average benefit amounts, throughout the short-range period. Finally,

an improvement in the short-range methodology for projecting average benefits for newly awarded retired workers decreased the tenth year trust fund

ratio by 4 percentage points.

Table IV.A4 also shows corresponding estimates of the factors underlying

the changes in the financial projections for the DI Trust Fund and for the

combined OASI and DI Trust Funds. The ratios at the beginning of 2024 for

the DI Trust Fund and the combined OASI and DI Trust Funds in last year’s

report, as well as the corresponding ratios for the beginning of 2025 in this

year’s report, are hypothetical because the Trustees project that the DI Trust

Fund reserves will be depleted prior to the end of the short-range projection

period. The 77-percentage-point increase in the DI trust fund ratio is the net

effect of increases and decreases from the factors described in the prior para-
51

Short-Range Estimates

graph for the OASI Trust Fund, the largest of which was the increase caused

by the Bipartisan Budget Act of 2015. For the DI Trust Fund, the effect of

this law was an increase of about 81 percentage points, which is a combination of a 79-percentage-point increase due to the temporary tax rate reallocation and an increase of about 2 percentage points caused by other provisions

affecting DI benefits. For the combined OASI and DI Trust Funds, the payroll tax rate reallocation has no net effect; the remaining change due to other

provisions is an increase of slightly less than 0.5 percentage point in the trust

fund ratio.

Note: Totals do not necessarily equal the sums of rounded components.

Table IV.A4.—Reasons for Change in Trust Fund (Unfunded Obligation) Ratios 

at the Beginning of the Tenth Year of Projection Under Intermediate Assumptions

[In percent]

Item

OASI

Trust Fund

DI

Trust Fund

OASI and DI

Trust Funds,

combined

Trust fund ratio shown in last year’s report for calendar year 2024a.

a Figures for DI, and OASI and DI combined, are hypothetical because the DI Trust Fund reserves are

depleted before the beginning of the tenth year under the assumptions of each report. The magnitudes of the

negative values for DI represent the ratios of the unfunded obligation at the beginning of the tenth year to

cost for that year.

216 -95 173

Change in trust fund ratio due to changes in: 

Legislation and regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12 81 b

b Between -0.5 and 0.5 percent.

Valuation period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17 -11 -15

Demographic data and assumptions. . . . . . . . . . . . . . . . . . . . . . . 4 b 3

Economic data and assumptions . . . . . . . . . . . . . . . . . . . . . . . . -3 -9 -4

Programmatic data and assumptions . . . . . . . . . . . . . . . . . . . . . . 10 16 12

Projection methods and data . . . . . . . . . . . . . . . . . . . . . . . . . . . -4 -1 -3

Total change in trust fund ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22 77 -8

Trust fund ratio shown in this report for calendar year 2025a . . . . . . 194 -18 165
Actuarial Estimates

52

B. LONG-RANGE ESTIMATES

The Trustees use three types of financial measures to assess the actuarial status of the Social Security trust funds under the financing approach specified

in current law: (1) annual cash-flow measures, including income rates, cost

rates, and balances; (2) trust fund ratios; and (3) summary measures such as

actuarial balances and unfunded obligations.

The difference between the annual income rate and annual cost rate, both

expressed as percentages of taxable payroll, is the annual balance. The level

and trend of the annual balances at the end of the 75-year projection period

are factors that the Trustees use to assess the financial condition of the program.

The trust fund ratio for a year is the proportion of the year’s projected cost

that could be paid with funds available at the beginning of the year. Critical

factors considered by the Trustees in assessing actuarial status include:

(1) the level and year of maximum trust fund ratio, (2) the year of depletion

of the fund reserves and the percent of scheduled benefits that is still payable

after reserves are depleted, and (3) the stability of the trust fund ratio at the

end of the long-range period. 

Solvency at any point in time requires that sufficient financial resources are

available to pay all scheduled benefits at that time. Solvency is generally

indicated by a positive trust fund ratio. “Sustainable solvency” for the financing of the program under a specified set of assumptions has been achieved

when the projected trust fund ratio is positive throughout the 75-year projection period and is either stable or rising at the end of the period.

Summarized measures for any period indicate whether projected income is

sufficient, on average, for the whole period. Summarized measures can only

indicate the solvency status of a fund for the end of the period. The Trustees

summarize the total income and cost over valuation periods that extend

through 75 years and over the infinite horizon.1 This section presents two

summarized measures: the actuarial balance and the open group unfunded

obligation. The actuarial balance indicates the size of any surplus or shortfall

as a percentage of the taxable payroll over the period. The open group

unfunded obligation indicates the size of any shortfall in present-value dollars.

This section also includes additional information that the Trustees use to

assess the financial status of the Social Security program, including: (1) a

comparison of the number of beneficiaries to the number of covered workers,

 1 See appendix F.
53

Long-Range Estimates

(2) the test of long-range close actuarial balance, and (3) the reasons for the

change in the actuarial balance from the last report.

1. Annual Income Rates, Cost Rates, and Balances

The concepts of income rate and cost rate, expressed as percentages of taxable payroll, are important in the consideration of the long-range actuarial

status of the trust funds. The annual income rate is the ratio of all non-interest income to the OASDI taxable payroll for the year. Non-interest income

includes payroll taxes, taxes on scheduled benefits, and any General Fund

transfers or reimbursements. The OASDI taxable payroll consists of the total

earnings subject to OASDI taxes with some relatively small adjustments.1

The annual cost rate is the ratio of the cost of the program to the taxable payroll for the year. The cost includes scheduled benefits, administrative

expenses, net interchange with the Railroad Retirement program, and payments for vocational rehabilitation services for disabled beneficiaries. For

any year, the income rate minus the cost rate is the “balance” for the year.

Table IV.B1 presents a comparison of the estimated annual income rates and

cost rates by trust fund and alternative. Table IV.B2 shows the separate components of the annual income rates.

Under the intermediate assumptions, the Trustees project that the OASI

income rate will decline from 11.15 percent of payroll for 2015 to

10.58 percent of payroll for 2016. This temporary reduction results from the

payroll tax rate reallocation of 0.57 percentage point from OASI to DI for

2016 through 2018 enacted in the Bipartisan Budget Act of 2015. After

returning to the pre-reallocation level for 2019, the income rate will rise at a

very gradual rate to 11.47 percent of taxable payroll for 2090. Income from

taxation of benefits causes this increase for two main reasons: (1) total benefits are rising faster than payroll; and (2) the benefit-taxation threshold

amounts are fixed (not indexed), and therefore an increasing share of total

benefits will be subject to tax as incomes and benefits rise. 

The pattern of the cost rate is much different. The OASI cost rate is projected

to decrease from 20162 to 2017 primarily because the projected percentage

 1 Adjustments include adding deemed wage credits based on military service for 1983-2001 and reflecting

the lower effective tax rates (as compared to the combined employee-employer rate) that apply to multipleemployer “excess wages.” Lower rates also applied to net earnings from self-employment before 1984 and

to income from tips before 1988.

 2 Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly

scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as

required by the statutory provision for early benefit payments when the normal delivery date is on a weekend or holiday. Such shifts in payments across calendar years have occurred in the past and will occur periodically in the future whenever January 3rd falls on a Sunday. In order to provide a consistent perspective on

trust fund operations over time, all trust fund operations in each year reflect the 12 months of benefits that

are regularly scheduled for payment in that year.
Actuarial Estimates

54

increase in average taxable earnings is greater than the projected increase in

the average benefit from 2016 to 2017, largely due to the small

0.2 percentage point projected COLA for December 2016. From 2017 to

2035, the cost rate rises rapidly because the retirement of the baby-boom

generation will increase the number of beneficiaries much faster than the

number of workers increases, as subsequent lower-birth-rate generations

replace the baby-boom generation at working ages. From 2038 to 2051, the

cost rate declines because the aging baby-boom generation is gradually

replaced at retirement ages by the historically low-birth-rate generation born

between 1966 and 1989. After 2051, the projected OASI cost rate generally

rises slowly, reaching 15.42 percent of taxable payroll for 2090, primarily

because of projected reductions in death rates at higher ages.

Projections of income rates under the low-cost and high-cost sets of assumptions are similar to those projected for the intermediate assumptions, because

income rates are largely a reflection of the payroll tax rates specified in the

law, with the gradual change from taxation of benefits noted above. In contrast, OASI cost rates for the low-cost and high-cost assumptions are significantly different from those projected for the intermediate assumptions. For

the low-cost assumptions, the OASI cost rate decreases through 2017, and

then rises until it peaks in 2033 at 12.43 percent of payroll. The cost rate then

declines to 11.41 percent for 2054, rises to 11.57 percent for 2070, and

declines again to 11.17 percent for 2084 before rising to 11.31 percent for

2090, at which point the income rate reaches 11.23 percent. For the high-cost

assumptions, the OASI cost rate rises throughout the 75-year period. It rises

relatively rapidly through about 2039 because of the aging of the baby-boom

generation. Thereafter, the cost rate continues to rise and reaches

21.71 percent of payroll for 2090, at which point the income rate reaches

11.83 percent.

The pattern of the projected OASI annual balance is important in the analysis

of the financial condition of the program. Under the intermediate assumptions, the annual balance is negative throughout the projection period. This

annual deficit is temporarily higher for years 2016 through 2018 because of

the 0.57-percentage-point payroll tax rate reallocation from OASI to DI.

After returning to the pre-reallocation level for 2019, the annual deficit then

rises relatively rapidly from 0.76 percent for 2019 to 3.20 percent for 2038. It

then declines to 2.81 percent of payroll for 2051, and generally rises thereafter, reaching 3.96 percent of taxable payroll for 2090.

Under the low-cost assumptions, after the 2016-2018 payroll tax rate reallocation period, the annual deficit rises from 0.23 percent of payroll for 2019 to

1.17 percent of payroll for 2033. Then the annual deficit generally declines

until it becomes a positive annual balance for 2082. The annual balance turns

negative again for 2088, reaching a deficit of 0.09 percent of payroll for
55

Long-Range Estimates

2090. Under the high-cost assumptions, the OASI balance worsens throughout the projection period. Annual deficits rise to 1.84 percent for 2020,

6.22 percent for 2050, and 9.87 percent of payroll for 2090.

Table IV.B1.—Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2090

[As a percentage of taxable payroll]

Calendar 

year

OASI DI OASDI

Income

ratea Costrateb Balanceb Incomeratea Costrateb Balanceb Incomeratea Costrateb Balanceb

Historical data:

1990. . . . . 11.47 9.66 1.82 1.18 1.09 0.10 12.66 10.74 1.91

1995. . . . . 10.64 10.22 .42 1.87 1.44 .43 12.51 11.67 .85

2000. . . . . 10.85 8.98 1.87 1.78 1.42 .36 12.62 10.40 2.23

2001. . . . . 10.90 9.08 1.82 1.82 1.48 .35 12.73 10.56 2.17

2002. . . . . 11.06 9.29 1.76 1.85 1.60 .24 12.90 10.89 2.01

2003. . . . . 10.79 9.35 1.44 1.80 1.68 .12 12.59 11.03 1.56

2004. . . . . 10.73 9.27 1.46 1.79 1.78 .02 12.53 11.05 1.48

2005. . . . . 10.96 9.31 1.65 1.84 1.85 -.02 12.80 11.16 1.63

2006. . . . . 10.96 9.18 1.78 1.83 1.88 -.05 12.79 11.06 1.73

2007. . . . . 11.01 9.44 1.57 1.84 1.88 -.04 12.85 11.32 1.53

2008. . . . . 10.90 9.54 1.37 1.83 2.01 -.19 12.73 11.55 1.18

2009. . . . . 11.23 10.74 .50 1.88 2.31 -.43 13.11 13.05 .06

2010. . . . . 10.75 11.06 -.30 1.79 2.41 -.62 12.54 13.47 -.92

2011 . . . . . 10.84 11.05 -.21 1.80 2.42 -.62 12.64 13.47 -.83

2012. . . . . 11.05 11.35 -.30 1.81 2.47 -.66 12.86 13.82 -.96

2013. . . . . 10.97 11.54 -.57 1.81 2.44 -.63 12.77 13.98 -1.20

2014. . . . . 10.96 11.60 -.64 1.81 2.36 -.55 12.77 13.96 -1.19

2015. . . . . 11.15 11.78 -.63 1.83 2.30 -.47 12.98 14.08 -1.10

Intermediate:

2016. . . . . 10.58 11.78 -1.20 2.37 2.27 .09 12.94 14.05 -1.10

2017. . . . . 10.52 11.55 -1.02 2.39 2.17 .22 12.92 13.72 -.80

2018. . . . . 10.56 11.72 -1.16 2.40 2.14 .26 12.96 13.86 -.90

2019. . . . . 11.11 11.88 -.76 1.85 2.11 -.26 12.97 13.99 -1.02

2020. . . . . 11.15 12.05 -.90 1.83 2.08 -.25 12.98 14.13 -1.15

2021. . . . . 11.18 12.21 -1.03 1.83 2.06 -.24 13.00 14.27 -1.27

2022. . . . . 11.20 12.44 -1.23 1.83 2.05 -.22 13.03 14.49 -1.46

2023. . . . . 11.23 12.71 -1.48 1.83 2.05 -.22 13.06 14.76 -1.70

2024. . . . . 11.26 12.98 -1.72 1.83 2.04 -.21 13.09 15.02 -1.93

2025. . . . . 11.28 13.25 -1.97 1.83 2.03 -.20 13.11 15.29 -2.17

2030. . . . . 11.34 14.10 -2.76 1.84 2.00 -.16 13.18 16.10 -2.92

2035. . . . . 11.37 14.48 -3.10 1.84 2.02 -.18 13.22 16.50 -3.28

2040. . . . . 11.39 14.55 -3.16 1.84 2.04 -.20 13.23 16.59 -3.36

2045. . . . . 11.38 14.34 -2.95 1.85 2.11 -.27 13.23 16.45 -3.22

2050. . . . . 11.38 14.20 -2.82 1.85 2.15 -.30 13.23 16.36 -3.13

2055. . . . . 11.39 14.28 -2.89 1.85 2.19 -.33 13.24 16.46 -3.22

2060. . . . . 11.41 14.53 -3.13 1.85 2.17 -.32 13.26 16.71 -3.44

2065. . . . . 11.42 14.77 -3.35 1.86 2.18 -.33 13.28 16.96 -3.68

2070. . . . . 11.44 15.03 -3.59 1.86 2.19 -.33 13.30 17.22 -3.92

2075. . . . . 11.45 15.22 -3.77 1.86 2.17 -.31 13.31 17.39 -4.08

2080. . . . . 11.45 15.21 -3.75 1.86 2.20 -.34 13.31 17.40 -4.09

2085. . . . . 11.46 15.22 -3.77 1.86 2.25 -.39 13.32 17.47 -4.15

2090. . . . . 11.47 15.42 -3.96 1.86 2.25 -.39 13.33 17.68 -4.35

First year balance becomes

negative and remains negative

throughout the projection 

period. . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . 2010
Actuarial Estimates

56

Low-cost:

2016. . . . . 10.53 11.64 -1.11 2.36 2.22 0.14 12.89 13.86 -0.97

2017. . . . . 10.50 11.25 -.75 2.39 2.06 .33 12.89 13.31 -.42

2018. . . . . 10.53 11.29 -.76 2.39 1.99 .41 12.93 13.28 -.35

2019. . . . . 11.08 11.31 -.23 1.85 1.91 -.07 12.93 13.23 -.30

2020. . . . . 11.11 11.37 -.26 1.82 1.85 -.03 12.94 13.22 -.28

2021. . . . . 11.13 11.43 -.30 1.82 1.80 .02 12.95 13.23 -.28

2022. . . . . 11.15 11.54 -.39 1.82 1.77 .06 12.98 13.31 -.33

2023. . . . . 11.17 11.68 -.51 1.82 1.73 .09 12.99 13.41 -.42

2024. . . . . 11.19 11.81 -.62 1.83 1.69 .13 13.02 13.51 -.49

2025. . . . . 11.20 11.94 -.74 1.82 1.66 .16 13.03 13.60 -.58

2030. . . . . 11.25 12.35 -1.10 1.83 1.54 .28 13.07 13.89 -.82

2035. . . . . 11.26 12.38 -1.12 1.83 1.50 .33 13.09 13.88 -.79

2040. . . . . 11.25 12.15 -.90 1.83 1.47 .36 13.08 13.62 -.53

2045. . . . . 11.24 11.74 -.51 1.83 1.49 .35 13.07 13.23 -.16

2050. . . . . 11.22 11.47 -.25 1.83 1.49 .34 13.06 12.96 .10

2055. . . . . 11.22 11.42 -.19 1.84 1.49 .34 13.06 12.91 .15

2060. . . . . 11.23 11.51 -.28 1.84 1.47 .36 13.07 12.98 .09

2065. . . . . 11.24 11.55 -.32 1.84 1.47 .37 13.07 13.02 .05

2070. . . . . 11.24 11.57 -.34 1.84 1.46 .37 13.07 13.04 .04

2075. . . . . 11.24 11.51 -.27 1.84 1.45 .39 13.07 12.96 .11

2080. . . . . 11.22 11.28 -.06 1.84 1.47 .37 13.06 12.75 .31

2085. . . . . 11.22 11.17 .05 1.84 1.52 .32 13.05 12.68 .37

2090. . . . . 11.23 11.31 -.09 1.84 1.53 .31 13.06 12.84 .22

First year balance becomes

negative and remains negative

throughout the projection 

period. . . . . . . . . . . . . . . . . . . . 2088 . . . . . . . . . . . . . . . . c . . . . . . . . . . . . . . . . c

High-cost:

2016. . . . . 10.66 12.01 -1.35 2.38 2.35 .04 13.04 14.35 -1.32

2017. . . . . 10.58 12.28 -1.70 2.40 2.37 .03 12.97 14.65 -1.67

2018. . . . . 10.59 12.45 -1.86 2.40 2.37 .02 12.99 14.82 -1.83

2019. . . . . 11.16 12.75 -1.59 1.86 2.39 -.53 13.02 15.15 -2.12

2020. . . . . 11.21 13.05 -1.84 1.83 2.39 -.56 13.04 15.44 -2.40

2021. . . . . 11.24 13.31 -2.08 1.83 2.40 -.56 13.07 15.71 -2.64

2022. . . . . 11.27 13.65 -2.37 1.84 2.41 -.58 13.11 16.06 -2.95

2023. . . . . 11.30 14.01 -2.71 1.84 2.43 -.59 13.14 16.44 -3.30

2024. . . . . 11.34 14.39 -3.06 1.84 2.44 -.60 13.18 16.83 -3.66

2025. . . . . 11.37 14.78 -3.42 1.84 2.46 -.62 13.21 17.24 -4.04

Table IV.B1.—Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2090 (Cont.)

[As a percentage of taxable payroll]

Calendar 

year

OASI DI OASDI

Income

ratea Costrateb Balanceb Incomeratea Costrateb Balanceb Incomeratea Costrateb Balanceb
57

Long-Range Estimates

Notes:

1. The income rate excludes interest income.

2. Revisions of taxable payroll may change some historical values.

3. Totals do not necessarily equal the sums of rounded components.

The DI cost rate rose substantially from 1.09 percent of taxable payroll for

1990 to 1.88 percent of taxable payroll for 2007 as the baby boom generation

moved into prime disability ages, and further to a peak of 2.47 percent for

2012 due to the recent economic recession. Under the intermediate assumptions, the projected DI cost rate generally declines to 1.99 percent for 2032,

and then generally increases gradually to 2.19 percent for 2056. From 2056

to 2079, the DI cost rate stays relatively stable before increasing slowly to

2.25 percent of payroll for 2090. Because of the temporary 2016-18 payroll

tax rate reallocation, the income rate increases to between 2.37 and

2.40 percent of payroll for those years. The income rate drops to 1.85 percent

of payroll for 2019 and then increases only very slightly to 1.86 percent for

2090. The annual balance is positive for years 2016 through 2018, reflecting

the reallocation. Thereafter, the annual deficit reappears, but generally

declines from 0.26 percent for 2019 to a low of 0.15 percent for 2032, and

then generally increases to 0.39 percent for 2090. 

Under the low-cost assumptions, the DI cost rate declines from 2.47 percent

of payroll for 2012 to 1.47 percent for 2039, and remains relatively stable

High-cost (Cont.):

2030. . . . . 11.45 16.12 -4.67 1.85 2.54 -0.69 13.30 18.66 -5.36

2035. . . . . 11.51 16.95 -5.45 1.85 2.65 -.80 13.36 19.61 -6.24

2040. . . . . 11.55 17.49 -5.95 1.86 2.75 -.89 13.41 20.24 -6.84

2045. . . . . 11.56 17.64 -6.07 1.87 2.90 -1.04 13.43 20.54 -7.11

2050. . . . . 11.58 17.80 -6.22 1.87 3.00 -1.13 13.45 20.79 -7.34

2055. . . . . 11.61 18.14 -6.53 1.87 3.08 -1.21 13.48 21.22 -7.74

2060. . . . . 11.64 18.69 -7.05 1.88 3.09 -1.21 13.52 21.78 -8.27

2065. . . . . 11.68 19.27 -7.59 1.88 3.13 -1.25 13.56 22.39 -8.84

2070. . . . . 11.72 19.93 -8.21 1.88 3.15 -1.27 13.60 23.09 -9.48

2075. . . . . 11.76 20.58 -8.82 1.88 3.13 -1.25 13.64 23.71 -10.07

2080. . . . . 11.79 21.00 -9.21 1.88 3.14 -1.26 13.67 24.14 -10.47

2085. . . . . 11.81 21.33 -9.52 1.88 3.19 -1.30 13.69 24.52 -10.82

2090. . . . . 11.83 21.71 -9.87 1.88 3.18 -1.30 13.72 24.89 -11.17

First year balance becomes

negative and remains negative

throughout the projection 

period. . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . 2010

a Income rates include certain reimbursements from the General Fund of the Treasury.

b Benefit payments which were scheduled to be paid on January 3 for some past and future years were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the

values for historical years and the projections in this report, all trust fund operations and asset reserves

reflect the 12 months of benefits scheduled for payment each year.

c The annual balance is projected to be negative for a temporary period and return to positive levels before

the end of the projection period.

Table IV.B1.—Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2090 (Cont.)

[As a percentage of taxable payroll]

Calendar 

year

OASI DI OASDI

Income

ratea Costrateb Balanceb Incomeratea Costrateb Balanceb Incomeratea Costrateb Balanceb
Actuarial Estimates

58

thereafter, reaching 1.53 percent for 2090. The annual balance is positive for

2016 through 2018, negative for 2019 through 2020, and is positive throughout the remainder of the long-range period. Under the high-cost assumptions,

the DI cost rate generally rises throughout the projection period, reaching

3.18 percent for 2090. The annual deficit is negative from 2019 through the

remainder of the projection period, reaching 0.53 percent for 2019,

1.13 percent for 2050, and 1.30 percent for 2090.

Figure IV.B1 shows the patterns of the OASI and DI annual cost rates.

Annual DI cost rates rose substantially between 1990 and 2010 in large part

due to: (1) aging of the working population as the baby-boom generation

moved from ages 25-44 in 1990, where disability prevalence is low, to ages

45-64 in 2010, where disability prevalence is much higher; (2) a substantial

increase in the percentage of women insured for DI benefits as a result of

increased and more consistent rates of employment; and (3) increased disability incidence rates for women to a level similar to those for men by 2010.

After 2010, all of these factors stabilize, and therefore the DI cost rate stabilizes also. Annual OASI cost rates follow a similar pattern to that for DI, but

displaced 20 to 25 years later, because the baby-boom generation enters

retirement ages 20 to 25 years after entering prime disability ages.

Figure IV.B1 shows only the income rates for alternative II because the variation in income rates by alternative is very small. Income rates generally

increase slowly for each of the alternatives over the long-range period. Taxation of benefits, which is a relatively small portion of income, is the main

source of both the increases in the income rate and the variation among the

alternatives. Increases in income from taxation of benefits reflect:

(1) increases in the total amount of benefits paid and (2) the increasing share

of individual benefits that will be subject to taxation because benefit taxation

threshold amounts are not indexed.

Figure IV.B1 shows the patterns of the annual balances for OASI and DI. For

each alternative and for historical data, the magnitude of each of the positive

balances, as a percentage of taxable payroll, is the distance between the

appropriate cost-rate curve and the income-rate curve above it. The magnitude of each of the deficits is the distance between the appropriate cost-rate

curve and the income-rate curve below it. Annual balances follow closely the

pattern of annual cost rates after 1990 because the payroll tax rate does not

change for the OASDI program, with only small variations in the allocation

between DI and OASI except for the 2016-2018 payroll tax rate reallocation.

The pattern of the projected OASDI annual balances is important to the analysis of the financial condition of the Social Security program as a whole.

In the future, the costs of OASI, DI, and the combined OASDI programs as a

percentage of taxable payroll are unlikely to fall outside the range encom-
59

Long-Range Estimates

passed by alternatives I and III because alternatives I and III define a wide

range of demographic and economic conditions.

Long-range OASDI cost and income are most often expressed as percentages

of taxable payroll. However, the Trustees also present cost and income as

shares of gross domestic product (GDP), the value of goods and services produced during the year in the United States. Under alternative II, the Trustees

project the OASDI cost to decrease from about 5.0 percent of GDP for 2016

to about 4.9 percent of GDP for 2017, and then increase to a peak of about

6.0 percent for 2037. After 2037, OASDI cost as a percentage of GDP

declines to a low of about 5.9 percent for 2051 and thereafter generally

increases slowly, reaching about 6.1 percent by 2090. Appendix G presents

full estimates of income and cost relative to GDP. 

Table IV.B2 contains historical and projected annual income rates and their

components by trust fund and alternative. The annual income rates consist of

the scheduled payroll tax rates, the rates of income from taxation of benefits,

and the rates of income from General Fund reimbursements. Projected

income from taxation of benefits increases over time for reasons discussed

on page 56. Historical General Fund reimbursements include temporary

reductions in revenue due to reduced payroll tax rates and certain other miscellaneous items.

 Figure IV.B1.—Long-Range OASI and DI Annual Income Rates and Cost Rates

[As a percentage of taxable payroll]

0%

5%

10%

15%

20%

25%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

Alternative II Income rates

OASI cost rates

DI cost rates

Historical Estimated 

OASI 

DI III 

II 

I 

II 

I 

III 
Actuarial Estimates

60

Table IV.B2.—Components of Annual Income Rates, Calendar Years 1990-2090

[As a percentage of taxable payroll]

Calendar

year

OASI DI OASDI

Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation of

benefits

General

Fund

Reimbursementsa Totalb

Historical:

1990 . . 11.29 0.21 -0.03 11.47 1.21 0.01 -0.03 1.18 12.50 0.21 -0.06 12.66

1995 . . 10.46 .19 -.01 10.64 1.87 .01 -.01 1.87 12.33 .20 -.01 12.51

2000 . . 10.56 .29 c 10.85 1.78 .02 -.02 1.78 12.34 .31 -.02 12.62

2001 . . 10.62 .29 c 10.90 1.80 .02 c 1.82 12.42 .31 c 12.73

2002 . . 10.74 .30 .01 11.06 1.82 .02 c 1.85 12.56 .33 .01 12.90

2003 . . 10.50 .29 c 10.79 1.78 .02 c 1.80 12.28 .31 c 12.59

2004 . . 10.41 .32 c 10.73 1.77 .02 c 1.79 12.18 .35 c 12.53

2005 . . 10.68 .29 -.01 10.96 1.81 .02 c 1.84 12.49 .31 -.01 12.80

2006 . . 10.65 .31 c 10.96 1.81 .02 c 1.83 12.46 .34 c 12.79

2007 . . 10.68 .33 c 11.01 1.81 .03 c 1.84 12.50 .35 c 12.85

2008 . . 10.61 .29 c 10.90 1.80 .02 c 1.83 12.42 .31 c 12.73

2009 . . 10.85 .38 c 11.23 1.84 .04 c 1.88 12.70 .42 c 13.11

2010 . . 10.30 .42 .04 10.75 1.75 .04 .01 1.79 12.05 .45 .05 12.54

2011 . . 8.82 .41 1.61 10.84 1.50 .03 .27 1.80 10.32 .44 1.88 12.64

2012 . . 8.86 .47 1.72 11.05 1.51 .01 .29 1.81 10.37 .48 2.01 12.86

2013 . . 10.54 .35 .07 10.97 1.79 .01 .01 1.81 12.33 .36 .08 12.77

2014 . . 10.50 .45 .01 10.96 1.78 .03 c 1.81 12.28 .48 .01 12.77

2015 10.67 .48 c 11.15 1.81 .02 c 1.83 12.48 .50 .01 12.98

Intermediate:

2016 . . 10.09 .48 c 10.58 2.35 .02 c 2.37 12.44 .50 c 12.94

2017 . . 10.00 .53 c 10.52 2.36 .03 c 2.39 12.36 .56 c 12.92

2018 . . 10.01 .55 c 10.56 2.37 .03 c 2.40 12.38 .58 c 12.96

2019 . . 10.55 .57 c 11.11 1.82 .03 c 1.85 12.37 .60 c 12.97

2020 . . 10.57 .59 c 11.15 1.79 .03 c 1.83 12.36 .62 c 12.98

2021 . . 10.57 .60 c 11.18 1.80 .03 c 1.83 12.37 .64 c 13.00

2022 . . 10.58 .63 c 11.20 1.80 .03 c 1.83 12.37 .66 c 13.03

2023 . . 10.58 .65 c 11.23 1.80 .03 c 1.83 12.37 .69 c 13.06

2024 . . 10.58 .68 c 11.26 1.80 .04 c 1.83 12.38 .71 c 13.09

2025 . . 10.58 .70 c 11.28 1.80 .04 c 1.83 12.37 .74 c 13.11

2030 . . 10.58 .77 c 11.34 1.80 .04 c 1.84 12.37 .81 c 13.18

2035 . . 10.58 .80 c 11.37 1.80 .05 c 1.84 12.37 .84 c 13.22

2040 . . 10.58 .81 c 11.39 1.80 .05 c 1.84 12.37 .86 c 13.23

2045 . . 10.58 .81 c 11.38 1.80 .05 c 1.85 12.37 .86 c 13.23

2050 . . 10.58 .80 c 11.38 1.80 .05 c 1.85 12.37 .86 c 13.23

2055 . . 10.58 .81 c 11.39 1.80 .06 c 1.85 12.37 .87 c 13.24

2060 . . 10.58 .83 c 11.41 1.80 .06 c 1.85 12.37 .89 c 13.26

2065 . . 10.58 .85 c 11.42 1.80 .06 c 1.86 12.37 .91 c 13.28

2070 . . 10.58 .86 c 11.44 1.80 .06 c 1.86 12.37 .92 c 13.30

2075 . . 10.58 .88 c 11.45 1.80 .06 c 1.86 12.37 .94 c 13.31

2080 . . 10.58 .88 c 11.45 1.80 .06 c 1.86 12.37 .94 c 13.31

2085 . . 10.58 .88 c 11.46 1.80 .06 c 1.86 12.37 .94 c 13.32

2090 . . 10.58 .89 c 11.47 1.80 .06 c 1.86 12.37 .95 c 13.33
61

Long-Range Estimates

Low-cost:

2016 . . 10.05 0.48 c 10.53 2.34 0.02 c 2.36 12.39 0.50 c 12.89

2017 . . 9.99 .51 c 10.50 2.36 .03 c 2.39 12.35 .54 c 12.89

2018 . . 10.00 .53 c 10.53 2.36 .03 c 2.39 12.37 .56 c 12.93

2019 . . 10.54 .54 c 11.08 1.82 .03 c 1.85 12.36 .57 c 12.93

2020 . . 10.56 .55 c 11.11 1.79 .03 c 1.82 12.35 .58 c 12.94

2021 . . 10.57 .57 c 11.13 1.79 .03 c 1.82 12.36 .59 c 12.95

2022 . . 10.57 .58 c 11.15 1.80 .03 c 1.82 12.37 .61 c 12.98

2023 . . 10.57 .60 c 11.17 1.79 .03 c 1.82 12.37 .63 c 12.99

2024 . . 10.58 .62 c 11.19 1.80 .03 c 1.83 12.37 .64 c 13.02

2025 . . 10.57 .63 c 11.20 1.79 .03 c 1.82 12.36 .66 c 13.03

2030 . . 10.57 .67 c 11.25 1.80 .03 c 1.83 12.37 .71 c 13.07

2035 . . 10.57 .69 c 11.26 1.80 .03 c 1.83 12.37 .72 c 13.09

2040 . . 10.57 .68 c 11.25 1.80 .04 c 1.83 12.37 .72 c 13.08

2045 . . 10.57 .67 c 11.24 1.80 .04 c 1.83 12.37 .70 c 13.07

2050 . . 10.57 .65 c 11.22 1.80 .04 c 1.83 12.37 .69 c 13.06

2055 . . 10.57 .65 c 11.22 1.80 .04 c 1.84 12.37 .69 c 13.06

2060 . . 10.57 .66 c 11.23 1.80 .04 c 1.84 12.37 .70 c 13.07

2065 . . 10.57 .66 c 11.24 1.80 .04 c 1.84 12.37 .71 c 13.07

2070 . . 10.57 .67 c 11.24 1.80 .04 c 1.84 12.37 .71 c 13.07

2075 . . 10.57 .66 c 11.24 1.80 .04 c 1.84 12.37 .71 c 13.07

2080 . . 10.57 .65 c 11.22 1.80 .04 c 1.84 12.37 .69 c 13.06

2085 . . 10.57 .65 c 11.22 1.80 .04 c 1.84 12.37 .69 c 13.05

2090 . . 10.57 .65 c 11.23 1.80 .04 c 1.84 12.37 .70 c 13.06

Table IV.B2.—Components of Annual Income Rates, Calendar Years 1990-2090 (Cont.)

[As a percentage of taxable payroll]

Calendar

year

OASI DI OASDI

Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation of

benefits

General

Fund

Reimbursementsa Totalb
Actuarial Estimates

62

Note: Totals do not necessarily equal the sums of rounded components.

2. Comparison of Workers to Beneficiaries

Under the intermediate assumptions, the Trustees project the OASDI cost

rate will rise rapidly between 2017 and 2035, primarily because the number

of beneficiaries rises much more rapidly than the number of covered workers

as the baby-boom generation retires. The ratio of OASDI beneficiaries to

workers is dominated by the OASI program because all workers eventually

die or retire, but only a relatively small minority become disabled. The trends

described below are primarily due to demographic changes and thus affect

the DI program roughly 20 years earlier than the OASI and OASDI programs. The baby-boom generation had lower fertility rates than their parents,

and the Trustees expect that lower fertility rates will persist for all future

generations; therefore, the ratio of OASDI beneficiaries to workers will rise

rapidly and reach a permanently higher level after the baby-boom generation

retires. Due to increasing longevity, the ratio of beneficiaries to workers will

High-cost:

2016 . . 10.16 0.49 c 10.66 2.36 0.02 c 2.38 12.53 0.51 c 13.04

2017 . . 10.01 .56 c 10.58 2.37 .03 c 2.40 12.38 .59 c 12.97

2018 . . 10.01 .58 c 10.59 2.36 .03 c 2.40 12.37 .62 c 12.99

2019 . . 10.55 .61 c 11.16 1.82 .04 c 1.86 12.38 .64 c 13.02

2020 . . 10.57 .63 c 11.21 1.80 .04 c 1.83 12.37 .67 c 13.04

2021 . . 10.58 .66 c 11.24 1.80 .04 c 1.83 12.37 .70 c 13.07

2022 . . 10.58 .69 c 11.27 1.80 .04 c 1.84 12.38 .73 c 13.11

2023 . . 10.58 .72 c 11.30 1.80 .04 c 1.84 12.38 .76 c 13.14

2024 . . 10.59 .75 c 11.34 1.80 .04 c 1.84 12.39 .79 c 13.18

2025 . . 10.58 .78 c 11.37 1.80 .04 c 1.84 12.38 .83 c 13.21

2030 . . 10.58 .87 c 11.45 1.80 .05 c 1.85 12.38 .92 c 13.30

2035 . . 10.58 .92 c 11.51 1.80 .06 c 1.85 12.38 .98 c 13.36

2040 . . 10.58 .96 c 11.55 1.80 .06 c 1.86 12.38 1.03 c 13.41

2045 . . 10.58 .98 c 11.56 1.80 .07 c 1.87 12.38 1.05 c 13.43

2050 . . 10.58 1.00 c 11.58 1.80 .07 c 1.87 12.38 1.07 c 13.45

2055 . . 10.58 1.02 c 11.61 1.80 .08 c 1.87 12.38 1.10 c 13.48

2060 . . 10.58 1.06 c 11.64 1.80 .08 c 1.88 12.38 1.14 c 13.52

2065 . . 10.59 1.09 c 11.68 1.80 .08 c 1.88 12.38 1.17 c 13.56

2070 . . 10.59 1.14 c 11.72 1.80 .08 c 1.88 12.38 1.22 c 13.60

2075 . . 10.59 1.18 c 11.76 1.80 .08 c 1.88 12.38 1.26 c 13.64

2080 . . 10.59 1.20 c 11.79 1.80 .08 c 1.88 12.38 1.29 c 13.67

2085 . . 10.59 1.22 c 11.81 1.80 .09 c 1.88 12.38 1.31 c 13.69

2090 . . 10.59 1.25 c 11.83 1.80 .09 c 1.88 12.38 1.33 c 13.72

a Includes payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and

112-96, and other miscellaneous reimbursements.

b Values exclude interest income.

c Between -0.005 and 0.005 percent of taxable payroll.

Table IV.B2.—Components of Annual Income Rates, Calendar Years 1990-2090 (Cont.)

[As a percentage of taxable payroll]

Calendar

year

OASI DI OASDI

Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation

of

benefits

General

Fund

Reimbursementsa Totalb Payroll

tax

Taxation of

benefits

General

Fund

Reimbursementsa Totalb
63

Long-Range Estimates

generally rise slowly thereafter. Table IV.B3 provides a comparison of the

numbers of covered workers and beneficiaries.

Table IV.B3.—Covered Workers and Beneficiaries, Calendar Years 1945-2090

Calendar year

Covered

workersa

(in thousands)

Beneficiariesb (in thousands) Covered

workers per

OASDI

beneficiary

OASDI

beneficiaries

per 100

covered

OASI DI OASDI workers c

Historical data:

1945 . . . . . . . . . 46,390 1,106 - 1,106 41.9 2

1950 . . . . . . . . . 48,280 2,930 - 2,930 16.5 6

1955 . . . . . . . . . 65,066 7,564 - 7,564 8.6 12

1960 . . . . . . . . . 72,371 13,740 522 14,262 5.1 20

1965 . . . . . . . . . 80,539 18,509 1,648 20,157 4.0 25

1970 . . . . . . . . . 92,963 22,618 2,568 25,186 3.7 27

1975 . . . . . . . . . 100,193 26,998 4,125 31,123 3.2 31

1980 . . . . . . . . . 112,651 30,384 4,734 35,117 3.2 31

1985 . . . . . . . . . 120,398 32,763 3,874 36,636 3.3 30

1990 . . . . . . . . . 133,087 35,255 4,204 39,459 3.4 30

1995 . . . . . . . . . 140,929 37,364 5,731 43,096 3.3 31

2000 . . . . . . . . . 154,805 38,556 6,606 45,162 3.4 29

2001 . . . . . . . . . 155,189 38,888 6,780 45,668 3.4 29

2002 . . . . . . . . . 154,615 39,117 7,060 46,176 3.3 30

2003 . . . . . . . . . 154,827 39,315 7,438 46,753 3.3 30

2004 . . . . . . . . . 156,599 39,558 7,810 47,368 3.3 30

2005 . . . . . . . . . 159,030 39,961 8,172 48,133 3.3 30

2006 . . . . . . . . . 161,549 40,435 8,428 48,863 3.3 30

2007 . . . . . . . . . 163,314 40,863 8,739 49,603 3.3 30

2008 . . . . . . . . . 162,704 41,355 9,065 50,420 3.2 31

2009 . . . . . . . . . 157,729 42,385 9,475 51,860 3.0 33

2010 . . . . . . . . . 157,112 43,440 9,958 53,398 2.9 34

2011 . . . . . . . . . 158,674 44,388 10,428 54,816 2.9 35

2012 . . . . . . . . . 160,777 45,377 10,799 56,176 2.9 35

2013 . . . . . . . . . 163,302 46,517 10,954 57,471 2.8 35

2014 . . . . . . . . . 165,885 47,603 10,971 58,574 2.8 35

2015 . . . . . . . . . 168,899 48,663 10,881 59,543 2.8 35

Intermediate:

2016 . . . . . . . . . 170,822 50,019 10,853 60,872 2.8 36

2020 . . . . . . . . . 179,102 56,505 11,231 67,736 2.6 38

2025 . . . . . . . . . 184,836 64,643 11,664 76,307 2.4 41

2030 . . . . . . . . . 188,769 71,615 11,890 83,506 2.3 44

2035 . . . . . . . . . 192,233 76,637 12,321 88,957 2.2 46

2040 . . . . . . . . . 197,022 79,319 12,849 92,168 2.1 47

2045 . . . . . . . . . 202,482 80,709 13,640 94,349 2.1 47

2050 . . . . . . . . . 207,610 82,520 14,226 96,746 2.1 47

2055 . . . . . . . . . 212,456 85,075 14,747 99,823 2.1 47

2060 . . . . . . . . . 217,070 88,345 15,021 103,366 2.1 48

2065 . . . . . . . . . 221,854 91,566 15,445 107,011 2.1 48

2070 . . . . . . . . . 227,089 95,079 15,874 110,953 2.0 49

2075 . . . . . . . . . 232,692 98,376 16,184 114,560 2.0 49

2080 . . . . . . . . . 238,422 100,509 16,744 117,253 2.0 49

2085 . . . . . . . . . 244,162 102,982 17,475 120,457 2.0 49

2090 . . . . . . . . . 249,698 106,626 17,931 124,557 2.0 50
Actuarial Estimates

64

Notes: 

1. The number of beneficiaries does not include uninsured individuals who received benefits under

Section 228 of the Social Security Act. The General Fund of the Treasury reimbursed the trust funds for the

costs of most of these individuals.

2. Historical covered worker and beneficiary data are subject to revision.

3. Totals do not necessarily equal the sums of rounded components.

The effect of the demographic shift under the three alternatives on the

OASDI cost rates is clear when one considers the projected number of

OASDI beneficiaries per 100 covered workers. Compared to the 2015 level

of 35 beneficiaries per 100 covered workers, the Trustees project that this

ratio rises to 46 by 2035 under the intermediate assumptions because the

growth in beneficiaries greatly exceeds the growth in workers. By 2090, this

projected ratio rises further under the intermediate and high-cost assumptions, reaching 50 under the intermediate assumptions and 63 under the highLow-cost:

2016 . . . . . . . . . 171,545 50,004 10,803 60,807 2.8 35

2020 . . . . . . . . . 182,507 56,386 10,676 67,062 2.7 37

2025 . . . . . . . . . 188,925 64,318 10,539 74,857 2.5 40

2030 . . . . . . . . . 193,605 70,713 10,291 81,004 2.4 42

2035 . . . . . . . . . 198,130 75,146 10,319 85,465 2.3 43

2040 . . . . . . . . . 204,791 77,208 10,499 87,708 2.3 43

2045 . . . . . . . . . 212,901 78,079 10,985 89,064 2.4 42

2050 . . . . . . . . . 220,970 79,491 11,379 90,870 2.4 41

2055 . . . . . . . . . 228,799 81,803 11,783 93,585 2.4 41

2060 . . . . . . . . . 236,623 84,883 12,057 96,940 2.4 41

2065 . . . . . . . . . 245,082 87,931 12,500 100,431 2.4 41

2070 . . . . . . . . . 254,625 91,227 12,996 104,223 2.4 41

2075 . . . . . . . . . 265,145 94,186 13,464 107,649 2.5 41

2080 . . . . . . . . . 276,175 96,031 14,196 110,227 2.5 40

2085 . . . . . . . . . 287,265 98,727 15,124 113,850 2.5 40

2090 . . . . . . . . . 298,093 103,444 15,819 119,264 2.5 40

High-cost:

2016 . . . . . . . . . 170,151 50,032 10,897 60,929 2.8 36

2020 . . . . . . . . . 174,217 56,604 11,873 68,476 2.5 39

2025 . . . . . . . . . 180,301 64,991 12,773 77,763 2.3 43

2030 . . . . . . . . . 183,821 72,638 13,531 86,168 2.1 47

2035 . . . . . . . . . 186,485 78,324 14,375 92,699 2.0 50

2040 . . . . . . . . . 189,536 81,713 15,246 96,959 2.0 51

2045 . . . . . . . . . 192,741 83,742 16,338 100,080 1.9 52

2050 . . . . . . . . . 195,267 86,050 17,086 103,136 1.9 53

2055 . . . . . . . . . 197,241 88,921 17,699 106,619 1.8 54

2060 . . . . . . . . . 198,857 92,412 17,921 110,333 1.8 55

2065 . . . . . . . . . 200,311 95,812 18,251 114,063 1.8 57

2070 . . . . . . . . . 201,750 99,581 18,507 118,088 1.7 59

2075 . . . . . . . . . 203,168 103,215 18,512 121,727 1.7 60

2080 . . . . . . . . . 204,403 105,645 18,704 124,349 1.6 61

2085 . . . . . . . . . 205,569 107,833 19,016 126,849 1.6 62

2090 . . . . . . . . . 206,635 110,312 19,105 129,417 1.6 63

a Workers who are paid at some time during the year for employment on which OASDI taxes are due.

b Beneficiaries with monthly benefits in current-payment status as of June 30.

c This column is the sum of OASI and DI beneficiaries. A small number of beneficiaries receive benefits

from both funds.

Table IV.B3.—Covered Workers and Beneficiaries, Calendar Years 1945-2090 (Cont.)

Calendar year

Covered

workersa

(in thousands)

Beneficiariesb (in thousands) Covered

workers per

OASDI

beneficiary

OASDI

beneficiaries

per 100

covered

OASI DI OASDI workers c
65

Long-Range Estimates

cost assumptions. Under the low-cost assumptions, this ratio rises to 43 by

2035 and then declines, reaching 40 by 2090. Figure IV.B2 shows beneficiaries per 100 covered workers.

For each alternative, the curve in figure IV.B2 is strikingly similar to the corresponding cost-rate curve in figure IV.B1. This similarity emphasizes the

extent to which the cost rate is determined by the age distribution of the population. The cost rate is essentially the product of the number of beneficiaries

and their average benefit, divided by the product of the number of covered

workers and their average taxable earnings. For this reason, the pattern of the

annual cost rates is similar to that of the annual ratios of beneficiaries to

workers.

Table IV.B3 also shows the number of covered workers per OASDI beneficiary, which was about 2.8 for 2015. Under the low-cost assumptions, this

ratio declines to 2.3 for 2035, generally rises from 2035 through 2080, and

remains relatively stable at 2.5 through 2090. Under the intermediate

assumptions, this ratio declines generally throughout the long-range period,

reaching 2.2 for 2035 and 2.0 by 2090. Under the high-cost assumptions, this

ratio decreases steadily to 1.6 by 2090.

 Figure IV.B2.—Number of OASDI Beneficiaries Per 100 Covered 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 

III 

II 

I 
Actuarial Estimates

66

3. Trust Fund Ratios and Test of Long-Range Close Actuarial Balance

Trust fund ratios are critical indicators of the adequacy of the financial

resources of the Social Security program. The trust fund ratio for a year is the

amount of asset reserves in a fund at the beginning of a year expressed as a

percentage of the cost for the year. Under present law, the OASI and DI Trust

Funds do not have the authority to borrow other than in the form of advance

tax transfers, which are limited to expected taxes for the current calendar

month. If reserves held in either trust fund become depleted during a year,

and continuing tax revenues fall short of the cost of scheduled benefits, then

full scheduled benefits would not be payable on a timely basis. For this reason, the trust fund ratio is a very critical financial measure.

The trust fund ratio serves an additional important purpose in assessing the

actuarial status of the program. If the projected trust fund ratio is positive

throughout the period and is either level or increasing at the end of the

period, then projected adequacy for the long-range period is likely to continue for subsequent reports. Under these conditions, the program has

achieved sustainable solvency.

Table IV.B4 shows the Trustees’ projections of trust fund ratios by alternative, without regard to advance tax transfers that would be effected, for the

separate and combined OASI and DI Trust Funds. The table also shows the

years of trust fund reserve depletion and the percentage of scheduled benefits

that would be payable thereafter, by alternative.

Under the intermediate assumptions, the OASI trust fund ratio has declined

since 2011 and continues to decline from 357 percent at the beginning of

20161 until the trust fund reserves become depleted in 2035 (the same year

as projected in last year’s report), at which time 77 percent of scheduled benefits would be payable. The DI trust fund ratio has been declining steadily

since 2003 (at first slowly and then more rapidly due to reduced employment

and increased disability claims during the recent recession), reaching

21 percent at the beginning of 2016. The 0.57-percentage-point reallocation

of payroll tax rate (for 2016 through 2018) from OASI to DI will increase the

trust fund ratio to 48 percent at the beginning of 2019. After 2019, the trust

fund ratio declines until the trust fund reserves become depleted in 2023, at

which time 89 percent of scheduled benefits would be payable.

Under the intermediate assumptions, the trust fund ratio for the combined

OASI and DI Trust Funds declines from 303 percent at the beginning of

2016 until the combined fund reserves become depleted in 2034 (the same

 1 If the scheduled January 3, 2016 payment, actually paid on December 31, 2015, were counted as reducing

trust fund reserves at the end of 2015 for presentation in this report, then the OASI trust fund ratio shown for

2016 would be 355 percent.
67

Long-Range Estimates

year as projected in last year’s report), at which time 79 percent of scheduled

benefits would be payable.

Under the low-cost assumptions, the trust fund ratio for the DI program

increases from 22 percent at the beginning of 2016 to 66 percent at the

beginning of 2019, again reflecting the temporary payroll tax rate reallocation. The DI trust fund ratio is then stable through 2023 and thereafter

increases through the end of the long-range projection period, reaching the

extremely high level of 1,930 percent for 2091. For the OASI program, the

trust fund ratio generally declines steadily, from 357 percent for 2016 to

35 percent for 2091. The expectation would be for the OASI Trust Fund

reserves to become depleted several years after the 75-year projection period.

For the combined OASDI program, the trust fund ratio declines from

304 percent for 2016 to a low of 142 percent in 2044, then rises thereafter

reaching 260 percent by 2091. Because the trust fund ratio is positive

throughout the projection period and increasing at the end of the period,

under the low-cost assumptions, the DI program and the combined OASDI

program achieve sustainable solvency.

Under the high-cost assumptions, the OASI trust fund ratio declines continually until reserves become depleted in 2030, at which time 69 percent of

scheduled benefits would still be payable. The DI trust fund ratio stays relatively stable between 21 and 25 percent through 2019 because of the payroll

tax rate reallocation, but reserves decline quickly after that and become

depleted in 2020. At that time, 76 percent of scheduled benefits would still

be payable. The combined OASI and DI trust fund ratio declines from

302 percent for 2016 until reserves become depleted in 2029, at which time

71 percent of scheduled benefits would still be payable.

The Trustees project trust fund reserve depletion within the 75-year projection period with the exceptions of the combined OASDI Trust Funds and the

individual OASI and DI Trust Funds under the low-cost assumptions. It is

therefore very likely that lawmakers will need to increase income, reduce

program costs, or both, in order to maintain solvency for the trust funds. The

stochastic projections discussed in appendix E suggest that trust fund reserve

depletion is highly probable by mid-century.

Even under the high-cost assumptions, however, the combined OASI and DI

Trust Fund reserves on hand plus their estimated future income are sufficient

to fully cover their combined cost until 2029. Under the intermediate

assumptions, the combined starting fund reserves plus estimated future

income are sufficient to fully cover cost until 2034. In the 2015 report, the

Trustees projected that the combined trust fund reserves would become

depleted in 2028 and 2034 under the high-cost and intermediate assumptions,
Actuarial Estimates

68

respectively, and would achieve sustainable solvency under the low-cost

assumptions.

Note: The definition of trust fund ratio appears in the Glossary. The ratios shown for the combined trust

funds for years after reserve depletion of either the DI or OASI Trust Fund are hypothetical.

Since 2013, when the Trustees modified the test of long-range close actuarial

balance, the standard for each trust fund requires meeting two conditions:

(1) the test of short-range financial adequacy is satisfied; and (2) the trust

fund ratios stay above zero throughout the 75-year projection period, allowing scheduled benefits to be paid in a timely manner throughout the period.

Table IV.B4.—Trust Fund Ratios, Calendar Years 2016-2090a

[In percent]

a Benefit payments which were scheduled to be paid on January 3 for some past and future years were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the

values for historical years and the projections in this report, all trust fund ratios reflect the 12 months of benefits scheduled for payment each year.

Calendar

year

Intermediate Low-cost High-cost

OASI DI OASDI OASI DI OASDI OASI DI OASDI

2016 . . . . . . . . . . . . . 357 21 303 357 22 304 357 21 302

2017 . . . . . . . . . . . . . 343 26 293 343 29 294 342 23 290

2018 . . . . . . . . . . . . . 321 36 277 321 45 280 318 24 271

2019 . . . . . . . . . . . . . 300 48 262 302 66 268 292 25 250

2020 . . . . . . . . . . . . . 282 36 246 289 63 257 270 3 229

2021 . . . . . . . . . . . . . 266 24 231 277 63 248 248 b 207

2022 . . . . . . . . . . . . . 249 13 216 266 64 239 225 b 185

2023 . . . . . . . . . . . . . 231 2 200 254 68 230 200 b 161

2024 . . . . . . . . . . . . . 213 b

b Trust fund reserves would be depleted at the beginning of this year.

183 242 75 221 175 b 137

2025 . . . . . . . . . . . . . 194 b 165 231 84 213 149 b 111

2030 . . . . . . . . . . . . . 102 b 81 186 160 183 17 b b

2035 . . . . . . . . . . . . . 3 b b 149 276 162 bbb

2040 . . . . . . . . . . . . . bbb 114 410 146 bbb

2045 . . . . . . . . . . . . . bbb 92 536 142 bbb

2050 . . . . . . . . . . . . . bbb 81 665 148 bbb

2055 . . . . . . . . . . . . . bbb 76 800 160 bbb

2060 . . . . . . . . . . . . . bbb 69 959 170 bbb

2065 . . . . . . . . . . . . . bbb 59 1,121 179 bbb

2070 . . . . . . . . . . . . . bbb 48 1,288 187 bbb

2075 . . . . . . . . . . . . . bbb 37 1,471 197 bbb

2080 . . . . . . . . . . . . . bbb 31 1,625 215 bbb

2085 . . . . . . . . . . . . . bbb 34 1,745 238 bbb

2090 . . . . . . . . . . . . . bbb 36 1,895 257 bbb

Trust fund reserves 

permanently 

become 

depleted in . . . . . . 2035 2023 2034 c

c Trust fund reserves would not be depleted within the projection period.

c c 2030 2020 2029

Payable benefits as 

percent of scheduled benefits:

At the time of 

permanent 

reserve

depletion . . . . . 77 89 79 ccc 69 76 71

For 2090 . . . . . 73 82 74 ccc 52 58 53
69

Long-Range Estimates

As discussed in section IV.A, the DI Trust Fund fails the test of short-range

financial adequacy under the intermediate assumptions because trust fund

reserves become depleted in the third quarter of 2023. Under the intermediate assumptions, the OASI Trust Fund reserves become depleted in 2035,

and the combined OASI and DI Trust Fund reserves become depleted in

2034. Therefore, the OASI, DI, and combined OASI and DI Trust Funds all

fail the long-range test of close actuarial balance.

Figure IV.B3 illustrates the trust fund ratios for the separate OASI and DI

Trust Funds for each of the alternative sets of assumptions. DI Trust Fund

status is more uncertain than OASI Trust Fund status because there is a high

degree of uncertainty associated with future disability prevalence. A graph of

the trust fund ratios for the combined trust funds appears in figure II.D7.

4. Summarized Income Rates, Summarized Cost Rates, and Actuarial

Balances

Summarized values for the full 75-year period are useful in analyzing the

program’s long-range financial adequacy over the period as a whole, both

under present law and under proposed modifications to the law. All annual

amounts included in a summarized value are present-value discounted to the

 Figure IV.B3.—Long-Range OASI and DI Trust Fund Ratios

[Asset reserves as a percentage of annual cost]

0%

200%

400%

600%

800%

1,000%

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

OASI

DI

Historical Estimated 

III 

II I 

I 

III II 
Actuarial Estimates

70

valuation date. It is important to note that the actuarial balance indicates the

solvency status of the fund only for the very end of the period.

Table IV.B5 presents summarized income rates, summarized cost rates, and

actuarial balances for 25-year, 50-year, and 75-year valuation periods. Summarized income rates are the sum of the present value of non-interest income

for a period (which includes scheduled payroll taxes, the projected income

from the taxation of scheduled benefits, and reimbursements from the General Fund of the Treasury) and the starting trust fund asset reserves,

expressed as a percentage of the present value of taxable payroll over the

period. Under current law, the total OASDI payroll tax rate will remain at

12.4 percent in the future. In contrast, the Trustees expect income from taxation of benefits, expressed as a percentage of taxable payroll, to increase in

most years of the long-range period for the two reasons discussed earlier on

page 53. Summarized cost rates are the sum of the present value of cost for a

period (which includes scheduled benefits, administrative expenses, net

interchange with the Railroad Retirement program, and payments for vocational rehabilitation services for disabled beneficiaries) and the present value

of the cost of reaching a target trust fund of 100 percent of annual cost at the

end of the period, expressed as a percentage of the present value of taxable

payroll over the period.

The actuarial balance for a valuation period is equal to the difference

between the summarized income rate and the summarized cost rate for the

period. An actuarial balance of zero for any period indicates that cost for the

period could be met for the period as a whole (but not necessarily at all

points within the period), with a remaining trust fund reserve at the end of

the period equal to 100 percent of the following year’s cost. A negative actuarial balance for a period indicates that the present value of income to the

program plus the existing trust fund is less than the present value of the cost

of the program plus the cost of reaching a target trust fund reserve of 1 year’s

cost by the end of the period. Generally, a trust fund is deemed to be adequately financed for a period if the actuarial balance is zero or positive,

meaning that the reserves at the end of the period are at least equal to annual

cost. Note that solvency is possible with a small negative actuarial balance

where reserves are still positive.1

Table IV.B5 contains summarized rates for the intermediate, low-cost, and

high-cost assumptions. The low-cost and high-cost assumptions define a

 1 A program is solvent over any period for which the trust fund maintains a positive level of asset reserves.

In contrast, the actuarial balance for a period includes the cost of having a target fund equal to 100 percent of

the following year’s cost at the end of the period. Therefore, if a program ends the period with reserves that

are positive but not sufficient to cover the following year’s costs, it will be solvent at the end of the period

and yet still have a small negative actuarial balance for that period.
71

Long-Range Estimates

wide range of possibilities. Financial outcomes as good as the low-cost scenario or as bad as the high-cost scenario are unlikely to occur.

For the 25-year valuation period, the OASDI program has an actuarial balance of 0.24 percent of taxable payroll under the low-cost assumptions,

-1.48 percent under the intermediate assumptions, and -3.53 percent under

the high-cost assumptions. These balances indicate that the program is adequately financed for the 25-year valuation period under only the low-cost

assumptions.

For the 50-year valuation period, the OASDI program has actuarial balances

of 0.19 percent under the low-cost assumptions, -2.23 percent under the

intermediate assumptions, and -5.23 percent under the high-cost assumptions. These actuarial balances mean that the OASDI program is adequately

financed for the 50-year valuation period under only the low-cost assumptions.

For the entire 75-year valuation period, the combined OASDI program has

actuarial balances of 0.22 percent of taxable payroll under the low-cost

assumptions, -2.66 percent under the intermediate assumptions, and

-6.30 percent under the high-cost assumptions. These balances indicate that

the combined OASDI program is adequately financed for the 75-year valuation period under only the low-cost assumptions.

Assuming the intermediate assumptions accurately capture future demographic and economic trends, solvency for the program over the next

75 years could be restored using a variety of approaches. For example, revenues could be increased in a manner equivalent to an immediate and permanent increase in the combined Social Security payroll tax rate from

12.40 percent to 14.98 percent (a relative increase of 20.8 percent), cost

could be reduced in a manner equivalent to an immediate and permanent

reduction in scheduled benefits of about 16 percent, or some combination of

approaches could be used.

However, eliminating the actuarial deficit for the next 75-year valuation

period requires raising payroll taxes or lowering benefits by more than is

required just to achieve solvency, because the actuarial deficit includes the

cost of attaining a target trust fund equal to 100 percent of annual program

cost by the end of the period. The actuarial deficit could be eliminated for the

75-year period by increasing revenues in a manner equivalent to an immediate and permanent increase in the combined payroll tax from 12.40 percent
Actuarial Estimates

72

to 15.15 percent (a relative increase of 22.2 percent),1 reducing cost in a

manner equivalent to an immediate reduction in scheduled benefits of about

17 percent, or some combination of approaches could be used.

Under the intermediate assumptions, the OASDI program has large annual

deficits toward the end of the long-range period that are increasing and reach

4.35 percent of payroll for 2090 (see table IV.B1). These large deficits indicate that annual cost continues to exceed non-interest income after 2090, so

continued adequate financing would require larger changes than those

needed to maintain solvency for the 75-year period. Over the period extending through the infinite horizon, the actuarial deficit is 4.0 percent of payroll

under the intermediate assumptions.

Under the intermediate assumptions, the financial shortfall of the DI program

is larger than that of the OASI program for the first 25 years when measured

relative to the level of program cost. Summarized over the full 75-year

period, however, the financial shortfall for the OASI program is larger than

that of the DI program, measured relative to the level of program cost.

Increases in longevity after 2027, when the age of conversion from disabledworker benefits to retired-worker benefits remains fixed, have a greater

effect on OASI cost than on DI cost. As a result of this greater effect on

OASI cost, the financial shortfall for the OASI program in the later portion

of the 75-year projection period is larger than the financial shortfall for the

DI program.

 1 The indicated increase in the payroll tax rate of 2.75 percent is somewhat larger than the 2.66 percent

75-year actuarial deficit because the indicated increase reflects a behavioral response to tax rate changes. In

particular, the calculation assumes that an increase in payroll taxes results in a small shift of wages and salaries to forms of employee compensation that are not subject to the payroll tax.

Table IV.B5.—Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2016-2090

[As a percentage of taxable payroll]

Valuation period

Summarized income rate Summarized cost rate

Actuarial

balance

Non-interest

income

Beginning

asset reservesa Total Costa

Ending

target

funda Total

OASI:

Intermediate:

2016-40. . . . . 11.24 1.51 12.75 13.46 0.56 14.02 -1.27

2016-65. . . . . 11.31 .82 12.14 13.89 .24 14.13 -1.99

2016-90. . . . . 11.35 .61 11.96 14.21 .14 14.36 -2.39

Low-cost:

2016-40. . . . . 11.16 1.38 12.54 12.00 .48 12.49 .05

2016-65. . . . . 11.20 .72 11.93 11.81 .21 12.01 -.08

2016-90. . . . . 11.21 .52 11.73 11.69 .12 11.81 -.08

High-cost:

2016-40. . . . . 11.33 1.69 13.01 15.21 .64 15.85 -2.84

2016-65. . . . . 11.45 .95 12.40 16.47 .29 16.76 -4.35

2016-90. . . . . 11.53 .73 12.26 17.44 .17 17.61 -5.35
73

Long-Range Estimates

Note: Totals do not necessarily equal the sums of rounded components.

5. Open Group Unfunded Obligation

Consistent with practice since 1965, this report focuses on a 75-year open

group valuation to evaluate the long-run financial status of the OASDI program. The open group valuation includes non-interest income and cost for

past, current, and future participants through the year 2090. The open group

unfunded obligation measures the adequacy of financing over the period as a

whole for a program financed on a pay-as-you-go basis. On this basis, payroll taxes and scheduled benefits for all participants are included through

2090.

The open group unfunded obligation increased from $10.7 trillion shown in

last year's report to $11.4 trillion in this report. If there had been no changes

in starting values, assumptions, laws, or methods for this report, then the

open group unfunded obligation would have increased to $11.2 trillion solely

DI:

Intermediate:

2016-40. . . . . 1.90 0.02 1.92 2.05 0.08 2.13 -0.21

2016-65. . . . . 1.88 .01 1.89 2.10 .04 2.13 -.24

2016-90. . . . . 1.87 .01 1.88 2.12 .02 2.14 -.26

Low-cost:

2016-40. . . . . 1.89 .02 1.90 1.65 .06 1.71 .19

2016-65. . . . . 1.86 .01 1.87 1.57 .03 1.60 .27

2016-90. . . . . 1.86 .01 1.86 1.55 .02 1.56 .30

High-cost:

2016-40. . . . . 1.91 .02 1.93 2.52 .10 2.63 -.69

2016-65. . . . . 1.89 .01 1.91 2.73 .05 2.78 -.87

2016-90. . . . . 1.89 .01 1.90 2.83 .02 2.86 -.95

OASDI:

Intermediate:

2016-40. . . . . 13.14 1.53 14.67 15.51 .64 16.15 -1.48

2016-65. . . . . 13.19 .83 14.03 15.98 .28 16.26 -2.23

2016-90. . . . . 13.23 .62 13.84 16.34 .16 16.50 -2.66

Low-cost:

2016-40. . . . . 13.05 1.39 14.44 13.66 .54 14.20 .24

2016-65. . . . . 13.07 .73 13.80 13.38 .23 13.61 .19

2016-90. . . . . 13.07 .52 13.59 13.23 .14 13.37 .22

High-cost:

2016-40. . . . . 13.24 1.71 14.95 17.73 .75 18.48 -3.53

2016-65. . . . . 13.35 .96 14.31 19.20 .33 19.53 -5.23

2016-90. . . . . 13.42 .74 14.16 20.27 .19 20.46 -6.30

a Benefit payments which were scheduled to be paid on January 3 for some past and future years were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the

values for historical years and the projections in this report, all trust fund operations and asset reserves reflect

the 12 months of benefits scheduled for payment each year.

Table IV.B5.—Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2016-2090 (Cont.)

[As a percentage of taxable payroll]

Valuation period

Summarized income rate Summarized cost rate

Actuarial

balance

Non-interest

income

Beginning

asset

reservesa Total Costa

Ending

target

funda Total
Actuarial Estimates

74

due to the change in the valuation period. This expected increase in the

unfunded obligation occurs because: (1) the unfunded obligation is now discounted to January 1, 2016, rather than to January 1, 2015, which tends to

increase the unfunded obligation by the annual nominal interest rate; and

(2) the unfunded obligation now includes an additional year (2090). However, changes in the law, assumptions, methods, and starting values resulted

in a net $0.2 trillion increase in the unfunded obligation. 

The 75-year unfunded obligation is equivalent to 2.49 percent of future

OASDI taxable payroll and 0.9 percent of GDP through 2090. These percentages were 2.53 and 0.9, respectively, for last year’s report. The 75-year

unfunded obligation as a percentage of taxable payroll is less than the actuarial deficit, because the unfunded obligation excludes the cost of having an

ending target trust fund value.

The actuarial deficit was 2.68 percent of payroll in last year’s report, and was

expected to increase to a deficit of 2.74 percent of payroll solely due to the

change in the valuation period. Changes in the law, assumptions, methods,

and starting values combined to account for a 0.08 percent decrease

(improvement) in the actuarial deficit to 2.66 percent of payroll. For additional details on these changes, see section IV.B.6.

As mentioned above, the open group unfunded obligation expressed in dollars increased (worsened) more than would be expected from changing the

valuation period alone. In large part, this increase occurred because nearterm and ultimate real interest rates are significantly reduced in this report,

thus discounting more distant years’ annual shortfalls less. The actuarial balance, in contrast, increased (improved) relative to the change based on the

valuation period effect alone. Lower interest rates have a much smaller worsening effect on the actuarial balance because interest rate changes affect the

numerator and denominator similarly.

Table IV.B6 presents the components and the calculation of the long-range

(75-year) actuarial balance under the intermediate assumptions. The present

value of future cost less future non-interest income over the long-range

period, minus the amount of trust fund asset reserves at the beginning of the

projection period, amounts to $11.4 trillion for the OASDI program. This

amount is the 75-year “open group unfunded obligation” (see row H). The

actuarial deficit (which is the negative of the actuarial balance) combines this

unfunded obligation with the present value of the ending target trust fund and

expresses the total as a percentage of the present value of the taxable payroll

for the period. The present value of future non-interest income minus cost,

plus starting trust fund reserves, minus the present value of the ending target

trust fund, is -$12.1 trillion for the OASDI program. 
75

Long-Range Estimates

Note: Totals do not necessarily equal the sums of rounded components.

Consideration of summary measures alone (such as the actuarial balance and

open group unfunded obligation) for a 75-year period can lead to incorrect

perceptions and to policy prescriptions that do not achieve sustainable solvency. These concerns can be addressed by considering the trend in trust

fund ratios toward the end of the period. (See the discussion of “sustainable

solvency” beginning on page 52.)

Another measure of trust fund finances, discussed in appendix F, is the

infinite horizon unfunded obligation, which takes account of all annual balances, even those after 75 years. The extension of the time period past

75 years assumes that the current-law OASDI program and the demographic

and economic trends used for the 75-year projection continue indefinitely.

This infinite horizon unfunded obligation is estimated to be 4.0 percent of

taxable payroll or 1.4 percent of GDP. These percentages were 3.9 and 1.3,

respectively, for last year’s report. Of course, the degree of uncertainty associated with estimates increases substantially for years further in the future.

Table IV.B6.—Components of 75-Year Actuarial Balance and Unfunded Obligation

Under Intermediate Assumptions

Item OASI DI OASDI

Present value as of January 1, 2016 (in billions):

A. Payroll tax revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $48,095 $8,301 $56,396

B. Reimbursements from general revenue. . . . . . . . . . . . . . . . . . . a

a Less than $0.5 billion.

a a

C. Taxation of benefits revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,606 230 3,836

D. Non-interest income (A + B + C) . . . . . . . . . . . . . . . . . . . . . . . 51,701 8,531 60,232

E. Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,730 9,672 74,401

F. Cost minus non-interest income (E - D) . . . . . . . . . . . . . . . . . . 13,028 1,141 14,169

G. Trust fund asset reserves at start of period . . . . . . . . . . . . . . . . 2,780 32 2,813

H. Open group unfunded obligation (F - G). . . . . . . . . . . . . . . . . . 10,248 1,109 11,357

I. Ending target trust fundb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

b The calculation of the actuarial balance includes the cost of accumulating a target trust fund reserve equal

to 100 percent of annual cost at the end of the period.

649 94 743

J. Income minus cost, plus reserves at start of period, minus

ending target trust fund (D - E + G - I = - H - I) . . . . . . . . . . . . -10,897 -1,203 -12,100

K. Taxable payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455,364 455,364 455,364

Percent of taxable payroll:

Actuarial balance (100 × J ÷ K) . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.39 -.26 -2.66
Actuarial Estimates

76

6. Reasons for Change in Actuarial Balance From Last Report

Table IV.B7 shows the effects of changes on the long-range actuarial balance

under the intermediate assumptions, by category, between last year’s report

and this report.

Note: Totals do not necessarily equal the sums of rounded components.

If the assumptions, methods, starting values, and the law had all remained

unchanged from last year’s Trustees Report, the long-range OASDI actuarial

balance would have decreased (become more negative) by 0.06 percent of

taxable payroll solely due to the change in the valuation period. However, as

described below, projections in this report also reflect changes in law, data,

assumptions, and methods. These changes, including the change in the valuation period, combined to improve the long-range OASDI actuarial balance,

from -2.68 percent of taxable payroll in last year’s report to -2.66 percent in

this report.

Since the last report, one law was enacted that is expected to have a significant effect on the long-range cost of the OASDI program. On

November 2, 2015, the President signed into law Public Law 114-74, the

Bipartisan Budget Act of 2015. Several sections of the law had significant

effects on long-range actuarial status, including:

Table IV.B7.—Reasons for Change in the 75-Year Actuarial Balance,

Based on Intermediate Assumptions

[As a percentage of taxable payroll]

Item OASI DI OASDI

Shown in last year’s report:

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.00 1.86 13.86

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.37 2.17 16.55

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.37 -.31 -2.68

Changes in actuarial balance due to changes in:

Legislation / Regulation . . . . . . . . . . . . . . . . . . . . . . . -.01 .04 .03

Valuation perioda . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a The change in the 75-year valuation period from last year’s report to this report means that the 75-year

actuarial balance now includes the relatively large negative annual balance for 2090. This change in the valuation period results in a larger long-range actuarial deficit. The actuarial deficit includes the trust fund

reserve at the beginning of the projection period.

-.05 -.01 -.06

Demographic data and assumptions. . . . . . . . . . . . . . .00 .00 .00

Economic data and assumptions. . . . . . . . . . . . . . . . . -.06 -.01 -.07

Disability data and assumptions. . . . . . . . . . . . . . . . . .00 .00 .00

Methods and programmatic data . . . . . . . . . . . . . . . . .08 .03 .11

Total change in actuarial balance . . . . . . . . . . . . . . . . . . -.02 .05 .02

Shown in this report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.39 -.26 -2.66

Income rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.96 1.88 13.84

Cost rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.36 2.14 16.50
77

Long-Range Estimates

 • Section 831. Closure of unintended loopholes. This provision eliminates (1) the ability to receive only a retired-worker benefit or an agedspouse benefit when eligible for both, for those attaining age 62 in 2016

and later, and (2) the ability of a family member other than a divorced

spouse to receive a benefit based on the earnings of a worker with a voluntarily suspended benefit, for voluntary suspensions requested after

April 29, 2016. This provision is expected to increase (improve) the

long-range actuarial balance by 0.02 percent of taxable payroll.

 • Section 832. Requirement for medical review. This section requires that

the medical portion of the case review and any applicable residual functional capacity assessment for an initial disability determination be

completed by an appropriate physician, psychiatrist, or psychologist.

This provision increased the long-range actuarial balance by

0.01 percent of payroll.

 • Section 833. Reallocation of payroll tax rates. For earnings in calendar

years 2016 through 2018, this section increases from 1.80 percent to

2.37 percent the portion of the total 12.40 percent OASDI payroll tax

that is directed to the DI Trust Fund. This reallocation of the payroll tax

rates had no cost effect on the combined OASDI program, but extended

projected DI Trust Fund reserve depletion by about 6 years.

Overall, the effects of this law are projected to increase the long-range

OASDI actuarial balance by 0.03 percent of taxable payroll.

Changing the 75-year valuation period from 2015 through 2089 to 2016

through 2090 decreased (worsened) the projected long-range OASDI actuarial balance by 0.06 percent of taxable payroll. This decrease is mainly the

result of including the relatively large negative annual balance for 2090 in

this year’s 75-year projection period. Note that the actuarial balance calculation includes trust fund asset reserves at the beginning of the projection

period. These reserves at the start of the period reflect the program’s net

financial flows for all past years up to the start of the projection period,

including 2015.

With the exception of a small change in marriage rates, ultimate demographic assumptions are unchanged from those in last year’s report. All

changes in demographic data and assumptions combined to have a negligible

net effect on the long-range OASDI actuarial balance. The following paragraph describes four of the demographic assumptions and data changes that,

individually, had significant effects on the long-range OASDI actuarial balance.

First, final fertility (birth) data for 2013 and 2014 indicate slightly lower

birth rates than were assumed for last year’s report for these years. The data
Actuarial Estimates

78

also show an increase in birth rates starting in 2014, one year later than

assumed in last year’s report. As in last year’s report, the estimates reflect:

(1) the effect of the recent economic recession on the total fertility rate for

recent years and (2) the assumption that the total fertility rate will rebound to

a level temporarily above the ultimate level and will subsequently decline to

the ultimate level. This year’s estimates use a slightly smaller rebound in the

path to the ultimate total fertility rate, which is again reached in 2027. These

changes in historical and projected birth rates decreased the long-range

OASDI actuarial balance by about 0.03 percent of taxable payroll. Second,

incorporating mortality data obtained from the National Center for Health

Statistics at ages under 65 for 2012 and 2013 and from Medicare experience

at ages 65 and older for 2013 resulted in slightly higher death rates than were

projected in last year’s report. These updated data combined to increase the

long-range OASDI actuarial balance by about 0.04 percent of taxable payroll. Third, the assumed ultimate marriage rates were decreased somewhat to

reflect a continuation of recent trends. This change increased the actuarial

balance by 0.01 percent of taxable payroll. Fourth, including more recent

legal and other-than-legal immigration data and updating historical population data combined to decrease the long-range OASDI actuarial balance by

0.02 percent of taxable payroll. 

Overall, changes in ultimate and near-term economic data and assumptions

decreased the actuarial balance by 0.07 percent of payroll. The following

paragraph describes the ultimate economic assumptions that had significant

effects on the long-range OASDI actuarial balance. 

Three ultimate economic assumptions in this year’s report were changed

from the values used in last year’s report. First, the ultimate rate of price

inflation (CPI-W) was lowered by 0.1 percentage point, from 2.7 percent for

last year’s report to 2.6 percent for this year’s report. While very low inflation in recent years is reflective of U.S. and international supply and demand

factors that have been affected by the global recession, the average rate of

change in the CPI-W over the last two complete business cycles (from 1989

to 2007) is 2.63 percent. This change decreases the OASDI actuarial balance

by 0.02 percent of payroll. Second, the ultimate average real wage differential is 1.20 percent per year in this report, increased from the 1.17 percent in

last year’s report. This change increased the long-range OASDI actuarial balance by 0.05 percent of taxable payroll. The higher real wage differential

assumption is based on new projections by the Centers for Medicare and

Medicaid Services of slower growth in employer sponsored group health

insurance premiums. Because these premiums are not subject to the payroll

tax, slower growth in these premiums means that a greater share of employee

compensation will be in the form of wages that are subject to the payroll tax.

Third, the ultimate real interest rate was lowered by 0.2 percentage point,
79

Long-Range Estimates

from 2.9 percent for last year’s report to 2.7 percent for this year’s report.

Real interest rates have been low since 2000, and particularly low since the

start of the recent recession. An ongoing and much-debated question among

experts is how much of this change is cyclic or a temporary response to

extraordinary events, versus a fundamental permanent change. The Trustees

believe that lowering the long-term ultimate real interest rate somewhat is

appropriate at this time. This change decreased the OASDI actuarial balance

by 0.08 percent of payroll.

In addition to the three changes in ultimate economic assumptions, updated

starting values and changes in near-term economic assumptions combined to

decrease the long-range OASDI actuarial balance slightly. In particular, this

report reflects the July 2015 revisions in historical GDP estimated by the

Bureau of Economic Analysis of the Department of Commerce and further

assumed reductions in the ultimate level of actual and potential GDP of

about 0.8 percent. Beyond this revision, a further reduction in the ultimate

level of actual and potential GDP of about 1 percent is assumed. Thus, by the

end of the short-range period (2025) and for all years thereafter, projected

GDP in 2009 dollars is about 1.8 percent below the level in last year's report.

These changes to assumed actual and potential GDP decreased the actuarial

balance by about 0.03 percent of taxable payroll. Other changes to starting

values and near-term economic assumptions combined for a net increase the

actuarial balance of 0.02 percent of taxable payroll. 

The projections in this report also reflect several methodological improvements and updates of program-specific data. These methodological changes,

programmatic data updates, and interactions combined to increase the longrange OASDI actuarial balance by 0.11 percent of taxable payroll. Descriptions of six significant methodological changes and programmatic data

updates follow. 

First, for this year’s report, the transition from recent mortality rates to the

ultimate rates starts sooner, immediately after the year of final data. The

approach used for the 2015 report extended the trend of the last 10 years

through the valuation year for the report and only thereafter started the transition to assumed ultimate rates of decline. The new approach will make the

projections less influenced by recent fluctuations in the rate of improvement

in mortality, thus diminishing volatility from one report to the next. This

methodological improvement increased the long-range OASDI actuarial balance by 0.03 percent of taxable payroll.

Second, several improvements were made to immigration methods. Historical non-immigrant population counts were revised to match recent totals provided by the Department of Homeland Security. In addition, emigration rates

for the never-authorized and visa-overstayer populations were recalibrated to
Actuarial Estimates

80

reflect a longer historical period and to be less influenced by the high emigration rates experienced during the recent recession. Finally, the method for

projecting emigration of the never-authorized population was altered to

reflect lower rates of emigration for those who have resided here longer.

These methodological improvements increased the long-range OASDI actuarial balance by 0.09 percent of taxable payroll. 

The third significant change was an improvement in the method for disaggregating the other-than-legal population in order to assign them appropriate

earnings and quarters of coverage. This change led to a small decrease in the

number of covered workers and number of insured workers, and decreased

the actuarial balance by 0.01 percent of payroll.

Fourth, enhancements were made to methods for modeling the number of

beneficiaries utilizing “claiming strategies” to better reflect their growing

popularity and the growth in the underlying population eligible to use the

strategies. This year’s report also incorporates new historical data, which

allowed projection of “deemed filer” aged spouses by sex and marital status.

These improved methods for modeling claiming strategies were incorporated

prior to estimating the effects of elimination of such strategies per the Bipartisan Budget Act of 2015, described above. These methodological changes

decreased the actuarial balance by 0.01 percent of payroll, which was offset

by the changes made as a part of the Bipartisan Budget Act of 2015. 

The fifth significant change relates to the long-range model for projecting

average benefit levels of retired worker and disabled-worker beneficiaries

newly entitled for benefits, which is based on a large sample of 10 percent of

all newly entitled retired-worker beneficiaries in a recent year. The sample

used in the 2015 report was for worker beneficiaries newly entitled in 2008.

This year’s report uses the results from worker beneficiaries newly entitled

in 2013. In addition, the method used to determine initial entitlements was

improved, primarily to take into account the recent increase of “file and suspend” cases, which were not fully included under the previous methodology.

Using this more recent sample and the associated method improvement

increased the OASDI actuarial balance by 0.02 percent of payroll. 

The sixth significant change is a programmatic data update that resulted in an

increase in income from taxation of benefits in this year’s report. Recent data

and estimates provided by the Office of Tax Analysis at the Department of

Treasury indicate higher levels of revenue from taxation of OASDI benefits

than projected in last year’s report. The increase in the near-term and ultimate projected ratios of income from taxation of benefits to benefits resulted

in an increase in the long-range OASDI actuarial balance of 0.03 percent of

taxable payroll.
81

Long-Range Estimates

In addition to these six significant methodological changes and programmatic data updates, changes in projected OASI and DI beneficiaries and benefit levels over the first 10 years of the projection period, updating other

programmatic data, other small methodological improvements, and interactions combined to decrease the long-range OASDI actuarial balance by

0.04 percent of taxable payroll.

Figure IV.B4 compares the annual cash-flow balances for this report and the

prior year’s report for the combined OASDI program over the long-range

(75-year) projection period. The figure illustrates the annual effects of the

changes described earlier in this section.

This pattern of differences between the annual balances (income rate minus

cost rate) in the two reports is due to the changes described earlier in this section. The annual balances are higher (less negative) each year in this year’s

report, with the exception of 2016 and 2023 through 2029, and average

0.20 percentage point higher over the 75-year projection period. For 2089,

the projected annual deficit is 4.30 percent of taxable payroll in this report,

compared to 4.65 percent in last year's report.

 Figure IV.B4.—OASDI Annual Balances: 2015 and 2016 Trustees Reports

[As a percentage of taxable payroll, based on intermediate assumptions]

-6%

-4%

-2%

0%

2%

2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

2015 Report

2016 Report
Assumptions and Methods

82

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES

The future income and cost of the OASDI program will depend on many

demographic, economic, and program-specific factors. Trust fund income

will depend on how these factors affect the size and composition of the

working population as well as the level and distribution of earnings. Similarly, program cost will depend on how these factors affect the size and composition of the beneficiary population as well as the general level of benefits.

The Trustees make basic assumptions for several of these factors based on

analysis of historical trends, historical conditions, and expected future conditions. These factors include fertility, mortality, immigration, marriage,

divorce, productivity, inflation, average earnings, unemployment, real interest rate, and disability incidence and termination. Other factors depend on

these basic assumptions. These other, often interdependent, factors include

total population, life expectancy, labor force participation, gross domestic

product, and program-specific factors. Each year the Trustees reexamine

these assumptions and methods in light of new information and make appropriate revisions. The Trustees selected the assumptions for this report by the

end of December 2015.

Future levels of these factors and their interrelationships are inherently

uncertain. To address these uncertainties, this report uses three sets of

assumptions, designated as intermediate (alternative II), low-cost (alternative

I), and high-cost (alternative III). The intermediate set represents the Trustees’ best estimate of the future course of the population and the economy.

With regard to the net effect on the actuarial status of the OASDI program,

the low-cost set is more optimistic and the high-cost set is more pessimistic.

The low-cost and high-cost sets of assumptions reflect significant potential

changes in the interrelationships among factors, as well as changes in the

values for individual factors. 

While it is unlikely that all of the factors and interactions will differ in the

specified directions from the intermediate values, many combinations of

individual differences in the factors could have a similar overall effect. Outcomes with overall long-range cost as low as the low-cost scenario or as high

as the high-cost scenario are very unlikely. This report also includes sensitivity analysis, where factors are changed one at a time (see appendix D), and a

stochastic projection, which provides a probability distribution of possible

future outcomes, with each input assumption centered around the intermediate alternative (see appendix E).
83

Demographic Assumptions and Methods

Readers should interpret with care the estimates based on the three sets of

alternative assumptions. These estimates are not specific predictions of the

future financial status of the OASDI program. Rather, they provide a reasonable range of future income and cost bounded by two plausible, albeit very

unlikely, demographic and economic scenarios.

The Trustees assume that values for each of the demographic, economic, and

program-specific factors change toward long-range ultimate values from

recent levels or trends within the next 25 years. For extrapolations beyond

the 75-year long-range period, the ultimate levels or trends reached by the

end of the 75-year period remain unchanged. The assumed ultimate values

represent average annual experience or growth rates. Actual future values

will exhibit fluctuations or cyclical patterns, as in the past.

The following sections briefly discuss the various assumptions and methods

required to make the estimates of trust fund financial status, which are the

heart of this report.1 There are, of course, many interrelationships among

these factors that are important but are beyond the scope of this discussion. 

A. DEMOGRAPHIC ASSUMPTIONS AND METHODS

This section of the report provides a brief overview of the demographic historical data and the assumptions used for the projections.

1. Fertility Assumptions

Birth rates by single year of age, for women aged 14 to 49,2 are the basis for

the fertility assumptions. These rates apply to the total number of women,

across all marital statuses, in the midyear population at each age. Table V.A1

displays the historical and projected total fertility rates.3

Historically, birth rates in the United States have fluctuated widely. The total

fertility rate decreased from 3.31 children per woman at the end of World

 1 Actuarial Studies published by the Office of the Chief Actuary, Social Security Administration, contain

further details about the assumptions, methods, and actuarial estimates. A complete list of available studies

may be found at www.ssa.gov/OACT/NOTES/actstud.html. To obtain copies of such studies or of this

report, please submit a request at www.ssa.gov/OACT/request.html or write to: Office of the Chief Actuary,

700 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235. This entire report, along with supplemental year-by-year tables and additional documentation on assumptions and methods, may be found at

www.ssa.gov/OACT/TR/2016/.

 2 Birth rates at age 14 include births to women aged 14 and under, and birth rates at age 49 include births to

women aged 49 and over.

 3 The total fertility rate may be interpreted as the average number of children that would be born to a woman

in her lifetime if she were to experience, at each age of her life, the birth rate observed in, or assumed for, a

specified year, and if she were to survive the entire childbearing period. A rate of about 2.1 would ultimately

result in a nearly constant population if immigration and emigration were both zero, and if death rates were

to remain at current levels.
Assumptions and Methods

84

War I (1918) to 2.15 during the Great Depression (1936). After 1936, the

total fertility rate rose to 3.68 in 1957 and then fell to 1.74 by 1976. After

1976, the total fertility rate rose slightly through 2007, reaching 2.12, but

dropped to 1.85 by 2013. The recession and high unemployment are likely

reasons for this drop.

These variations in the total fertility rate resulted from changes in many factors, including social attitudes, economic conditions, birth-control practices,

and the racial/ethnic composition of the population. The Trustees expect

future total fertility rates to remain close to recent levels. Certain population

characteristics, such as the higher percentages of women who have never

married, of women who are divorced, and of young women who are in the

labor force, are consistent with continued lower total fertility rates than experienced during the baby-boom era (1946-65). Based on consideration of

these factors, the Trustees assume ultimate total fertility rates of 2.20, 2.00,

and 1.80 children per woman for the low-cost, intermediate, and high-cost

assumptions, respectively. These ultimate rates are unchanged from last

year’s report.

For the intermediate assumptions, the projected total fertility rate rises until it

reaches 2.05 for 2023. This reflects the assumption that the drop in the total

fertility rate below 2.0 children per woman during the recent economic

downturn was in part a deferral in childbearing that will be partially offset

with full economic recovery. Thereafter, the total fertility rate follows a linear trend toward the ultimate level in 2027. The assumed low-cost and highcost total fertility rates trend away from the intermediate path and reach the

ultimate values in 2024 and 2032, respectively.

2. Mortality Assumptions

For the projections in this year’s report, ultimate average annual percentage

reductions in future mortality rates were assumed by age group and cause of

death. These assumptions were then used to estimate future central death

rates by age group, sex, and cause of death. From these estimated central

death rates, probabilities of death by single year of age and sex were calculated.

Historical death rates are calculated for years 1900 through 2013 for ages

below 65 (and for all ages for years prior to 1968) using data from the

National Center for Health Statistics (NCHS).1 For ages 65 and over, final

Medicare data on deaths and enrollments for years 1968 through 2012 and

 1 These rates reflect NCHS data on deaths and Census estimates of population.
85

Demographic Assumptions and Methods

preliminary data for 2013 are used. Death rates by cause of death are produced for all ages for years 1979-2013 using data from the NCHS.

The total age-sex-adjusted death rate1 declined at an average annual rate of

1.05 percent between 1900 and 2013. Between 1979 and 2013, the period for

which death rates were analyzed by cause, the total age-sex-adjusted death

rate, for all causes combined, declined at an average rate of 0.93 percent per

year.

Death rates have declined substantially in the U.S. since 1900, with rapid

declines over some periods and slow or no improvement over the other periods. Historical death rates generally declined more slowly for older ages and

more rapidly for children and infants than for the rest of the population.

Between 1900 and 2013, the age-sex-adjusted death rate for ages 65 and over

declined at an average rate of 0.78 percent per year, while declining at an

average rate of 3.08 percent per year for ages under 15.

Many factors are responsible for historical reductions in death rates, including increased medical knowledge, increased availability of health-care services, and improvements in sanitation and nutrition. Considering the

expected rate of future progress in these and other areas, the Trustees present

three alternative sets of ultimate annual percentage reductions in central

death rates by age group and cause of death, for 2040 and later. The intermediate set, alternative II, represents the Trustees’ best estimate. The average

annual percentage reductions for alternative I (low-cost) are smaller than

those for alternative II, while those for alternative III (high-cost) are larger.

These ultimate annual percentage reductions are the same as those in last

year’s report.

The trends in the annual reductions in central death rates are calculated for

the period from 2003 to 2013 by age group, sex, and cause of death. These

trends are the starting reductions for alternative II. For alternatives I and III,

50 and 150 percent of the starting reductions are used, respectively. These

annual reductions, by alternative, are assumed to transition rapidly from the

starting reductions until they reach the ultimate annual percentage reductions

assumed for 2040 and later.

Table V.A1 contains historical and projected age-sex-adjusted death rates for

the total population (all ages), for ages under 65, and for ages 65 and over.

Age-sex adjustment eliminates the effect of a changing distribution of population by age and sex, allowing the pure effects of changes in death rates to

 1 Based on the enumerated total population as of April 1, 2010, if that population were to experience the

death rates by age and sex for the selected year.
Assumptions and Methods

86

be observed. Under the intermediate assumptions, projected age-sex-adjusted

death rates are, in general, slightly higher than the death rates in last year’s

report. These changes primarily result from incorporating additional historical data and from beginning the transition to the ultimate rates of improvement immediately after the final historical data year. Prior to this year’s

report, rates of improvement after the last historical data year and before the

first year of the projection period were assumed to be the same as the average annual rates of improvement over the prior 10 years.

The projected average annual rate of decline for the total age-sex-adjusted

death rate is about 0.42 percent, 0.78 percent, and 1.16 percent between 2015

and 2090 for alternatives I, II, and III, respectively. In keeping with the patterns observed in the historical data, the assumed future rates of decline are

greater for younger ages than for older ages, but to a substantially lesser

degree than in the past. Accordingly, the projected age-sex-adjusted death

rates for ages 65 and over decline at average annual rates of about

0.37 percent, 0.69 percent, and 1.02 percent between 2015 and 2090 for

alternatives I, II, and III, respectively. The projected age-sex-adjusted death

rates for ages under 15 decline at average annual rates of about 0.80 percent,

1.59 percent, and 2.59 percent between 2015 and 2090 for alternatives I, II,

and III, respectively.

Demographers express a wide range of views on the likely rate of future

decline in death rates. For example, some believe that the long-standing historical tendency for mortality to decline more slowly at the highest ages will

cease in the future. Others believe that biological factors, social factors, and

limitations on health care spending may slow future rates of decline in mortality.1

The Trustees periodically revise the assumed ultimate rates of decline in

mortality based on experience, new conditions, and expert opinion. Evolving

trends in health care and lifestyle will determine what modifications to the

assumed ultimate rates of decline in mortality will be warranted for future

reports. The Trustees intend to carefully consider the mortality assumptions

for the 2017 report.

 1 The 2015 Technical Panel on Assumptions and Methods, appointed by the Social Security Advisory

Board, recommended retaining ultimate rates of improvement that vary by age and cause of death as

assumed by the Trustees, but with an overall rate of improvement on an age-sex-adjusted basis of

1.00 percent.
87

Demographic Assumptions and Methods

.

Table V.A1.—Fertility and Mortality Assumptions,a

Calendar Years 1940-2090

Calendar year

Total

fertility

rateb

Age-sex-adjusted death ratec

per 100,000, by age

Total Under 65 65 and over

Historical data:

1940 . . . . . . . . . 2.23 1,919.8 750.1 9,718.8

1945 . . . . . . . . . 2.42 1,716.6 674.8 8,662.9

1950 . . . . . . . . . 3.03 1,561.9 570.2 8,173.7

1955 . . . . . . . . . 3.50 1,453.8 508.2 7,758.4

1960 . . . . . . . . . 3.61 1,454.3 503.2 7,795.4

1965 . . . . . . . . . 2.88 1,428.8 495.2 7,653.3

1970 . . . . . . . . . 2.43 1,340.0 485.7 7,036.3

1975 . . . . . . . . . 1.77 1,204.8 426.6 6,393.6

1980 . . . . . . . . . 1.82 1,136.9 384.3 6,154.3

1985 . . . . . . . . . 1.83 1,081.0 353.3 5,932.9

1990 . . . . . . . . . 2.07 1,021.3 333.6 5,606.3

1995 . . . . . . . . . 1.98 1,001.5 317.9 5,559.5

1996 . . . . . . . . . 1.98 987.8 306.6 5,529.1

1997 . . . . . . . . . 1.97 971.9 293.3 5,496.4

1998 . . . . . . . . . 2.00 963.8 285.4 5,487.1

1999 . . . . . . . . . 2.01 970.6 283.2 5,553.6

2000 . . . . . . . . . 2.05 960.7 281.0 5,492.3

2001 . . . . . . . . . 2.03 951.1 280.4 5,422.8

2002 . . . . . . . . . 2.03 947.0 279.0 5,400.6

2003 . . . . . . . . . 2.05 933.4 277.2 5,308.6

2004 . . . . . . . . . 2.06 898.9 269.7 5,093.9

2005 . . . . . . . . . 2.06 901.3 270.7 5,105.4

2006 . . . . . . . . . 2.11 876.1 267.6 4,933.5

2007 . . . . . . . . . 2.12 856.8 261.6 4,825.2

2008 . . . . . . . . . 2.07 857.0 258.8 4,845.5

2009 . . . . . . . . . 2.00 827.1 255.3 4,639.7

2010 . . . . . . . . . 1.93 821.3 248.5 4,640.1

2011 . . . . . . . . . 1.89 819.3 249.1 4,621.4

2012 . . . . . . . . . 1.87 811.9 248.5 4,568.2

2013 . . . . . . . . . 1.85 d 812.2 249.1 d 4,566.1

2014 . . . . . . . . . 1.86 d 790.4 d 242.6 d 4,442.9

2015 . . . . . . . . . e1.87 e 781.4 e239.8 e 4,392.3

Intermediate: 

2020 . . . . . . . . . 2.00 742.8 226.5 4,185.1

2025 . . . . . . . . . 2.03 709.5 213.8 4,014.5

2030 . . . . . . . . . 2.00 679.1 201.8 3,861.1

2035 . . . . . . . . . 2.00 650.8 190.6 3,719.3

2040 . . . . . . . . . 2.00 624.5 180.2 3,586.9

2045 . . . . . . . . . 2.00 599.9 170.5 3,462.8

2050 . . . . . . . . . 2.00 576.8 161.4 3,346.3

2055 . . . . . . . . . 2.00 555.1 153.0 3,236.6

2060 . . . . . . . . . 2.00 534.8 145.1 3,133.2

2065 . . . . . . . . . 2.00 515.7 137.7 3,035.7

2070 . . . . . . . . . 2.00 497.6 130.8 2,943.6

2075 . . . . . . . . . 2.00 480.7 124.3 2,856.5

2080 . . . . . . . . . 2.00 464.6 118.2 2,774.0

2085 . . . . . . . . . 2.00 449.5 112.5 2,695.7

2090 . . . . . . . . . 2.00 435.1 107.2 2,621.5
Assumptions and Methods

88

3. Immigration Assumptions

Projections of the total Social Security area population reflect assumptions

for annual legal immigration, legal emigration, “other immigration,” and

“other emigration.” Legal immigration consists of persons who are granted

legal permanent resident status. Legal emigration consists of legal permanent

residents and citizens who leave the Social Security area population. Net

legal immigration is the difference between legal immigration and legal emigration. “Other immigration” consists of immigrants who enter the Social

Low-cost: 

2020 . . . . . . . . . 2.09 777.4 237.2 4,378.5

2025 . . . . . . . . . 2.20 760.5 230.7 4,292.9

2030 . . . . . . . . . 2.20 743.8 224.1 4,208.6

2035 . . . . . . . . . 2.20 727.5 217.7 4,126.4

2040 . . . . . . . . . 2.20 711.7 211.5 4,046.8

2045 . . . . . . . . . 2.20 696.4 205.5 3,969.7

2050 . . . . . . . . . 2.20 681.7 199.7 3,895.1

2055 . . . . . . . . . 2.20 667.4 194.1 3,823.0

2060 . . . . . . . . . 2.20 653.6 188.7 3,753.1

2065 . . . . . . . . . 2.20 640.2 183.5 3,685.5

2070 . . . . . . . . . 2.20 627.3 178.5 3,620.0

2075 . . . . . . . . . 2.20 614.8 173.6 3,556.6

2080 . . . . . . . . . 2.20 602.7 168.9 3,495.1

2085 . . . . . . . . . 2.20 591.0 164.4 3,435.5

2090 . . . . . . . . . 2.20 579.7 160.0 3,377.7

High-cost:

2020 . . . . . . . . . 1.91 706.0 214.6 3,982.4

2025 . . . . . . . . . 1.89 655.1 195.1 3,722.7

2030 . . . . . . . . . 1.82 610.9 177.6 3,500.4

2035 . . . . . . . . . 1.80 571.7 162.0 3,303.3

2040 . . . . . . . . . 1.80 536.5 148.0 3,126.2

2045 . . . . . . . . . 1.80 504.7 135.6 2,965.8

2050 . . . . . . . . . 1.80 476.0 124.5 2,820.0

2055 . . . . . . . . . 1.80 450.0 114.5 2,686.7

2060 . . . . . . . . . 1.80 426.3 105.5 2,564.6

2065 . . . . . . . . . 1.80 404.6 97.4 2,452.4

2070 . . . . . . . . . 1.80 384.7 90.1 2,348.8

2075 . . . . . . . . . 1.80 366.4 83.5 2,252.9

2080 . . . . . . . . . 1.80 349.6 77.5 2,163.9

2085 . . . . . . . . . 1.80 334.0 72.0 2,081.1

2090 . . . . . . . . . 1.80 319.6 67.0 2,003.7

a This table contains basic assumptions along with key summary values that are derived from basic assumptions.

b The total fertility rate for any year is the average number of children that would be born to a woman in her

lifetime if she were to experience, at each age of her life, the birth rate observed in, or assumed for, the

selected year, and if she were to survive the entire childbearing period.

c Based on the enumerated total population as of April 1, 2010, if that population were to experience the

death rates by age and sex observed in, or assumed for, the selected year.

d Estimated. 

e Estimated, intermediate alternative.

Table V.A1.—Fertility and Mortality Assumptions,a

Calendar Years 1940-2090 (Cont.)

Calendar year

Total

fertility

rateb

Age-sex-adjusted death ratec

per 100,000, by age

Total Under 65 65 and over
89

Demographic Assumptions and Methods

Security area in a given year and stay to the end of that year without having

legal permanent resident status, such as undocumented immigrants and temporary foreign workers and students. “Other emigration” consists of other

immigrants who leave the Social Security area population or who adjust their

status to become legal permanent residents. Net other immigration is the difference between other immigration and other emigration. Net immigration

refers to the sum of net legal immigration and net other immigration.

Immigration assumptions differ for the low-cost, intermediate, and high-cost

scenarios. The low-cost scenario includes higher annual net immigration and

the high-cost scenario includes lower annual net immigration. Table V.A2

contains historical and projected levels of various immigration flows.

Legal immigration has increased significantly since World War II, due to various events and legislative changes, including the Immigration Act of 1965

and the Immigration Act of 1990.

The assumed ratios of annual legal emigration to legal immigration are 20,

25, and 30 percent for alternatives I, II, and III, respectively. This range is

consistent with the limited historical data for legal emigration from the

Social Security area. These ratios are unchanged from last year’s report.

Under the intermediate alternative, by combining the ultimate annual legal

immigration and emigration assumptions, ultimate annual net legal immigration is 795,000 persons. For the low-cost and high-cost scenarios, ultimate

annual net legal immigration is about 1,008,000 persons and 602,000 persons, respectively.

The estimated number of other immigrants residing in the Social Security

area and the annual level of other immigration have been affected significantly by the recent recession. Net immigration was greatly reduced during

the economic downturn. Under the intermediate assumptions, annual other

immigration is expected to increase from recent levels, reflecting a continued

recovery from levels experienced during the recession. 

Emigration from the other-immigrant population includes those who leave

the Social Security area and those who adjust their status to become legal

permanent residents. This other-immigrant population is highly mobile and

far more likely to leave the Social Security area than is the citizen or legal

permanent resident population. This year’s report reflects lower assumed

departure rates for the unauthorized portion of the other immigrant population. As individuals from this population reside in the country for extended

periods of time, they generally become less likely to leave the country.
Assumptions and Methods

90

Under the intermediate assumptions, the total annual number of other emigrants who leave the Social Security area averages about 415,000 through

the 75-year projection period. In addition, the ultimate annual number of

other immigrants who adjust status to become legal permanent residents is

assumed to be 450,000 for the intermediate assumptions. This is one-third of

the assumed ultimate annual number of other immigrants entering the Social

Security area. For the low-cost and high-cost scenarios, the total annual number of other emigrants averages about 488,000 and 325,000, respectively,

through the 75-year projection period. The ultimate annual number of people

adjusting status to legal permanent resident status is assumed to be

550,000 persons and 350,000 persons, for the low-cost and high-cost scenarios, respectively. While the ultimate annual number of people adjusting status to become legal permanent residents is unchanged from last year’s report,

the annual number of other emigrants who leave the Social Security area is

about 110,000 to 163,000 lower than in last year’s report for each alternative.

This lower level of other emigration reflects revisions in the assumed departure rates of the unauthorized portion of the other immigrant population.

Under the assumptions and methods described above, the projected size of

the other-immigrant population grows substantially. This growth reflects the

excess of annual other immigration over the combined annual numbers of

emigrants and deaths that occur within the other-immigrant population.

Under the intermediate assumptions, projected net other immigration reaches

a peak in 2018, reflecting the recovering economy, then sharply decreases

over the next few years, primarily due to the decline in the number of other

immigrants entering the country, to a stable long-term level. This is followed

by a gradual decrease in net other immigration after 2022, due to the increasing number of other immigrants residing in the Social Security area. Because

the number of other immigrants leaving the Social Security area is based on

rates of departure, an increase in the number of other immigrants residing in

the Social Security area results in an increase in the number who emigrate

out of the area. All other components of other immigration and emigration

are assumed to be stable after 2022, and thus do not contribute toward any

change in net other immigration. Under the intermediate assumptions, the

projected average annual level of net other immigration over the 75-year projection period is about 496,000 persons. For the low-cost and high-cost

assumptions, projected average annual net other immigration is about

621,000 persons and 359,000 persons, respectively.

The projected average total level of net immigration (legal and other, combined) is about 1,291,000 persons per year during the 75-year projection

period under the intermediate assumptions. For the low-cost and high-cost
91

Demographic Assumptions and Methods

assumptions, projected average annual total net immigration is about

1,629,000 persons and 961,000 persons, respectively.

Demographers express a wide range of views about the future course of

immigration for the United States. Some believe that net immigration will

increase substantially in the future. Others believe that potential immigrants

may be increasingly attracted to other countries, that the number of potential

immigrants may be lower due to lower birth rates in many countries, or that

changes in the law or enforcement of the law could reduce immigration. The

average of the 2015 Technical Panel’s recommended annual levels of total

net immigration is very close to the average projected in this year’s report.
Assumptions and Methods

92

Table V.A2.—Immigration Assumptions,a Calendar Years 1940-2090

[in thousands]

Calendar 

year

Legal immigration Other-than-legal immigrationb

Total net

immigration

Legal

in

Legal

out

Adjustments

of statusc d Netlegal

Other

in

Other

out

Adjustments

of statusc d Netother

Historical data:

1940 . . . . - - - 46 - - - - -

1945 . . . . 73 18 - 55 - - - - -

1950 . . . . 227 57 - 171 - - - - -

1955 . . . . 280 70 - 210 - - - - -

1960 . . . . 268 67 - 201 - - - - -

1965 . . . . 261 77 49 232 - - 49 - -

1970 . . . . 307 93 65 279 - - 65 - -

1975 . . . . 340 98 53 294 - - 53 - -

1980 . . . . 431 136 112 407 - - 112 208 614

1985 . . . . 458 144 119 432 - - 119 264 696

1990 . . . . 548 166 114 497 - - 114 620 1,116

1995 . . . . 511 192 255 575 - - 255 557 1,132

1996 . . . . 535 221 349 663 - - 349 473 1,137

1997 . . . . 468 190 294 571 - - 294 545 1,117

1998 . . . . 418 163 233 488 - - 233 605 1,093

1999 . . . . 451 174 243 521 1,307 438 243 625 1,146

2000 . . . . 482 224 413 672 1,408 338 413 657 1,329

2001 . . . . 517 265 542 794 1,322 122 542 658 1,453

2002 . . . . 483 243 487 728 1,259 112 487 660 1,388

2003 . . . . 414 192 354 575 1,139 123 354 662 1,237

2004 . . . . 466 250 533 749 1,304 108 533 662 1,411

2005 . . . . 561 290 597 869 1,791 52 597 1,141 2,010

2006 . . . . 639 303 573 910 1,450 76 573 801 1,710

2007 . . . . 584 267 482 800 883 328 482 72 872

2008 . . . . 635 278 478 835 672 948 478 -754 81

2009 . . . . 633 277 475 832 752 170 475 106 938

2010 . . . . 622 262 426 786 678 199 426 53 838

2011 . . . . 647 264 408 791 606 263 408 -66 725

2012 . . . . 621 255 401 766 776 131 401 244 1,011

2013 . . . . 589 249 409 748 939 184 409 346 1,094

2014e . . . 616 254 401 762 1,200 245 401 554 1,316

2015f . . . 610 265 450 795 1,400 188 450 762 1,557

Intermediate: 

2020 . . . . 610 265 450 795 1,450 287 450 713 1,508

2025 . . . . 610 265 450 795 1,350 333 450 567 1,362

2030 . . . . 610 265 450 795 1,350 363 450 537 1,332

2035 . . . . 610 265 450 795 1,350 390 450 510 1,305

2040 . . . . 610 265 450 795 1,350 411 450 489 1,284

2045 . . . . 610 265 450 795 1,350 426 450 474 1,269

2050 . . . . 610 265 450 795 1,350 436 450 464 1,259

2055 . . . . 610 265 450 795 1,350 445 450 455 1,250

2060 . . . . 610 265 450 795 1,350 451 450 449 1,244

2065 . . . . 610 265 450 795 1,350 456 450 444 1,239

2070 . . . . 610 265 450 795 1,350 460 450 440 1,235

2075 . . . . 610 265 450 795 1,350 463 450 437 1,232

2080 . . . . 610 265 450 795 1,350 465 450 435 1,230

2085 . . . . 610 265 450 795 1,350 466 450 434 1,229

2090 . . . . 610 265 450 795 1,350 467 450 433 1,228
93

Demographic Assumptions and Methods

Low-cost: 

2020 . . . . 710 252 550 1,008 1,750 304 550 896 1,904

2025 . . . . 710 252 550 1,008 1,650 366 550 734 1,742

2030 . . . . 710 252 550 1,008 1,650 409 550 691 1,699

2035 . . . . 710 252 550 1,008 1,650 448 550 652 1,660

2040 . . . . 710 252 550 1,008 1,650 480 550 620 1,628

2045 . . . . 710 252 550 1,008 1,650 502 550 598 1,606

2050 . . . . 710 252 550 1,008 1,650 519 550 581 1,589

2055 . . . . 710 252 550 1,008 1,650 532 550 568 1,576

2060 . . . . 710 252 550 1,008 1,650 543 550 557 1,565

2065 . . . . 710 252 550 1,008 1,650 550 550 550 1,558

2070 . . . . 710 252 550 1,008 1,650 556 550 544 1,552

2075 . . . . 710 252 550 1,008 1,650 560 550 540 1,548

2080 . . . . 710 252 550 1,008 1,650 562 550 538 1,546

2085 . . . . 710 252 550 1,008 1,650 564 550 536 1,544

2090 . . . . 710 252 550 1,008 1,650 565 550 535 1,543

High-cost:

2020 . . . . 510 258 350 602 850 231 350 269 871

2025 . . . . 510 258 350 602 1,050 259 350 441 1,043

2030 . . . . 510 258 350 602 1,050 282 350 418 1,020

2035 . . . . 510 258 350 602 1,050 302 350 398 1,000

2040 . . . . 510 258 350 602 1,050 318 350 382 984

2045 . . . . 510 258 350 602 1,050 330 350 370 972

2050 . . . . 510 258 350 602 1,050 339 350 361 963

2055 . . . . 510 258 350 602 1,050 345 350 355 957

2060 . . . . 510 258 350 602 1,050 351 350 349 951

2065 . . . . 510 258 350 602 1,050 356 350 344 946

2070 . . . . 510 258 350 602 1,050 359 350 341 943

2075 . . . . 510 258 350 602 1,050 362 350 338 940

2080 . . . . 510 258 350 602 1,050 364 350 336 938

2085 . . . . 510 258 350 602 1,050 365 350 335 937

2090 . . . . 510 258 350 602 1,050 366 350 334 936

a This table contains basic assumptions along with key summary values that are derived from basic assumptions.

b Historical other immigration and emigration estimates depend on a residual method, using Department of

Homeland Security January 1 stock estimates for 2005 through 2012.

c Estimates do not include persons who attained legal permanent resident status under the special one-time

provisions of the Immigration Reform and Control Act of 1986.

d Adjustments of status are a positive for net legal immigration and a negative for net other immigration.

e Estimated.

f Estimated, intermediate alternative.

Note: Totals do not necessarily equal the sums of rounded components.

Table V.A2.—Immigration Assumptions,a Calendar Years 1940-2090 (Cont.)

[in thousands]

Calendar 

year

Legal immigration Other-than-legal immigrationb

Total net

immigration

Legal

in

Legal

out

Adjustments

of statusc d Netlegal

Other

in

Other

out

Adjustments

of statusc d Netother
Assumptions and Methods

94

4. Total Population Estimates

The starting Social Security area population for December 31, 2013, is

derived from the Census Bureau’s estimate of the residents of the 50 States

and D.C. and U.S. Armed Forces overseas. Adjustments are made to reflect

mortality assumptions for the aged population since 2010 that are consistent

with Medicare and Social Security data, net immigration assumptions for the

aged population since 2010, estimates of the net undercount in the 2010 census, inclusion of U.S. citizens living abroad (including residents of U.S. territories), and inclusion of non-citizens living abroad who are insured for Social

Security benefits. The Office of the Chief Actuary projects the population in

the Social Security area by age, sex, and marital status for December 31 of

each year from 2014 through 2090 by combining the assumptions for future

fertility, mortality, and immigration with assumptions for marriage and

divorce. Previous sections of this chapter present the assumptions for future

fertility, mortality, and immigration. Assumptions for future rates of marriage and divorce reflect historical data from the National Center for Health

Statistics, the Census Bureau, and selected individual States. 

This report presents a July 1 (i.e., midyear) population for each year, which

is derived from surrounding December populations. Table V.A3 shows the

historical and projected population for July 1 by broad age group, for the

three alternatives. It also shows the aged and total dependency ratios (see

table footnotes for definitions).
95

Demographic Assumptions and Methods

Table V.A3.—Social Security Area Population on July 1 and Dependency Ratios,

Calendar Years 1945-2090

Calendar year

Population (in thousands) Dependency ratio

Under 20 20-64

65 and

over Total Ageda Totalb

Historical data:

1945 . . . . . . . . . . . . . . 49,121 88,109 10,900 148,130 0.124 0.681

1950 . . . . . . . . . . . . . . 53,903 92,382 12,769 159,053 .138 .722

1955 . . . . . . . . . . . . . . 63,293 96,207 15,075 174,576 .157 .815

1960 . . . . . . . . . . . . . . 73,074 99,802 17,277 190,153 .173 .905

1965 . . . . . . . . . . . . . . 80,020 104,885 19,071 203,975 .182 .945

1970 . . . . . . . . . . . . . . 81,019 112,995 20,898 214,912 .185 .902

1975 . . . . . . . . . . . . . . 78,623 122,663 23,316 224,602 .190 .831

1980 . . . . . . . . . . . . . . 74,844 134,100 26,307 235,251 .196 .754

1985 . . . . . . . . . . . . . . 72,997 144,545 29,144 246,686 .202 .707

1990 . . . . . . . . . . . . . . 74,800 152,764 31,924 259,489 .209 .699

1995 . . . . . . . . . . . . . . 79,285 160,718 34,316 274,318 .214 .707

2000 . . . . . . . . . . . . . . 82,006 170,160 35,505 287,671 .209 .691

2005 . . . . . . . . . . . . . . 84,014 180,875 37,163 302,052 .205 .670

2010 . . . . . . . . . . . . . . 85,699 188,331 41,050 315,080 .218 .673

2015 c . . . . . . . . . . . . . 85,146 193,941 47,841 326,928 .247 .686

Intermediate:

2020 . . . . . . . . . . . . . . 87,420 198,796 56,165 342,381 .283 .722

2025 . . . . . . . . . . . . . . 90,466 201,895 65,471 357,831 .324 .772

2030 . . . . . . . . . . . . . . 92,811 205,362 73,686 371,859 .359 .811

2035 . . . . . . . . . . . . . . 96,512 209,092 78,803 384,407 .377 .838

2040 . . . . . . . . . . . . . . 98,987 214,843 81,678 395,509 .380 .841

2045 . . . . . . . . . . . . . . 100,113 221,772 83,745 405,630 .378 .829

2050 . . . . . . . . . . . . . . 101,761 227,380 86,376 415,517 .380 .827

2055 . . . . . . . . . . . . . . 104,060 232,085 89,709 425,854 .387 .835

2060 . . . . . . . . . . . . . . 106,735 236,185 93,823 436,743 .397 .849

2065 . . . . . . . . . . . . . . 109,355 240,929 97,653 447,938 .405 .859

2070 . . . . . . . . . . . . . . 111,631 245,765 101,733 459,129 .414 .868

2075 . . . . . . . . . . . . . . 113,540 250,737 105,899 470,176 .422 .875

2080 . . . . . . . . . . . . . . 115,432 257,432 108,244 481,108 .420 .869

2085 . . . . . . . . . . . . . . 117,605 263,085 111,404 492,095 .423 .870

2090 . . . . . . . . . . . . . . 120,005 267,398 115,804 503,208 .433 .882

Low-cost:

2020 . . . . . . . . . . . . . . 88,667 199,947 55,919 344,534 .280 .723

2025 . . . . . . . . . . . . . . 93,942 204,348 64,816 363,106 .317 .777

2030 . . . . . . . . . . . . . . 99,315 209,133 72,464 380,911 .346 .821

2035 . . . . . . . . . . . . . . 106,148 214,176 76,902 397,226 .359 .855

2040 . . . . . . . . . . . . . . 111,278 221,815 79,068 412,161 .356 .858

2045 . . . . . . . . . . . . . . 114,401 231,604 80,496 426,502 .348 .842

2050 . . . . . . . . . . . . . . 117,880 240,838 82,638 441,356 .343 .833

2055 . . . . . . . . . . . . . . 122,679 249,205 85,653 457,538 .344 .836

2060 . . . . . . . . . . . . . . 128,391 257,024 89,562 474,977 .348 .848

2065 . . . . . . . . . . . . . . 134,132 265,779 93,208 493,119 .351 .855

2070 . . . . . . . . . . . . . . 139,256 275,263 97,031 511,550 .353 .858

2075 . . . . . . . . . . . . . . 143,747 285,674 100,849 530,270 .353 .856

2080 . . . . . . . . . . . . . . 148,245 298,408 102,869 549,523 .345 .842

2085 . . . . . . . . . . . . . . 153,333 309,988 106,232 569,554 .343 .837

2090 . . . . . . . . . . . . . . 158,959 319,693 111,699 590,351 .349 .847
Assumptions and Methods

96

Notes:

1. Historical data are subject to revision.

2. Totals do not necessarily equal the sums of rounded components.

5. Life Expectancy Estimates

Life expectancy, or the average remaining number of years expected prior to

death, is an additional way to summarize the Trustees’ mortality assumptions. This report includes life expectancy in two different forms (period and

cohort) for two separate purposes.

 • Period life expectancy for a given year uses the actual or expected death

rates at each age for that year. It is a useful summary statistic for illustrating the overall level of the death rates experienced in a single year.

Period life expectancy for a particular year provides an individual’s

expected average remaining lifetime at a selected age, assuming no

change in death rates after that year. Table V.A4 presents historical and

projected life expectancy calculated on a period basis. 

 • Cohort life expectancy does not use death rates for a single year, but for

the series of years in which the individual will actually reach each succeeding age if he or she survives. Cohort life expectancy provides an

individual’s expected average remaining lifetime at a selected age in a

given year, using actual or expected future changes in death rates.

Table V.A5 presents historical and projected life expectancy calculated

High-cost:

2020 . . . . . . . . . . . . . . 85,533 196,457 56,404 338,393 0.287 0.722

2025 . . . . . . . . . . . . . . 86,427 198,104 66,151 350,682 .334 .770

2030 . . . . . . . . . . . . . . 86,390 200,376 74,993 361,760 .374 .805

2035 . . . . . . . . . . . . . . 87,190 202,934 80,865 370,988 .398 .828

2040 . . . . . . . . . . . . . . 87,293 206,890 84,529 378,713 .409 .830

2045 . . . . . . . . . . . . . . 86,731 211,116 87,297 385,144 .414 .824

2050 . . . . . . . . . . . . . . 86,536 213,757 90,444 390,737 .423 .828

2055 . . . . . . . . . . . . . . 86,922 215,078 94,053 396,054 .437 .841

2060 . . . . . . . . . . . . . . 87,314 215,747 98,263 401,323 .455 .860

2065 . . . . . . . . . . . . . . 87,566 216,819 102,143 406,527 .471 .875

2070 . . . . . . . . . . . . . . 87,645 217,476 106,352 411,473 .489 .892

2075 . . . . . . . . . . . . . . 87,597 217,638 110,760 415,994 .509 .911

2080 . . . . . . . . . . . . . . 87,596 219,055 113,343 419,994 .517 .917

2085 . . . . . . . . . . . . . . 87,765 219,694 116,105 423,564 .528 .928

2090 . . . . . . . . . . . . . . 88,025 219,606 119,175 426,805 .543 .944

a Ratio of the population at ages 65 and over to the population at ages 20-64.

b Ratio of the population at ages 65 and over and the population under age 20 to the population at

ages 20-64.

c Estimated, intermediate alternative.

Table V.A3.—Social Security Area Population on July 1 and Dependency Ratios,

Calendar Years 1945-2090 (Cont.)

Calendar year

Population (in thousands) Dependency ratio

Under 20 20-64

65 and

over Total Ageda Totalb
97

Demographic Assumptions and Methods

on a cohort basis. Cohort life expectancy is somewhat greater than

period life expectancy for a given year because: (1) death rates at any

age tend to decline over time; and (2) cohort life expectancy uses death

rates from future years, while period life expectancy uses death rates

only from the given year.

Life expectancy at a given age reflects death rates at that and all older ages.

Period life expectancy is somewhat related to the age-sex-adjusted death rate

discussed in section V.A.2. However, life expectancy places far greater

weight on death rates at lower ages than at higher ages. Therefore, changes in

death rates at lower ages have far greater effects in changing life expectancy

over time. It is important to keep this concept in mind when considering

trends in life expectancy. 
Assumptions and Methods

98

Table V.A4.—Period Life Expectancya

a The period life expectancy at a given age for a given year is the average remaining number of years

expected prior to death for a person at that exact age, born on January 1, using the mortality rates for that

year over the course of his or her remaining life.

Historical data

Calendar

year

At birth At age 65

Male Female Male Female

1940 . . . . 61.4 65.7 11.9 13.4

1945 . . . . 62.9 68.4 12.6 14.4

1950 . . . . 65.6 71.1 12.8 15.1

1955 . . . . 66.7 72.8 13.1 15.6

1960 . . . . 66.7 73.2 12.9 15.9

1965 . . . . 66.8 73.8 12.9 16.3

1970 . . . . 67.2 74.9 13.1 17.1

1975 . . . . 68.7 76.6 13.7 18.0

1980 . . . . 69.9 77.5 14.0 18.4

1985 . . . . 71.1 78.2 14.4 18.6

1990 . . . . 71.8 78.9 15.1 19.1

1995 . . . . 72.5 79.1 15.4 19.1

2000 . . . . 74.0 79.4 15.9 19.0

2001 . . . . 74.1 79.5 16.1 19.1

2002 . . . . 74.2 79.5 16.2 19.1

2003 . . . . 74.4 79.6 16.3 19.2

2004 . . . . 74.8 80.0 16.7 19.5

2005 . . . . 74.8 80.0 16.7 19.5

2006 . . . . 75.1 80.2 17.0 19.7

2007 . . . . 75.4 80.5 17.2 19.9

2008 . . . . 75.5 80.5 17.2 19.9

2009 . . . . 75.9 80.8 17.5 20.2

2010 . . . . 76.1 80.9 17.6 20.2

2011 . . . . 76.2 81.0 17.7 20.2

2012 . . . . 76.3 81.0 17.8 20.3

2013 b . . .

b Estimated.

76.3 81.1 17.8 20.3

2014 b . . . 76.6 81.2 18.0 20.5

2015 c . . .

c Estimated, intermediate alternative.

76.8 81.5 18.1 20.6

Intermediate Low-cost High-cost

Calendar

year

At birth At age 65 At birth At age 65 At birth At age 65

Male Female Male Female Male Female Male Female Male Female Male Female

2020 . . . . 77.5 82.0 18.6 21.0 77.0 81.5 18.2 20.6 78.2 82.5 19.0 21.3

2025 . . . . 78.2 82.5 19.0 21.3 77.3 81.8 18.4 20.8 79.2 83.3 19.6 21.9

2030 . . . . 78.8 83.0 19.3 21.6 77.6 82.0 18.6 20.9 80.1 84.1 20.1 22.3

2035 . . . . 79.3 83.4 19.6 21.9 77.9 82.3 18.8 21.1 80.9 84.8 20.6 22.8

2040 . . . . 79.8 83.9 19.9 22.2 78.2 82.5 18.9 21.3 81.7 85.4 21.1 23.2

2045 . . . . 80.4 84.3 20.2 22.4 78.5 82.8 19.1 21.4 82.5 86.0 21.5 23.6

2050 . . . . 80.9 84.7 20.5 22.7 78.7 83.0 19.2 21.5 83.2 86.6 22.0 24.0

2055 . . . . 81.3 85.1 20.8 23.0 79.0 83.2 19.4 21.7 83.8 87.2 22.4 24.4

2060 . . . . 81.8 85.5 21.1 23.2 79.3 83.4 19.6 21.8 84.4 87.7 22.8 24.7

2065 . . . . 82.2 85.8 21.3 23.4 79.6 83.7 19.7 22.0 85.0 88.2 23.1 25.1

2070 . . . . 82.7 86.2 21.6 23.7 79.8 83.9 19.9 22.1 85.6 88.6 23.5 25.4

2075 . . . . 83.1 86.5 21.9 23.9 80.1 84.1 20.0 22.2 86.1 89.1 23.8 25.7

2080 . . . . 83.5 86.9 22.1 24.1 80.3 84.3 20.2 22.4 86.6 89.5 24.2 26.0

2085 . . . . 83.8 87.2 22.3 24.3 80.6 84.5 20.3 22.5 87.1 89.9 24.5 26.3

2090 . . . . 84.2 87.5 22.6 24.6 80.8 84.7 20.5 22.6 87.6 90.3 24.8 26.6
99

Demographic Assumptions and Methods

Table V.A5.—Cohort Life Expectancya

a The cohort life expectancy at a given age for a given year is the average remaining number of years

expected prior to death for a person at that exact age, born on January 1, using the mortality rates for the

series of years in which the individual will actually reach each succeeding age if he or she survives.

Calendar

year

Intermediate Low-cost High-cost

At birth b At age 65 c At birth b

b Cohort life expectancy at birth for those born in the calendar year is based on a combination of actual, estimated, and projected death rates for birth years 1940 through 2013. For birth years after 2013, these values

depend on estimated and projected death rates.

At age 65 c

c Age 65 cohort life expectancy for those attaining age 65 in calendar years 1940 though 2012 depends on

actual death rates or on a combination of actual, estimated, and projected death rates. After 2012, these values depend on estimated and projected death rates.

At birth b At age 65 c

Male Female Male Female Male Female Male Female Male Female Male Female

1940 . . . . 70.5 76.7 12.7 14.7 70.3 76.4 12.7 14.7 70.7 77.0 12.7 14.7

1945 . . . . 72.3 78.4 13.0 15.4 72.0 78.0 13.0 15.4 72.7 78.8 13.0 15.4

1950 . . . . 73.5 79.7 13.1 16.2 73.0 79.2 13.1 16.2 74.1 80.3 13.1 16.2

1955 . . . . 74.2 80.3 13.1 16.7 73.5 79.6 13.1 16.7 75.0 81.1 13.1 16.7

1960 . . . . 74.9 80.7 13.2 17.4 74.1 79.9 13.2 17.4 75.9 81.8 13.2 17.4

1965 . . . . 75.9 81.3 13.5 18.0 74.8 80.3 13.5 18.0 77.1 82.6 13.5 18.0

1970 . . . . 77.1 82.2 13.8 18.5 75.8 81.0 13.8 18.5 78.6 83.6 13.8 18.5

1975 . . . . 78.1 82.9 14.2 18.7 76.6 81.5 14.2 18.7 79.8 84.6 14.2 18.7

1980 . . . . 78.9 83.6 14.7 18.8 77.2 82.0 14.7 18.8 80.9 85.4 14.7 18.8

1985 . . . . 79.7 84.2 15.4 19.1 77.7 82.4 15.4 19.1 81.9 86.2 15.4 19.1

1990 . . . . 80.4 84.7 16.1 19.4 78.2 82.8 16.1 19.4 82.8 86.9 16.1 19.5

1995 . . . . 81.1 85.3 16.8 19.8 78.8 83.2 16.7 19.7 83.7 87.6 16.8 19.9

2000 . . . . 81.7 85.7 17.6 20.3 79.1 83.5 17.4 20.1 84.5 88.2 17.7 20.5

2001 . . . . 81.8 85.8 17.7 20.4 79.2 83.5 17.5 20.2 84.6 88.3 17.9 20.6

2002 . . . . 81.8 85.8 17.8 20.5 79.2 83.6 17.6 20.2 84.7 88.4 18.1 20.8

2003 . . . . 81.9 85.9 18.0 20.6 79.3 83.6 17.7 20.3 84.8 88.5 18.2 20.9

2004 . . . . 82.0 86.0 18.1 20.7 79.4 83.7 17.8 20.4 85.0 88.6 18.4 21.0

2005 . . . . 82.1 86.1 18.2 20.8 79.4 83.7 17.9 20.5 85.1 88.7 18.5 21.1

2006 . . . . 82.2 86.1 18.3 20.9 79.5 83.8 18.0 20.5 85.2 88.8 18.7 21.3

2007 . . . . 82.3 86.2 18.4 20.9 79.5 83.8 18.1 20.6 85.3 88.9 18.8 21.4

2008 . . . . 82.4 86.3 18.5 21.0 79.6 83.9 18.1 20.6 85.5 89.0 18.9 21.5

2009 . . . . 82.5 86.4 18.6 21.1 79.7 83.9 18.2 20.7 85.6 89.1 19.1 21.6

2010 . . . . 82.6 86.5 18.7 21.2 79.7 84.0 18.2 20.7 85.8 89.2 19.2 21.7

2011 . . . . 82.7 86.5 18.8 21.3 79.8 84.0 18.3 20.8 85.9 89.3 19.3 21.8

2012 . . . . 82.8 86.6 18.8 21.3 79.8 84.1 18.3 20.8 86.0 89.4 19.5 22.0

2013 . . . . 82.9 86.7 18.9 21.4 79.9 84.1 18.4 20.8 86.1 89.5 19.6 22.1

2014 . . . . 83.0 86.8 19.0 21.5 80.0 84.1 18.4 20.9 86.2 89.6 19.7 22.2

2015 . . . . 83.1 86.8 19.1 21.5 80.0 84.2 18.5 20.9 86.4 89.7 19.9 22.3

2020 . . . . 83.5 87.2 19.5 21.9 80.3 84.4 18.6 21.1 87.0 90.2 20.4 22.8

2025 . . . . 83.9 87.5 19.8 22.1 80.5 84.6 18.8 21.2 87.5 90.6 21.0 23.3

2030 . . . . 84.3 87.9 20.1 22.4 80.8 84.8 19.0 21.4 88.1 91.1 21.4 23.7

2035 . . . . 84.7 88.2 20.4 22.7 81.0 85.0 19.2 21.5 88.6 91.5 21.9 24.1

2040 . . . . 85.1 88.5 20.7 23.0 81.3 85.2 19.3 21.7 89.1 91.9 22.4 24.5

2045 . . . . 85.5 88.8 21.0 23.2 81.5 85.4 19.5 21.8 89.5 92.2 22.8 24.9

2050 . . . . 85.8 89.1 21.3 23.5 81.8 85.6 19.6 22.0 90.0 92.6 23.2 25.2

2055 . . . . 86.2 89.4 21.6 23.7 82.0 85.8 19.8 22.1 90.4 93.0 23.6 25.6

2060 . . . . 86.5 89.6 21.8 24.0 82.2 86.0 20.0 22.2 90.8 93.3 23.9 25.9

2065 . . . . 86.8 89.9 22.1 24.2 82.4 86.2 20.1 22.4 91.2 93.6 24.3 26.3

2070 . . . . 87.1 90.2 22.3 24.4 82.7 86.4 20.3 22.5 91.5 93.9 24.6 26.6

2075 . . . . 87.4 90.4 22.6 24.7 82.9 86.5 20.4 22.6 91.9 94.2 25.0 26.9

2080 . . . . 87.7 90.6 22.8 24.9 83.1 86.7 20.6 22.8 92.3 94.5 25.3 27.2

2085 . . . . 88.0 90.9 23.1 25.1 83.3 86.9 20.7 22.9 92.6 94.8 25.6 27.5

2090 . . . . 88.3 91.1 23.3 25.3 83.5 87.0 20.8 23.0 92.9 95.1 25.9 27.7
Assumptions and Methods

100

B. ECONOMIC ASSUMPTIONS AND METHODS

The three alternative sets of economic assumptions provide a reasonable

range for estimating the financial status of the trust funds. The intermediate

assumptions reflect the Trustees’ consensus expectation of sustained moderate economic growth and their best estimate for various other economic

parameters. The low-cost assumptions represent a more optimistic outlook: a

faster recovery, stronger long-term economic growth, and relatively optimistic levels for other parameters. The high-cost assumptions represent a more

pessimistic scenario: a slower recovery, interrupted by a brief recession,

weaker long-term economic growth, and relatively pessimistic levels for

other parameters.

Actual economic data were available through the third quarter of 2015 at the

time the Trustees set the assumptions for this report. The data indicated that

economic activity peaked in the fourth quarter of 20071 with the level of

gross domestic product (GDP) about 1 percent above the estimated longterm sustainable trend level. A severe recession followed, with a low point in

the economic cycle reached in the second quarter of 2009 with GDP about

7 percent below the estimated sustainable trend level. The annual growth rate

in real GDP has been positive in all years since then, but not as strong as in

most past recoveries. The Trustees project that the economy will return to its

sustainable trend level of output within the first 10 years of the projection

period and remain on that trend thereafter. However, the speed of the return

varies by alternative. The economy is projected to return to its sustainable

trend level of output by 2022 for the intermediate assumptions, and 2020 for

the low-cost assumptions, the same as in last year’s report. The economy is

projected to return to its sustainable trend level of output by 2025 for the

high-cost assumption, about 1 year later than in last year’s report. Complete

economic cycles have little effect on the long-range estimates of financial

status, so the assumptions do not include cycles beyond the short-range

period (2016 through 2025).

The key economic assumptions underlying the three sets of projections of the

future financial status of the OASI and DI Trust Funds are discussed in the

remainder of this section.

 1 See www.nber.org/cycles/cyclesmain.html.
101

Economic Assumptions and Methods

1. Productivity Assumptions

Total U.S. economy productivity is defined as the ratio of real GDP to hours

worked by all workers.1 The rate of change in total-economy productivity is

a major determinant in the growth of average earnings. Over the last five

complete economic cycles (1966-73, 1973-79, 1979-89, 1989-2000, and

2000-07, measured peak to peak), the annual increases in total productivity

averaged 2.27, 1.10, 1.38, 1.78 and 2.15 percent, respectively. For the 41-

year period from 1966 to 2007, covering those last five complete economic

cycles, the annual increase in total-economy productivity averaged 1.73 percent.

The assumed ultimate annual increases in total-economy productivity are

1.98, 1.68, and 1.38 percent for the low-cost, intermediate, and high-cost

assumptions, respectively.2 These rates of increase are unchanged from the

2015 report.

The average annual rate of change in total economy productivity from 2007

(the end of the last complete economic cycle) to 2015 is estimated to be

0.98 percent. For the intermediate assumptions, the annual change in productivity is assumed to be 1.68 percent for 2016, then increase to 2.03 percent

for 2017, gradually decline to 1.67 percent for 2022 and 2023, and then rise

to its ultimate value of 1.68 percent for 2024 and later. For the low-cost

assumptions, the assumed annual change in productivity is 1.95 percent for

2016, then increases to 2.26 percent for 2017, averages 2.06 percent for 2018

through 2021, and reaches its ultimate value of 1.98 percent for 2022. For the

high-cost assumptions, the assumed annual change in productivity is

0.91 percent for 2016, 1.36 percent for 2017, then averages 1.70 percent for

2018 through 2021, 1.46 percent for 2022 through 2025, and reaches its ultimate value of 1.38 percent after 2025.

2. Price Inflation Assumptions

Future changes in the Consumer Price Index for Urban Wage Earners and

Clerical Workers (CPI) will directly affect the OASDI program through the

automatic cost-of-living benefit increases. Future changes in the GDP price

 1 Historical levels of real GDP are from the Bureau of Economic Analysis’ National Income and Product

Accounts. Historical total hours worked are provided by the Bureau of Labor Statistics and cover all U.S.

Armed Forces and civilian employment.

 2 These assumptions are consistent with ultimate annual increases in private non-farm business productivity

of 2.42, 2.06, and 1.69 percent. Compared to total-economy productivity, private non-farm business productivity is a more widely known concept that excludes the farm, government, non-profit institution, and private

household sectors.
Assumptions and Methods

102

index (GDP deflator) affect the nominal levels of GDP, wages, self-employment income, average earnings, and taxable payroll.

The annual increases in the CPI averaged 4.61, 8.54, 5.31, 2.96, and

2.65 percent over the economic cycles 1966-73, 1973-79, 1979-89, 1989-

2000, and 2000-07, respectively. The annual increases in the GDP deflator

averaged 4.60, 7.52, 4.68, 2.20, and 2.50 percent for the same respective economic cycles. For the 41 years from 1966 to 2007, covering the last five

complete economic cycles, the annual increases in the CPI and GDP deflator

averaged 4.56 and 4.03 percent, respectively. The estimated average annual

change from 2007 (the end of the last complete economic cycle) to 2015 is

1.68 percent for the CPI and 1.52 percent for the GDP deflator.

The assumed ultimate annual increases in the CPI are 3.2, 2.6, and

2.0 percent for the low-cost, intermediate, and high-cost assumptions,

respectively. When compared to the 2015 report, the low-cost assumption is

0.2 percentage point lower and the intermediate assumption is 0.1 percentage

point lower. The high-cost assumption is unchanged from the 2015 report.

For a given rate of growth in average real earnings, a higher price inflation

rate results in faster nominal earnings and revenue growth immediately,

while the resulting added growth in benefit levels occurs with a delay, causing an overall improvement in the actuarial balance. Similarly, a lower price

inflation rate causes an overall decline in the actuarial balance. 

The Federal Reserve Board’s monetary policy changed in the 1980s toward

more vigilance in preventing high inflation. Consistent with the Board’s continued emphasis on containing inflation, as indicated by their current target

for the GDP deflator,1 the Trustees lowered the assumed ultimate annual rate

of increase in the CPI for the intermediate case from 4.0 percent for the 1996

report to 2.8 percent for the 2004 through 2013 reports, to 2.7 percent for the

2014 and 2015 reports, and to 2.6 percent for this report.

For the intermediate assumptions, the assumed annual change in the CPI is

0.86 percent for 2016, 2.76 percent for 2017, 2.65 percent for 2018, and

reaches the ultimate growth rate of 2.60 percent for 2019 and later. For the

low-cost assumptions, the assumed annual change in the CPI is 1.23 percent

for 2016, increases to 3.63 percent for 2017, declines to 3.28 percent in 2018,

and drops to its ultimate annual growth rate of 3.20 percent for 2019 and

later. For the high-cost assumptions, the assumed annual rate of change in the

CPI is 0.02 percent for 2016, increases to 2.44 percent for 2017, declines to

 1 The Federal Open Market Committee (FOMC) targets a rate of 2 percent for the price index for Personal

Consumption Expenditures, which is similar to the GDP deflator. See 

www.federalreserve.gov/newsevents/press/monetary/20150128a.htm.
103

Economic Assumptions and Methods

2.13 percent in 2018, and drops to the ultimate annual change of 2.00 percent

for 2019 and later. The projections for the first two years are influenced by

changes in the price of oil.

The annual increase in the GDP deflator differs from the annual increase in

the CPI because the two indices are constructed using different computational methods and coverage. The difference between the rate of change in

the CPI and the rate of change in the GDP deflator is called the price differential in this report. For the 41-year period including 1967 through 2007,

covering the last five complete economic cycles, the average annual price

differential was 0.54 percentage point. From 2007 (the end of the last complete economic cycle) to 2015, the average annual price differential is estimated to be 0.18 percentage point.

The assumed ultimate price differential is 0.3, 0.4, and 0.5 percentage point

for the low-cost, intermediate, and high-cost alternatives, respectively. Varying the ultimate projected price differential across alternatives recognizes the

historical variation in this measure. Accordingly, the assumed ultimate

annual increase in the GDP deflator is 2.9 (3.2 less 0.3), 2.2 (2.6 less 0.4),

and 1.5 (2.0 less 0.5) percent for the low-cost, intermediate, and high-cost

alternatives, respectively. The ultimate price differentials for the three alternatives are unchanged from the 2015 report.

The price differential was 0.26 percentage point for 2012, -0.26 percentage

point for 2013, -0.14 percentage point for 2014, and is estimated to be -1.44

for 2015 and assumed to be -0.26 for 2016. The negative price differential

since 2013 primarily reflects a general decline in oil prices in recent years.

Changes in oil prices affect the CPI much more than the GDP deflator

because oil represents a much larger share of U.S. consumption than of U.S.

production. For 2017 and later, oil prices are assumed to grow at a relatively

stable rate. For the intermediate assumptions, the assumed price differential

is 0.51 percentage point for 2017 and 0.40 percentage point for 2018 and

later.

3. Average Earnings Assumptions

The average level of nominal earnings in OASDI covered employment for

each year has a direct effect on the size of the taxable payroll and on the

future level of average benefits. In addition, under the automatic adjustment

provisions in the law, growth in the average wage in the U.S. economy

directly affects certain parameters used in the OASDI benefit formulas as

well as the contribution and benefit base, the exempt amounts under the

retirement earnings test, the amount of earnings required for a quarter of cov-
Assumptions and Methods

104

erage, and in certain circumstances, the automatic cost-of-living benefit

increases.

Projected growth rates in average covered earnings and average wages are

derived from projections of the most inclusive measure, average U.S. earnings. Average U.S. earnings is defined as the ratio of the sum of total U.S.

wage and salary disbursements and net proprietors’ income to the sum of

total U.S. civilian employment and armed forces. The growth rate in average

U.S. earnings for any period is equal to the combined growth rates for total

U.S. economy productivity, average hours worked, the ratio of earnings to

total compensation (which includes fringe benefits), the ratio of total compensation to GDP, and the GDP deflator.

The average annual change in average hours worked was -0.27 percent over

the last five complete economic cycles covering the period from 1966 to

2007. The annual change in average hours worked averaged -0.71, -0.56,

0.00, 0.16, and -0.63 percent over the economic cycles 1966-73, 1973-79,

1979-89, 1989-2000, and 2000-07, respectively. From 2007 (the end of the

last complete economic cycle) to 2015, the average annual change in average

hours worked is estimated to be 0.00 percent.

The ultimate annual rates of change for average hours worked are assumed to

be 0.05, -0.05, and -0.15 percent for the low-cost, intermediate, and highcost assumptions, respectively. These ultimate annual rates of change for

average hours worked are unchanged from the 2015 report.

The average annual change in the ratio of earnings to total compensation was

-0.20 percent from 1966 to 2007. Most of this decrease was due to the relative increase in the cost of employer-sponsored group health insurance for

wage workers. Assuming that the level of total employee compensation is

not affected by the amount of employer-sponsored group health insurance,

any increase or decrease in employer-sponsored group health insurance leads

to a commensurate decrease or increase in other components of employee

compensation, including wages. Projections of future ratios of earnings to

total compensation follow this principle. The Trustees assume that the total

amount of future employer-sponsored group health insurance premiums will

increase more slowly than in the past due to provisions of the Affordable

Care Act of 2010, as described in the 2010 report. Data from the Bureau of

Economic Analysis (BEA) indicate that the other significant component of

non-wage employee compensation is employer contributions to retirement

plans. The other component is assumed to grow faster than employee compensation in the future as life expectancy and potential time in retirement

increase.
105

Economic Assumptions and Methods

The average annual rate of change in the ratio of wages to employee compensation from 2030 to 2090 is assumed to be about 0.03, -0.07, and

-0.17 percent for the low-cost, intermediate, and high-cost assumptions,

respectively. These assumed rates are 0.02 percentage point higher (less negative) than those assumed in the 2015 report. The change is due to updated

estimates from the Centers for Medicare and Medicaid Services that produce

slower growth in the total amount of employer-sponsored health insurance

premiums. Under the intermediate assumptions, the ratio of wages to

employee compensation is assumed to decline from 0.810 for 2015 to 0.775

for 2090. The assumed ultimate annual rate of this decline, now 0.07 percent,

compares with 0.09 percent assumed for the 2015 report, 0.13 percent

assumed for the 2014 report, and 0.20 percent assumed for the 2009 report,

prior to enactment of the Affordable Care Act of 2010. The ratio of earnings

to compensation includes self-employment income both in the numerator and

in the denominator. As a result, the rate of decline in earnings to compensation (which, under the intermediate assumptions, averages 0.06 percent from

2030 to 2090) is less than the rate of decline in wages to employee compensation.

The ratio of total compensation (i.e., employee compensation and net proprietors’ income) to GDP varies over the economic cycle and with changes in

the relative sizes of different sectors of the economy. Over the last five economic cycles from 1966 to 2007, this ratio has averaged 0.627. The ratio

declined from 0.648 for 2001 to 0.601 in 2010, and is 0.611 in 2014. This

ratio is assumed to rise as the economy recovers, reaching a level of 0.633

for 2025. For years after 2025, relative sizes of different sectors of the economy are assumed to remain constant, and therefore the ratio of total compensation to GDP remains at the 2025 level for each alternative.

The projected average annual growth rate in average nominal U.S. earnings

from 2030 to 2090 is about 3.81 percent for the intermediate alternative. This

growth rate reflects the average annual growth rate of approximately

-0.06 percent for the ratio of earnings to total compensation, and also reflects

the assumed ultimate annual growth rates of 1.68, -0.05, and 2.20 percent for

productivity, average hours worked, and the GDP deflator, respectively. Similarly, the projected average annual growth rate in average nominal U.S.

earnings is 5.02 percent for the low-cost assumptions and 2.60 percent for

the high-cost assumptions.

Over long periods, the average annual growth rate in the average wage in

OASDI covered employment (henceforth the “average covered wage”) is

expected to be very close to the average annual growth rate in average U.S.

earnings. The assumed average annual growth rates in the average covered
Assumptions and Methods

106

wage from 2030 to 2090 are 5.02, 3.80, and 2.50 percent for the low-cost,

intermediate, and high-cost assumptions, respectively. The estimated annual

rate of change in the average covered wage is 2.74 percent for 2015. For the

intermediate assumptions, as the economy recovers, the annual rate of

change in the average covered wage is projected to average 4.16 percent

from 2015 to 2025. Thereafter, the assumed average annual rate of change in

the average covered wage is 3.80 percent.

4. Assumed Real-Wage Differential

For these reports, the real increase in the average covered wage has traditionally been expressed in the form of a real-wage differential—the annual percentage change in the average covered wage minus the annual percentage

change in the CPI. For the 41-year period from 1966 to 2007, covering the

last five complete economic cycles, the real-wage differential averaged

0.89 percentage point, the result of averages of 1.48, -0.01, 0.47, 1.55, and

0.61 percentage points over the economic cycles 1966-73, 1973-79, 1979-89,

1989-2000, and 2000-07, respectively.

For the years 2030-90, the assumed annual real-wage differentials for

OASDI covered employment average 1.82, 1.20, and 0.58 percentage points

for the low-cost, intermediate, and high-cost assumptions, respectively. The

real-wage differential is higher than the assumed values from last year’s

report by about 0.03 percentage point for each alternative.

The estimated real-wage differential averaged 0.45 percentage point for 2008

through 2015 (the years since the last complete economic cycle ending in a

peak). For the intermediate assumptions, the real-wage differential increased

from 1.94 percentage points in 2014 to 3.17 percentage points in 2015, an

improvement that reflects both the economic recovery and low inflation. The

wage differential is projected to rise from 2.08 in 2016 to 2.17 in 2018, and

then gradually decline to an average of 1.20 percentage points for 2030

through 2090. For the low-cost assumptions, the real-wage differential is

2.41 percentage points for 2016, increases to 2.83 percentage points in 2018,

declines to 1.95 percentage points in 2021, and reaches its long-run average

of 1.82 percentage points for 2030 through 2090. For the high-cost assumptions, the real-wage differential is 1.22 percentage points for 2016, drops to

0.10 percentage point in 2017, and rises to 1.73 percentage points in 2018

before gradually declining to its long-run average of 0.58 percentage point

for 2030 through 2090.
107

Economic Assumptions and Methods

Table V.B1.—Principal Economic Assumptions

Calendar year

Annual percentage changea in—

Realwage

differentialb

Productivity

(Total U.S.

economy)

Earnings as

a percent of

compensation

Average

hours

worked

GDP

price

index

Average

annual wage

in covered

employment

Consumer

Price

Index

Historical data:

5-year periods:

1960 to 1965 . . . 3.27 -0.18 0.16 1.36 3.22 1.24 1.98

1965 to 1970 . . . 2.06 -.31 -.68 4.03 5.84 4.23 1.61

1970 to 1975 . . . 2.07 -.50 -.87 6.60 6.58 6.76 -.22

1975 to 1980 . . . .95 -.32 -.17 7.19 8.89 8.91 -.04

1980 to 1985 . . . 1.74 -.33 .02 5.21 6.53 5.22 1.30

1985 to 1990 . . . 1.37 -.19 -.07 3.11 4.77 3.83 .94

1990 to 1995 . . . 1.25 -.11 .41 2.44 3.54 3.03 .51

1995 to 2000 . . . 2.31 .28 .15 1.67 5.32 2.43 2.89

2000 to 2005 . . . 2.63 -.41 -.80 2.35 2.70 2.49 .22

2005 to 2010 . . . 1.61 -.08 -.46 1.93 2.50 2.30 .22

Economic cycles:c

1966 to 1973 . . . 2.27 -.29 -.71 4.60 6.09 4.61 1.48

1973 to 1979 . . . 1.10 -.43 -.56 7.52 8.53 8.54 -.01

1979 to 1989 . . . 1.38 -.28 d 4.68 5.82 5.31 .47

1989 to 2000 . . . 1.78 .05 .16 2.20 4.50 2.96 1.55

2000 to 2007 . . . 2.15 -.23 -.63 2.50 3.25 2.65 .61

2007 to 2015 . . . .98 .05 d 1.52 2.14 1.68 .45

Single years:

2005 . . . . . . . . . . 1.83 -.22 -.23 3.22 3.71 3.52 .19

2006 . . . . . . . . . . .84 .49 -.03 3.07 4.74 3.19 1.54

2007 . . . . . . . . . . 1.04 -.05 -.38 2.67 4.49 2.88 1.62

2008 . . . . . . . . . . .75 -.06 -.60 1.93 2.41 4.09 -1.68

2009 . . . . . . . . . . 2.87 -.66 -1.85 .79 -1.59 -.67 -.91

2010 . . . . . . . . . . 2.55 -.10 .56 1.23 2.58 2.07 .51

2011 . . . . . . . . . . .07 .28 .97 2.06 3.12 3.56 -.43

2012 . . . . . . . . . . .47 .40 -.05 1.84 3.35 2.10 1.25

2013 . . . . . . . . . . .21 .01 .29 1.63 1.13 1.37 -.24

2014 . . . . . . . . . . .49 .39 .31 1.64 3.44 1.50 1.94

2015e . . . . . . . . . .44 .11 .37 1.01 2.74 -.43 3.17

Intermediate: 

2016 . . . . . . . . . . 1.68 .14 -.05 1.12 2.94 .86 2.08

2017 . . . . . . . . . . 2.03 .18 -.07 2.25 4.86 2.76 2.10

2018 . . . . . . . . . . 1.91 .10 -.07 2.25 4.82 2.65 2.17

2019 . . . . . . . . . . 1.84 -.06 -.07 2.20 4.46 2.60 1.86

2020 . . . . . . . . . . 1.77 -.10 -.06 2.20 4.28 2.60 1.68

2021 . . . . . . . . . . 1.77 -.08 -.06 2.20 4.23 2.60 1.63

2022 . . . . . . . . . . 1.67 -.07 -.06 2.20 4.07 2.60 1.47

2023 . . . . . . . . . . 1.67 -.06 -.05 2.20 3.98 2.60 1.38

2024 . . . . . . . . . . 1.68 -.03 -.05 2.20 4.04 2.60 1.44

2025 . . . . . . . . . . 1.68 -.03 -.05 2.20 3.93 2.60 1.33

2025 to 2030 . . . 1.68 -.03 -.05 2.20 3.89 2.60 1.29

2030 to 2090 . . . 1.68 -.06 -.05 2.20 3.80 2.60 1.20
Assumptions and Methods

108

5. Labor Force and Unemployment Projections

The model used by the Office of the Chief Actuary at the Social Security

Administration for this report projects the civilian labor force by age, sex,

marital status, and presence of children. Projections of the labor force participation rates reflect changes in disability prevalence, educational attainment,

the average level of Social Security retirement benefits, the state of the economy, and the change in life expectancy. The projections also include a

“cohort effect,” which reflects an upward trend in female participation rates

across cohorts born through 1948.

Low-cost: 

2016 . . . . . . . . . . 1.95 0.14 0.01 1.25 3.64 1.23 2.41

2017 . . . . . . . . . . 2.26 .20 .02 2.95 6.22 3.63 2.59

2018 . . . . . . . . . . 2.23 .12 .03 2.98 6.11 3.28 2.83

2019 . . . . . . . . . . 2.06 -.03 .04 2.90 5.54 3.20 2.34

2020 . . . . . . . . . . 2.00 -.05 .04 2.90 5.29 3.20 2.09

2021 . . . . . . . . . . 1.96 -.03 .05 2.90 5.15 3.20 1.95

2022 . . . . . . . . . . 1.98 -.01 .05 2.90 5.16 3.20 1.96

2023 . . . . . . . . . . 1.98 d .05 2.90 5.21 3.20 2.01

2024 . . . . . . . . . . 1.98 .05 .05 2.90 5.28 3.20 2.08

2025 . . . . . . . . . . 1.98 .06 .05 2.90 5.18 3.20 1.98

2025 to 2030 . . . 1.98 .05 .05 2.90 5.14 3.20 1.94

2030 to 2090 . . . 1.98 .03 .05 2.90 5.02 3.20 1.82

High-cost: 

2016 . . . . . . . . . . .91 .14 -.11 .71 1.24 .02 1.22

2017 . . . . . . . . . . 1.36 .19 -.12 1.91 2.54 2.44 .10

2018 . . . . . . . . . . 1.89 .08 -.17 1.63 3.87 2.13 1.73

2019 . . . . . . . . . . 1.73 -.10 -.18 1.50 3.66 2.00 1.66

2020 . . . . . . . . . . 1.59 -.14 -.18 1.50 3.40 2.00 1.40

2021 . . . . . . . . . . 1.58 -.13 -.17 1.50 3.36 2.00 1.36

2022 . . . . . . . . . . 1.50 -.14 -.17 1.50 3.24 2.00 1.24

2023 . . . . . . . . . . 1.47 -.14 -.16 1.50 3.13 2.00 1.13

2024 . . . . . . . . . . 1.45 -.11 -.16 1.50 3.08 2.00 1.08

2025 . . . . . . . . . . 1.40 -.12 -.16 1.50 2.87 2.00 .87

2025 to 2030 . . . 1.38 -.12 -.15 1.50 2.66 2.00 .66

2030 to 2090 . . . 1.38 -.14 -.15 1.50 2.58 2.00 .58

a For rows with a single year listed, the value is the annual percentage change from the prior year. For rows

with a range of years listed, the value is the compound average annual percentage change.

b For rows with a single year listed, the value is the annual percentage change in the average annual wage in

covered employment less the annual percentage change in the Consumer Price Index. For rows with a range

of years listed, the value is the average of annual values of the differential. Values are rounded after all computations.

c Economic cycles are shown from peak to peak, except for the last cycle, which is not yet complete.

d Greater than -0.005 and less than 0.005 percent.

e Historical data are not available for the full year. Estimated values vary slightly by alternative and are

shown for the intermediate assumptions.

Table V.B1.—Principal Economic Assumptions (Cont.)

Calendar year

Annual percentage changea in—

Realwage

differentialb

Productivity

(Total U.S.

economy)

Earnings as

a percent of

compensation

Average

hours

worked

GDP

price

index

Average

annual wage

in covered

employment

Consumer

Price

Index
109

Economic Assumptions and Methods

The annual rate of growth in the size of the labor force decreased from an

average of about 2.4 percent during the 1966-73 economic cycle and

2.7 percent during the 1973-79 cycle to 1.7 percent during the 1979-89 cycle,

1.3 percent during the 1989-2000 cycle, and 1.0 percent during the

2000-07 cycle. Further slowing of labor force growth will follow from a substantial slowing of growth in the working age population in the future—a

consequence of the baby-boom generation reaching retirement and succeeding lower-birth-rate cohorts reaching working age. Under the intermediate

assumptions, the labor force is projected to increase by an average of

1.0 percent per year from 2015 to 2025 and 0.5 percent per year over the

remainder of the 75-year projection period.

The projected labor force participation rates are derived from a model

reflecting the historically based structural relationship that uses demographic

and economic assumptions specific to each alternative. More optimistic economic assumptions in the low-cost alternative are consistent with higher

labor force participation rates, but demographic assumptions in the low-cost

alternative (such as slower improvement in longevity) are consistent with

lower labor force participation rates. These relationships with various basic

assumptions move the labor force participation rates in opposite directions.

Therefore, the projected labor force participation rates do not vary substantially across alternatives.

Historically, labor force participation rates reflect trends in demographics

and pensions. Between the mid-1960s and the mid-1980s, labor force participation rates at ages 50 and over declined for males but were fairly stable for

females. During this period, the baby-boom generation reached working age

and more women entered the labor force. This increasing supply of labor

allowed employers to offer attractive early retirement options. Between the

mid-1980s and the mid-1990s, participation rates at ages 55 and older

roughly stabilized for males and increased for females. Since the mid-1990s,

however, participation rates for both sexes at ages 50 and over have generally risen.

Many economic and demographic factors, including longevity, health, disability prevalence, the business cycle, incentives for retirement in Social

Security and private pensions, education, and marriage patterns, will influence future labor force participation rates. The Office of the Chief Actuary

models some of these factors directly. To model the effects of other factors

related to increases in life expectancy, projected participation rates are

adjusted upward for mid-career and older ages to reflect projected increases
Assumptions and Methods

110

in life expectancy. For the intermediate projections, this adjustment increases

the total labor force by 2.9 percent for 2090.

For men age 16 and over, the projected age-adjusted labor force participation

rate1 for 2090 is 72.9, 73.0, and 72.9 percent for the low-cost, intermediate,

and high-cost assumptions, respectively. The low-cost assumptions result in

a larger working-age population and a larger labor force when compared to

the intermediate assumptions, but a lower labor force participation rate for

men. This occurs because the low-cost assumptions include shorter life

expectancies and relatively higher numbers of never-married individuals in

the population. Shorter life expectancies tend to reduce work at older ages,

while labor force participation rates tend to be lower for never-married men

and higher for never-married women compared to their married counterparts.2 For women age 16 and over, the projected age-adjusted labor force

participation rates for 2090 are 61.6, 61.0, and 60.1 percent for the low-cost,

intermediate, and high-cost assumptions, respectively. The age-adjusted rates

for 2090 are higher under all three alternatives than the age-adjusted rates for

2014 of 70.1 percent for men and 57.7 percent for women (based on actual

age-specific rates published by the Bureau of Labor Statistics), primarily due

to the Trustees’ projected increases in life expectancy. In the first ten years,

the assumed labor force participation rates also increase as the economic

recovery draws more people into the labor force. Increasing disability prevalence rates offset these increases somewhat in the intermediate and high-cost

assumptions, but a decrease in disability prevalence further contributes to

increases in labor force participation in the low-cost assumptions.

The unemployment rates presented in table V.B2 are in the most commonly

cited form, the civilian rate. For years through 2025, the table presents total

civilian rates without adjustment for the changing age-sex distribution of the

population. For years after 2025, the table presents unemployment rates as

age-sex-adjusted rates, using the age-sex distribution of the 2011 civilian

labor force. Age-sex-adjusted rates allow for more meaningful comparisons

across longer time periods. The age-sex adjusted unemployment rate is about

0.1 percentage point lower than the unadjusted rate for 2026.

The total civilian unemployment rate reflects the projected levels of unemployment for various age-sex groups of the population. Each group’s unemployment rate is projected in relation to changes in the economic cycle, as

 1 The Office of the Chief Actuary adjusts the labor force participation rates to the 2011 age distribution of

the civilian noninstitutional U.S. population.

 2 The high-cost labor force participation rate is lower than the intermediate because life expectancy has a

non-linear effect on labor force participation rates in the Office of the Chief Actuary’s model.
111

Economic Assumptions and Methods

measured by the ratio of actual to potential GDP.1 For each alternative, the

total civilian unemployment rate moves toward the ultimate assumed rate as

the economy moves toward the long-range sustainable growth path.

The ultimate assumed age-sex-adjusted unemployment rates are 4.5, 5.5, and

6.5 percent for the low-cost, intermediate, and high-cost assumptions,

respectively. These values are unchanged from the 2015 report. The decline

in the overall rate from 5.3 for 2015 to 5.1 for 2016 under intermediate

assumptions reflects a rapid increase in employment with a relatively small

change in labor force participation. Improvements in labor market conditions

will eventually draw more nonparticipants back into the labor force and

unemployment will reach the ultimate rate in 2020 under the intermediate

assumptions. Under low-cost assumptions the ultimate unemployment rate is

reached in 2018. Under the high-cost assumptions, unemployment will reach

the ultimate rate in 2022.2

6. Gross Domestic Product Projections

The value of real GDP equals the product of three components: (1) average

weekly total employment,3 (2) productivity, and (3) average hours worked

per week. Consequently, the growth rate in real GDP is approximately equal

to the sum of the growth rates for total employment, productivity, and average hours worked. For the period from 1966 to 2007, which covers the last

five complete economic cycles, the average growth rate in real GDP was

3.1 percent. This average growth rate approximately equals the sum of the

average growth rates of 1.6, 1.7, and -0.3 percent for total employment, productivity, and average hours worked, respectively. As a result of the

2007-2009 recession, the real GDP in 2014 was only 7.3 percent above the

2007 level. The estimated real GDP growth from 2014 to 2015 is 2.5 percent.

For the intermediate assumptions, the average annual growth in real GDP is

2.7 percent from 2015 to 2025, the approximate sum of component growth

rates of 0.9 percent for total employment, 1.8 percent for productivity, and

-0.06 percent for average hours worked. The projected average annual

growth in real GDP of 2.7 percent for this period is 0.4 percentage point

higher than the underlying sustainable trend rate of 2.3 percent. This

 1 Potential GDP is the level of GDP assuming the economy is operating at the underlying sustainable trend

rate of growth.

 2 The assumed ultimate unemployment rate is an age-sex-adjusted rate. The quarterly age-sex-adjusted

unemployment rate is used to determine the calendar year when the ultimate assumption is reached within

the short-range period.

 3 Total employment is the sum of the U.S. Armed Forces and total civilian employment, which depends on

the total civilian labor force and unemployment rate.
Assumptions and Methods

112

0.4-percentage-point above-trend component reflects a relatively rapid

increase in employment as the economy recovers. After 2025, the assumptions do not explicitly reflect economic cycles. The projected annual growth

rate in real GDP combines the projected growth rates for total employment,

total U.S. economy productivity, and average hours worked. After 2025, the

annual growth in real GDP averages 2.1 percent, based on the projected average annual growth rate of 0.5 percent for total employment and the assumed

ultimate growth rates of 1.7 percent for productivity and -0.05 percent for

average hours worked. The assumed growth rate of real GDP is slower than

the past average growth rate mainly because the working-age population is

expected to grow slower than in the past.

For the low-cost assumptions, the annual growth in real GDP averages

3.3 percent over the decade ending in 2025. The relatively faster growth is

due mostly to higher assumed rates of growth for employment and worker

productivity. For the high-cost assumptions, the annual growth in real GDP

averages 1.9 percent for the decade ending in 2025.

7. Interest Rates

Table V.B2 presents average annual nominal and real interest rates for newly

issued trust fund securities. The nominal rate is the average of the nominal

interest rates for special U.S. Government obligations issuable to the trust

funds in each of the 12 months of the year. Interest for these securities is generally compounded semiannually. The real interest rate is defined as the

annual yield rate for investments in these securities divided by the annual

rate of growth in the CPI for the first year after issuance. The real rate shown

for each year reflects the actual realized (historical) or expected (future) real

yield on securities issuable in the prior year.

To develop a reasonable range of assumed ultimate future real interest rates

for the three alternatives, the Office of the Chief Actuary examined historical

experience for the last five complete economic cycles. For the 41-year period

from 1966 to 2007, the real interest rate averaged 2.8 percent per year. The

real interest rates averaged 1.3, -1.0, 5.2, 4.0, and 2.2 percent per year over

the economic cycles 1966-73, 1973-79, 1979-89, 1989-2000, and 2000-07,

respectively. The assumed ultimate real interest rates are 3.2 percent,

2.7 percent, and 2.2 percent for the low-cost, intermediate, and high-cost

assumptions, respectively. These rates are 0.2 percentage point lower than

the rates used in the 2015 report. The lower assumed real interest rates reflect

recent lower realized rates and an expectation that low real interest rates will

persist.
113

Economic Assumptions and Methods

The actual average annual nominal interest rate was approximately

2.3 percent for 2014, which means that securities newly issued in 2014

would yield 2.3 percent if held one year. Estimated average prices fell from

2014 to 2015 by approximately 0.4 percent. The annual real interest rate for

2015 is 2.7 percent, the approximate difference between the nominal interest

rate and the rate of price increase. For the 10-year short-range projection

period, projected nominal interest rates depend on changes in the economic

cycle and in the CPI. When combined with the ultimate CPI assumptions of

3.2, 2.6, and 2.0 percent, the assumed ultimate real interest rates yield ultimate nominal interest rates of 6.4 percent for the low-cost assumptions,

5.3 percent for the intermediate assumptions, and 4.2 percent for the highcost assumptions. These nominal rates for newly issued trust fund securities

reach their ultimate levels by the end of the short-range period.

Table V.B2.—Additional Economic Factors

Calendar year 

Average annual

unemployment

ratea

Annual percentage changeb in— Average annual interest rate

Labor

forcec Total

employmentd RealGDPe Nominalf Realg

Historical data:

5-year periods:

1960 to 1965. . . . . 5.5 1.3 1.6 5.0 4.0 2.5

1965 to 1970. . . . . 3.9 2.2 2.1 3.5 5.9 1.0

1970 to 1975. . . . . 6.1 2.5 1.5 2.7 6.7 h

1975 to 1980. . . . . 6.8 2.7 2.9 3.7 8.5 -.9

1980 to 1985. . . . . 8.3 1.5 1.5 3.3 12.1 6.9

1985 to 1990. . . . . 5.9 1.7 2.0 3.4 8.5 5.1

1990 to 1995. . . . . 6.6 1.0 .9 2.6 7.0 4.3

1995 to 2000. . . . . 4.6 1.5 1.8 4.3 6.2 3.9

2000 to 2005. . . . . 5.4 .9 .7 2.5 4.6 2.4

2005 to 2010. . . . . 6.8 .6 -.4 .8 3.8 1.8

Economic cycles:i

1966 to 1973. . . . . 4.6 2.4 2.0 3.6 6.1 1.3

1973 to 1979. . . . . 6.8 2.7 2.4 3.0 7.7 -1.0

1979 to 1989. . . . . 7.3 1.7 1.7 3.1 10.5 5.2

1989 to 2000. . . . . 5.6 1.3 1.3 3.3 6.8 4.0

2000 to 2007. . . . . 5.2 1.0 .9 2.4 4.6 2.2

2007 to 2015. . . . . 7.6 .3 .2 1.2 2.4 1.1

Single years:

2005 . . . . . . . . . . . 5.1 1.3 1.7 3.3 4.3 .8

2006 . . . . . . . . . . . 4.6 1.4 1.8 2.7 4.8 1.1

2007 . . . . . . . . . . . 4.6 1.1 1.1 1.8 4.7 1.9

2008 . . . . . . . . . . . 5.8 .8 -.4 -.3 3.6 .6

2009 . . . . . . . . . . . 9.3 -.1 -3.7 -2.8 2.9 4.4

2010 . . . . . . . . . . . 9.6 -.2 -.6 2.5 2.8 .9

2011 . . . . . . . . . . . 8.9 -.2 .6 1.6 2.4 -.7

2012 . . . . . . . . . . . 8.1 .9 1.8 2.2 1.5 .3

2013 . . . . . . . . . . . 7.4 .3 1.0 1.5 1.9 .1

2014 . . . . . . . . . . . 6.2 .3 1.6 2.4 2.3 .4

2015j. . . . . . . . . . . 5.3 .8 1.6 2.5 2.0 2.7
Assumptions and Methods

114

Intermediate:

2016 . . . . . . . . . . . 5.1 0.9 1.1 2.8 2.4 1.2

2017 . . . . . . . . . . . 5.2 1.3 1.2 3.1 3.6 -.3

2018 . . . . . . . . . . . 5.3 1.4 1.2 3.1 4.2 1.0

2019 . . . . . . . . . . . 5.4 1.3 1.2 3.0 4.5 1.6

2020 . . . . . . . . . . . 5.5 1.2 1.1 2.8 4.7 1.9

2021 . . . . . . . . . . . 5.5 1.0 1.0 2.7 4.8 2.1

2022 . . . . . . . . . . . 5.5 .8 .8 2.4 5.0 2.2

2023 . . . . . . . . . . . 5.5 .6 .6 2.2 5.2 2.4

2024 . . . . . . . . . . . 5.6 .6 .6 2.2 5.3 2.6

2025 . . . . . . . . . . . 5.6 .6 .5 2.2 5.3 2.7

2030 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2035 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2040 . . . . . . . . . . . 5.5 .6 .6 2.2 5.3 2.7

2045 . . . . . . . . . . . 5.5 .6 .6 2.2 5.3 2.7

2050 . . . . . . . . . . . 5.5 .5 .5 2.2 5.3 2.7

2055 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2060 . . . . . . . . . . . 5.5 .4 .4 2.1 5.3 2.7

2065 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2070 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2075 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2080 . . . . . . . . . . . 5.5 .5 .5 2.1 5.3 2.7

2085 . . . . . . . . . . . 5.5 .4 .4 2.1 5.3 2.7

2090 . . . . . . . . . . . 5.5 .4 .4 2.0 5.3 2.7

Low-cost:

2016 . . . . . . . . . . . 4.8 1.1 1.6 3.6 3.2 .8

2017 . . . . . . . . . . . 4.7 1.8 1.9 4.2 4.9 -.4

2018 . . . . . . . . . . . 4.6 1.6 1.7 4.0 5.2 1.7

2019 . . . . . . . . . . . 4.6 1.5 1.5 3.7 5.4 2.0

2020 . . . . . . . . . . . 4.6 1.3 1.3 3.3 5.5 2.2

2021 . . . . . . . . . . . 4.6 1.0 1.0 3.0 5.7 2.3

2022 . . . . . . . . . . . 4.6 .8 .8 2.8 6.0 2.5

2023 . . . . . . . . . . . 4.6 .7 .7 2.8 6.3 2.8

2024 . . . . . . . . . . . 4.6 .7 .7 2.8 6.4 3.0

2025 . . . . . . . . . . . 4.6 .7 .7 2.7 6.4 3.2

2030 . . . . . . . . . . . 4.5 .6 .6 2.7 6.4 3.2

2035 . . . . . . . . . . . 4.5 .6 .6 2.7 6.4 3.2

2040 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2045 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2050 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2055 . . . . . . . . . . . 4.5 .7 .7 2.7 6.4 3.2

2060 . . . . . . . . . . . 4.5 .7 .7 2.7 6.4 3.2

2065 . . . . . . . . . . . 4.5 .7 .7 2.8 6.4 3.2

2070 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2075 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2080 . . . . . . . . . . . 4.5 .8 .8 2.8 6.4 3.2

2085 . . . . . . . . . . . 4.5 .7 .7 2.8 6.4 3.2

2090 . . . . . . . . . . . 4.5 .7 .7 2.7 6.4 3.2

Table V.B2.—Additional Economic Factors (Cont.)

Calendar year 

Average annual

unemployment

ratea

Annual percentage changeb in— Average annual interest rate

Labor

forcec Totalemploymentd RealGDPe Nominalf Realg
115

Economic Assumptions and Methods

High-cost:

2016 . . . . . . . . . . . 5.6 0.8 0.5 1.3 1.7 2.0

2017 . . . . . . . . . . . 7.3 1.1 -.7 .6 2.3 -.7

2018 . . . . . . . . . . . 7.2 .4 .5 2.2 3.3 .2

2019 . . . . . . . . . . . 7.0 .6 .9 2.5 3.7 1.3

2020 . . . . . . . . . . . 6.8 .8 .9 2.4 3.8 1.7

2021 . . . . . . . . . . . 6.7 .7 .8 2.3 3.9 1.8

2022 . . . . . . . . . . . 6.6 .7 .8 2.2 4.1 1.9

2023 . . . . . . . . . . . 6.5 .7 .7 2.1 4.3 2.1

2024 . . . . . . . . . . . 6.5 .7 .7 2.0 4.3 2.2

2025 . . . . . . . . . . . 6.5 .6 .6 1.9 4.2 2.3

2030 . . . . . . . . . . . 6.5 .4 .4 1.6 4.2 2.2

2035 . . . . . . . . . . . 6.5 .4 .4 1.6 4.2 2.2

2040 . . . . . . . . . . . 6.5 .4 .4 1.6 4.2 2.2

2045 . . . . . . . . . . . 6.5 .3 .3 1.6 4.2 2.2

2050 . . . . . . . . . . . 6.5 .3 .3 1.5 4.2 2.2

2055 . . . . . . . . . . . 6.5 .2 .2 1.4 4.2 2.2

2060 . . . . . . . . . . . 6.5 .2 .2 1.4 4.2 2.2

2065 . . . . . . . . . . . 6.5 .2 .2 1.4 4.2 2.2

2070 . . . . . . . . . . . 6.5 .1 .1 1.4 4.2 2.2

2075 . . . . . . . . . . . 6.5 .1 .1 1.4 4.2 2.2

2080 . . . . . . . . . . . 6.5 .1 .1 1.4 4.2 2.2

2085 . . . . . . . . . . . 6.5 .1 .1 1.3 4.2 2.2

2090 . . . . . . . . . . . 6.5 .1 .1 1.3 4.2 2.2

a The Office of the Chief Actuary adjusts the civilian unemployment rates for 2026 and later to the age-sex

distribution of the civilian labor force in 2011. For years through 2025, the values are the total rates without

adjustment for the changing age-sex distribution.

b For rows with a single year listed, the value is the annual percentage change from the prior year. For rows

with a range of years listed, the value is the compounded average annual percentage change.

c The U.S. civilian labor force.

d Total U.S. military and civilian employment.

e The value of the total output of goods and services in 2009 dollars.

f The average of the nominal interest rates, which compound semiannually, for special public-debt obligations

issuable to the trust funds in each of the 12 months of the year.

g The realized or expected annual real yield for each year on securities issuable in the prior year.

h Greater than -0.05 and less than 0.05 percent.

i Economic cycles are shown from peak to peak, except for the last cycle, which is not yet complete.

j Historical data are not available for the full year. Estimated values vary slightly by alternative and are shown

for the intermediate assumptions.

Table V.B2.—Additional Economic Factors (Cont.)

Calendar year 

Average annual

unemployment ratea

Annual percentage changeb in— Average annual interest rate

Labor

forcec Totalemploymentd RealGDPe Nominalf Realg
Assumptions and Methods

116

C. PROGRAM-SPECIFIC ASSUMPTIONS AND METHODS

The Office of the Chief Actuary at the Social Security Administration uses a

set of models to project future income and cost under the OASDI program.

These models rely not only on the demographic and economic assumptions

described in the previous sections, but also on a number of program-specific

assumptions and methods. Values of many program parameters change from

year to year as prescribed by formulas set out in the Social Security Act.

These program parameters affect the level of payroll taxes collected and the

level of benefits paid. The office uses more complex models to project the

numbers of future workers covered under OASDI and the levels of their covered earnings, as well as the numbers of future beneficiaries and the expected

levels of their benefits. The following subsections provide descriptions of

these program-specific assumptions and methods.

1. Automatically Adjusted Program Parameters

The Social Security Act requires that certain parameters affecting the determination of OASDI benefits and taxes be adjusted annually to reflect

changes in particular economic measures. Formulas prescribed in the law,

applied to reported statistics, change these program parameters annually. The

law bases these automatic adjustments on measured changes in the national

average wage index (AWI) and the Consumer Price Index for Urban Wage

Earners and Clerical Workers (CPI).1 This section shows values for program

parameters adjusted using these indices from the time that these adjustments

became effective through 2025. Projected values for future years depend on

the economic assumptions described in the preceding section of this report.

Tables V.C1 and V.C2 present the historical and projected values of the CPIbased benefit increases, the AWI series, and the values of many of the wageindexed program parameters. Each table shows projections under the three

alternative sets of economic assumptions. Table V.C1 includes:

 • The annual cost-of-living benefit increase percentages. The automatic

cost-of-living adjustment provisions in the Social Security Act specify

increases in OASDI benefits based on increases in the CPI. Volatility in

oil prices has resulted in substantial volatility in recent cost-of-living

adjustments. A large cost-of-living adjustment in December 2008 was

followed by no cost-of-living adjustments in December 2009 and

December 2010. More recent volatility in oil prices has again affected

 1 The Federal Register publishes details of these indexation procedures annually. Also see

www.ssa.gov/OACT/COLA/.
117

Program Assumptions and Methods

the CPI, resulting in no cost-of-living adjustment for December 2015.

Under the intermediate and low-cost assumptions, annual cost-of-living

adjustments resume in December 2016. Under the high-cost assumptions, there is no cost-of-living adjustment for December 2016, but

annual cost-of-living adjustments resume in December 2017. After

cost-of-living adjustments resume, all three sets of assumptions have

automatic cost-of-living adjustments in all later years.

 • The annual levels of and percentage increases in the AWI. Under section 215(b)(3) of the Social Security Act, Social Security benefit computations index taxable earnings (for most workers first becoming

eligible for benefits in 1979 or later) using the AWI for each year after

1950. This procedure converts a worker’s past earnings to approximately average-wage-indexed equivalent values near the time of his or

her benefit eligibility. Other program parameters presented in this section that are subject to the automatic-adjustment provisions also rely on

the AWI.

 • The wage-indexed contribution and benefit base. For any year, the contribution and benefit base is the maximum amount of earnings subject to

the OASDI payroll tax and creditable toward benefit computation. The

Social Security Act defers any increase in the contribution and benefit

base if there is no cost-of-living adjustment effective for December of

the preceding year. There was no increase in the contribution and benefit base for 2010, 2011, or 2016 because there was no cost-of-living

adjustment for the immediate prior December. Under the intermediate

and low-cost assumptions, the contribution and benefit base increases in

all years after 2016. Under the high-cost assumptions, the contribution

and benefit base remains the same in 2017 and then increases in 2018

and all later years.

 • The wage-indexed retirement earnings test exempt amounts. The

exempt amounts are the annual amount of earnings below which beneficiaries do not have benefits withheld. A lower exempt amount applies in

years before normal retirement age. A higher amount applies for the

year in which a beneficiary attains normal retirement age. Starting in

2000, the retirement earnings test no longer applies beginning with the

month of normal retirement age attainment. The Social Security Act

defers any increase in these exempt amounts if there is no cost-of-living

adjustment effective for December of the preceding year. There was no

increase in these exempt amounts in 2010, 2011, or 2016 because there

was no cost-of-living adjustment for the immediate prior December.

Under the intermediate and low-cost assumptions, the exempt amounts
Assumptions and Methods

118

increase in all years after 2016. Under the high-cost assumptions, the

exempt amounts remain the same in 2017 and then increase in 2018 and

all later years.

Table V.C1.—Cost-of-Living Benefit Increases, Average Wage Index, Contribution and 

Benefit Bases, and Retirement Earnings Test Exempt Amounts, 1975-2025

Calendar year

Cost-of-living

benefit

increasea

(percent)

Average

wage index (AWI) b Contribution

and benefit

base c

Retirement earnings

test exempt amount

Amount

Increase

(percent)

Under

NRAd At NRAe

Historical data:

1975 . . . . . . . . . . . 8.0 $8,630.92 7.5 $14,100 $2,520 $2,520

1976 . . . . . . . . . . . 6.4 9,226.48 6.9 15,300 2,760 2,760

1977 . . . . . . . . . . . 5.9 9,779.44 6.0 16,500 3,000 3,000

1978 . . . . . . . . . . . 6.5 10,556.03 7.9 17,700 3,240 4,000

1979 . . . . . . . . . . . 9.9 11,479.46 8.7 22,900 3,480 4,500

1980 . . . . . . . . . . . 14.3 12,513.46 9.0 25,900 3,720 5,000

1981 . . . . . . . . . . . 11.2 13,773.10 10.1 29,700 4,080 5,500

1982 . . . . . . . . . . . 7.4 14,531.34 5.5 32,400 4,440 6,000

1983 . . . . . . . . . . . 3.5 15,239.24 4.9 35,700 4,920 6,600

1984 . . . . . . . . . . . 3.5 16,135.07 5.9 37,800 5,160 6,960

1985 . . . . . . . . . . . 3.1 16,822.51 4.3 39,600 5,400 7,320

1986 . . . . . . . . . . . 1.3 17,321.82 3.0 42,000 5,760 7,800

1987 . . . . . . . . . . . 4.2 18,426.51 6.4 43,800 6,000 8,160

1988 . . . . . . . . . . . 4.0 19,334.04 4.9 45,000 6,120 8,400

1989 . . . . . . . . . . . 4.7 20,099.55 4.0 48,000 6,480 8,880

1990 . . . . . . . . . . . 5.4 21,027.98 4.6 51,300 6,840 9,360

1991 . . . . . . . . . . . 3.7 21,811.60 3.7 53,400 7,080 9,720

1992 . . . . . . . . . . . 3.0 22,935.42 5.2 55,500 7,440 10,200

1993 . . . . . . . . . . . 2.6 23,132.67 .9 57,600 7,680 10,560

1994 . . . . . . . . . . . 2.8 23,753.53 2.7 60,600 8,040 11,160

1995 . . . . . . . . . . . 2.6 24,705.66 4.0 61,200 8,160 11,280

1996 . . . . . . . . . . . 2.9 25,913.90 4.9 62,700 8,280 12,500

1997 . . . . . . . . . . . 2.1 27,426.00 5.8 65,400 8,640 13,500

1998 . . . . . . . . . . . 1.3 28,861.44 5.2 68,400 9,120 14,500

1999 . . . . . . . . . . . f2.5 30,469.84 5.6 72,600 9,600 15,500

2000 . . . . . . . . . . . 3.5 32,154.82 5.5 76,200 10,080 17,000

2001 . . . . . . . . . . . 2.6 32,921.92 2.4 80,400 10,680 25,000

2002 . . . . . . . . . . . 1.4 33,252.09 1.0 84,900 11,280 30,000

2003 . . . . . . . . . . . 2.1 34,064.95 2.4 87,000 11,520 30,720

2004 . . . . . . . . . . . 2.7 35,648.55 4.6 87,900 11,640 31,080

2005 . . . . . . . . . . . 4.1 36,952.94 3.7 90,000 12,000 31,800

2006 . . . . . . . . . . . 3.3 38,651.41 4.6 94,200 12,480 33,240

2007 . . . . . . . . . . . 2.3 40,405.48 4.5 97,500 12,960 34,440

2008 . . . . . . . . . . . 5.8 41,334.97 2.3 102,000 13,560 36,120

2009 . . . . . . . . . . . .0 40,711.61 -1.5 106,800 14,160 37,680

2010 . . . . . . . . . . . .0 41,673.83 2.4 106,800 14,160 37,680

2011 . . . . . . . . . . . 3.6 42,979.61 3.1 106,800 14,160 37,680

2012 . . . . . . . . . . . 1.7 44,321.67 3.1 110,100 14,640 38,880

2013 . . . . . . . . . . . 1.5 44,888.16 1.3 113,700 15,120 40,080

2014 . . . . . . . . . . . 1.7 46,481.52 3.5 117,000 15,480 41,400

Intermediate:

2015 . . . . . . . . . . . g.0 47,730.20 2.7 g118,500 g15,720 g41,880

2016 . . . . . . . . . . . .2 49,121.32 2.9 g118,500 g15,720 g41,880

2017 . . . . . . . . . . . 2.9 51,467.41 4.8 126,000 16,680 44,520

2018 . . . . . . . . . . . 2.6 53,929.00 4.8 129,900 17,160 45,840

2019 . . . . . . . . . . . 2.6 56,341.78 4.5 135,900 18,000 48,000
119

Program Assumptions and Methods

Table V.C2 shows values for other wage-indexed parameters. The table provides historical values from 1978, when indexing of the amount of earnings

required for a quarter of coverage first began, through 2016, and also shows

projected values through 2025. These other wage-indexed program parameters are:

2020 . . . . . . . . . . . 2.6 $58,754.57 4.3 $142,500 $18,960 $50,280

2021 . . . . . . . . . . . 2.6 61,237.90 4.2 148,800 19,800 52,560

2022 . . . . . . . . . . . 2.6 63,735.69 4.1 155,100 20,640 54,840

2023 . . . . . . . . . . . 2.6 66,277.05 4.0 161,700 21,480 57,120

2024 . . . . . . . . . . . 2.6 68,952.47 4.0 168,300 22,320 59,520

2025 . . . . . . . . . . . 2.6 71,668.95 3.9 175,200 23,280 61,800

Low-cost:

2015 . . . . . . . . . . . g.0 47,738.57 2.7 g118,500 g15,720 g41,880

2016 . . . . . . . . . . . .7 49,447.98 3.6 g118,500 g15,720 g41,880

2017 . . . . . . . . . . . 3.7 52,465.16 6.1 126,000 16,680 44,520

2018 . . . . . . . . . . . 3.2 55,650.39 6.1 130,800 17,280 46,080

2019 . . . . . . . . . . . 3.2 58,743.24 5.6 138,600 18,360 48,960

2020 . . . . . . . . . . . 3.2 61,849.15 5.3 147,000 19,560 51,960

2021 . . . . . . . . . . . 3.2 65,032.70 5.1 155,100 20,640 54,840

2022 . . . . . . . . . . . 3.2 68,392.20 5.2 163,500 21,720 57,720

2023 . . . . . . . . . . . 3.2 71,951.98 5.2 171,900 22,800 60,720

2024 . . . . . . . . . . . 3.2 75,746.74 5.3 180,600 24,000 63,840

2025 . . . . . . . . . . . 3.2 79,674.91 5.2 190,200 25,200 67,080

High-cost:

2015 . . . . . . . . . . . g.0 47,686.76 2.6 g118,500 g15,720 g41,880

2016 . . . . . . . . . . . .0 48,298.98 1.3 g118,500 g15,720 g41,880

2017 . . . . . . . . . . . 1.9 49,518.62 2.5 118,500 15,720 41,880

2018 . . . . . . . . . . . 2.1 51,416.70 3.8 127,500 16,920 45,120

2019 . . . . . . . . . . . 2.0 53,305.83 3.7 130,800 17,400 46,200

2020 . . . . . . . . . . . 2.0 55,122.98 3.4 135,900 18,000 48,000

2021 . . . . . . . . . . . 2.0 56,973.96 3.4 140,700 18,720 49,680

2022 . . . . . . . . . . . 2.0 58,817.79 3.2 145,500 19,320 51,480

2023 . . . . . . . . . . . 2.0 60,655.65 3.1 150,600 19,920 53,160

2024 . . . . . . . . . . . 2.0 62,523.17 3.1 155,400 20,640 54,840

2025 . . . . . . . . . . . 2.0 64,321.07 2.9 160,200 21,240 56,640

a Effective with benefits payable for June in each year 1975-82, and for December in each year after 1982.

b See table VI.G6 for projected dollar amounts of the AWI for years beyond the last year of this table.

c Public Law 95-216 specified amounts for 1978-81. Public Law 101-239 changed the indexing procedure

and caused slightly higher bases after 1989.

d Normal retirement age. See table V.C3 for specific values.

e In 1955-82, the retirement earnings test did not apply at ages 72 and over. In 1983-99, the test did not apply

at ages 70 and over. Beginning in 2000, the test does not apply beginning with the month of normal retirement

age attainment. In the year of normal retirement age attainment, the higher exempt amount applies to earnings

prior to the month of normal retirement age attainment. Public Law 95-216 specified amounts for 1978-82.

Public Law 104-121 specified amounts for 1996-2002.

f Originally determined as 2.4 percent. Pursuant to Public Law 106-554, effectively 2.5 percent.

g Actual amount, as determined under automatic-adjustment provisions.

Table V.C1.—Cost-of-Living Benefit Increases, Average Wage Index, Contribution and 

Benefit Bases, and Retirement Earnings Test Exempt Amounts, 1975-2025 (Cont.)

Calendar year

Cost-of-living

benefit

increasea

(percent)

Average

wage index (AWI) b Contribution

and benefit

base c

Retirement earnings

test exempt amount

Amount

Increase

(percent)

Under

NRAd At NRAe
Assumptions and Methods

120

 • The bend points in the formula for computing the primary insurance

amount (PIA) for workers who reach age 62, become disabled, or die in

a given year. As figure V.C1 illustrates, these two bend points define

three ranges in a worker’s average indexed monthly earnings (AIME).

The formula for the worker’s PIA multiplies a 90, 32, or 15 percent factor by the portion of the worker’s AIME that falls within the three

respective ranges, and then adds the resulting products together.

 • The bend points in the formula for computing the maximum total

amount of monthly benefits payable based on the earnings record of a

retired or deceased worker (maximum family benefit). As figure V.C2

illustrates, these three bend points define four ranges in a worker’s PIA.

The formula for the maximum family benefit multiplies a 150, 272, 134,

or 175 percent factor by the portion of the worker’s PIA that falls within

the four respective ranges, and then adds the resulting products together.

 Figure V.C1.—Primary-Insurance-Amount Formula for Those Newly Eligible in 2016

90% 

32% 

15% 

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000

Primary Insurance Amount 

Average Indexed Monthly Earnings

First

bend point

($856)

Second

bend point

($5,157)
121

Program Assumptions and Methods

 • The amount of earnings required in a year to earn a quarter of coverage

(QC). The number and timing of QCs earned determines an individual’s

insured status—the basic requirement for benefit eligibility under

OASDI.

 • The old-law contribution and benefit base—the contribution and benefit

base that would have been in effect without enactment of the 1977

amendments. This old-law base is used in determining special-minimum benefits for certain workers who have many years of low earnings

in covered employment. Since 1986, the calculation of OASDI benefits

for certain workers who are eligible to receive pensions based on noncovered employment uses the old-law base. In addition, the Railroad

Retirement program and the Employee Retirement Income Security Act

of 1974 use the old-law base for certain purposes.

 Figure V.C2.—OASI Maximum-Family-Benefit Formula 

for Those Newly Eligible in 2016

150% 

272% 

134% 

175% 

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$0 $500 $1,000 $1,500 $2,000 $2,500

Maximum family benefit 

Primary Insurance Amount

Third

bend point

($2,058)

Second

bend point

($1,578)

First

bend point

($1,093)
Assumptions and Methods

122

Table V.C2.—Values for Selected Wage-Indexed Program Parameters, 

Calendar Years 1978-2025

Calendar year

AIME bend

points in PIA

formulaa

PIA bend points

in OASI maximumfamily-benefit formulab

Earnings

required for

a quarter of

coverage

Old-law

contribution

and benefit

basec First Second First Second Third

Historical data:

1978 . . . . . . . . . d d d d de $250 e $17,700

1979 . . . . . . . . . e $180 e $1,085 e $230 e $332 e $433 260 18,900

1980 . . . . . . . . . 194 1,171 248 358 467 290 20,400

1981 . . . . . . . . . 211 1,274 270 390 508 310 22,200

1982 . . . . . . . . . 230 1,388 294 425 554 340 24,300

1983 . . . . . . . . . 254 1,528 324 468 610 370 26,700

1984 . . . . . . . . . 267 1,612 342 493 643 390 28,200

1985 . . . . . . . . . 280 1,691 358 517 675 410 29,700

1986 . . . . . . . . . 297 1,790 379 548 714 440 31,500

1987 . . . . . . . . . 310 1,866 396 571 745 460 32,700

1988 . . . . . . . . . 319 1,922 407 588 767 470 33,600

1989 . . . . . . . . . 339 2,044 433 626 816 500 35,700

1990 . . . . . . . . . 356 2,145 455 656 856 520 38,100

1991 . . . . . . . . . 370 2,230 473 682 890 540 39,600

1992 . . . . . . . . . 387 2,333 495 714 931 570 41,400

1993 . . . . . . . . . 401 2,420 513 740 966 590 42,900

1994 . . . . . . . . . 422 2,545 539 779 1,016 620 45,000

1995 . . . . . . . . . 426 2,567 544 785 1,024 630 45,300

1996 . . . . . . . . . 437 2,635 559 806 1,052 640 46,500

1997 . . . . . . . . . 455 2,741 581 839 1,094 670 48,600

1998 . . . . . . . . . 477 2,875 609 880 1,147 700 50,700

1999 . . . . . . . . . 505 3,043 645 931 1,214 740 53,700

2000 . . . . . . . . . 531 3,202 679 980 1,278 780 56,700

2001 . . . . . . . . . 561 3,381 717 1,034 1,349 830 59,700

2002 . . . . . . . . . 592 3,567 756 1,092 1,424 870 63,000

2003 . . . . . . . . . 606 3,653 774 1,118 1,458 890 64,500

2004 . . . . . . . . . 612 3,689 782 1,129 1,472 900 65,100

2005 . . . . . . . . . 627 3,779 801 1,156 1,508 920 66,900

2006 . . . . . . . . . 656 3,955 838 1,210 1,578 970 69,900

2007 . . . . . . . . . 680 4,100 869 1,255 1,636 1,000 72,600

2008 . . . . . . . . . 711 4,288 909 1,312 1,711 1,050 75,900

2009 . . . . . . . . . 744 4,483 950 1,372 1,789 1,090 79,200

2010 . . . . . . . . . 761 4,586 972 1,403 1,830 1,120 79,200

2011 . . . . . . . . . 749 4,517 957 1,382 1,803 1,120 79,200

2012 . . . . . . . . . 767 4,624 980 1,415 1,845 1,130 81,900

2013 . . . . . . . . . 791 4,768 1,011 1,459 1,903 1,160 84,300

2014 . . . . . . . . . 816 4,917 1,042 1,505 1,962 1,200 87,000

2015 . . . . . . . . . 826 4,980 1,056 1,524 1,987 1,220 88,200

2016 . . . . . . . . . 856 5,157 1,093 1,578 2,058 1,260 88,200

Intermediate:

2017 . . . . . . . . . 879 5,296 1,123 1,620 2,113 1,290 93,600

2018 . . . . . . . . . 904 5,450 1,155 1,668 2,175 1,330 96,300

2019 . . . . . . . . . 947 5,710 1,210 1,747 2,279 1,390 101,100

2020 . . . . . . . . . 993 5,983 1,268 1,831 2,388 1,460 105,900

2021 . . . . . . . . . 1,037 6,251 1,325 1,913 2,495 1,530 110,400

2022 . . . . . . . . . 1,081 6,519 1,382 1,995 2,601 1,590 115,200

2023 . . . . . . . . . 1,127 6,794 1,440 2,079 2,711 1,660 120,300

2024 . . . . . . . . . 1,173 7,071 1,499 2,164 2,822 1,730 125,100

2025 . . . . . . . . . 1,220 7,353 1,559 2,250 2,935 1,800 129,900
123

Program Assumptions and Methods

In addition to the economic factors that affect the determination of OASDI

benefits, there are certain legislated changes that affect current and future

benefit amounts. Two such changes are the scheduled increases in the normal

retirement age and in the delayed retirement credits. Table V.C3 shows the

scheduled changes in these parameters and the resulting effects on benefit

levels expressed as a percentage of PIA.

Low-cost:

2017 . . . . . . . . . $879 $5,296 $1,123 $1,621 $2,114 $1,290 $93,600

2018 . . . . . . . . . 910 5,486 1,163 1,679 2,189 1,340 96,900

2019 . . . . . . . . . 966 5,821 1,234 1,781 2,323 1,420 102,900

2020 . . . . . . . . . 1,024 6,174 1,309 1,889 2,464 1,510 109,200

2021 . . . . . . . . . 1,081 6,517 1,382 1,994 2,601 1,590 115,200

2022 . . . . . . . . . 1,138 6,862 1,455 2,100 2,738 1,680 121,200

2023 . . . . . . . . . 1,197 7,215 1,529 2,208 2,879 1,760 127,500

2024 . . . . . . . . . 1,259 7,588 1,608 2,322 3,028 1,850 134,100

2025 . . . . . . . . . 1,324 7,983 1,692 2,443 3,186 1,950 141,300

High-cost:

2017 . . . . . . . . . 878 5,291 1,122 1,619 2,111 1,290 88,200

2018 . . . . . . . . . 889 5,359 1,136 1,640 2,139 1,310 94,800

2019 . . . . . . . . . 911 5,494 1,165 1,681 2,193 1,340 97,200

2020 . . . . . . . . . 946 5,705 1,209 1,746 2,277 1,390 100,800

2021 . . . . . . . . . 981 5,914 1,254 1,810 2,360 1,440 104,700

2022 . . . . . . . . . 1,015 6,116 1,296 1,871 2,441 1,490 108,300

2023 . . . . . . . . . 1,049 6,321 1,340 1,934 2,523 1,540 111,900

2024 . . . . . . . . . 1,083 6,526 1,383 1,997 2,604 1,590 115,500

2025 . . . . . . . . . 1,116 6,730 1,427 2,059 2,686 1,640 119,100

a The formula to compute a PIA is: (1) 90% of AIME below the first bend point, plus (2) 32% of AIME in

excess of the first bend point but not in excess of the second, plus (3) 15% of AIME in excess of the second

bend point. The bend points are determined based on the first year a beneficiary becomes eligible for benefits.

b The formula to compute an OASI family maximum is: (1) 150% of PIA below the first bend point, plus

(2) 272% of PIA in excess of the first bend point but not in excess of the second, plus (3) 134% of PIA in

excess of the second bend point but not in excess of the third, plus (4) 175% of PIA in excess of the third

bend point. This formula also determines family maximums for disabled workers first eligible after 1978 and

entitled before July 1980.

c Contribution and benefit base that would have been in effect without enactment of the Social Security

Amendments of 1977. Public Law 101-239 changed the indexing procedure and caused slightly higher bases

after 1989.

d No provision in law for this amount in this year.

e Amount specified by Social Security Amendments of 1977.

Table V.C2.—Values for Selected Wage-Indexed Program Parameters, 

Calendar Years 1978-2025 (Cont.)

Calendar year

AIME bend

points in PIA

formulaa

PIA bend points

in OASI maximumfamily-benefit formulab

Earnings

required for

a quarter of

coverage

Old-law

contribution

and benefit

basec First Second First Second Third
Assumptions and Methods

124

2. Covered Employment

Projections of the total U.S. labor force and unemployment rate (see

table V.B2) are based on Bureau of Labor Statistics definitions from the Current Population Survey (CPS). These projections represent the average

weekly number of employed and unemployed persons, age 16 and over, in

the U.S. in a calendar year. Covered employment for a calendar year is

defined as the total number of persons who have any OASDI covered earnings (that is, earnings subject to the OASDI payroll tax) at any time during

that year. For those age 16 and over, projected covered employment is the

sum of age-sex components, each reflecting the growth projected for the

component’s total U.S employment and average weeks worked per year.1For

the short-range period, the average weeks worked for each component is

assumed to increase during the economic recovery. After 2025, the average

weeks worked for each component is assumed to remain constant. The proTable V.C3.—Legislated Changes in Normal Retirement Age and Delayed Retirement

Credits for Persons Reaching Age 62 in Each Year 1986 and Later

Year of birth

Year of

attainment of

age 62

Normal

retirement

age (NRA)

Credit for each 

year of delayed 

retirement after

NRA (percent)

Benefit, as a percentage of PIA, 

beginning at age —

62 65 66 67 70

1924 . . . . . . . . 1986. . . . . . . . 65 . . . . . . . . 3 80 100 103 106 115

1925 . . . . . . . . 1987. . . . . . . . 65 . . . . . . . . 3 1/2 80 100 103 1/2 107 117 1/2

1926 . . . . . . . . 1988. . . . . . . . 65 . . . . . . . . 3 1/2 80 100 103 1/2 107 117 1/2

1927 . . . . . . . . 1989. . . . . . . . 65 . . . . . . . . 4 80 100 104 108 120

1928 . . . . . . . . 1990. . . . . . . . 65 . . . . . . . . 4 80 100 104 108 120

1929 . . . . . . . . 1991. . . . . . . . 65 . . . . . . . . 4 1/2 80 100 104 1/2 109 122 1/2

1930 . . . . . . . . 1992. . . . . . . . 65 . . . . . . . . 4 1/2 80 100 104 1/2 109 122 1/2

1931 . . . . . . . . 1993. . . . . . . . 65 . . . . . . . . 5 80 100 105 110 125

1932 . . . . . . . . 1994. . . . . . . . 65 . . . . . . . . 5 80 100 105 110 125

1933 . . . . . . . . 1995. . . . . . . . 65 . . . . . . . . 5 1/2 80 100 105 1/2 111 127 1/2

1934 . . . . . . . . 1996. . . . . . . . 65 . . . . . . . . 5 1/2 80 100 105 1/2 111 127 1/2

1935 . . . . . . . . 1997. . . . . . . . 65 . . . . . . . . 6 80 100 106 112 130

1936 . . . . . . . . 1998. . . . . . . . 65 . . . . . . . . 6 80 100 106 112 130

1937 . . . . . . . . 1999. . . . . . . . 65 . . . . . . . . 6 1/2 80 100 106 1/2 113 132 1/2

1938 . . . . . . . . 2000. . . . . . . . 65, 2 mo . . . 6 1/2 79 1/6 98 8/9 105 5/12 111 11/12 131 5/12

1939 . . . . . . . . 2001. . . . . . . . 65, 4 mo . . . 7 78 1/3 97 7/9 104 2/3 111 2/3 132 2/3

1940 . . . . . . . . 2002. . . . . . . . 65, 6 mo . . . 7 77 1/2 96 2/3 103 1/2 110 1/2 131 1/2

1941 . . . . . . . . 2003. . . . . . . . 65, 8 mo . . . 7 1/2 76 2/3 95 5/9 102 1/2 110 132 1/2

1942 . . . . . . . . 2004. . . . . . . . 65, 10 mo . . 7 1/2 75 5/6 94 4/9 101 1/4 108 3/4 131 1/4

1943-54 . . . . . 2005-16 . . . . . 66 . . . . . . . . 8 75 93 1/3 100 108 132

1955 . . . . . . . . 2017. . . . . . . . 66, 2 mo . . . 8 74 1/6 92 2/9 98 8/9 106 2/3 130 2/3

1956 . . . . . . . . 2018. . . . . . . . 66, 4 mo . . . 8 73 1/3 91 1/9 97 7/9 105 1/3 129 1/3

1957 . . . . . . . . 2019. . . . . . . . 66, 6 mo . . . 8 72 1/2 90 96 2/3 104 128

1958 . . . . . . . . 2020. . . . . . . . 66, 8 mo . . . 8 71 2/3 88 8/9 95 5/9 102 2/3 126 2/3

1959 . . . . . . . . 2021. . . . . . . . 66, 10 mo . . 8 70 5/6 87 7/9 94 4/9 101 1/3 125 1/3

1960 & later . . 2022 & later . 67 . . . . . . . . 8 70 86 2/3 93 1/3 100 124

 1 For those under age 16, projected covered employment is the sum of age-sex components, each of which is

projected as a ratio to the Social Security area population.
125

Program Assumptions and Methods

jection method also accounts for changes in non-OASDI-covered employment, the increase in coverage of Federal civilian employment as a result of

the 1983 Social Security Amendments, and changes in the number and

employment status of other immigrants residing within the Social Security

coverage area.

The covered-worker rate is the ratio of OASDI covered workers to the Social

Security area population. For men age 16 and over, the projected ageadjusted covered-worker rates1 for 2090 are 69.1, 68.7, and 68.3 percent for

the low-cost, intermediate, and high-cost assumptions, respectively. For

women age 16 and over, the projected covered-worker rates for 2090 are

66.1, 64.7, and 63.2 percent for the low-cost, intermediate, and high-cost

assumptions, respectively. These rates are higher than the 2014 levels of

67.6 percent for males and 61.6 percent for women, due to the assumed

decreases in unemployment rates and assumed increase in labor force participation rates. 

3. Insured Population

Eligibility for worker benefits under the OASDI program requires some

threshold level of work in covered employment. A worker satisfies this

requirement by his or her accumulation of quarters of coverage (QCs). Prior

to 1978, a worker earned one QC for each calendar quarter in which he or

she earned at least $50. In 1978, when annual earnings reporting replaced

quarterly reporting, the amount required to earn a QC (up to a maximum of

four per year) was set at $250. As specified in the law, the Social Security

Administration has adjusted this amount each year since then according to

changes in the AWI. Its value in 2016 is $1,260.

There are three types of insured status that a worker can acquire under the

OASDI program. The number and recency of QCs earned determine each

status. A worker acquires fully insured status when his or her total number of

QCs is greater than or equal to the number of years elapsed after the year of

attainment of age 21 (but not less than six). Once a worker has accumulated

40 QCs, he or she remains permanently fully insured. A worker acquires disability insured status if he or she is: (1) a fully insured worker who has accumulated 20 QCs during the 40-quarter period ending with the current quarter,

(2) a fully insured worker aged 24-30 who has accumulated QCs during onehalf of the quarters elapsed after the quarter of attainment of age 21 and up to

and including the current quarter, or (3) a fully insured worker under age 24

 1 Age-adjusted covered-worker rates are adjusted to the 2012 age distribution of the Social Security area

population.
Assumptions and Methods

126

who has accumulated six QCs during the 12-quarter period ending with the

current quarter. A worker acquires currently insured status when he or she

has accumulated six QCs during the 13-quarter period ending with the current quarter. Periods of disability reduce the number of quarters required for

insured status, but not below the minimum of six QCs.

There are many types of benefits payable to workers and their family members under the OASDI program. A worker must be fully insured to be eligible for a primary retirement benefit and for his or her spouse or children to

be eligible for auxiliary benefits. A deceased worker must have been either

currently insured or fully insured at the time of death for his or her children

(and their mother or father) to be eligible for benefits. If there are no eligible

surviving children, the deceased worker must have been fully insured at the

time of death for his or her surviving spouse to be eligible. A worker must be

disability insured to be eligible for a primary disability benefit and for his or

her spouse or children to be eligible for auxiliary benefits.

The Office of the Chief Actuary estimates the fully insured population, as a

percentage of the Social Security area population, by single year of age and

sex starting in 1969. The short-range model extrapolates the historical trend

in these rates from data in the Continuous Work History Sample. The model

uses information on quarters of coverage earned due to employment covered

by Social Security derived from tabulations of the Continuous Work History

Sample. The model also uses historical administrative data on beneficiaries

in force and estimated historical mortality rates. The model combines this

information to estimate the proportion of individuals who were alive and

fully insured as of the end of each historical year. Using projected mortality

rates and covered workers, the model extrapolates these rates into the future

and applies them to the historical and projected population to arrive at the

fully insured population by age and sex through the end of the short-range

period.

The long-range fully insured model uses 30,000 simulated work histories for

each sex and birth cohort, representing everyone except the other immigrant

population.1 For the other immigrant population, the model generates substantially lower percentages attaining fully insured status. The model constructs simulated work histories using past coverage rates, earnings

distributions, and amounts required for crediting QCs, and develops them in

a manner that replicates historical individual variations in work patterns. The

probability of covered employment in any year is assumed to be higher for

 1 Those given legal work authorization through the Deferred Action for Childhood Arrivals and the

Deferred Action for Parents of Americans programs are included in the simulations.
127

Program Assumptions and Methods

those who have worked more consistently in the recent past. Model parameters are selected so that simulated fully insured percentages are consistent

with the fully insured percentages estimated by the short-range model for the

recent historical period.

The Office of the Chief Actuary estimates the disability insured population,

as a percentage of the fully insured population, by age and sex starting in

1970. The office bases historical values on a tabulation of the disability

insured population from the Continuous Work History Sample and estimates

of the fully insured population. The short-range model projects these percentages by using the relationship between the historical percentages and

covered-worker rates. The long-range model projects these percentages by

using the same simulated work histories used to project the fully insured percentages. The long-range model makes additional adjustments to the model

simulations in order to bring the disability insured percentages in the historical and short-range periods into close agreement with those estimated from

the Continuous Work History Sample and the short-range model.

The office does not project the currently insured population because the

number of beneficiaries who are entitled to benefits based solely on currently

insured status has been very small and is likely to remain small in the future.

Using these insured models, the percentage of the Social Security area population aged 62 and over that is fully insured will increase from its estimated

level of 85.2 for December 31, 2013, to 86.6, 87.3, and 88.5 for

December 31, 2090, under the low-cost, intermediate, and high-cost alternatives, respectively. Over the projection period, the percentage for females

increases significantly, reflecting the past substantial growth in the employment of younger cohorts of women. The percentage for males declines,

reflecting, in part, increases in the percent of the population that is classified

as other immigrants and is thus less likely to have earnings reported and

credited to them. Under the intermediate assumptions, for example, the percentage for males decreases from 93.0 to 86.7, and the percentage for

females increases from 78.7 to 87.8.

4. Old-Age and Survivors Insurance Beneficiaries

The Office of the Chief Actuary projects the number of OASI beneficiaries

for each type of benefit separately by the sex of the worker on whose earnings the benefits are based and by the age of the beneficiary. For the longrange period, the office also projects the number of beneficiaries by marital

status for several types of benefits. The office uses two separate models in

making these projections. The short-range model makes projections during
Assumptions and Methods

128

the first 10 years of the projection period and the long-range model makes

projections thereafter.

The short-range model develops the number of retired-worker beneficiaries

by applying award rates to the aged fully insured population, excluding those

already receiving retired-worker, disabled-worker, aged-widow(er)’s, or

aged-spouse’s benefits, and by applying termination rates to the number of

retired-worker beneficiaries.

The long-range model projects the number of retired-worker beneficiaries

who were not previously converted from disabled-worker beneficiary status

as a percentage of the exposed population.1 For age 62, the model projects

this percentage by using a linear regression based on the historical relationship between this percentage, the labor force participation rate at age 62, and

the number of months from age 62 to normal retirement age. The percentage

for ages 70 and over is nearly 100 because delayed retirement credits cannot

be earned after age 70. The long-range model projects the percentage for

each age 63 through 69 based on historical experience with an adjustment for

changes in the portion of the primary insurance amount that is payable at

each age of entitlement. The model adjusts these percentages for ages 62

through 69 to reflect changes in the normal retirement age.

The long-range model calculates the number of retired-worker beneficiaries

previously converted from disabled-worker beneficiary status using an

extension of disabled-worker death rates by age, sex, and duration.

The Office of the Chief Actuary estimates the number of aged-spouse beneficiaries, excluding those who are also receiving a retired-worker benefit, from

the population projected by age and sex. Benefits of aged-spouse beneficiaries depend on the earnings records of their husbands or wives, who are

referred to as “earners.” The short-range model projects insured aged-spouse

beneficiaries in conjunction with the retired-worker beneficiaries. This

model projects uninsured aged-spouse beneficiaries by applying award rates

to the aged uninsured male or female population and by applying termination

rates to the population already receiving such benefits.

The long-range model estimates aged-spouse beneficiaries separately for

those married and divorced. The model projects the number of married agedspouse beneficiaries, by age and sex, by applying a series of factors to the

number of spouses, aged 62 and over, in the population. These factors are the

probabilities that the spouse and the earner meet all of the conditions of

 1 The exposed population is the fully insured population age 62 and over, excluding persons entitled to or

converted from disabled-worker benefits and fully insured persons entitled only to widow(er)’s benefits.
129

Program Assumptions and Methods

eligibility—that is, the probabilities that: (1) the earner is 62 or over, (2) the

earner is insured, (3) the earner is either receiving benefits or has suspended

benefits, (4) the spouse is not receiving a benefit for the care of an entitled

child, (5) the spouse is either not insured or is insured but not receiving benefits, and (6) the spouse is not eligible to receive a significant government

pension based on earnings in noncovered employment. Due to the Bipartisan

Budget Act of 2015, aged spouses will no longer be eligible to receive an

aged-spouse benefit if the earner suspends their benefit after April 29, 2016.

Additionally, for those turning age 62 in 2016 and later, deemed filing will

now apply to all retired workers and spouses even after initial entitlement,

regardless of age. Thus, spouses who are insured will no longer be eligible to

delay their retired-worker benefit while receiving an aged-spouse benefit. To

calculate the estimated number of aged-spouse beneficiaries, the model

applies a projected prevalence rate to the resulting number of spouses.

The long-range model estimates the number of divorced aged-spouse beneficiaries, by age and sex, by applying the same factors to the number of

divorced persons aged 62 and over in the population, with three differences.

First, the model applies a factor to reflect the probability that the earner (former spouse) is still alive. If the former spouse is not alive, the person may be

entitled to a divorced widow(er)’s benefit. Second, the model applies a factor

to reflect the probability that the marriage to the former spouse lasted at least

10 years. Third, the model does not apply factor (3) in the previous paragraph because, effective January 1985, a divorced person is generally no longer required to wait for the former spouse to receive benefits.

The Office of the Chief Actuary bases the projected numbers of children

under age 18, and students aged 18 and 19, who are eligible for benefits as

children of retired-worker beneficiaries, on the projected number of children

in the population. The short-range model develops the number of entitled

children by applying award rates to the number of children in the population

who have two living parents and by applying termination rates to the number

of children already receiving benefits.

The long-range model projects separately the number of entitled children by

sex of the earner parent. For each age under 18, the model multiplies the projected number of children with a parent aged 62 and over by the ratio of the

number of retired workers aged 62 to 71 to the number of members of the

population aged 62 to 71. For student beneficiaries, the model multiplies the

number of children aged 18 and 19 in the population by the probabilities that:

(1) the parent is alive, aged 62 or over, insured, and receiving a retiredworker benefit; and (2) the child is attending high school.
Assumptions and Methods

130

The Office of the Chief Actuary projects the number of disabled children,

aged 18 and over, of retired-worker beneficiaries from the adult population.

The short-range model applies award rates to the population and applies termination rates to the number of disabled children already receiving benefits.

The long-range model projects the number of disabled children in a manner

similar to that used for student children except for a factor that reflects the

probability of being disabled before age 22.

The short-range model develops the number of spouses of retired workers,

who are entitled to spouse benefits because they are caring for a child who is

under age 16 or disabled, by applying award rates to the number of awards to

children of retired workers and by applying termination rates to the number

of young spouses with a child in their care who are already receiving benefits. The long-range model projects the number of young-spouse beneficiaries with a child in their care as a proportion of the number of child

beneficiaries of retired workers, including projected changes in average family size.

The Office of the Chief Actuary projects the number of aged-widow(er) beneficiaries, excluding those who are also receiving a retired-worker benefit,

from the population by age and sex. The short-range model projects fully

insured aged-widow(er) beneficiaries in conjunction with the retired-worker

beneficiaries. The model projects the number of uninsured aged-widow(er)

beneficiaries by applying award rates to the aged uninsured male or female

population and by applying termination rates to the population already

receiving such benefits. The long-range model projects uninsured agedwidow(er) beneficiaries by marital status. The model multiplies the number

of widow(er)s in the population aged 60 and over by the probabilities that:

(1) the deceased earner is fully insured at death, (2) the widow(er) is not

receiving a benefit for the care of an entitled child, (3) the widow(er) is not

fully insured, and (4) the widow(er)’s benefits are not withheld because of

receipt of a significant government pension based on earnings in noncovered

employment. In addition, the model applies the same factors to the number

of divorced persons aged 60 and over in the population and includes additional factors representing the probability that the person’s former earner

spouse has died and that the marriage lasted at least 10 years. The model

projects the number of insured aged-widow(er) beneficiaries who are ages 60

through 70 in a manner similar to that for uninsured aged-widow(er) beneficiaries. In addition, the model assumes that some insured widow(er)s who

had not applied for their retired-worker benefits will receive widow(er)’s

benefits. The model projects insured aged-widow(er) beneficiaries over
131

Program Assumptions and Methods

age 70 by applying termination rates to the population that started receiving

such benefits prior to age 70.

The short-range model develops the number of disabled-widow(er) beneficiaries by applying award rates to the uninsured male or female population

and by applying termination rates to the population already receiving a disabled-widow(er) benefit. The long-range model projects the number for each

cohort by age from 50 to normal retirement age as percentages of the widowed and divorced populations, adjusted for the insured status of the

deceased spouse, the prevalence of disability, and the probability that the disabled spouse is not receiving another type of benefit.

The Office of the Chief Actuary bases the projected number of children

under age 18, and students aged 18 and 19, who are entitled to benefits as

survivors of deceased workers, on the number of children in the population

whose mothers or fathers are deceased. The short-range model develops the

number of entitled children by applying award rates to the number of

orphaned children and by applying termination rates to the number of children already receiving benefits.

The long-range model projects the number of child-survivor beneficiaries in

a manner similar to that for student beneficiaries of retired workers, except

that the model replaces the probability that the parent is aged 62 or over with

the probability that the parent is deceased.

The Office of the Chief Actuary projects the number of disabled-child-survivor beneficiaries, aged 18 and over, from the adult population. The shortrange model applies award rates to the population and applies termination

rates to the number of disabled-child-survivor beneficiaries already receiving

benefits. The long-range model projects the number of disabled-child-survivor beneficiaries in a manner similar to that for student-child-survivor beneficiaries, except for including an additional factor to reflect the probability of

being disabled before age 22.

The short-range model develops the numbers of entitled mother-survivor and

father-survivor beneficiaries by applying award rates to the number of

awards to child-survivor beneficiaries, in cases where the children are either

under age 16 or disabled, and by applying termination rates to the number of

mother-survivors and father-survivors already receiving benefits. The longrange model estimates the numbers of mother-survivor and father-survivor

beneficiaries, assuming they are not remarried, from the number of child-survivor beneficiaries.
Assumptions and Methods

132

The Office of the Chief Actuary projects the number of parent-survivor beneficiaries based on the historical pattern of the number of such beneficiaries.

Table V.C4 shows the projected number of beneficiaries under the OASI program by type of benefit. The retired-worker beneficiary counts include those

persons who receive a residual auxiliary benefit in addition to their retiredworker benefit. The office makes estimates of the number and amount of

residual payments separately for spouses and widow(er)s.

Table V.C4.—OASI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1945-2090

[In thousands]

Calendar year

Retired workers and auxiliaries Survivors

Worker Total a Spouse Child

WidowwidowerMotherfather Child Parent

Historical data:

1945 . . . . . . . . . . 518 159 13 94 121 377 6 1,288

1950 . . . . . . . . . . 1,771 508 46 314 169 653 15 3,477

1955 . . . . . . . . . . 4,474 1,192 122 701 292 1,154 25 7,961

1960 . . . . . . . . . . 8,061 2,269 268 1,544 401 1,577 36 14,157

1965 . . . . . . . . . . 11,101 2,614 461 2,371 472 2,074 35 19,128

1970 . . . . . . . . . . 13,349 2,668 546 3,227 523 2,688 29 23,030

1975 . . . . . . . . . . 16,589 2,867 643 3,888 582 2,919 21 27,509

1980 . . . . . . . . . . 19,564 3,018 639 4,415 563 2,610 15 30,823

1985 . . . . . . . . . . 22,435 3,069 456 4,862 372 1,918 10 33,122

1990 . . . . . . . . . . 24,841 3,104 421 5,098 304 1,777 6 35,551

1995 . . . . . . . . . . 26,679 3,027 441 5,213 275 1,884 4 37,522

1996 . . . . . . . . . . 26,905 2,971 442 5,199 242 1,898 4 37,661

1997 . . . . . . . . . . 27,282 2,926 441 5,043 230 1,893 3 37,817

1998 . . . . . . . . . . 27,518 2,866 439 4,981 221 1,884 3 37,911

1999 . . . . . . . . . . 27,784 2,811 442 4,936 212 1,885 3 38,073

2000 . . . . . . . . . . 28,505 2,798 459 4,901 203 1,878 3 38,747

2001 . . . . . . . . . . 28,843 2,742 467 4,828 197 1,890 3 38,969

2002 . . . . . . . . . . 29,195 2,681 477 4,771 194 1,908 2 39,227

2003 . . . . . . . . . . 29,537 2,622 480 4,707 190 1,910 2 39,448

2004 . . . . . . . . . . 29,952 2,569 482 4,643 184 1,901 2 39,733

2005 . . . . . . . . . . 30,461 2,524 488 4,569 178 1,903 2 40,126

2006 . . . . . . . . . . 30,976 2,476 490 4,494 171 1,899 2 40,508

2007 . . . . . . . . . . 31,528 2,431 494 4,436 165 1,892 2 40,947

2008 . . . . . . . . . . 32,274 2,370 525 4,380 160 1,915 2 41,625

2009 . . . . . . . . . . 33,514 2,343 561 4,327 160 1,921 2 42,828

2010 . . . . . . . . . . 34,593 2,316 580 4,285 159 1,913 2 43,847

2011 . . . . . . . . . . 35,600 2,291 594 4,239 158 1,907 2 44,791

2012 . . . . . . . . . . 36,720 2,280 612 4,193 154 1,907 1 45,868

2013 . . . . . . . . . . 37,893 2,285 625 4,139 150 1,899 1 46,992

2014 . . . . . . . . . . 39,009 2,303 635 4,092 143 1,892 1 48,075

2015 . . . . . . . . . . 40,089 2,335 648 4,050 140 1,893 1 49,155

Intermediate:

2016 . . . . . . . . . . 41,497 2,336 675 4,042 137 1,897 1 50,584

2020 . . . . . . . . . . 48,038 2,287 773 4,016 128 1,915 1 57,158

2025 . . . . . . . . . . 56,067 2,065 863 4,055 125 1,935 1 65,112

2030 . . . . . . . . . . 62,977 2,281 1,012 3,893 133 1,958 1 72,255

2035 . . . . . . . . . . 67,625 2,353 1,119 3,738 141 2,019 1 76,996

2040 . . . . . . . . . . 70,286 2,323 1,155 3,539 138 2,014 1 79,455
133

Program Assumptions and Methods

Notes: 

1. The number of beneficiaries does not include uninsured individuals who receive benefits under Section

228 of the Social Security Act. Transfers from the General Fund of the Treasury reimburse the OASI Trust

Fund for the cost of most of these individuals.

2. Totals do not necessarily equal the sums of rounded components.

Intermediate (Cont.):

2045 . . . . . . . . . . 71,904 2,330 1,155 3,369 134 1,969 1 80,862

2050 . . . . . . . . . . 73,894 2,355 1,185 3,228 129 1,926 1 82,718

2055 . . . . . . . . . . 76,617 2,409 1,219 3,127 125 1,882 1 85,381

2060 . . . . . . . . . . 79,917 2,482 1,247 3,055 123 1,844 1 88,669

2065 . . . . . . . . . . 83,112 2,557 1,261 3,023 121 1,825 1 91,900

2070 . . . . . . . . . . 86,525 2,664 1,301 3,014 119 1,818 1 95,442

2075 . . . . . . . . . . 89,639 2,756 1,335 3,001 116 1,806 1 98,654

2080 . . . . . . . . . . 91,614 2,854 1,339 2,995 113 1,787 1 100,702

2085 . . . . . . . . . . 94,075 2,975 1,366 3,009 111 1,765 1 103,301

2090 . . . . . . . . . . 97,629 3,087 1,416 3,026 108 1,750 1 107,018

Low-cost:

2016 . . . . . . . . . . 41,475 2,335 675 4,038 137 1,898 1 50,559

2020 . . . . . . . . . . 47,900 2,288 776 4,004 130 1,931 1 57,030

2025 . . . . . . . . . . 55,671 2,074 873 4,036 129 1,992 1 64,776

2030 . . . . . . . . . . 61,822 2,239 1,042 3,939 131 2,119 1 71,293

2035 . . . . . . . . . . 65,757 2,289 1,173 3,812 138 2,272 1 75,443

2040 . . . . . . . . . . 67,718 2,232 1,227 3,626 137 2,347 1 77,287

2045 . . . . . . . . . . 68,782 2,206 1,244 3,462 135 2,355 1 78,185

2050 . . . . . . . . . . 70,356 2,195 1,296 3,322 133 2,354 1 79,658

2055 . . . . . . . . . . 72,806 2,220 1,357 3,214 134 2,357 1 82,090

2060 . . . . . . . . . . 75,865 2,263 1,414 3,133 136 2,377 1 85,189

2065 . . . . . . . . . . 78,820 2,310 1,455 3,090 140 2,432 1 88,246

2070 . . . . . . . . . . 81,947 2,375 1,525 3,073 143 2,502 1 91,566

2075 . . . . . . . . . . 84,650 2,428 1,586 3,055 146 2,557 1 94,423

2080 . . . . . . . . . . 86,310 2,496 1,607 3,057 147 2,595 1 96,212

2085 . . . . . . . . . . 88,966 2,598 1,662 3,103 149 2,630 1 99,108

2090 . . . . . . . . . . 93,522 2,701 1,760 3,168 151 2,676 1 103,981

High-cost:

2016 . . . . . . . . . . 41,516 2,336 674 4,046 136 1,895 1 50,605

2020 . . . . . . . . . . 48,172 2,285 768 4,026 127 1,893 1 57,271

2025 . . . . . . . . . . 56,513 2,052 847 4,074 119 1,868 1 65,473

2030 . . . . . . . . . . 64,274 2,340 982 3,820 134 1,788 1 73,338

2035 . . . . . . . . . . 69,688 2,454 1,069 3,634 138 1,769 1 78,753

2040 . . . . . . . . . . 73,109 2,461 1,090 3,420 131 1,705 1 81,917

2045 . . . . . . . . . . 75,385 2,500 1,076 3,245 122 1,622 1 83,952

2050 . . . . . . . . . . 77,892 2,550 1,078 3,107 114 1,547 1 86,289

2055 . . . . . . . . . . 80,947 2,626 1,083 3,009 106 1,478 1 89,250

2060 . . . . . . . . . . 84,512 2,711 1,082 2,939 99 1,409 1 92,754

2065 . . . . . . . . . . 87,926 2,810 1,074 2,908 93 1,354 1 96,166

2070 . . . . . . . . . . 91,657 2,934 1,090 2,894 87 1,311 1 99,975

2075 . . . . . . . . . . 95,167 3,038 1,099 2,874 81 1,272 1 103,532

2080 . . . . . . . . . . 97,464 3,145 1,089 2,846 76 1,233 1 105,853

2085 . . . . . . . . . . 99,617 3,277 1,092 2,824 71 1,192 1 108,074

2090 . . . . . . . . . . 102,035 3,396 1,105 2,798 67 1,156 1 110,557

a Retired-worker beneficiaries include persons who also receive a residual benefit consisting of the excess of

an auxiliary benefit over their retired-worker benefit.

Table V.C4.—OASI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1945-2090 (Cont.)

[In thousands]

Calendar year

Retired workers and auxiliaries Survivors

Worker Total a Spouse Child

WidowwidowerMotherfather Child Parent
Assumptions and Methods

134

5. Disability Insurance Beneficiaries

The DI Trust Fund pays for benefits to disabled workers who: (1) satisfy the

disability insured requirements, (2) are unable to engage in any substantial

gainful activity due to a medically determinable physical or mental impairment severe enough to satisfy the requirements of the program, and (3) have

not yet attained normal retirement age. Spouses and children of such disabled

workers may also receive DI benefits provided they satisfy certain criteria,

primarily age and earnings requirements.

The Office of the Chief Actuary projects the number of disabled-worker beneficiaries in current-payment status (disability prevalence) for each future

year. The projections start with the number in current-payment status as of

December 2015. Projections of the number of new beneficiaries awarded

benefits each year (disability incidence) and the number of beneficiaries

leaving the disability rolls each year then determine the number in currentpayment status in later years. Beneficiaries leave the rolls due to death and

recovery (disability terminations) and due to conversion from disabledworker to retired-worker beneficiary status at normal retirement age, after

which the OASI Trust Fund pays for benefits. The remainder of this section

describes the concepts of disability incidence, termination, and prevalence.

a. Disability Incidence

The disability incidence rate is the ratio of the number of new beneficiaries

awarded benefits each year to the number of individuals who meet insured

requirements but are not yet receiving benefits (the disability-exposed population1). The Office of the Chief Actuary projects the number of newly

awarded beneficiaries for each future year by multiplying assumed age-sexspecific disability incidence rates and the projected disability-exposed population by age and sex.

Figure V.C3 illustrates the historical and estimated incidence rates under the

three alternatives. Incidence rates have varied substantially during the historical period since 1970 due to a variety of demographic and economic factors,

along with changes in legislation and program administration. The solid lines

in figure V.C3 show the incidence rate adjusted to the age-sex distribution of

the disability-exposed population for 2000. This adjustment allows a comparison of incidence rates over time by focusing on the likelihood of becom-

 1 The disability-exposed population excludes those receiving benefits, while the disability insured population includes them. Section V.C.3 of this report describes the projection of the disability insured population.
135

Program Assumptions and Methods

ing disabled, and by excluding the effects of a changing distribution of the

population toward ages where disability is more or less likely.

The dashed lines in figure V.C3 represent the gross (unadjusted) incidence

rates. The changing age-sex distribution of the exposed population over time

influences these unadjusted rates. The gross incidence rate fell substantially

below the age-sex-adjusted rate between 1975 and 1995 as the baby-boom

generation swelled the size of the younger working-age population, where

disability incidence is lower than in older populations. After 1995, the gross

rate rose faster than the age-sex-adjusted rate as the baby-boom generation

moved into an age range where disability incidence peaks. After 2023, the

projected gross incidence rate declines relative to the age-sex-adjusted rate

as the baby-boom generation moves above the normal retirement age and the

lower-birth-rate cohorts of the 1970s enter prime disability ages (50 to normal retirement age). As these smaller cohorts age beyond normal retirement

age, by about 2050, the gross incidence rate returns to a higher relative level

under the intermediate assumptions. Thereafter, the gross rate remains higher

than the age-sex-adjusted rate, and reflects the persistently higher average

age of the working-age population, which is largely due to lower birth rates

since 1965, and to the increase in the normal retirement age.

For the first 10 years of the projection period (through 2025), incidence rates

reflect several factors including: (1) aspects of program administration, such

as efforts to reduce the disability backlog and recent changes to how claims

are adjudicated; (2) assumed future unemployment rates; and (3) underlying

trends in incidence. As described in section V.B.5, all three sets of economic

assumptions reflect a continuation of the gradual economic recovery from

the recession that began in December 2007. The corresponding projected

unemployment rates follow near-term paths specific to the three alternative

sets of economic assumptions, then gradually move toward their respective

ultimate levels. At the beginning of the recent period of high unemployment,

disability incidence rates were well above the general trend level, with rates

reaching a peak in 2010. Over the last few years, incidence rates have subsided as the economy has recovered. At the beginning of the projection

period, disability incidence rates remain briefly below the general trend level

for each alternative because some of the earlier additional awards would

have occurred in a later year. Due to expected efforts to reduce backlogs in

processing disability determinations which have developed over the last few

years, incidence rates are projected to rise above the general trend level

through about 2020. Over the rest of the short-range period, disability incidence rates under each alternative evolve toward their ultimate levels along

trajectories consistent with the assumed unemployment rates. After 2025,
Assumptions and Methods

136

age-sex-specific incidence rates trend toward the ultimate rates assumed for

the long-range projections and reach these ultimate rates in 2035. These ultimate age-sex-specific disability incidence rates were selected based on careful analysis of historical levels and patterns and expected future conditions,

including the impact of scheduled increases in the normal retirement age.1

The ultimate incidence rates represent the expected average rates of incidence for the future.

For the intermediate alternative, the Trustees assume that the ultimate agesex-adjusted incidence rate (adjusted to the disability-exposed population for

the year 2000) will be 5.4 awards per thousand exposed,2 which is the same

as in last year’s report. Figure V.C3 illustrates that the estimated ultimate

age-sex-adjusted incidence rate of 5.4 is slightly higher than the average rate

for the historical period 1970 through 2015, reflecting the increase in female

incidence rates over this period. However, a similar comparison using gross

incidence rates gives a different result. The estimated ultimate gross incidence rate is substantially greater than the average gross rate over the historical period due to the large changes in the age-sex distribution of the

disability-exposed population between 1970 and 2010.

The Trustees assume that the ultimate age-sex-adjusted incidence rates for

the low-cost and high-cost alternatives will be 4.3 and 6.4 awards per thousand exposed, or about 17 percent lower and 23 percent higher than the average for the historical period, respectively. These ultimate age-sex-adjusted

incidence rates are similar to those in last year’s report.

 1 Projected incidence rates are adjusted upward to account for additional workers who are expected to file

for disability benefits (rather than retirement benefits) in response to reductions in retirement benefits as the

normal retirement age rises.

 2 The ultimate age-sex-adjusted incidence rate decreased from 5.42 in last year’s report to 5.38 in this year’s

report due to a new physician review requirement mandated by the Bipartisan Budget Act of 2015.
137

Program Assumptions and Methods

b. Disability Termination

Beneficiaries stop receiving disability benefits when they die, recover from

their medically-determinable disabling condition, or return to work. Disabled-worker beneficiaries who return to substantial work for an extended

period are deemed to have recovered, and their benefits are then terminated.

The termination rate is the ratio of the number of terminations for these reasons to the average number of disabled-worker beneficiaries during the year.

The Office of the Chief Actuary projects termination rates by age, sex, and

reason for termination. In addition, the office projects termination rates by

duration of entitlement to disabled-worker benefits in the long-range period

(post-2025).

In the short-range period (through 2025), the projected age-sex-adjusted

death rate (adjusted to the 2000 disabled-worker population) under the intermediate assumptions gradually declines from 25.7 deaths per thousand beneficiaries for 2015 to about 22.9 per thousand for 2025. The projected agesex-adjusted recovery rate (medical improvement and return to work) under

the intermediate assumptions evolves from a level of 13.4 per thousand beneficiaries for 2015 to 11.3 per thousand beneficiaries for 2025. Under the low-

 Figure V.C3.—DI Disability Incidence Rates, 1970-2090

[Awards per thousand disability-exposed]

0

1

2

3

4

5

6

7

8

9

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

Gross incidence rates

Age-sex-adjusted

incidence rates

I 

II 

III 

Historical Estimated 
Assumptions and Methods

138

cost and high-cost assumptions, total age-sex-adjusted termination rates due

to death and recovery are roughly 10-15 percent higher or lower, respectively, than under the intermediate assumptions.

For the long-range period (post-2025), the Office of the Chief Actuary projects death and recovery rates by age, sex, and duration of entitlement relative

to the average level of rates experienced over the base period 2006 through

2010. The assumed ultimate age-sex-adjusted recovery rate for disabled

workers is about 10.4 per thousand beneficiaries. The assumed ultimate agesex-adjusted recovery rates for the low-cost and high-cost alternatives are

about 12.6 and 8.3 recoveries per thousand beneficiaries, respectively.

Recovery rates by age, sex, and duration of entitlement reach ultimate levels

in the twentieth year of the projection period (2035) for all three sets of

assumptions. In contrast, death rates by age and sex change throughout the

long-range period at the same rate as death rates in the general population.

From the age-sex-adjusted death rate of 25.7 per thousand beneficiaries in

2015, this rate decreases to 18.1, 11.4, and 6.7 per thousand disabled-worker

beneficiaries for 2090 under the low-cost, intermediate, and high-cost

assumptions, respectively.

Figure V.C4 illustrates gross and age-sex-adjusted total termination rates

(including both recoveries and deaths) for disabled-worker beneficiaries for

the historical period since 1970, and for the projection period through 2090.

In the near term, through 2018, recovery terminations are projected to remain

at relatively high levels, consistent with the assumption that the Social Security Administration will receive sufficient budget appropriations to reduce

the pending backlog of continuing disability reviews. As with incidence

rates, the age-sex-adjusted termination rate illustrates the real change in the

tendency to terminate benefits. Changes in the age-sex distribution of the

beneficiary population influence the gross termination rate. A shift in the

beneficiary population to older ages, as occurred over the past 20 years when

the baby-boom generation moved into pre-retirement ages, increases gross

death termination rates relative to the age-sex-adjusted rates.
139

Program Assumptions and Methods

c. Comparison of Incidence, Termination, and Conversion

Incidence and termination rates are the foundation for projecting the number

of disabled-worker beneficiaries in current-payment status. At normal retirement age, disabled-worker beneficiaries convert to retired-worker status and

leave the DI rolls. 

Figure V.C5 compares the historical and projected (intermediate) levels of

incidence, termination, and conversion on both a gross basis and an age-sexadjusted basis. Incidence rates have varied widely, and the Trustees expect

the age-sex adjusted rates under the intermediate assumptions to remain near

the middle of the high and low extremes experienced since 1970. Termination rates have declined and the Trustees expect them to continue to decline,

largely because of declining death rates. 

Conversions are simply a transfer of beneficiaries at normal retirement age

from the DI Trust Fund account to the OASI Trust Fund account. Therefore,

the disability “conversion” rate is 100 percent for disabled-worker beneficiaries reaching normal retirement age in a given year and zero at all other ages.

After conversion, recovery from the disabling condition is no longer relevant

for benefit eligibility. The conversion ratio is the number of conversions in a

 Figure V.C4.—DI Disability Termination Rates, 1970-2090

[Terminations per thousand disabled-worker beneficiaries]

0

20

40

60

80

100

120

140

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

Gross termination rates

Age-sex-adjusted

termination rates

II 

III 

I 

Historical Estimated 
Assumptions and Methods

140

given year (that is, beneficiaries who reach normal retirement age) divided

by the average number of disabled-worker beneficiaries at all ages in that

year. The ratio is constant on an age-sex-adjusted basis, except for the two

periods during which normal retirement age increases under current law. On

a gross basis, however, the conversion ratio rises and falls with the changing

proportion of all disabled-worker beneficiaries who attain normal retirement

age in a given year. The gross conversion ratio generally increases from 2002

to 2030 due to aging of the beneficiary population.

d. DI Beneficiaries and Disability Prevalence Rates

The Office of the Chief Actuary makes detailed projections of disabledworker awards, terminations, and conversions and combines these to project

the number of disabled workers receiving benefits over the next 75 years.

Table V.C5 presents the projected numbers of disabled workers in currentpayment status. The number of disabled workers in current-payment status

grows from 8.9 million at the end of 2015, to 12.6 million, 14.6 million, and

15.8 million at the end of 2090, under the low-cost, intermediate, and highcost assumptions, respectively. Of course, much of this growth results from

 Figure V.C5.—Comparison of DI Disability Incidence Rates, Termination Rates and 

Conversion Ratios Under Intermediate Assumptions, 1970-2090

[Awards per thousand disability-exposed;

terminations and conversions per thousand disabled-worker beneficiaries]

0

20

40

60

80

100

120

140

160

0

1

2

3

4

5

6

7

8

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Termination rates & 

Conversion ratios 

Incidence rates 

Calendar year 

Gross incidence rates 

Age-sex-adjusted incidence rates 

Gross conversion ratios 

Age-sex-adjusted conversion ratios 

Gross termination rates 

Historical Estimated 

Age-sex-adjusted termination rates 
141

Program Assumptions and Methods

the growth and aging of the population described earlier in this chapter.

Table V.C5 also presents projected numbers of auxiliary beneficiaries and

disability prevalence rates on both a gross basis and an age-sex-adjusted

basis.

Table V.C5.—DI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1960-2090

[Beneficiaries in thousands; prevalence rates per thousand persons insured for disability benefits]

Calendar year

Disabledworker

beneficiaries

Auxiliary beneficiaries

Total

beneficiaries

Disability

prevalence rates

Spouse Child Gross

Age-sexadjusteda

Historical data:

1960. . . . . . . . . . . . 455 77 155 687

1965. . . . . . . . . . . . 988 193 558 1,739

1970. . . . . . . . . . . . 1,493 283 889 2,665 20 18

1975. . . . . . . . . . . . 2,488 453 1,411 4,351 29 28

1980. . . . . . . . . . . . 2,856 462 1,359 4,677 28 31

1985. . . . . . . . . . . . 2,653 306 945 3,904 24 26

1990. . . . . . . . . . . . 3,007 266 989 4,261 25 28

1995. . . . . . . . . . . . 4,179 264 1,409 5,852 33 35

1996. . . . . . . . . . . . 4,378 224 1,463 6,065 34 36

1997. . . . . . . . . . . . 4,501 207 1,438 6,146 34 36

1998. . . . . . . . . . . . 4,691 190 1,446 6,327 35 36

1999. . . . . . . . . . . . 4,870 176 1,468 6,514 36 36

2000. . . . . . . . . . . . 5,036 165 1,466 6,667 36 36

2001. . . . . . . . . . . . 5,268 157 1,482 6,907 38 37

2002. . . . . . . . . . . . 5,539 152 1,526 7,217 39 38

2003. . . . . . . . . . . . 5,869 151 1,571 7,590 41 38

2004. . . . . . . . . . . . 6,198 153 1,599 7,950 43 39

2005. . . . . . . . . . . . 6,519 157 1,633 8,309 45 40

2006. . . . . . . . . . . . 6,807 156 1,652 8,615 46 40

2007. . . . . . . . . . . . 7,099 154 1,665 8,918 48 41

2008. . . . . . . . . . . . 7,427 155 1,692 9,273 50 41

2009. . . . . . . . . . . . 7,788 159 1,749 9,695 52 43

2010. . . . . . . . . . . . 8,204 161 1,820 10,185 55 44

2011. . . . . . . . . . . . 8,576 164 1,874 10,614 58 45

2012. . . . . . . . . . . . 8,827 163 1,900 10,890 59 46

2013. . . . . . . . . . . . 8,941 157 1,889 10,987 60 46

2014. . . . . . . . . . . . 8,955 150 1,828 10,932 59 46

2015. . . . . . . . . . . . 8,909 143 1,756 10,808 59 45

Intermediate:

2016. . . . . . . . . . . . 8,993 139 1,739 10,871 59 45

2020. . . . . . . . . . . . 9,349 139 1,764 11,252 60 45

2025. . . . . . . . . . . . 9,790 153 1,800 11,742 62 45

2030. . . . . . . . . . . . 9,771 166 1,966 11,904 59 45

2035. . . . . . . . . . . . 9,988 184 2,208 12,381 59 45

2040. . . . . . . . . . . . 10,391 193 2,346 12,929 60 46

2045. . . . . . . . . . . . 11,078 207 2,429 13,714 62 47

2050. . . . . . . . . . . . 11,577 211 2,497 14,284 64 47

2055. . . . . . . . . . . . 12,012 220 2,556 14,788 65 48

2060. . . . . . . . . . . . 12,210 222 2,622 15,054 64 48

2065. . . . . . . . . . . . 12,547 232 2,709 15,488 65 49

2070. . . . . . . . . . . . 12,866 243 2,805 15,914 65 49

2075. . . . . . . . . . . . 13,082 245 2,884 16,210 65 49

2080. . . . . . . . . . . . 13,613 256 2,951 16,820 66 49

2085. . . . . . . . . . . . 14,246 270 3,020 17,536 67 50

2090. . . . . . . . . . . . 14,594 275 3,094 17,963 67 50
Assumptions and Methods

142

Note: Totals do not necessarily equal the sums of rounded components.

The disability prevalence rate is the ratio of the number of disabled-worker

beneficiaries in current-payment status to the number of persons insured for

disability benefits. Figure V.C6 illustrates the historical and projected disability prevalence rates on both a gross basis and on an age-sex-adjusted

basis (adjusted to the age-sex distribution of the insured population for the

year 2000).

Changes in prevalence rates are a direct result of changes in incidence rates

and termination rates. Figure V.C5 depicts patterns for incidence and termination rates, which are helpful for understanding the trend in prevalence

Low-cost:

2016. . . . . . . . . . . . 8,919 139 1,716 10,774 59 44

2020. . . . . . . . . . . . 8,845 136 1,653 10,634 57 42

2025. . . . . . . . . . . . 8,790 150 1,630 10,569 55 40

2030. . . . . . . . . . . . 8,386 136 1,743 10,265 50 38

2035. . . . . . . . . . . . 8,263 142 1,934 10,339 48 37

2040. . . . . . . . . . . . 8,365 140 2,040 10,545 47 37

2045. . . . . . . . . . . . 8,784 146 2,103 11,033 48 37

2050. . . . . . . . . . . . 9,117 145 2,159 11,421 48 37

2055. . . . . . . . . . . . 9,443 149 2,224 11,817 48 37

2060. . . . . . . . . . . . 9,627 150 2,314 12,091 47 37

2065. . . . . . . . . . . . 9,950 156 2,440 12,547 47 38

2070. . . . . . . . . . . . 10,303 163 2,581 13,047 47 38

2075. . . . . . . . . . . . 10,642 165 2,703 13,510 47 38

2080. . . . . . . . . . . . 11,303 175 2,810 14,289 47 38

2085. . . . . . . . . . . . 12,100 188 2,919 15,207 48 38

2090. . . . . . . . . . . . 12,642 194 3,040 15,876 49 38

High-cost:

2016. . . . . . . . . . . . 9,060 140 1,758 10,957 60 45

2020. . . . . . . . . . . . 9,923 141 1,883 11,947 65 49

2025. . . . . . . . . . . . 10,802 154 1,940 12,896 69 50

2030. . . . . . . . . . . . 11,208 204 2,174 13,587 69 52

2035. . . . . . . . . . . . 11,786 240 2,450 14,476 71 54

2040. . . . . . . . . . . . 12,496 260 2,606 15,362 74 56

2045. . . . . . . . . . . . 13,458 285 2,692 16,435 78 57

2050. . . . . . . . . . . . 14,115 293 2,750 17,158 81 59

2055. . . . . . . . . . . . 14,642 307 2,794 17,742 83 60

2060. . . . . . . . . . . . 14,819 307 2,819 17,946 84 60

2065. . . . . . . . . . . . 15,116 318 2,848 18,282 86 61

2070. . . . . . . . . . . . 15,320 330 2,876 18,526 87 61

2075. . . . . . . . . . . . 15,283 326 2,890 18,500 86 61

2080. . . . . . . . . . . . 15,505 337 2,898 18,740 87 61

2085. . . . . . . . . . . . 15,777 350 2,910 19,037 88 61

2090. . . . . . . . . . . . 15,826 351 2,928 19,104 88 62

a Adjusted to the age-sex distribution of the insured population for the year 2000.

Table V.C5.—DI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1960-2090 (Cont.)

[Beneficiaries in thousands; prevalence rates per thousand persons insured for disability benefits]

Calendar year

Disabledworker

beneficiaries

Auxiliary beneficiaries

Total

beneficiaries

Disability

prevalence rates

Spouse Child Gross

Age-sexadjusteda
143

Program Assumptions and Methods

rates. Annual incidence and termination rates are not directly comparable or

combinable because their denominators differ.

Age-sex-adjusted prevalence rates have increased primarily because: (1) termination rates have declined, (2) incidence rates at younger ages have

increased relative to rates at older ages, and (3) incidence rates have

increased substantially for women to parity with men. Gross prevalence rates

have increased more than age-sex-adjusted prevalence rates ever since the

baby-boom generation began to reach ages 45 through normal retirement

age, a time of life when disability incidence rates are relatively high. The

Office of the Chief Actuary projects both gross and age-sex adjusted prevalence rates to grow at a slower pace based on assumed stabilization in three

factors: (1) the age distribution of the general population, (2) the age distribution of the disability insured population, and (3) incidence rates by age and

gender. As these factors gradually stabilize, the declining death termination

rate continues to have a small influence toward higher disability prevalence

rates.

As mentioned above in the discussion of incidence and termination rates, the

age-sex-adjusted prevalence rate isolates the changing trend in the underly-

 Figure V.C6.—DI Disability Prevalence Rates, 1970-2090

[Rate per thousand persons insured for disability benefits]

0

10

20

30

40

50

60

70

80

90

100

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year 

Gross prevalence rates

Age-sex-adjusted

prevalence rates

III 

II 

II 

I 

I 

Historical Estimated 

III 
Assumptions and Methods

144

ing likelihood of receiving benefits for the insured population, without

reflecting changes in the age distribution of the population. As with incidence rates, gross disability prevalence rates declined relative to the age-sexadjusted rate when the baby-boom generation reached working age between

1970 and 1990; this trend reflects the lower disability prevalence rates associated with younger ages. Conversely, the gross rate of disability prevalence

has increased relative to the age-sex-adjusted rate after 1990 due to the aging

of the baby-boom generation into ages with higher disability prevalence

rates.

Under the intermediate assumptions, the projected age-sex-adjusted disability prevalence rate grows from 44.7 per thousand disability insured at the end

of 2015 to 49.7 per thousand at the end of 2090. As mentioned above, the

Office of the Chief Actuary projects that the growth in prevalence will slow

relative to the historical period.

Under the low-cost and high-cost assumptions, the age-sex-adjusted disability prevalence rate decreases to 38.3 per thousand and increases to 61.6 per

thousand insured workers at the end of 2090, respectively.

Table V.C5 presents projections of the numbers of auxiliary beneficiaries

paid from the DI Trust Fund. As indicated at the beginning of this subsection, auxiliary beneficiaries are qualifying spouses and children of disabled

workers. A spouse must either be at least age 62 or have an eligible child

beneficiary in his or her care who is either under age 16 or disabled prior to

age 22. A child must be: (1) under age 18, (2) age 18 or 19 and still a student

in high school, or (3) age 18 or older and disabled prior to age 22.

The projection of the number of auxiliary beneficiaries relies on the projected number of disabled-worker beneficiaries. In the short-range period

(2016 through 2025), the Office of the Chief Actuary projects incidence and

termination rates for each category of auxiliary beneficiary. After 2025, the

office projects child beneficiaries at ages 18 and under in relation to the projected number of children in the population using the probability that either

of their parents is a disabled-worker beneficiary. The office projects the

remaining categories of children and spouses in a similar manner.

6. Covered and Taxable Earnings, Taxable Payroll, and Payroll Tax

Contributions

Covered earnings are the sum of covered wages and covered self-employment net earnings. The Office of the Chief Actuary projects covered wages

for component sectors of the economy (i.e., private, State and local, Federal

civilian, and military) based on the projected overall growth of sectoral and
145

Program Assumptions and Methods

total wages in the U.S. economy. The projections of covered wages also

reflect changes in covered employment due to a relative increase in non-covered undocumented immigrants and to the mandatory coverage of new hires

in the Federal civilian sector. The office projects covered self-employment

net earnings based on the growth in net proprietors’ income in the U.S. economy.

Taxable earnings are the amount of covered earnings subject to the Social

Security payroll tax. Taxable wages for an employee are total covered wages

from all wage employment up to the contribution and benefit base. Taxable

wages for an employer are the sum of all covered wages paid to each

employee up to the base. Employees with multiple jobs whose total wages

exceed the base are eligible for a refund of excess employee taxes withheld;

employers are not eligible for a refund on this basis. For self-employed

workers with no taxable wages, taxable earnings are the amount of covered

self-employment net earnings up to the base. For self-employed workers

with taxable wages less than the base, covered self-employment net earnings

are taxable up to the difference between the base and their taxable wages.

For projection purposes, the Office of the Chief Actuary computes taxable

earnings based on a proportion of covered earnings that is at or below the

base.

The OASDI taxable payroll (see table VI.G6) for a year is the amount of

earnings which, when multiplied by the combined OASDI employeeemployer payroll tax rate for that year, yields the total amount of payroll

taxes due from wages paid and self-employment net earnings for the year.

The Trustees use taxable payroll to determine income rates, cost rates, and

actuarial balances. Taxable payroll is derived by adjusting total taxable earnings to account for categories of earnings that are taxed at rates other than the

combined employee-employer rate and to take into account amounts credited

as wages that were not included in normally reported wages. For 1951 and

later, taxable earnings are reduced by one-half of the amount of wages paid

to employees with multiple jobs that exceed the contribution and benefit

base. For 1983 through 2001, deemed wage credits for military service after

1956 are added to taxable earnings. The self-employment tax rates for 1951

through 1983 were less than the combined employee-employer rates; therefore, the self-employment component of taxable payroll for those years is

reduced by multiplying the ratio of the self-employment rate to the combined

employee-employer rate times the taxable self-employment net earnings.

Finally, for 1966 through 1979, employers were exempt from paying their

share of payroll tax on their employees’ tips and, for 1980 through 1987,

employers paid tax on only part of their employees’ tips. For those years, the
Assumptions and Methods

146

taxable payroll is reduced by half of the amount of tips for which the

employer owed no payroll tax.

The ratio of taxable payroll to covered earnings (the taxable ratio) fell from

88.3 percent for 1984 to 82.6 percent for 2000, mostly due to much higher

increases in wage levels for very high earners than for all other earners. From

2000 to 2010, the taxable ratio varied with the business cycle, rising during

economic downturns and falling during recoveries. Specifically, the taxable

ratio rose to 85.7 percent for 2002, declined to 82.4 percent for 2007, rose to

85.2 percent for 2009, and was 83.0 percent for 2014.

For this report, the Trustees assume a level for the taxable ratio at the end of

the short-range period (2025) of 82.5 percent for the intermediate assumptions, 81.0 percent for the high-cost assumptions (or 1.5 percentage points

lower than the intermediate assumptions), and 84.0 percent for the low-cost

assumptions (or 1.5 percentage points higher than the intermediate assumptions). These are the same assumptions that the Trustees made for the end of

the short-range period (2024) for the 2015 report.

The Office of the Chief Actuary projects payroll tax contributions using the

patterns of tax collection required by Federal laws and regulations. The

office determines payroll tax liabilities by multiplying the scheduled tax rates

for each year by the amount of taxable wages and self-employment net earnings for that year. The office then splits these liabilities into amounts by collection period. For wages, Federal law requires that employers withhold

OASDI and HI payroll taxes and Federal individual income taxes from

employees’ pay. As an employer’s accumulation of such taxes (including the

employer share of payroll taxes) meets certain thresholds, which the Department of the Treasury determines, the employer must deposit these taxes with

the U.S. Treasury by a specific day, depending on the amount of money

involved.1 For projection purposes, the office splits the payroll tax contributions related to wages into amounts paid in the same quarter as incurred and

in the following quarter. Self-employed workers must make estimated tax

payments on their earnings four times during the year and make up any

underestimate on their individual income tax returns. The projection splits

the self-employed tax liabilities by collection quarter to reflect this pattern of

receipts. 

 1 Generally, the higher the amount of liability, the sooner the taxes must be paid. For smaller employers,

payment is due by the middle of the month following when the liability was incurred. Medium-size employers have three banking days in which to make their deposits. Larger employers must make payment on the

next business day after paying their employees.
147

Program Assumptions and Methods

The projected tax contributions also reflect the method used to ensure that

money transferred to the trust funds is adjusted, over time, to equal the actual

liability owed. Because payers generally make tax payments without identifying the separate OASDI contribution amounts, Treasury makes daily transfers of money from the General Fund to the trust funds on an initial

estimated basis. The Social Security Administration periodically certifies the

amounts of wages and self-employment net earnings on which tax contributions are owed for each year, at which time Treasury determines adjustments

to appropriations to reconcile tax liabilities with deposits in the trust funds.

This process also includes periodic transfers from the trust funds to the General Fund for contributions on wages in excess of the contribution and benefit base.

Table V.C6 shows the payroll tax contribution rates applicable under current

law in each calendar year and the allocation of these rates between the OASI

and DI Trust Funds.1 It also shows the contribution and benefit base for each

year through 2016.

 1 Table VI.G1 shows the payroll tax contribution rates for the Hospital Insurance (HI) program.
Assumptions and Methods

148

Table V.C6.—Contribution and Benefit Base and Payroll Tax Contribution Rates

Calendar years

Contribution

and benefit 

base

Payroll tax contribution rates (percent)

Employees and employers, 

combineda Self-employedb

OASDI OASI DI OASDI OASI DI

1937-49 . . . . . . . . . $3,000 2.00 2.00 — — — —

1950. . . . . . . . . . . . 3,000 3.00 3.00 — — — —

1951-53 . . . . . . . . . 3,600 3.00 3.00 — 2.2500 2.2500 —

1954. . . . . . . . . . . . 3,600 4.00 4.00 — 3.0000 3.0000 —

1955-56 . . . . . . . . . 4,200 4.00 4.00 — 3.0000 3.0000 —

1957-58 . . . . . . . . . 4,200 4.50 4.00 0.50 3.3750 3.0000 0.3750

1959. . . . . . . . . . . . 4,800 5.00 4.50 .50 3.7500 3.3750 .3750

1960-61 . . . . . . . . . 4,800 6.00 5.50 .50 4.5000 4.1250 .3750

1962. . . . . . . . . . . . 4,800 6.25 5.75 .50 4.7000 4.3250 .3750

1963-65 . . . . . . . . . 4,800 7.25 6.75 .50 5.4000 5.0250 .3750

1966. . . . . . . . . . . . 6,600 7.70 7.00 .70 5.8000 5.2750 .5250

1967. . . . . . . . . . . . 6,600 7.80 7.10 .70 5.9000 5.3750 .5250

1968. . . . . . . . . . . . 7,800 7.60 6.65 .95 5.8000 5.0875 .7125

1969. . . . . . . . . . . . 7,800 8.40 7.45 .95 6.3000 5.5875 .7125

1970. . . . . . . . . . . . 7,800 8.40 7.30 1.10 6.3000 5.4750 .8250

1971. . . . . . . . . . . . 7,800 9.20 8.10 1.10 6.9000 6.0750 .8250

1972. . . . . . . . . . . . 9,000 9.20 8.10 1.10 6.9000 6.0750 .8250

1973. . . . . . . . . . . . 10,800 9.70 8.60 1.10 7.0000 6.2050 .7950

1974. . . . . . . . . . . . 13,200 9.90 8.75 1.15 7.0000 6.1850 .8150

1975. . . . . . . . . . . . 14,100 9.90 8.75 1.15 7.0000 6.1850 .8150

1976. . . . . . . . . . . . 15,300 9.90 8.75 1.15 7.0000 6.1850 .8150

1977. . . . . . . . . . . . 16,500 9.90 8.75 1.15 7.0000 6.1850 .8150

1978. . . . . . . . . . . . 17,700 10.10 8.55 1.55 7.1000 6.0100 1.0900

1979. . . . . . . . . . . . 22,900 10.16 8.66 1.50 7.0500 6.0100 1.0400

1980. . . . . . . . . . . . 25,900 10.16 9.04 1.12 7.0500 6.2725 .7775

1981. . . . . . . . . . . . 29,700 10.70 9.40 1.30 8.0000 7.0250 .9750

1982. . . . . . . . . . . . 32,400 10.80 9.15 1.65 8.0500 6.8125 1.2375

1983. . . . . . . . . . . . 35,700 10.80 9.55 1.25 8.0500 7.1125 .9375

1984c . . . . . . . . . . . 37,800 11.40 10.40 1.00 11.4000 10.4000 1.0000

1985c . . . . . . . . . . . 39,600 11.40 10.40 1.00 11.4000 10.4000 1.0000

1986c . . . . . . . . . . . 42,000 11.40 10.40 1.00 11.4000 10.4000 1.0000

1987c . . . . . . . . . . . 43,800 11.40 10.40 1.00 11.4000 10.4000 1.0000

1988c . . . . . . . . . . . 45,000 12.12 11.06 1.06 12.1200 11.0600 1.0600

1989c . . . . . . . . . . . 48,000 12.12 11.06 1.06 12.1200 11.0600 1.0600

1990 . . . . . . . . . . . 51,300 12.40 11.20 1.20 12.4000 11.2000 1.2000

1991. . . . . . . . . . . . 53,400 12.40 11.20 1.20 12.4000 11.2000 1.2000

1992. . . . . . . . . . . . 55,500 12.40 11.20 1.20 12.4000 11.2000 1.2000

1993. . . . . . . . . . . . 57,600 12.40 11.20 1.20 12.4000 11.2000 1.2000

1994. . . . . . . . . . . . 60,600 12.40 10.52 1.88 12.4000 10.5200 1.8800

1995. . . . . . . . . . . . 61,200 12.40 10.52 1.88 12.4000 10.5200 1.8800

1996. . . . . . . . . . . . 62,700 12.40 10.52 1.88 12.4000 10.5200 1.8800

1997. . . . . . . . . . . . 65,400 12.40 10.70 1.70 12.4000 10.7000 1.7000

1998. . . . . . . . . . . . 68,400 12.40 10.70 1.70 12.4000 10.7000 1.7000

1999. . . . . . . . . . . . 72,600 12.40 10.70 1.70 12.4000 10.7000 1.7000

2000. . . . . . . . . . . . 76,200 12.40 10.60 1.80 12.4000 10.6000 1.8000

2001. . . . . . . . . . . . 80,400 12.40 10.60 1.80 12.4000 10.6000 1.8000

2002. . . . . . . . . . . . 84,900 12.40 10.60 1.80 12.4000 10.6000 1.8000

2003. . . . . . . . . . . . 87,000 12.40 10.60 1.80 12.4000 10.6000 1.8000

2004. . . . . . . . . . . . 87,900 12.40 10.60 1.80 12.4000 10.6000 1.8000

2005. . . . . . . . . . . . 90,000 12.40 10.60 1.80 12.4000 10.6000 1.8000
149

Program Assumptions and Methods

7. Income From Taxation of Benefits

Under current law, the OASI and DI Trust Funds are credited with income

tax revenue from the taxation of up to the first 50 percent of OASI and DI

benefit payments. (The HI Trust Fund receives the remainder of the income

tax revenue from the taxation of up to 85 percent of OASI and DI benefit

payments.) Benefits are taxed for beneficiaries with adjusted income (including half of benefits and all non-taxable interest) exceeding specified threshold amounts. The threshold amounts are $25,000 for single filers, $32,000

for joint filers, and $0 for those married but filing separately.

For the short-range period, the Office of the Chief Actuary estimates the

income to the trust funds from taxation of benefits by applying the following

2006. . . . . . . . . . . . $94,200 12.40 10.60 1.80 12.4000 10.6000 1.8000

2007. . . . . . . . . . . . 97,500 12.40 10.60 1.80 12.4000 10.6000 1.8000

2008. . . . . . . . . . . . 102,000 12.40 10.60 1.80 12.4000 10.6000 1.8000

2009. . . . . . . . . . . . 106,800 12.40 10.60 1.80 12.4000 10.6000 1.8000

2010d . . . . . . . . . . . 106,800 12.40 10.60 1.80 12.4000 10.6000 1.8000

2011d . . . . . . . . . . . 106,800 10.40 8.89 1.51 10.4000 8.8900 1.5100

2012d . . . . . . . . . . . 110,100 10.40 8.89 1.51 10.4000 8.8900 1.5100

2013. . . . . . . . . . . . 113,700 12.40 10.60 1.80 12.4000 10.6000 1.8000

2014. . . . . . . . . . . . 117,000 12.40 10.60 1.80 12.4000 10.6000 1.8000

2015. . . . . . . . . . . . 118,500 12.40 10.60 1.80 12.4000 10.6000 1.8000

2016e . . . . . . . . . . . 118,500 12.40 10.03 2.37 12.4000 10.0300 2.3700

2017-18e . . . . . . . . f 12.40 10.03 2.37 12.4000 10.0300 2.3700

2019 and later . . . . f 12.40 10.60 1.80 12.4000 10.6000 1.8000

a Except as noted below, the combined employee/employer rate is divided equally between employees and

employers.

b Beginning in 1990, self-employed persons receive a deduction, for purposes of computing their net earnings, equal to half of the combined OASDI and HI contributions that would be payable without regard to the

contribution and benefit base. The OASDI contribution rate then applies to net earnings after this deduction,

but subject to the OASDI base.

c In 1984 only, employees received an immediate credit of 0.3 percent of taxable wages against their OASDI

payroll tax contributions. The self-employed received similar credits of 2.7 percent, 2.3 percent, and

2.0 percent against their combined OASDI and Hospital Insurance (HI) contributions on net earnings from

self-employment in 1984, 1985, and 1986-89, respectively. The General Fund of the Treasury reimbursed the

trust funds for these credits.

d Public Law 111-147 exempted most employers from paying the employer share of OASDI payroll tax on

wages paid during the period March 19, 2010 through December 31, 2010 to certain qualified individuals

hired after February 3, 2010. Public Law 111-312 reduced the OASDI payroll tax rate for 2011 by

2 percentage points for employees and for self-employed workers. Public Law 112-96 extended the 2011

rate reduction through 2012. These laws require that the General Fund of the Treasury reimburse the OASI

and DI Trust Funds for these temporary reductions in 2010 through 2012 payroll tax revenue, in order to

“replicate to the extent possible” revenue that would have been received if the combined employee/employer

payroll tax rates had remained at 12.4 percent for OASDI (10.6 percent for OASI and 1.8 percent for DI).

e Section 833 of the Bipartisan Budget Act of 2015 reallocated payroll tax rates on a temporary basis. For

earnings in calendar years 2016 through 2018, 0.57 percentage point of the 12.40 percent OASDI payroll tax

rate is reallocated from OASI to DI.

f Subject to automatic adjustment based on increases in average wages.

Table V.C6.—Contribution and Benefit Base and Payroll Tax Contribution Rates (Cont.)

Calendar years

Contribution

and benefit 

base

Payroll tax contribution rates (percent)

Employees and employers, 

combineda Self-employedb

OASDI OASI DI OASDI OASI DI
Assumptions and Methods

150

two factors (projected by the Office of Tax Analysis, Department of the Treasury) to total OASI and DI scheduled benefits: (1) the percentage of scheduled benefits (limited to 50 percent) that is taxable and (2) the average

marginal tax rate applicable to those benefits.

For the long-range period, the office estimates the income to the trust funds

from taxation of benefits by applying projected ratios of taxation of OASI

and DI benefits to total OASI and DI scheduled benefits. The income thresholds used for benefit taxation are, by law, constant in the future, while

income and benefit levels continue to rise. Accordingly, projected ratios of

income from taxation of benefits to the amount of benefits increase gradually. Ultimate tax ratios for OASI and DI benefits used in the projection rely

on estimates from the Office of Tax Analysis in the Department of the Treasury. 

8. Average Benefits

Projections of average benefits for each benefit type reflect recent historical

averages, projected average primary insurance amounts (PIAs), and projected ratios of average benefits to average PIAs. Calculations of average

PIAs are based on projected distributions of beneficiaries by duration from

year of initial entitlement, average PIAs at initial entitlement, and increases

in PIAs after initial entitlement. Projected increases in average PIAs after initial entitlement depend on automatic benefit increases, recomputations to

reflect additional covered earnings, and differences in mortality by level of

lifetime earnings. Calculations of future average PIAs at initial entitlement

are based on projected earnings histories, which in turn reflect a combination

of the actual earnings histories associated with a sample of 2013 initial entitlements and more recent actual earnings levels by age and sex for covered

workers.

For retired-worker, aged-spouse, and aged-widow(er) benefits, the percentage of the PIA that is payable depends on the age at initial entitlement to

benefits. Projected ratios of average benefits to average PIAs for these types

of benefits are based on projections of age distributions at initial entitlement.

9. Scheduled Benefits

For each type of benefit, scheduled benefits are the product of the number of

beneficiaries and the corresponding average monthly benefit. The shortrange model calculates scheduled benefits on a quarterly basis. The longrange model calculates all scheduled benefits on an annual basis, using the

number of beneficiaries at the beginning and end of the year. Adjustments to
151

Program Assumptions and Methods

these annual scheduled benefits include retroactive payments to newly

awarded beneficiaries and other amounts not reflected in the regular monthly

scheduled benefits.

Scheduled lump-sum death benefits are estimated as the product of: (1) the

number of lump-sum death payments projected on the basis of the assumed

death rates, the projected fully insured population, and the estimated percentage of the fully insured population that will qualify for lump-sum death payments; and (2) the amount of the lump-sum death payment, which is $255

(unindexed since 1973).

10.Illustrative Scheduled Benefit Amounts

Table V.C7 shows, under the intermediate assumptions, future benefit

amounts payable upon retirement at the normal retirement age and at age 65,

for various hypothetical workers attaining age 65 in 2016 and subsequent

years. The illustrative benefit amounts in table V.C7 are presented in CPIindexed 2016 dollars—that is, adjusted to 2016 levels by the CPI indexing

series shown in table VI.G6. As a point of comparison, table V.C7 also

shows the national average wage index (AWI) for 2016 and subsequent years

in CPI-indexed 2016 dollars.

The normal retirement age was 65 for individuals who reached age 62 before

2000. It increased to age 66 during the period 2000 through 2005, at a rate of

2 months per year as workers attained age 62. Under current law, the normal

retirement age will increase to age 67 during the period 2017 through 2022,

also by 2 months per year as workers attain age 62. The illustrative benefit

amounts shown in table V.C7 for retirees at age 65 are lower than the

amounts shown for retirees at normal retirement age because the statute

requires an actuarial reduction for monthly benefits taken before normal

retirement age to reflect the expected additional years benefits will be collected. For example, those who collect benefits starting in 2027 at age 65 will

receive benefits for two more years than if they instead claim benefits at the

normal retirement age (age 67) unless they die between the ages of 65

and 67.

Table V.C7 shows five different pre-retirement earnings patterns. Four of

these patterns assume the earnings history of workers with scaled-earnings

patterns1 and reflect very low, low, medium, and high career-average levels

of pre-retirement earnings starting at age 21. The fifth pattern assumes the

 1 Actuarial Note 2016.3 has more details on scaled-earnings patterns.

See www.ssa.gov/OACT/NOTES/ran3/an2016-3.pdf.
Assumptions and Methods

152

earnings history of a steady maximum earner starting at age 22. The four

scaled-earnings patterns derive from earnings experienced by insured workers during 1993-2012. These earnings levels differ by age. The career-average level of earnings for each scaled case targets a percent of the AWI. 

For the scaled medium earner, the career-average earnings level is about

equal to the AWI (or $49,121 for 2016). For the scaled very low, low, and

high earners, the career-average earnings level is about 25 percent,

45 percent, and 160 percent of the AWI, respectively (or $12,280, $22,105,

and $78,594, respectively, for 2016). The steady maximum earner has earnings at or above the contribution and benefit base for each year starting at

age 22 through the year prior to retirement (or $118,500 for 2016).

Table V.C7.—Annual Scheduled Benefit Amounts for Retired Workers 

With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, Calendar Years 2016-2090

Benefits in 2016 dollarsa with retirement at normal retirement age

Year attain 

age 65b Age atretirement

Scaled very

low

earningsc Scaled lowearningsd

Scaled

medium

earningse Scaled highearningsf

Steady

maximum

earningsg

National

Average Wage

Index in 2016

dollarsh

2016 . . . . 66:0 $9,025 $11,800 $19,455 $25,788 $31,418 $49,121

2020 . . . . 66:2 9,722 12,722 20,976 27,794 34,021 52,913

2025 . . . . 67:0 10,488 13,728 22,641 29,990 36,948 56,770

2030 . . . . 67:0 11,255 14,733 24,284 32,171 39,661 60,429

2035 . . . . 67:0 11,985 15,681 25,846 34,247 42,249 64,288

2040 . . . . 67:0 12,752 16,681 27,499 36,434 44,913 68,226

2045 . . . . 67:0 13,534 17,704 29,186 38,669 47,681 72,471

2050 . . . . 67:0 14,376 18,811 31,001 41,076 50,593 77,033

2055 . . . . 67:0 15,280 19,994 32,952 43,657 53,667 81,797

2060 . . . . 67:0 16,226 21,230 34,987 46,359 56,913 86,764

2065 . . . . 67:0 17,211 22,517 37,112 49,174 60,375 91,888

2070 . . . . 67:0 18,229 23,848 39,302 52,077 63,945 97,169

2075 . . . . 67:0 19,275 25,218 41,562 55,070 67,630 102,716

2080 . . . . 67:0 20,379 26,660 43,934 58,214 71,500 108,546

2085 . . . . 67:0 21,534 28,172 46,427 61,519 75,567 114,712

2090 . . . . 67:0 22,757 29,773 49,065 65,012 79,871 121,296

Benefits in 2016 dollarsa with retirement at age 65

2016 . . . . 65:0 $8,617 $11,270 $18,579 $24,628 $29,897 $49,121

2020 . . . . 65:0 8,967 11,729 19,343 25,624 31,256 52,913

2025 . . . . 65:0 9,088 11,898 19,614 25,987 31,778 56,770

2030 . . . . 65:0 9,753 12,768 21,039 27,883 34,134 60,429

2035 . . . . 65:0 10,384 13,589 22,403 29,677 36,360 64,288

2040 . . . . 65:0 11,051 14,454 23,827 31,573 38,657 68,226

2045 . . . . 65:0 11,727 15,347 25,290 33,511 41,048 72,471

2050 . . . . 65:0 12,461 16,302 26,867 35,598 43,550 77,033

2055 . . . . 65:0 13,240 17,324 28,554 37,837 46,200 81,797

2060 . . . . 65:0 14,062 18,399 30,321 40,177 48,999 86,764

2065 . . . . 65:0 14,917 19,517 32,162 42,616 51,979 91,888

2070 . . . . 65:0 15,798 20,668 34,062 45,133 55,054 97,169
153

Program Assumptions and Methods

11. Administrative Expenses

The projection of administrative expenses through the short-range period is

based on historical experience and the projected growth in average wages.

The Office of Budget of the Social Security Administration provides estimates for the first several years of the projection. For years after the shortrange period, projected administrative expenses reflect increases in the number of beneficiaries in current-payment status, and increases in the average

wage. However, the increases in average wage are partially offset by

assumed administrative productivity gains.

12.Railroad Retirement Financial Interchange

Railroad workers are covered under a separate multi-tiered benefit plan, with

a first tier of coverage similar to OASDI coverage. An annual financial interchange between the Railroad Retirement fund and the OASI and DI Trust

Funds is made to resolve the difference between: (1) the amount of OASDI

benefits that would be paid to railroad workers and their families if railroad

employment had been covered under the OASDI program, plus administrative expenses associated with these benefits; and (2) the amount of OASDI

payroll tax and income tax that would be received with allowances for interest from railroad workers.

2075 . . . . 65:0 16,706 21,856 36,020 47,727 58,230 102,716

2080 . . . . 65:0 17,661 23,105 38,076 50,452 61,564 108,546

2085 . . . . 65:0 18,662 24,417 40,236 53,316 65,065 114,712

2090 . . . . 65:0 19,723 25,803 42,522 56,343 68,770 121,296

a Annual amounts are the total for the 12-month period starting with the month of retirement, adjusted to be

in 2016 dollars by using the CPI indexing series from table VI.G6.

b Attains age 65 on January 1 of the year.

c Career-average earnings at about 25 percent of the AWI.

d Career-average earnings at about 45 percent of the AWI.

e Career-average earnings at about 100 percent of the AWI. Such a worker would have career-average earnings at approximately the 56th percentile of all new retired-worker beneficiaries.

f Career-average earnings at about 160 percent of the AWI.

g Earnings for each year at or above the contribution and benefit base.

h Average Wage Index from table VI.G6, adjusted to be in 2016 dollars by using the CPI indexing series

from table VI.G6.

Note: Benefits shown at age 65 reflect adjustments for early retirement. For early retirement as early as age

62, the benefit amount is reduced 5/9 of one percent for each month before normal retirement age, up to 36

months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per

month. For example, if the number of reduction months is 60 (the maximum number for retirement at 62

when normal retirement age is 67), then the benefit is reduced by 30 percent. Delayed retirement credit is

generally given for retirement after the normal retirement age. The delayed retirement credit is 2/3 of one

percent per month for persons born in 1943 and later. No credit is given for delaying benefits after attaining

age 70. See table V.C3 for additional details, including adjustments applying to other birth years.

Table V.C7.—Annual Scheduled Benefit Amounts for Retired Workers 

With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, Calendar Years 2016-2090 (Cont.)
Assumptions and Methods

154

Calculation of the financial interchange with the Railroad Retirement reflects

trends similar to those used in estimating the cost of OASDI benefits. The

annual short-range net cost for the OASI and DI Trust Funds is about

$4-$5 billion and the long-range summarized net cost for the OASI and DI

Trust Funds is 0.04 percent of taxable payroll.

13.Military Service Transfers

Beginning in 1966, the General Fund of the Treasury reimbursed the OASI

and DI Trust Funds annually for the cost (including administrative expenses)

of providing additional benefit payments resulting from noncontributory

wage credits for military service performed prior to 1957. The 1983 amendments modified the reimbursement mechanism and the timing of the reimbursements, and required a reimbursement in 1983 to include all future costs

attributable to the wage credits. The amendments also require adjustments to

that 1983 reimbursement every fifth year, beginning with 1985, to account

for actual data. The Bipartisan Budget Act of 2015 eliminated the requirement for this adjustment every fifth year.
155

History of Trust Fund Operations

VI. APPENDICES

A. HISTORY OF OASI AND DI TRUST FUND OPERATIONS

The Federal Old-Age and Survivors Insurance (OASI) Trust Fund was established on January 1, 1940 as a separate account in the United States Treasury.

The Federal Disability Insurance (DI) Trust Fund, another separate account

in the United States Treasury, was established on August 1, 1956. These

funds conduct the financial operations of the OASI and DI programs. The

Board of Trustees is responsible for overseeing the financial operations of

these funds. The following paragraphs describe the various components of

trust fund income and outgo. Following this description, tables VI.A1 and

VI.A2 present the historical operations of the separate trust funds since their

inception, and table VI.A3 presents the operations of the hypothetical combined trust funds1 during the period when they have co-existed.

The primary receipts of these two funds are amounts appropriated under permanent authority on the basis of payroll tax contributions. Federal law

requires that all employees who work in OASDI covered employment, and

their employers, make payroll tax contributions on their wages. Employees

and their employers must also make payroll tax contributions on monthly

cash tips if such tips are at least $20. Self-employed persons must make payroll tax contributions on their covered net earnings from self-employment.

The Federal Government pays amounts equivalent to the combined employer

and employee contributions that would be paid on deemed wage credits

attributable to military service performed between 1957 and 2001, if such

wage credits were covered wages. Treasury initially deposits payroll tax contributions to the trust funds each month on an estimated basis. Subsequently,

Treasury makes adjustments based on the certified amount of wages and selfemployment earnings in the records of the Social Security Administration.

Income also includes various reimbursements from the General Fund of the

Treasury, such as: (1) the cost of noncontributory wage credits for military

service before 1957, and periodic adjustments to previous determinations of

this cost; (2) the cost in 1971 through 1982 of deemed wage credits for military service performed after 1956; (3) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (4) the cost of payroll tax

credits provided to employees in 1984 and self-employed persons in 1984

through 1989 by Public Law 98-21; (5) the cost in 2009 through 2017 of

excluding certain self-employment earnings from SECA taxes under Public

Law 110-246; and (6) payroll tax revenue forgone under the provisions of

Public Laws 111-147, 111-312, 112-78, and 112-96.

 1 The OASI and DI Trust Funds are distinct legal entities which operate independently. To illustrate the

actuarial status of the program as a whole, the fund operations are often combined on a hypothetical basis.
Appendices

156

Beginning in 1984, Federal law subjected up to 50 percent of an individual’s

or couple’s OASDI benefits to Federal income taxation under certain circumstances. Effective for taxable years beginning after 1993, the law increased

the maximum percentage from 50 percent to 85 percent. Treasury credits the

proceeds from this taxation of up to 50 percent of benefits to the OASI and

DI Trust Funds in advance, on an estimated basis, at the beginning of each

calendar quarter, with no reimbursement to the General Fund for interest

costs attributable to the advance transfers.1 Treasury makes subsequent

adjustments based on the actual amounts shown on annual income tax

records. Each of the OASI and DI Trust Funds receives the income taxes

paid on the benefits from that trust fund.2

Another source of income to the trust funds is interest received on investments held by the trust funds. On a daily basis, Treasury invests trust fund

income not required to meet current operating expenses, primarily in interest-bearing obligations of the U.S. Government. These investments include

the special public-debt obligations described in the next paragraph. The

Social Security Act also authorizes the trust funds to hold obligations guaranteed as to both principal and interest by the United States. The act therefore permits the trust funds to hold certain Federally sponsored agency

obligations and marketable obligations.3 The trust funds may acquire any of

these obligations on original issue at the issue price or by purchase of outstanding obligations at their market price.

The Social Security Act authorizes the issuance of special public-debt obligations for purchase exclusively by the trust funds. The act provides that the

interest rate for special obligations newly issued in any month is the average

market yield, as of the last business day of the prior month, on all of the outstanding marketable U.S. obligations that are due or callable more than

4 years in the future. This rate is rounded to the nearest one-eighth of one

percent. Beginning January 1999, in calculating the average market yield

rate for this purpose, the Treasury incorporates the yield to the call date when

a callable bond’s market price is above par.

Although the Social Security Act does not authorize the purchase or sale of

special issues in the open market, Treasury redeems special issues prior to

 1 The HI Trust Fund receives the additional tax revenue resulting from the increase to 85 percent.

 2 A special provision applies to benefits paid to nonresident aliens. Effective for taxable years beginning

after 1994, Public Law 103-465 subjects benefits to a flat-rate tax, usually 25.5 percent, before they are

paid. Therefore, this tax remains in the trust funds. From 1984 to 1994, the flat-rate tax was usually

15 percent.

 3 The Social Security Act requires the trust funds to acquire special-issue obligations unless the Managing

Trustee determines that the purchase of marketable obligations is in the public interest. The purchase of marketable obligations has been quite limited and has not occurred since 1980.
157

History of Trust Fund Operations

maturity at par value when needed to meet current operating expenses. Given

this separation from market-based valuations, changes in market yield rates

do not cause fluctuations in principal value. As is true for marketable Treasury securities held by the public, the full faith and credit of the U.S. Government backs all of the investments held by the trust funds.

The primary annual expenditures of the OASI and DI Trust Funds are:

(1) OASDI benefit payments1, net of any reimbursements from the General

Fund of the Treasury for unnegotiated benefit checks; and (2) expenses

incurred by the Social Security Administration and the Department of the

Treasury in administering the OASDI program and the provisions of the

Internal Revenue Code relating to the collection of contributions. Such

administrative expenses include expenditures for construction, rental and

lease, or purchase of office buildings and related facilities for the Social

Security Administration. The Social Security Act prohibits expenditures

from the OASI and DI Trust Funds for any purpose not related to the payment of benefits or administrative costs for the OASDI program. 

The expenditures of the trust funds also include: (1) the costs of vocational

rehabilitation services furnished to disabled persons receiving cash benefits

because of their disabilities, where such services contributed to their successful rehabilitation; and (2) net costs of the provisions of the Railroad Retirement Act that provide for a system of coordination and financial interchange

between the Railroad Retirement program and the Social Security program.

Under the financial interchange provisions, the Railroad Retirement program’s Social Security Equivalent Benefit Account and the trust funds interchange amounts on an annual basis so that each trust fund is in the same

position it would have been had railroad employment always been covered

under Social Security.

The statements of the operations of the trust funds in this report do not

include the net worth of facilities and other fixed capital assets because the

value of fixed capital assets is not available in the form of a financial asset

redeemable for the payment of benefits or administrative expenditures. As a

result of this unavailability, the actuarial status of the trust funds does not

take these assets into account.

 1 Periodically, benefit payments which were scheduled to be paid on January 3 were actually paid on

December 31 of the preceding year as required by the statutory provision included in the 1977 Social Security Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. Such advance payments have occurred about every 7 years, first for

benefits scheduled for January 3, 1982. The most recent such accelerated payment affected benefits scheduled to be paid on January 3, 2016. For comparability with the values for historical years and the projections

in this report, all trust fund operations and asset reserves reflect the 12 months of benefits scheduled for payment each year.
Appendices

158

Table VI.A1.— Operations of the OASI Trust Fund, Calendar Years 1937-2015

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsad

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

1937f . . $0.8 $0.8 — — gg g — — $0.8 $0.8 —

1938f . . .4 .4 — — gg g — — .4 1.1 7,660

1939f . . .6 .6 — — gg g — — .6 1.7 8,086

1940 . . .4 .3 — — g $0.1 g g — .3 2.0 2,781

1941 . . .8 .8 — — $0.1 .1 $0.1 g — .7 2.8 1,782

1942 . . 1.1 1.0 — — .1 .2 .1 g — .9 3.7 1,737

1943 . . 1.3 1.2 — — .1 .2 .2 g — 1.1 4.8 1,891

1944 . . 1.4 1.3 — — .1 .2 .2 g — 1.2 6.0 2,025

1945 . . 1.4 1.3 — — .1 .3 .3 g — 1.1 7.1 1,975

1946 . . 1.4 1.3 — — .2 .4 .4 g — 1.0 8.1 1,704

1947 . . 1.7 1.6 g — .2 .5 .5 g — 1.2 9.4 1,592

1948 . . 2.0 1.7 g — .3 .6 .6 $0.1 — 1.4 10.7 1,542

1949 . . 1.8 1.7 g — .1 .7 .7 .1 — 1.1 11.8 1,487

1950 . . 2.9 2.7 g — .3 1.0 1.0 .1 — 1.9 13.7 1,156

1951 . . 3.8 3.4 g — .4 2.0 1.9 .1 — 1.8 15.5 698

1952 . . 4.2 3.8 — — .4 2.3 2.2 .1 — 1.9 17.4 681

1953 . . 4.4 3.9 — — .4 3.1 3.0 .1 — 1.3 18.7 564

1954 . . 5.6 5.2 — — .4 3.7 3.7 .1 g 1.9 20.6 500

1955 . . 6.2 5.7 — — .5 5.1 5.0 .1 g 1.1 21.7 405

1956 . . 6.7 6.2 — — .5 5.8 5.7 .1 g .9 22.5 371

1957 . . 7.4 6.8 — — .6 7.5 7.3 .2 g -.1 22.4 300

1958 . . 8.1 7.6 — — .6 8.6 8.3 .2 $0.1 -.5 21.9 259

1959 . . 8.6 8.1 — — .5 10.3 9.8 .2 .3 -1.7 20.1 212

1960 . . 11.4 10.9 — — .5 11.2 10.7 .2 .3 .2 20.3 180

1961 . . 11.8 11.3 — — .5 12.4 11.9 .2 .3 -.6 19.7 163

1962 . . 12.6 12.1 — — .5 14.0 13.4 .3 .4 -1.4 18.3 141

1963 . . 15.1 14.5 — — .5 14.9 14.2 .3 .4 .1 18.5 123

1964 . . 16.3 15.7 — — .6 15.6 14.9 .3 .4 .6 19.1 118

1965 . . 16.6 16.0 — — .6 17.5 16.7 .3 .4 -.9 18.2 109

1966 . . 21.3 20.6 $0.1 — .6 19.0 18.3 .3 .4 2.3 20.6 96

1967 . . 24.0 23.1 .1 — .8 20.4 19.5 .4 .5 3.7 24.2 101

1968 . . 25.0 23.7 .4 — .9 23.6 22.6 .5 .4 1.5 25.7 103

1969 . . 29.6 27.9 .4 — 1.2 25.2 24.2 .5 .5 4.4 30.1 102

1970 . . 32.2 30.3 .4 — 1.5 29.8 28.8 .5 .6 2.4 32.5 101

1971 . . 35.9 33.7 .5 — 1.7 34.5 33.4 .5 .6 1.3 33.8 94

1972 . . 40.1 37.8 .5 — 1.8 38.5 37.1 .7 .7 1.5 35.3 88

1973 . . 48.3 46.0 .4 — 1.9 47.2 45.7 .6 .8 1.2 36.5 75

1974 . . 54.7 52.1 .4 — 2.2 53.4 51.6 .9 .9 1.3 37.8 68

1975 . . 59.6 56.8 .4 — 2.4 60.4 58.5 .9 1.0 -.8 37.0 63

1976 . . 66.3 63.4 .6 — 2.3 67.9 65.7 1.0 1.2 -1.6 35.4 54

1977 . . 72.4 69.6 .6 — 2.2 75.3 73.1 1.0 1.2 -2.9 32.5 47

1978 . . 78.1 75.5 .6 — 2.0 83.1 80.4 1.1 1.6 -5.0 27.5 39

1979 . . 90.3 87.9 .6 — 1.8 93.1 90.6 1.1 1.4 -2.9 24.7 30

1980 . . 105.8 103.5 .5 — 1.8 107.7 105.1 1.2 1.4 -1.8 22.8 23

1981 . . 125.4 122.6 .7 — 2.1 126.7 123.8 1.3 1.6 -1.3 21.5 18

1982 . . 125.2 123.7 .7 — .8 142.1 138.8 1.5 1.8 h .6 22.1 15

1983 . . 150.6 138.3 5.5 — 6.7 153.0 149.2 1.5 2.3 -2.4 19.7 14

1984 . . 169.3 159.5 4.7 $2.8 2.3 161.9 157.8 1.6 2.4 7.4 27.1 i

20

1985 . . 184.2 175.1 4.0 3.2 1.9 171.2 167.2 1.6 2.3 h8.7 35.8 i

24

1986 . . 197.4 189.1 1.8 3.4 3.1 181.0 176.8 1.6 2.6 h3.2 39.1 i

28

1987 . . 210.7 201.1 1.7 3.3 4.7 187.7 183.6 1.5 2.6 23.1 62.1 i

30

1988 . . 240.8 227.7 2.1 3.4 7.6 200.0 195.5 1.8 2.8 40.7 102.9 i

41

1989 . . 264.7 248.1 2.1 2.4 12.0 212.5 208.0 1.7 2.8 52.2 155.1 i

59

1990 . . 286.7 266.1 -.7 4.8 16.4 227.5 223.0 1.6 3.0 59.1 214.2 i

78

1991 . . 299.3 272.5 .1 5.9 20.8 245.6 240.5 1.8 3.4 53.7 267.8 87

1992 . . 311.2 281.1 -.1 5.9 24.3 259.9 254.9 1.8 3.1 51.3 319.1 103

1993 . . 323.3 290.9 g 5.3 27.0 273.1 267.8 2.0 3.4 50.2 369.3 117

1994 . . 328.3 293.3 g 5.0 29.9 284.1 279.1 1.6 3.4 44.1 413.5 130
159

History of Trust Fund Operations

1995 . . $342.8 $304.7 -$0.2 $5.5 $32.8 $297.8 $291.6 $2.1 $4.1 $45.0 $458.5 139

1996 . . 363.7 321.6 g 6.5 35.7 308.2 302.9 1.8 3.6 55.5 514.0 149

1997 . . 397.2 349.9 g 7.4 39.8 322.1 316.3 2.1 3.7 75.1 589.1 160

1998 . . 424.8 371.2 g 9.1 44.5 332.3 326.8 1.9 3.7 92.5 681.6 177

1999 . . 457.0 396.4 g 10.9 49.8 339.9 334.4 1.8 3.7 117.2 798.8 201

2000 . . 490.5 421.4 g 11.6 57.5 358.3 352.7 2.1 3.5 132.2 931.0 223

2001 . . 518.1 441.5 g 11.9 64.7 377.5 372.3 2.0 3.3 140.6 1,071.5 247

2002 . . 539.7 455.2 .4 12.9 71.2 393.7 388.1 2.1 3.5 146.0 1,217.5 272

2003 . . 543.8 456.1 g 12.5 75.2 406.0 399.8 2.6 3.6 137.8 1,355.3 300

2004 . . 566.3 472.8 g 14.6 79.0 421.0 415.0 2.4 3.6 145.3 1,500.6 322

2005 . . 604.3 506.9 -.3 13.8 84.0 441.9 435.4 3.0 3.6 162.4 1,663.0 340

2006 . . 642.2 534.8 g 15.6 91.8 461.0 454.5 3.0 3.5 181.3 1,844.3 361

2007 . . 675.0 560.9 g 17.2 97.0 495.7 489.1 3.1 3.6 179.3 2,023.6 372

2008 . . 695.5 574.6 g 15.6 105.3 516.2 509.3 3.2 3.6 179.3 2,202.9 392

2009 . . 698.2 570.4 g 19.9 107.9 564.3 557.2 3.4 3.7 133.9 2,336.8 390

2010 . . 677.1 544.8 2.0 22.1 108.2 584.9 577.4 3.5 3.9 92.2 2,429.0 400

2011 . . 698.8 482.4 87.8 22.2 106.5 603.8 596.2 3.5 4.1 95.0 2,524.1 402

2012 . . 731.1 503.9 97.7 26.7 102.8 645.5 637.9 3.4 4.1 85.6 2,609.7 391

2013 . . 743.8 620.8 4.2 20.7 98.1 679.5 672.1 3.4 3.9 64.3 2,674.0 384

2014 . . 769.4 646.2 .4 28.0 94.8 714.2 706.8 3.1 4.3 55.2 2,729.2 374

2015 . . 801.6 679.5 .3 30.6 91.2 750.5 742.9 3.4 4.3 51.0 2,780.3 364

a Beginning in 1979, benefit payments scheduled to be paid on January 3 of a given year were paid on

December 31 of the preceding year as required by the statutory provision included in the 1977 Social Security

Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. Such advance payments have occurred about every 7 years, first for benefits scheduled for January 3, 1982. For comparability with other historical years and the projections in this report, all trust

fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year.

b Includes net reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of

noncontributory wage credits for military service before 1957; (2) the cost in 1971-82 of deemed wage credits

for military service performed after 1956; (3) the cost of benefits to certain uninsured persons who attained age

72 before 1968; (4) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in

1984-89 by Public Law 98-21; (5) the cost in 2009-17 of excluding certain self-employment earnings from

SECA taxes under Public Law 110-246; and (6) payroll tax revenue forgone under the provisions of Public

Laws 111-147, 111-312, 112-78, and 112-96.

c Net interest includes net profits or losses on marketable investments. Beginning in 1967, the trust fund pays

administrative expenses on an estimated basis, with a final adjustment including interest made in the following

fiscal year. Net interest includes the amounts of these interest adjustments. The 1970 report describes the

accounting for administrative expenses for years prior to 1967. Beginning in October 1973, figures include relatively small amounts of gifts to the fund. Net interest for 1983-86 reflects payments for interest on amounts

owed under the interfund borrowing provisions. During 1983-90, net interest reflects interest reimbursements

paid from the trust fund to the General Fund on advance tax transfers.

d Beginning in 1966, includes payments for vocational rehabilitation services furnished to disabled persons

receiving benefits because of their disabilities. Beginning in 1983, net benefit amounts include reimbursements

paid from the General Fund to the trust fund for unnegotiated benefit checks. Excluding the portion attributable

to vocational rehabilitation services and unnegotiated benefit checks, amounts are the same as benefits scheduled under law at that time for all historical years.

e The “Trust fund ratio” column represents asset reserves at the beginning of a year as a percentage of expenditures during the year. The table shows no ratio for 1937 because no reserves existed at the beginning of the year.

f Operations prior to 1940 are for the Old-Age Reserve Account established by the original Social Security Act.

The 1939 Amendments transferred the asset reserves of the Account to the OASI Trust Fund effective January

1, 1940.

g Between -$50 million and $50 million.

h Reflects interfund borrowing and subsequent repayment of loans. The OASI Trust Fund borrowed

$17.5 billion from the DI and HI Trust Funds in 1982 and repaid the loans in 1985 ($4.4 billion) and 1986

($13.2 billion).

i Reserves used for the trust fund ratio calculation include January advance tax transfers.

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.A1.— Operations of the OASI Trust Fund, Calendar Years 1937-2015 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsad

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Appendices

160

Table VI.A2.— Operations of the DI Trust Fund, Calendar Years 1957-2015

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsa d

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

1957 . . $0.7 $0.7 — — f $0.1 $0.1 f — $0.6 $0.6 —

1958 . . 1.0 1.0 — — f .3 .2 f — .7 1.4 249

1959 . . .9 .9 — — f .5 .5 f f .4 1.8 284

1960 . . 1.1 1.0 — — $0.1 .6 .6 f f .5 2.3 304

1961 . . 1.1 1.0 — — .1 1.0 .9 $0.1 f .1 2.4 239

1962 . . 1.1 1.0 — — .1 1.2 1.1 .1 f -.1 2.4 206

1963 . . 1.2 1.1 — — .1 1.3 1.2 .1 f -.1 2.2 183

1964 . . 1.2 1.2 — — .1 1.4 1.3 .1 f -.2 2.0 159

1965 . . 1.2 1.2 — — .1 1.7 1.6 .1 f -.4 1.6 121

1966 . . 2.1 2.0 f — .1 1.9 1.8 .1 f .1 1.7 82

1967 . . 2.4 2.3 f — .1 2.1 1.9 .1 f .3 2.0 83

1968 . . 3.5 3.3 f — .1 2.5 2.3 .1 f 1.0 3.0 83

1969 . . 3.8 3.6 f — .2 2.7 2.6 .1 f 1.1 4.1 111

1970 . . 4.8 4.5 f — .3 3.3 3.1 .2 f 1.5 5.6 126

1971 . . 5.0 4.6 $0.1 — .4 4.0 3.8 .2 f 1.0 6.6 140

1972 . . 5.6 5.1 .1 — .4 4.8 4.5 .2 f .8 7.5 140

1973 . . 6.4 5.9 .1 — .5 6.0 5.8 .2 f .5 7.9 125

1974 . . 7.4 6.8 .1 — .5 7.2 7.0 .2 f .2 8.1 110

1975 . . 8.0 7.4 .1 — .5 8.8 8.5 .3 f -.8 7.4 92

1976 . . 8.8 8.2 .1 — .4 10.4 10.1 .3 f -1.6 5.7 71

1977 . . 9.6 9.1 .1 — .3 11.9 11.5 .4 f -2.4 3.4 48

1978 . . 13.8 13.4 .1 — .3 13.0 12.6 .3 f .9 4.2 26

1979 . . 15.6 15.1 .1 — .4 14.2 13.8 .4 f 1.4 5.6 30

1980 . . 13.9 13.3 .1 — .5 15.9 15.5 .4 f -2.0 3.6 35

1981 . . 17.1 16.7 .2 — .2 17.7 17.2 .4 f -.6 3.0 21

1982 . . 22.7 22.0 .2 — .5 18.0 17.4 .6 f g -.4 2.7 17

1983 . . 20.7 18.0 1.1 — 1.6 18.2 17.5 .6 f 2.5 5.2 15

1984 . . 17.3 15.5 .4 $0.2 1.2 18.5 17.9 .6 f -1.2 4.0 h35

1985 . . 19.3 17.0 1.2 .2 .9 19.5 18.8 .6 f g2.4 6.3 h27

1986 . . 19.4 18.2 .2 .2 .8 20.5 19.9 .6 $0.1 g1.5 7.8 h38

1987 . . 20.3 19.5 .2 f .6 21.4 20.5 .8 .1 -1.1 6.7 h44

1988 . . 22.7 21.8 .2 .1 .6 22.5 21.7 .7 .1 .2 6.9 h38

1989 . . 24.8 23.8 .2 .1 .7 23.8 22.9 .8 .1 1.0 7.9 h38

1990 . . 28.8 28.4 -.6 .1 .9 25.6 24.8 .7 .1 3.2 11.1 h40

1991 . . 30.4 29.1 f .2 1.1 28.6 27.7 .8 .1 1.8 12.9 39

1992 . . 31.4 30.1 f .2 1.1 32.0 31.1 .8 .1 -.6 12.3 40

1993 . . 32.3 31.2 f .3 .8 35.7 34.6 1.0 .1 -3.4 9.0 35

1994 . . 52.8 51.4 f .3 1.2 38.9 37.7 1.0 .1 14.0 22.9 23

1995 . . 56.7 54.4 -.2 .3 2.2 42.1 40.9 1.1 .1 14.6 37.6 55

1996 . . 60.7 57.3 f .4 3.0 45.4 44.2 1.2 f 15.4 52.9 83

1997 . . 60.5 56.0 f .5 4.0 47.0 45.7 1.3 .1 13.5 66.4 113

1998 . . 64.4 59.0 f .6 4.8 49.9 48.2 1.6 .2 14.4 80.8 133

1999 . . 69.5 63.2 f .7 5.7 53.0 51.4 1.5 .1 16.5 97.3 152

2000 . . 77.9 71.1 -.8 .7 6.9 56.8 55.0 1.6 .2 21.1 118.5 171

2001 . . 83.9 74.9 f .8 8.2 61.4 59.6 1.7 f 22.5 141.0 193

2002 . . 87.4 77.3 f .9 9.2 67.9 65.7 2.0 .2 19.5 160.5 208

2003 . . 88.1 77.4 f .9 9.7 73.1 70.9 2.0 .2 15.0 175.4 219

2004 . . 91.4 80.3 f 1.1 10.0 80.6 78.2 2.2 .2 10.8 186.2 218

2005 . . 97.4 86.1 f 1.1 10.3 88.0 85.4 2.3 .3 9.4 195.6 212

2006 . . 102.6 90.8 f 1.2 10.6 94.5 91.7 2.3 .4 8.2 203.8 207

2007 . . 109.9 95.2 f 1.4 13.2 98.8 95.9 2.5 .4 11.1 214.9 206

2008 . . 109.8 97.6 f 1.3 11.0 109.0 106.0 2.5 .4 .9 215.8 197

2009 . . 109.3 96.9 f 2.0 10.5 121.5 118.3 2.7 .4 -12.2 203.5 178
161

History of Trust Fund Operations

2010. . . $104.0 $92.5 $0.4 $1.9 $9.3 $127.7 $124.2 $3.0 $0.5 -$23.6 $179.9 159

2011. . . 106.3 81.9 14.9 1.6 7.9 132.3 128.9 2.9 .5 -26.1 153.9 136

2012. . . 109.1 85.6 16.5 .6 6.4 140.3 136.9 2.9 .5 -31.2 122.7 110

2013. . . 111.2 105.4 .7 .4 4.7 143.4 140.1 2.8 .6 -32.2 90.4 86

2014. . . 114.9 109.7 .1 1.7 3.4 145.1 141.7 2.9 .4 -30.2 60.2 62

2015. . . 118.6 115.4 f 1.1 2.1 146.6 143.4 2.8 .4 -28.0 32.3 41

a Beginning in 1979, benefit payments scheduled to be paid on January 3 of a given year were paid on

December 31 of the preceding year as required by the statutory provision included in the 1977 Social Security

Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. Such advance payments have occurred about every 7 years, first for benefits scheduled for January 3, 1982. For comparability with other historical years and the projections in this report, all trust

fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year.

b Includes net reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of

noncontributory wage credits for military service before 1957; (2) the cost in 1971-82 of deemed wage credits

for military service performed after 1956; (3) the cost of payroll tax credits provided to employees in 1984 and

self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain selfemployment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under

the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

c Net interest includes net profits or losses on marketable investments. Beginning in 1967, the trust fund pays

administrative expenses on an estimated basis, with a final adjustment including interest made in the following

fiscal year. Net interest includes the amounts of these interest adjustments. The 1970 report describes the

accounting for administrative expenses for years prior to 1967. Beginning in July 1974, figures include relatively small amounts of gifts to the fund. Net interest for 1983-86 reflects payments for interest on amounts

owed under the interfund borrowing provisions. During 1983-90, net interest reflects interest reimbursements

paid from the trust fund to the General Fund on advance tax transfers.

d Beginning in 1966, includes payments for vocational rehabilitation services furnished to disabled persons

receiving benefits because of their disabilities. Beginning in 1983, net benefit amounts include reimbursements

paid from the General Fund to the trust fund for unnegotiated benefit checks. Excluding the portion attributable

to vocational rehabilitation services and unnegotiated benefit checks, amounts are the same as benefits scheduled under law at that time for all historical years.

e The “Trust fund ratio” column represents asset reserves at the beginning of a year as a percentage of expenditures during the year. The table shows no ratio for 1957 because no reserves existed at the beginning of the year.

f Between -$50 million and $50 million.

g Reflects interfund borrowing and subsequent repayment of loans. The DI Trust Fund loaned $5.1 billion to the

OASI Trust Fund in 1982. The OASI Trust Fund repaid the loan in 1985 ($2.5 billion) and 1986 ($2.5 billion).

h Reserves used for the trust fund ratio calculation include January advance tax transfers.

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.A2.— Operations of the DI Trust Fund, Calendar Years 1957-2015 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsa d

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Appendices

162

Table VI.A3.— Operations of the Combined OASI and DI Trust Funds,

Calendar Years 1957-2015

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsad

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe

1957 . . $8.1 $7.5 — — $0.6 $7.6 $7.4 $0.2 f $0.5 $23.0 298

1958 9.1 8.5 — — .6 8.9 8.6 .2 $0.1 .2 23.2 259

1959 . . 9.5 8.9 — — .6 10.8 10.3 .2 .3 -1.3 22.0 215

1960 . . 12.4 11.9 — — .6 11.8 11.2 .2 .3 .6 22.6 186

1961 . . 12.9 12.3 — — .6 13.4 12.7 .3 .3 -.5 22.2 169

1962 . . 13.7 13.1 — — .6 15.2 14.5 .3 .4 -1.5 20.7 146

1963 . . 16.2 15.6 — — .6 16.2 15.4 .3 .4 f 20.7 128

1964 . . 17.5 16.8 — — .6 17.0 16.2 .4 .4 .5 21.2 122

1965 . . 17.9 17.2 — — .7 19.2 18.3 .4 .5 -1.3 19.8 110

1966 . . 23.4 22.6 $0.1 — .7 20.9 20.1 .4 .5 2.5 22.3 95

1967 . . 26.4 25.4 .1 — .9 22.5 21.4 .5 .5 3.9 26.3 99

1968 . . 28.5 27.0 .4 — 1.0 26.0 25.0 .6 .5 2.5 28.7 101

1969 . . 33.3 31.5 .5 — 1.3 27.9 26.8 .6 .5 5.5 34.2 103

1970 . . 37.0 34.7 .5 — 1.8 33.1 31.9 .6 .6 3.9 38.1 103

1971 . . 40.9 38.3 .5 — 2.0 38.5 37.2 .7 .6 2.4 40.4 99

1972 . . 45.6 42.9 .5 — 2.2 43.3 41.6 .9 .7 2.3 42.8 93

1973 . . 54.8 51.9 .5 — 2.4 53.1 51.5 .8 .8 1.6 44.4 80

1974 . . 62.1 58.9 .5 — 2.7 60.6 58.6 1.1 .9 1.5 45.9 73

1975 . . 67.6 64.3 .5 — 2.9 69.2 67.0 1.2 1.0 -1.5 44.3 66

1976 . . 75.0 71.6 .7 — 2.7 78.2 75.8 1.2 1.2 -3.2 41.1 57

1977 . . 82.0 78.7 .7 — 2.5 87.3 84.7 1.4 1.2 -5.3 35.9 47

1978 . . 91.9 88.9 .8 — 2.3 96.0 93.0 1.4 1.6 -4.1 31.7 37

1979 . . 105.9 103.0 .7 — 2.2 107.3 104.4 1.5 1.5 -1.5 30.3 30

1980 . . 119.7 116.7 .7 — 2.3 123.5 120.6 1.5 1.4 -3.8 26.5 25

1981 . . 142.4 139.4 .8 — 2.2 144.4 141.0 1.7 1.6 -1.9 24.5 18

1982 . . 147.9 145.7 .9 — 1.4 160.1 156.2 2.1 1.8 g .2 24.8 15

1983 . . 171.3 156.3 6.7 — 8.3 171.2 166.7 2.2 2.3 .1 24.9 14

1984 . . 186.6 175.0 5.2 $3.0 3.4 180.4 175.7 2.3 2.4 6.2 31.1 h21

1985 . . 203.5 192.1 5.2 3.4 2.7 190.6 186.1 2.2 2.4 g11.1 42.2 h24

1986 . . 216.8 207.4 1.9 3.7 3.9 201.5 196.7 2.2 2.7 g 4.7 46.9 h29

1987 . . 231.0 220.6 1.9 3.2 5.3 209.1 204.1 2.4 2.6 21.9 68.8 h31

1988 . . 263.5 249.5 2.3 3.4 8.2 222.5 217.1 2.5 2.9 41.0 109.8 h41

1989 . . 289.4 271.9 2.3 2.5 12.7 236.2 230.9 2.4 2.9 53.2 163.0 h57

1990 . . 315.4 294.5 -1.3 5.0 17.2 253.1 247.8 2.3 3.0 62.3 225.3 h75

1991 . . 329.7 301.6 .1 6.1 21.9 274.2 268.2 2.6 3.5 55.5 280.7 82

1992 . . 342.6 311.3 -.1 6.1 25.4 291.9 286.0 2.7 3.2 50.7 331.5 96

1993 . . 355.6 322.0 .1 5.6 27.9 308.8 302.4 3.0 3.4 46.8 378.3 107

1994 . . 381.1 344.7 f 5.3 31.1 323.0 316.8 2.7 3.5 58.1 436.4 117

1995 . . 399.5 359.1 -.4 5.8 35.0 339.8 332.6 3.1 4.1 59.7 496.1 128

1996 . . 424.5 378.9 f 6.8 38.7 353.6 347.0 3.0 3.6 70.9 567.0 140

1997 . . 457.7 406.0 f 7.9 43.8 369.1 362.0 3.4 3.7 88.6 655.5 154

1998 . . 489.2 430.2 f 9.7 49.3 382.3 375.0 3.5 3.8 106.9 762.5 171

1999 . . 526.6 459.6 f 11.6 55.5 392.9 385.8 3.3 3.8 133.7 896.1 194

2000 . . 568.4 492.5 -.8 12.3 64.5 415.1 407.6 3.8 3.7 153.3 1,049.4 216

2001 . . 602.0 516.4 f 12.7 72.9 438.9 431.9 3.7 3.3 163.1 1,212.5 239

2002 . . 627.1 532.5 .4 13.8 80.4 461.7 453.8 4.2 3.6 165.4 1,378.0 263

2003 . . 631.9 533.5 f 13.4 84.9 479.1 470.8 4.6 3.7 152.8 1,530.8 288

2004 . . 657.7 553.0 f 15.7 89.0 501.6 493.3 4.5 3.8 156.1 1,686.8 305

2005 . . 701.8 592.9 -0.3 14.9 94.3 529.9 520.7 5.3 3.9 171.8 1,858.7 318

2006 . . 744.9 625.6 f 16.9 102.4 555.4 546.2 5.3 3.8 189.5 2,048.1 335

2007 . . 784.9 656.1 f 18.6 110.2 594.5 584.9 5.5 4.0 190.4 2,238.5 345

2008 . . 805.3 672.1 f 16.9 116.3 625.1 615.3 5.7 4.0 180.2 2,418.7 358

2009 . . 807.5 667.3 f 21.9 118.3 685.8 675.5 6.2 4.1 121.7 2,540.3 353
163

History of Trust Fund Operations

Tables VI.A4 and VI.A5 show the total asset reserves of the OASI Trust

Fund and the DI Trust Fund, respectively, at the end of calendar years 2014

and 2015. The tables show reserves by interest rate and year of maturity.

Bonds issued to the trust funds in 2015 had an interest rate of 2.00 percent,

compared with an interest rate of 2.25 percent for bonds issued in 2014.

2010 . . . $781.1 $637.3 $2.4 $23.9 $117.5 $712.5 $701.6 $6.5 $4.4 $68.6 $2,609.0 357

2011 . . . 805.1 564.2 102.7 23.8 114.4 736.1 725.1 6.4 4.6 69.0 2,677.9 354

2012 . . . 840.2 589.5 114.3 27.3 109.1 785.8 774.8 6.3 4.7 54.4 2,732.3 341

2013 . . . 855.0 726.2 4.9 21.1 102.8 822.9 812.3 6.2 4.5 32.1 2,764.4 332

2014 . . . 884.3 756.0 .5 29.6 98.2 859.2 848.5 6.1 4.7 25.0 2,789.5 322

2015 . . . 920.2 794.9 .3 31.6 93.3 897.1 886.3 6.2 4.7 23.0 2,812.5 311

a Beginning in 1979, benefit payments scheduled to be paid on January 3 of a given year were paid on

December 31 of the preceding year as required by the statutory provision included in the 1977 Social Security

Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. Such advance payments have occurred about every 7 years, first for benefits scheduled for January 3, 1982. For comparability with other historical years and the projections in this report, all trust

fund operations and asset reserves reflect the 12 months of benefits scheduled for payment in each year.

b Includes net reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1)

the cost of noncontributory wage credits for military service before 1957; (2) the cost in 1971-82 of deemed

wage credits for military service performed after 1956; (3) the cost of benefits to certain uninsured persons who

attained age 72 before 1968; (4) the cost of payroll tax credits provided to employees in 1984 and self-employed

persons in 1984-89 by Public Law 98-21; (5) the cost in 2009-17 of excluding certain self-employment earnings

from SECA taxes under Public Law 110-246; and (6) payroll tax revenue forgone under the provisions of Public

Laws 111-147, 111-312, 112-78, and 112-96.

c Net interest includes net profits or losses on marketable investments. Beginning in 1967, the trust funds pay

administrative expenses on an estimated basis, with a final adjustment including interest made in the following

fiscal year. Net interest includes the amounts of these interest adjustments. The 1970 report describes the

accounting for administrative expenses for years prior to 1967. Beginning in October 1973, figures include relatively small amounts of gifts to the funds. Net interest for 1983-86 reflects payments for interest on amounts

owed under the interfund borrowing provisions. During 1983-90, net interest reflects interest reimbursements

paid from the trust funds to the General Fund on advance tax transfers.

d Beginning in 1966, includes payments for vocational rehabilitation services furnished to disabled persons

receiving benefits because of their disabilities. Beginning in 1983, net benefit amounts include reimbursements

paid from the General Fund to the trust funds for unnegotiated benefit checks. Excluding the portion attributable

to vocational rehabilitation services and unnegotiated benefit checks, amounts are the same as benefits scheduled

under law at that time for all historical years.

e The “Trust fund ratio” column represents asset reserves at the beginning of a year as a percentage of expenditures during the year.

f Between -$50 million and $50 million.

g Reflects interfund borrowing and subsequent repayment of loans. The OASI Trust Fund borrowed

$12.4 billion from the HI Trust Fund in 1982 and repaid the loan in 1985 ($1.8 billion) and 1986 ($10.6 billion).

h Reserves used for the trust fund ratio calculation include January advance tax transfers.

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.A3.— Operations of the Combined OASI and DI Trust Funds,

Calendar Years 1957-2015 (Cont.)

[Dollar amounts in billions]

Calendar

year

Income Cost Asset Reservesa

Total

Net payroll tax

contributions

GF

reimbursementsbTaxation of

benefits

Net

interestc Totala

Benefit

paymentsad

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioe
Appendices

164

Table VI.A4.—OASI Trust Fund Asset Reserves, End of Calendar Years 2014 and 2015

[In thousands]

December 31, 2014 December 31, 2015

Obligations sold only to the trust funds (special issues): 

Certificates of indebtedness:

 2.000 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . $57,308,984 —

 2.125 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . — $38,935,438

Bonds:

 1.375 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,693,019 —

 1.375 percent, 2017-25 . . . . . . . . . . . . . . . . . . . . . . . . 60,237,180 60,237,180

 1.375 percent, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,693,019 6,693,019

 1.375 percent, 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,240,401 173,240,401

 1.750 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,908,186 —

 1.750 percent, 2017-18 . . . . . . . . . . . . . . . . . . . . . . . . 9,816,372 9,816,372

 1.750 percent, 2019-25 . . . . . . . . . . . . . . . . . . . . . . . . 34,357,295 34,357,295

 1.750 percent, 2026-27 . . . . . . . . . . . . . . . . . . . . . . . . 9,816,372 9,816,372

 1.750 percent, 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,148,587 178,148,587

 2.000 percent, 2017-19 . . . . . . . . . . . . . . . . . . . . . . . . — 10,966,887

 2.000 percent, 2020-25 . . . . . . . . . . . . . . . . . . . . . . . . — 21,933,768

 2.000 percent, 2026-29 . . . . . . . . . . . . . . . . . . . . . . . . — 14,622,516

 2.000 percent, 2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . — 185,790,628

 2.250 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,986,412 —

 2.250 percent, 2017-18 . . . . . . . . . . . . . . . . . . . . . . . . 7,972,824 7,972,824

 2.250 percent, 2019-25 . . . . . . . . . . . . . . . . . . . . . . . . 27,904,891 27,904,891

 2.250 percent, 2026-28 . . . . . . . . . . . . . . . . . . . . . . . . 11,959,236 11,959,236

 2.250 percent, 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . 182,134,999 182,134,999

 2.500 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,971,788 —

 2.500 percent, 2017-25 . . . . . . . . . . . . . . . . . . . . . . . . 53,746,083 53,746,083

 2.500 percent, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,547,382 166,547,382

 2.875 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,264,432 —

 2.875 percent, 2017-24 . . . . . . . . . . . . . . . . . . . . . . . . 58,115,456 58,115,456

 2.875 percent, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,575,595 160,575,595

 3.250 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,628,270 —

 3.250 percent, 2017-23 . . . . . . . . . . . . . . . . . . . . . . . . 74,397,890 74,397,890

 3.250 percent, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,311,163 153,311,163

 3.500 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,513,752 —

 3.500 percent, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,513,752 9,513,752

 3.500 percent, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,900,994 86,900,994

 4.000 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 977,473 —

 4.000 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,075,192 —

 4.000 percent, 2017-22 . . . . . . . . . . . . . . . . . . . . . . . . 72,451,152 72,451,152

 4.000 percent, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,682,893 142,682,893

 4.125 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,516,946 —

 4.125 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,516,946 9,936,522

 4.125 percent, 2017-19 . . . . . . . . . . . . . . . . . . . . . . . . 31,550,838 31,550,838

 4.125 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,585,700 106,585,700

 4.625 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,167,664 —

 4.625 percent, 2016-18 . . . . . . . . . . . . . . . . . . . . . . . . 27,502,989 27,502,989

 4.625 percent, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,068,657 96,068,657

 5.000 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,454,232 —

 5.000 percent, 2016-21 . . . . . . . . . . . . . . . . . . . . . . . . 74,725,392 74,725,392

 5.000 percent, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,607,701 130,607,701

 5.125 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,567,866 —

 5.125 percent, 2016-19 . . . . . . . . . . . . . . . . . . . . . . . . 46,271,464 46,271,464

 5.125 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,567,769 11,567,769

 5.125 percent, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,153,469 118,153,469
165

History of Trust Fund Operations

Note: Amounts of special issues are at par value. The trust fund purchases and redeems special issues at par

value. The table groups equal amounts that mature in two or more years at a given interest rate.

Note: Amounts of special issues are at par value. The trust fund purchases and redeems special issues at par

value. The table groups equal amounts that mature in two or more years at a given interest rate. 

Bonds (Cont.):

 5.250 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,235,912 —

 5.250 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,235,911 $9,235,911

 5.250 percent, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,387,242 77,387,242

 5.625 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,621,437 —

 5.625 percent, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,151,331 68,151,331

 6.500 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,529,893 —

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,729,270,403 2,760,517,758

Undisbursed balancesa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37,873 19,733,589

Total asset reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,729,232,530 2,780,251,347

a A negative amount for each year represents a situation where actual program cash expenditures exceeded

the amount of invested securities of the OASI Trust Fund that were redeemed to pay for such expenditures.

In this situation, future redemption of additional invested securities will be required to pay for this shortfall.

For 2015 and other calendar years where January 3 of the following year is a Sunday, a positive amount is

shown on a liability basis for benefits scheduled to be paid on January 3 of the following year that were, by

law, actually paid on the preceding December 31.

Table VI.A5.—DI Trust Fund Asset Reserves, End of Calendar Years 2014 and 2015

[In thousands]

December 31, 2014 December 31, 2015

Obligations sold only to the trust funds (special issues):

Certificates of indebtedness: 

2.000 percent, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,493,788 —

Bonds:

 4.000 percent, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,572 —

 4.000 percent, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,572 —

 4.000 percent, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,675,554 $14,675,554

 4.125 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,649,018 —

 5.000 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 476,584 —

 5.000 percent, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . 476,584 —

 5.000 percent, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,052,982 11,425,890

 5.125 percent, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 665,115 —

 5.125 percent, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,576,398 —

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,311,167 26,101,444

Undisbursed balancesa . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a A negative amount for each year represents a situation where actual program cash expenditures exceeded

the amount of invested securities of the DI Trust Fund that were redeemed to pay for such expenditures. In

this situation, future redemption of additional invested securities will be required to pay for this shortfall.

For 2015 and other calendar years where January 3 of the following year is a Sunday, a positive amount is

shown on a liability basis for benefits scheduled to be paid on January 3 of the following year that were, by

law, actually paid on the preceding December 31.

-67,279 6,157,191

Total asset reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,243,888 32,258,635

Table VI.A4.—OASI Trust Fund Asset Reserves, End of Calendar Years 2014 and 2015

[In thousands]

December 31, 2014 December 31, 2015
Appendices

166

B. HISTORY OF ACTUARIAL STATUS ESTIMATES

This appendix chronicles the history of the OASDI actuarial balance and the

year of combined OASI and DI Trust Fund reserve depletion since 1982. The

actuarial balance is the principal summary measure of long-range actuarial

status. The 1983 report was the last report for which the actuarial balance

was positive. The two basic components of actuarial balance are the summarized income rate and the summarized cost rate, both of which are expressed

as percentages of taxable payroll. Section IV.B.4 defines summarized

income rate, summarized cost rate, and actuarial balance in detail. For any

given period, the actuarial balance is the difference between the present

value of non-interest income for the period and the present value of the cost

for the period, each divided by the present value of taxable payroll for all

years in the period. The computation of the actuarial balance also includes:

 • In the reports for 1988 and later, the amount of the trust fund asset

reserves on hand at the beginning of the valuation period; and

 • In the reports for 1991 and later, the present value of a target trust fund

asset reserve equal to 100 percent of the annual cost to be reached and

maintained at the end of the valuation period.

Reports prior to 1973 used the current method of calculating the actuarial

balance based on present values, but the reports of 1973-87 did not. During

that period, the reports used the average-cost method, a simpler method

which approximates the results of the present-value approach. Under the

average-cost method, the sum of the annual cost rates over the 75-year projection period was divided by the total number of years, 75, to obtain the

average cost rate per year. A similar computation produced the average

income rate. The actuarial balance was the difference between the average

income rate and the average cost rate.

When the 1973 report introduced the average-cost method, the long-range

financing of the program was more nearly on a pay-as-you-go basis. Also,

the long-range demographic and economic assumptions in that report produced an annual rate of growth in taxable payroll which was about the same

as the annual rate at which the trust funds earned interest. In either situation

(i.e., pay-as-you-go financing, where the annual income rate is the same as

the annual cost rate, or an annual rate of growth in taxable payroll equal to

the annual interest rate), the average-cost method produces the same result as

the present-value method. However, by 1988, neither of these situations still

existed.
167

History of Actuarial Status

After the 1977 and 1983 Social Security Amendments, estimates showed

substantial increases in the trust funds continuing well into the 21st century.

These laws changed the program’s financing from essentially pay-as-you-go

to partial advance funding. Also, the reports from 1973 through 1987 phased

in reductions in long-range fertility rates and average real-wage growth,

which produced an annual rate of growth in long-range taxable earnings

which was significantly lower than the assumed interest rate. As a result of

the difference between this rate of growth and the assumed interest rate, the

results of the average-cost method and the present-value method in the

reports for 1973 through 1987 began to diverge, and by 1988 they were quite

different. While the average-cost method still accounted for most of the

effects of the assumed interest rate, it no longer accounted for all of the interest effects. The present-value method, by contrast, accounts for the full effect

of the assumed interest rates. The 1988 report reintroduced the present-value

method of calculating the actuarial balance in order to fully reflect the effects

of interest.

A positive actuarial balance indicates that estimated income is more than sufficient to meet estimated trust fund obligations for the period as a whole. A

negative actuarial balance indicates that estimated income is insufficient to

meet estimated trust fund obligations for the entire period. An actuarial balance of zero indicates that the estimated income exactly matches estimated

trust fund obligations for the period.

Table VI.B1 contains the estimated OASDI actuarial balances, summarized

income rates, and summarized cost rates for the 1982 report through the current report. The reports presented these values on the basis of the intermediate assumptions, which recent reports refer to as alternative II and reports

prior to 1991 referred to as alternative II-B.
Appendices

168

Note: Totals do not necessarily equal the sums of rounded components.

For several of the years included in the table, significant legislative changes

or definitional changes affected the estimated actuarial balance. The Social

Table VI.B1.—Long-Range OASDI Actuarial Balances and Trust Fund Reserve 

Depletion Dates as Shown in the Trustees Reports for 1982-2016a

[As a percentage of taxable payroll]

a The reports compute the actuarial balance and year of trust fund reserve depletion based on the intermediate assumptions, which the 1982-90 reports referred to as alternative II-B and the 1991 and later reports

refer to as alternative II.

Year of report

Summarized

income rate

Summarized

cost rate

Actuarial

balanceb

b The definition and method of calculating the actuarial balance were changed in 1988 and 1991. See text

for details.

Change from

previous yearc

c A detailed year-by-year breakdown of the reasons for the changes in the actuarial balance since the 1983

Trustees Report may be found in Actuarial Note 2016.8 at www.ssa.gov/OACT/NOTES/ran8/.

Year of

combined trust

fund reserve

depletion

1982 . . . . . . . . . . . 12.27 14.09 -1.82 d 1983

1983 . . . . . . . . . . . 12.87 12.84 +.02 +1.84 solvent

1984 . . . . . . . . . . . 12.90 12.95 -.06 -.08 solvent

1985 . . . . . . . . . . . 12.94 13.35 -.41 -.35 2049

1986 . . . . . . . . . . . 12.96 13.40 -.44 -.03 2051

1987 . . . . . . . . . . . 12.89 13.51 -.62 -.18 2051

1988 . . . . . . . . . . . 12.94 13.52 -.58 +.04 2048

1989 . . . . . . . . . . . 13.02 13.72 -.70 -.13 2046

1990 . . . . . . . . . . . 13.04 13.95 -.91 -.21 2043

1991 . . . . . . . . . . . 13.11 14.19 -1.08 -.17 2041

1992 . . . . . . . . . . . 13.16 14.63 -1.46 -.38 2036

1993 . . . . . . . . . . . 13.21 14.67 -1.46 d

d Between -0.005 and 0.005 percent of taxable payroll.

2036

1994 . . . . . . . . . . . 13.24 15.37 -2.13 -.66 2029

1995 . . . . . . . . . . . 13.27 15.44 -2.17 -.04 2030

1996 . . . . . . . . . . . 13.33 15.52 -2.19 -.02 2029

1997 . . . . . . . . . . . 13.37 15.60 -2.23 -.03 2029

1998 . . . . . . . . . . . 13.45 15.64 -2.19 +.04 2032

1999 . . . . . . . . . . . 13.49 15.56 -2.07 +.12 2034

2000 . . . . . . . . . . . 13.51 15.40 -1.89 +.17 2037

2001 . . . . . . . . . . . 13.58 15.44 -1.86 +.03 2038

2002 . . . . . . . . . . . 13.72 15.59 -1.87 -.01 2041

2003 . . . . . . . . . . . 13.78 15.70 -1.92 -.04 2042

2004 . . . . . . . . . . . 13.84 15.73 -1.89 +.03 2042

2005 . . . . . . . . . . . 13.87 15.79 -1.92 -.04 2041

2006 . . . . . . . . . . . 13.88 15.90 -2.02 -.09 2040

2007 . . . . . . . . . . . 13.92 15.87 -1.95 +.06 2041

2008 . . . . . . . . . . . 13.94 15.63 -1.70 +.26 2041

2009 . . . . . . . . . . . 14.02 16.02 -2.00 -.30 2037

2010 . . . . . . . . . . . 14.01 15.93 -1.92 +.08 2037

2011 . . . . . . . . . . . 14.02 16.25 -2.22 -.30 2036

2012 . . . . . . . . . . . 14.02 16.69 -2.67 -.44 2033

2013 . . . . . . . . . . . 13.88 16.60 -2.72 -.05 2033

2014 . . . . . . . . . . . 13.89 16.77 -2.88 -.16 2033

2015 . . . . . . . . . . . 13.86 16.55 -2.68 +.20 2034

2016 . . . . . . . . . . . 13.84 16.50 -2.66 +.02 2034
169

History of Actuarial Status

Security Amendments of 1983 accounted for the largest single change in

recent history: the actuarial balance of -1.82 for the 1982 report improved to

+0.02 for the 1983 report. In 1985, the estimated actuarial balance changed

largely because of an adjustment made to the method for estimating the age

distribution of immigrants.

Rebenchmarking of the National Income and Product Accounts and changes

in demographic assumptions contributed to the change in the actuarial balance for 1987. Various changes in assumptions and methods for the 1988

report had roughly offsetting effects on the actuarial balance. In 1989 and

1990, changes in economic assumptions accounted for most of the changes

in the estimated actuarial balance.

In 1991, the effect of legislation, changes in economic assumptions, and the

introduction of the cost of reaching and maintaining an ending target trust

fund combined to produce the change in the actuarial balance. In 1992,

changes in disability assumptions and the method for projecting average benefit levels accounted for most of the change in the actuarial balance. In 1993,

numerous small changes in assumptions and methods had offsetting effects

on the actuarial balance. In 1994, changes in the real-wage assumptions, disability rates, and the earnings sample used for projecting average benefit levels accounted for most of the change in the actuarial balance. In 1995,

numerous small changes had largely offsetting effects on the actuarial balance, including a substantial reallocation of the payroll tax rate, which

reduced the OASI actuarial balance, but increased the DI actuarial balance.

In 1996, a change in the method of projecting dually-entitled beneficiaries

produced a large increase in the actuarial balance, which almost totally offset

decreases produced by changes in the valuation period and in the demographic and economic assumptions. Various changes in assumptions and

methods for the 1997 report had roughly offsetting effects on the actuarial

balance. In 1998, increases caused by changes in the economic assumptions,

although partially offset by decreases produced by changes in the valuation

period and in the demographic assumptions, accounted for most of the

changes in the estimated actuarial balance. In 1999, increases caused by

changes in the economic assumptions (related to improvements in the CPI by

the Bureau of Labor Statistics) accounted for most of the changes in the estimated actuarial balance.

For the 2000 report, changes in economic assumptions and methodology

caused increases in the actuarial balance, although reductions in the balance

caused by the change in valuation period and changes in demographic

assumptions partially offset these increases. For the 2001 report, increases
Appendices

170

caused by changes in the demographic starting values, although partially offset by a decrease produced by the change in the valuation period, accounted

for most of the changes in the estimated actuarial balance. For the 2002

report, changes in the valuation period and the demographic assumptions—

both decreases in the actuarial balance—were offset by changes in the economic assumptions, while an increase due to disability assumptions was

slightly more than offset by a decrease due to changes in the projection methods and data. For the 2003 report, an increase due to the change in program

assumptions was more than offset by decreases due to the change in valuation period and changes in demographic assumptions. In the 2004 report,

increases due to changing the method of projecting benefit levels for higher

earners more than offset decreases in the actuarial balance arising from the

change in the valuation period and the net effect of other changes in programmatic data and methods.

For the 2005 report, an increase due to changing the method of projecting

future average benefit levels was more than offset by decreases due to

changes in the valuation period, updated starting values for the economic

assumptions, and other methodological changes. In 2006, decreases in the

actuarial balance due to the change in the valuation period, a reduction in the

ultimate annual real interest rate, and improvements in calculating mortality

for disabled workers, were greater in aggregate than increases in the actuarial

balance due to changes in demographic starting values and the ultimate total

fertility rate, as well as other programmatic data and method changes. For the

2007 report, increases in the actuarial balance arising from revised disability

incidence rate assumptions, improvements in average benefit level projections, and changes in near-term economic projections, more than offset

decreases in the balance due to the valuation period change and updated historical mortality data.

For the 2008 report, the large increase in the actuarial balance was primarily

due to changes in immigration projection methods and assumptions. These

changes more than offset the decreases in the actuarial balance due to the

change in the valuation period and the lower starting and ultimate mortality

rates. In 2009, changes in starting values and near-term economic assumptions due to the economic recession, faster ultimate rates of decline in death

rates for ages 65-84, and the change in the valuation period accounted for

most of the large decrease in the actuarial balance. Legislative changes, in

particular the estimated effects of the Patient Protection and Affordable Care

Act and the Health Care and Education Reconciliation Act of 2010, were the

main reason for the increase in the actuarial balance for the 2010 report. The

change in the valuation period partially offset this increase; there were also
171

History of Actuarial Status

changes in several assumptions, methods, and recent data which had largely

offsetting effects.

For the 2011 report, changes in mortality projections, due to new starting

values and revised methods, were the most significant of several factors contributing to the increase in the deficit. These mortality changes resulted in

lower death rates for the population age 65 and over. Adding to this negative

effect were near-term lower levels of net other immigration and real earnings

than assumed in the 2010 report.

For the 2012 report, changes in economic assumptions and starting values

accounted for about half of the decrease in actuarial balance. Updating starting economic data resulted in higher benefit levels, lower payroll taxes, and

lower real interest rates in the short term than projected in the previous year.

Other factors worsening the actuarial balance were the change in valuation

period, changes to starting demographic values, changes to ultimate disability incidence assumptions, and methodology changes and data updates.

For the 2013 report, the change in valuation period accounted for the entire

net change in the actuarial balance. The effects of substantially lower death

rates for 2009 than previously projected and the American Taxpayer Relief

Act of 2012 (which lowered the Federal marginal income tax rates) were offset by updates of program-specific data and methodology improvements.

The primary factors improving the actuarial balance were changes in ultimate age-sex specific unemployment rates, changes in modeling the number

of workers insured, changes in average benefit levels due to the update of the

sample, changes in projections of income from taxation of benefits, and other

method changes and data updates.

For the 2014 report, changes in economic data and assumptions accounted

for the majority of the net change in the actuarial balance. In particular, the

2014 report includes a lower projected ratio of average taxable earnings to

the average wage index throughout the long-range period, resulting in lower

payroll taxes relative to benefit levels. In addition, the estimated level of fullemployment (potential) GDP is about 1 percent lower in the 2014 report,

resulting in lower earnings and payroll taxes for the future. This change

reflects the fact that GDP growth has not been as strong so far in the economic recovery as had been experienced in prior recoveries. Other factors

worsening the actuarial balance were the change in the valuation period and

various methodology improvements and data updates.

For the 2015 report, methodological improvements and updates of programmatic data accounted for the majority of the net increase in the actuarial balance. The most significant methodological changes were improvements to
Appendices

172

the method for projecting earnings levels of newly entitled worker beneficiaries, using a 10-percent sample of actual worker beneficiaries. Also increasing the actuarial balance were a lower assumed ultimate average wage

differential and changes in near-term economic assumptions. These increases

were offset somewhat by the change in the valuation period and updates to

historical and near-term projected birth rates.

Section IV.B.6 describes changes affecting the actuarial balance shown for

the 2016 report.
173

Fiscal Year Operations and Projections

C. FISCAL YEAR HISTORICAL AND PROJECTED TRUST FUND 

OPERATIONS THROUGH 2025

Tables VI.C1, VI.C2, and VI.C3 contain details of the fiscal year 2015 operations of the OASI, DI, and the combined OASI and DI Trust Funds, respectively. The fiscal year for the U.S. Government is the 12-month period

ending September 30. Fiscal year 2015 is the most recent fiscal year for

which complete information is available. The descriptions of the values in

these tables are similar to the corresponding descriptions and values in the

calendar year operations tables in section III.A. Please see that section for a

description of the various items of income and outgo.
Appendices

174

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C1.—Operations of the OASI Trust Fund, Fiscal Year 2015

[In millions]

Total asset reserves, September 30, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,712,699

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

a Includes adjustments for prior years

$674,639

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,393

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672,246

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a . 205

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net General Fund reimbursementsa 211

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 189

All other, not subject to withholdinga. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,438

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,627

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,234

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust fund and

the General Fund account for the Supplemental Security Income program, (2) interest arising from the

revised allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the trust fund.

1

Total investment income and interest adjustments . . . . . . . . . . . . . . . . . . . . . . . . 93,235

Gifts —

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 795,319

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

733,742

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -34

Payment for costs of vocational rehabilitation services for disabled beneficiaries 2

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 733,711

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,258

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,003

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5

Miscellaneous reimbursements from the General Fund e . . . . . . . . . . . . . . . . . . . . 

e Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the OASI program.

-5

Net administrative expenses 3,496

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741,464

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,855

Total invested assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,766,649

Undisbursed balancesf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f A negative balance represents a situation where the actual program cash expenditures exceeded the amount

of invested securities of the OASI Trust Fund that were redeemed to pay for such expenditures. In this situation, future redemption of additional invested securities will be required to pay for this shortfall.

-95

Total asset reserves, September 30, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,766,554
175

Fiscal Year Operations and Projections

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C2.—Operations of the DI Trust Fund, Fiscal Year 2015

[In millions]

Total asset reserves, September 30, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $69,925

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior years.

$114,562

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -406

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,156

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a. 38

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net General Fund reimbursementsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 4

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,032

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,036

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,732

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust fund and

the General Fund account for the Supplemental Security Income program, (2) interest arising from the

revised allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the trust fund.

1

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 2,733

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,965

Disbursements:

Benefit payments:

Monthly benefitsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

142,835

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -19

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 108

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,923

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,793

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Miscellaneous reimbursements from the General Funde . . . . . . . . . . . . . . . . . . . . .

e Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the DI program.

-3

Net administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,892

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,234

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28,269

Total invested assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,638

Undisbursed balancesf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f A positive balance represents a situation where more of the invested securities of the DI Trust Fund were

redeemed than was needed to cover actual program cash expenditures.

18

Total asset reserves, September 30, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,656
Appendices

176

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C3.—Operations of the Combined OASI and DI Trust Funds, Fiscal Year 2015

[In millions]

Total asset reserves, September 30, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,782,624

Receipts:

Net payroll tax contributions:

Payroll tax contributionsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a Includes adjustments for prior years.

$789,201

Payments from the General Fund of the Treasury for payroll tax contributions subject to refunda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,800

Net payroll tax contributionsa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786,402

Reimbursements from the General Fund:

Reduction in payroll tax contributions due to P.L.s 111-312, 112-78, and 112-96a. 243

Reimbursements directed by P.L. 110-246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Payroll tax credits due to P.L. 98-21a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

b Between -$0.5 and $0.5 million.

Net General Fund reimbursementsa 251

Income based on taxation of benefit payments:

Withheld from benefit payments to nonresident aliens . . . . . . . . . . . . . . . . . . . . . . 193

All other, not subject to withholdinga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,470

Total income from taxation of benefitsa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,663

Investment income and interest adjustments:

Interest on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,966

Interest adjustmentsc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c Includes: (1) interest on adjustments in the allocation of administrative expenses between the trust funds

and the General Fund account for the Supplemental Security Income program, (2) interest arising from the

revised allocation of administrative expenses among the trust funds, and (3) interest on certain reimbursements to the trust funds.

2

Total investment income and interest adjustments. . . . . . . . . . . . . . . . . . . . . . . . 95,968

Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Total receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 913,284

Disbursements:

Benefit payments:

Monthly benefits and lump-sum death paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . .

d Includes net reductions for the recovery of overpayments.

876,577

Reimbursement from the General Fund for unnegotiated checks . . . . . . . . . . . . . . -53

Payment for costs of vocational rehabilitation services for disabled beneficiaries . 110

Net benefit paymentsd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 876,634

Financial interchange with the Railroad Retirement “Social Security Equivalent

Benefit Account”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,677

Administrative expenses:

Costs incurred by:

Social Security Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,796

Department of the Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590

Offsetting miscellaneous receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5

Demonstration projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Miscellaneous reimbursements from the General Funde . . . . . . . . . . . . . . . . . . . . .

e Reimbursements for costs incurred in performing certain legislatively mandated activities not directly

related to administering the OASI and DI programs.

-8

Net administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,388

Total disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 887,698

Net increase in asset reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,586

Total invested assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,808,287

Undisbursed balancesf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f A negative net balance represents a situation where the actual combined program cash expenditures

exceeded the amount of invested securities of the OASI and DI Trust Funds that were redeemed to pay for

such expenditures. In this situation, future net redemption of additional invested securities will be required to

pay for this shortfall.

-78

Total asset reserves, September 30, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,808,210
177

Fiscal Year Operations and Projections

Tables VI.C4, VI.C5, and VI.C6 show estimates of the operations and status of

the OASI, DI, and the hypothetical combined OASI and DI Trust Funds,

respectively, during fiscal years 2011 through 2025. 

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C4.—Operations of the OASI Trust Fund, Fiscal Years 2011-2025

[Dollar amounts in billions]

Fiscal 

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsa

a Includes reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of

noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984 and selfemployed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

Taxation of

benefitsb

b Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

Net

interest Total

Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioc

c The “Trust fund ratio” column represents asset reserves at the beginning of a year (which are identical to

reserves at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for

the year. 

Historical data:

2011 . . $692.5 $495.0 $68.9 $21.2 $107.4 $599.2 $591.5 $3.6 $4.1 $93.3 $2,491.7 400

2012 . . 729.0 500.7 95.9 27.2 105.2 634.7 627.2 3.4 4.1 94.3 2,585.9 393

2013 . . 739.7 590.0 26.4 23.1 100.1 670.6 663.2 3.4 3.9 69.1 2,655.0 386

2014 . . 763.3 642.3 .1 24.6 96.3 705.6 698.2 3.2 4.3 57.6 2,712.7 376

2015 . . 795.3 672.2 .2 29.6 93.2 741.5 733.7 3.5 4.3 53.9 2,766.6 366

Intermediate:

2016 . . 789.4 669.1 .1 31.2 89.1 770.9 763.4 3.2 4.2 18.6 2,785.1 359

2017 . . 815.8 692.9 d

d Between -$50 million and $50 million.

36.4 86.5 804.0 796.5 3.3 4.1 11.8 2,796.9 346

2018 . . 862.7 737.4 d 39.9 85.4 857.8 849.9 3.3 4.5 4.9 2,801.9 326

2019 . . 942.3 811.0 d 43.7 87.6 919.7 911.6 3.5 4.6 22.6 2,824.5 305

2020 . . 999.9 863.6 d 47.6 88.6 985.0 976.7 3.6 4.7 14.9 2,839.4 287

2021 . . 1,058.5 915.6 d 51.8 91.1 1,051.0 1,042.5 3.7 4.7 7.5 2,846.9 270

2022 . . 1,113.6 964.4 d 56.4 92.9 1,123.2 1,114.4 3.9 5.0 -9.7 2,837.2 253

2023 . . 1,161.5 1,006.5 d 61.3 93.7 1,201.8 1,192.7 4.0 5.1 -40.3 2,796.9 236

2024 . . 1,216.4 1,054.3 d 66.7 95.4 1,285.8 1,276.5 4.1 5.2 -69.4 2,727.4 218

2025 . . 1,269.2 1,100.9 d 72.4 95.8 1,372.7 1,363.2 4.2 5.2 -103.5 2,623.9 199

Low-cost:

2016 . . 791.8 671.2 .1 31.2 89.3 770.6 763.1 3.2 4.2 21.2 2,787.8 359

2017 . . 836.0 710.9 d 36.5 88.6 805.9 798.5 3.3 4.1 30.1 2,817.9 346

2018 . . 902.6 769.7 d 40.2 92.7 864.9 857.1 3.3 4.5 37.7 2,855.6 326

2019 . . 1,002.0 860.4 d 44.3 97.3 932.0 923.8 3.5 4.6 70.0 2,925.6 306

2020 . . 1,082.5 929.4 d 48.5 104.6 1,002.6 994.1 3.7 4.7 79.9 3,005.5 292

2021 . . 1,162.4 997.9 d 52.9 111.6 1,074.5 1,065.9 3.9 4.7 88.0 3,093.5 280

2022 . . 1,241.4 1,064.3 d 57.9 119.3 1,153.4 1,144.3 4.1 5.0 88.0 3,181.5 268

2023 . . 1,319.9 1,127.0 d 63.3 129.6 1,239.6 1,230.2 4.3 5.2 80.2 3,261.7 257

2024 . . 1,408.2 1,197.9 d 69.1 141.1 1,332.5 1,322.8 4.4 5.3 75.7 3,337.4 245

2025 . . 1,497.6 1,269.1 d 75.4 153.0 1,429.7 1,419.7 4.6 5.3 67.9 3,405.3 233

High-cost:

2016 . . 785.9 665.6 .1 31.2 89.0 771.2 763.7 3.2 4.2 14.8 2,781.3 359

2017 . . 779.2 659.2 d 36.4 83.6 803.8 796.3 3.3 4.2 -24.6 2,756.7 346

2018 . . 805.5 686.5 d 39.6 79.4 851.7 843.8 3.3 4.6 -46.2 2,710.5 324

2019 . . 869.3 748.9 d 43.2 77.3 908.7 900.5 3.4 4.7 -39.3 2,671.2 298

2020 . . 908.6 786.7 d 46.9 75.1 968.8 960.6 3.5 4.8 -60.2 2,611.0 276

2021 . . 946.6 823.8 d 50.7 72.2 1,029.0 1,020.7 3.6 4.7 -82.3 2,528.6 254

2022 . . 981.0 857.8 d 54.9 68.3 1,094.6 1,085.9 3.7 5.0 -113.6 2,415.0 231

2023 . . 1,008.8 886.6 d 59.5 62.7 1,165.5 1,156.6 3.8 5.1 -156.7 2,258.3 207

2024 . . 1,041.1 919.0 d 64.4 57.8 1,240.5 1,231.5 3.9 5.2 -199.4 2,058.9 182

2025 . . 1,070.4 948.7 d 69.5 52.2 1,317.1 1,308.1 3.9 5.1 -246.7 1,812.2 156
Appendices

178

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.C5.—Operations of the DI Trust Fund, Fiscal Years 2011-2025a

[Dollar amounts in billions]

a The DI Trust Fund becomes depleted in fiscal years 2023 and 2020 under the intermediate and high-cost

assumptions, respectively. For any period during which reserves would be depleted, scheduled benefits could

not be paid in full on a timely basis, income from taxing benefits would be less than would apply to scheduled

benefits, and interest on trust fund reserves would be negligible.

Fiscal 

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsb

b Includes reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of noncontributory wage credits for military service before 1957; (2) the cost of payroll tax credits provided to

employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; (3) the cost in 2009-17 of

excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (4) payroll tax

revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

Taxation of

benefitsc

c Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

Net

interest Total

Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratiod

d The “Trust fund ratio” column represents asset reserves at the beginning of a year (which are identical to

reserves at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for

the year. 

Historical data:

2011 . . $106.2 $84.0 $11.7 $1.9 $8.6 $131.5 $128.0 $3.0 $0.5 -$25.3 $161.7 142

2012. . 108.8 85.1 16.2 .4 7.2 138.5 135.1 2.9 .5 -29.7 132.0 117

2013. . 111.3 100.2 4.5 1.1 5.5 142.8 139.4 2.8 .6 -31.5 100.5 92

2014. . 114.1 109.1 e

e Between -$50 million and $50 million.

1.0 4.0 144.7 141.3 2.9 .4 -30.6 69.9 69

2015. . 118.0 114.2 e 1.0 2.7 146.2 142.9 2.9 .4 -28.3 41.7 48

Intermediate:

2016. . 148.4 145.7 e 1.2 1.5 148.9 145.5 3.1 .3 -.5 41.2 28

2017. . 167.4 163.7 e 2.1 1.6 151.9 148.6 3.1 .2 15.5 56.7 27

2018. . 178.9 174.2 e 2.2 2.4 157.5 154.3 3.1 .1 21.3 78.0 36

2019. . 156.9 151.3 e 2.4 3.2 164.4 160.9 3.5 e -7.5 70.5 47

2020. . 152.0 146.7 e 2.6 2.7 171.1 167.2 3.8 .1 -19.1 51.3 41

2021. . 160.2 155.5 e 2.8 1.9 178.5 174.3 4.1 .1 -18.3 33.0 29

2022. . 168.0 163.8 e 3.0 1.2 186.5 182.1 4.4 .1 -18.6 14.4 18

2023. . f

f While the fund is depleted, values under current law would reflect permissible expenditures only, which are

inconsistent with the cost of scheduled benefits shown in this table.

170.9 e 3.3 f 194.8 190.1 4.7 e ff 7

2024. . f 179.0 e 3.5 f 203.0 198.1 4.9 e f ff

2025. . f 186.9 e 3.8 f 212.0 206.8 5.2 e f ff

Low-cost:

2016. . 148.9 146.2 e 1.2 1.6 147.5 144.1 3.1 .3 1.5 43.1 28

2017. . 172.0 168.0 e 2.0 2.0 149.1 145.8 3.1 .2 22.9 66.0 29

2018. . 187.4 181.9 e 2.2 3.3 153.6 150.4 3.1 .1 33.8 99.8 43

2019. . 167.6 160.3 e 2.4 4.9 159.2 155.6 3.5 e 8.4 108.2 63

2020. . 165.6 157.8 e 2.5 5.2 164.7 160.7 3.9 .1 .9 109.1 66

2021. . 177.6 169.5 e 2.7 5.4 170.9 166.5 4.3 .1 6.7 115.8 64

2022. . 189.5 180.7 e 2.9 5.9 177.8 173.1 4.6 e 11.8 127.5 65

2023. . 201.5 191.4 e 3.1 7.0 185.0 180.1 5.0 e 16.4 144.0 69

2024. . 215.0 203.4 e 3.3 8.2 192.4 187.1 5.3 e 22.6 166.5 75

2025. . 228.9 215.5 e 3.5 9.8 200.6 194.9 5.7 e 28.3 194.8 83

High-cost:

2016. . 147.6 144.8 e 1.2 1.5 150.2 146.8 3.1 .3 -2.6 39.0 28

2017. . 159.2 155.8 e 2.1 1.4 155.4 152.1 3.1 .2 3.8 42.9 25

2018. . 166.1 162.2 e 2.3 1.5 162.8 159.5 3.1 .1 3.3 46.1 26

2019. . 144.0 139.9 e 2.5 1.6 171.2 167.7 3.4 .1 -27.3 18.9 27

2020. . f 133.6 e 2.8 f 178.6 174.8 3.7 .1 f f 11

2021. . f 139.9 e 3.0 f 186.2 182.1 3.9 .1 f ff

2022. . f 145.7 e 3.2 f 194.4 190.1 4.2 .1 f ff

2023. . f 150.6 e 3.4 f 202.9 198.4 4.4 .1 f ff

2024. . f 156.1 e 3.6 f 211.3 206.7 4.6 e f ff

2025. . f 161.1 e 3.9 f 220.4 215.6 4.8 e f ff
179

Fiscal Year Operations and Projections

Table VI.C6.—Operations of the Combined OASI and DI Trust Funds,

Fiscal Years 2011-2025

[Dollar amounts in billions]

Fiscal

year

Income Cost Asset Reserves

Total

Net payroll tax

contributions

GF

reimbursementsa

a Includes reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1) the

cost of noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984

and self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain selfemployment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under

the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96.

Taxation of

benefitsb

b Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the

law.

Net

interest Total

 Scheduled

benefits

Administrative

costs

RRB

interchange

Net

increase

during

year

Amount

at end

of year

Trust

fund

ratioc

c The “Trust fund ratio” column represents asset reserves at the beginning of a year (which are identical to

reserves at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for

the year. 

Historical data:

2011 . . $798.7 $579.1 $80.6 $23.1 $116.0 $730.7 $719.5 $6.7 $4.6 $68.0 $2,653.3 354

2012 . . 837.8 585.7 112.2 27.5 112.4 773.2 762.3 6.3 4.7 64.6 2,717.9 343

2013 . . 850.9 690.1 30.9 24.2 105.7 813.3 802.6 6.2 4.5 37.6 2,755.5 334

2014 . . 877.4 751.3 .2 25.7 100.3 850.3 839.6 6.0 4.7 27.1 2,782.6 324

2015 . . 913.3 786.4 .3 30.7 96.0 887.7 876.6 6.4 4.7 25.6 2,808.2 313

Intermediate:

2016 . . 937.9 814.7 .1 32.4 90.6 919.8 908.9 6.3 4.6 18.1 2,826.3 305

2017 . . 983.2 856.6 d

d Between -$50 million and $50 million.

38.5 88.1 955.9 945.2 6.4 4.3 27.3 2,853.6 296

2018 . . 1,041.5 911.6 d 42.1 87.8 1,015.3 1,004.2 6.4 4.6 26.2 2,879.9 281

2019 . . 1,099.2 962.3 d 46.1 90.8 1,084.1 1,072.5 7.0 4.7 15.1 2,894.9 266

2020 . . 1,151.9 1,010.3 d 50.3 91.3 1,156.1 1,143.9 7.4 4.8 -4.3 2,890.7 250

2021 . . 1,218.7 1,071.1 d 54.6 93.0 1,229.5 1,216.9 7.9 4.8 -10.8 2,879.9 235

2022 . . 1,281.5 1,128.1 d 59.4 94.0 1,309.8 1,296.5 8.3 5.1 -28.2 2,851.6 220

2023 . . 1,335.7 1,177.4 d 64.6 93.7 1,396.6 1,382.8 8.7 5.1 -60.9 2,790.7 204

2024 . . 1,398.0 1,233.3 d 70.2 94.5 1,488.8 1,474.6 9.1 5.2 -90.8 2,699.9 187

2025 . . 1,457.9 1,287.9 d 76.2 93.9 1,584.7 1,570.0 9.4 5.2 -126.7 2,573.2 170

Low-cost:

2016 . . 940.7 817.3 .1 32.4 90.9 918.0 907.2 6.3 4.6 22.7 2,830.9 306

2017 . . 1,008.0 878.9 d 38.5 90.5 955.0 944.3 6.4 4.3 53.0 2,883.9 296

2018 . . 1,090.0 951.6 d 42.4 96.0 1,018.5 1,007.5 6.4 4.6 71.5 2,955.4 283

2019 . . 1,169.6 1,020.8 d 46.6 102.2 1,091.2 1,079.5 7.1 4.7 78.4 3,033.8 271

2020 . . 1,248.1 1,087.2 d 51.0 109.8 1,167.3 1,154.8 7.6 4.8 80.8 3,114.6 260

2021 . . 1,340.0 1,167.4 d 55.6 117.0 1,245.4 1,232.4 8.2 4.8 94.6 3,209.3 250

2022 . . 1,430.9 1,245.0 d 60.7 125.2 1,331.2 1,317.4 8.7 5.1 99.8 3,309.1 241

2023 . . 1,521.3 1,318.4 d 66.3 136.6 1,424.7 1,410.3 9.2 5.2 96.6 3,405.7 232

2024 . . 1,623.1 1,401.4 d 72.4 149.3 1,524.9 1,509.9 9.8 5.3 98.2 3,503.9 223

2025 . . 1,726.5 1,484.6 d 79.0 162.8 1,630.2 1,614.6 10.3 5.3 96.2 3,600.1 215

High-cost:

2016 . . 933.5 810.5 .1 32.4 90.5 921.4 910.5 6.3 4.6 12.1 2,820.3 305

2017 . . 938.4 814.9 d 38.5 84.9 959.1 948.4 6.4 4.3 -20.8 2,799.6 294

2018 . . 971.6 848.8 d 41.9 80.9 1,014.5 1,003.3 6.4 4.7 -42.9 2,756.7 276

2019 . . 1,013.3 888.7 d 45.7 78.8 1,079.9 1,068.3 6.9 4.8 -66.6 2,690.1 255

2020 . . 1,045.1 920.3 d 49.6 75.2 1,147.5 1,135.4 7.2 4.9 -102.4 2,587.7 234

2021 . . 1,088.0 963.7 d 53.6 70.7 1,215.2 1,202.8 7.5 4.8 -127.1 2,460.6 213

2022 . . 1,126.6 1,003.4 d 58.1 65.1 1,289.0 1,276.1 7.8 5.1 -162.5 2,298.1 191

2023 . . 1,157.3 1,037.2 d 62.9 57.3 1,368.4 1,355.1 8.1 5.1 -211.0 2,087.1 168

2024 . . 1,193.0 1,075.0 d 68.0 50.0 1,451.8 1,438.2 8.4 5.2 -258.8 1,828.3 144

2025 . . 1,225.0 1,109.8 d 73.4 41.8 1,537.5 1,523.6 8.7 5.2 -312.4 1,515.8 119
Appendices

180

D. LONG-RANGE SENSITIVITY ANALYSIS

This appendix presents estimates that illustrate the sensitivity of the longrange actuarial status of the OASDI program to changes in selected individual assumptions. The estimates based on the three alternative sets of assumptions, which were presented earlier in this report, illustrate the effects of

varying all of the principal assumptions simultaneously, in order to portray a

significantly more optimistic or pessimistic future. For each sensitivity analysis presented in this appendix, the intermediate alternative II projection is

the reference point, and one assumption is varied within that alternative. The

variation used for each individual assumption is the same as the level used

for that assumption in the low-cost alternative I and high-cost alternative III

projections.

Each table in this section shows the effects of changing a particular assumption on the OASDI summarized income rates, summarized cost rates, and

actuarial balances for 25-year, 50-year, and 75-year valuation periods. Following each table is a discussion of the estimated changes in cost rates. The

change in each of the actuarial balances is approximately equal to the change

in the corresponding cost rate, but in the opposite direction. This appendix

does not discuss income rates following each table because income rates

vary only slightly with changes in assumptions that affect revenue from taxation of benefits.

1. Total Fertility Rate

Table VI.D1 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about the ultimate

total fertility rate. The Trustees assume that total fertility will ultimately be

1.8, 2.0, and 2.2 children per woman under alternatives III, II, and I, respectively. The total fertility rate reaches ultimate values in 2032, 2027, and 2024

under alternatives III, II, and I, respectively.
181

Long-Range Sensitivity Analysis

For the 25-year period, the cost rate for the three fertility assumptions varies

by only about 0.03 percent of taxable payroll. In contrast, the 75-year cost

rate varies over a wide range, decreasing from 16.90 to 16.09 percent, as the

assumed ultimate total fertility rate increases from 1.8 to 2.2. Similarly,

while the 25-year actuarial balance varies by only 0.03 percent of taxable

payroll, the 75-year actuarial balance varies over a much wider range, from

-3.02 to -2.28 percent.

During the 25-year period, the very slight increases in the working population resulting from higher fertility (than that experienced in an alternative

scenario) are more than offset by decreases in the female labor force and

increases in the number of child beneficiaries. Therefore, program cost

increases slightly with higher fertility. For the 75-year long-range period,

however, changes in fertility have a relatively greater effect on the labor

force than on the beneficiary population. As a result, an increase in fertility

significantly reduces the cost rate. Each increase of 0.1 in the ultimate total

fertility rate increases the long-range actuarial balance by about 0.18 percent

of taxable payroll.

2. Death Rates

Table VI.D2 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about future reducTable VI.D1.—Sensitivity of OASDI Measures to Varying Fertility Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate total fertility ratea b

a The total fertility rate for any year is the average number of children that would be born to a woman in her

lifetime if she were to experience, at each age of her life, the birth rate observed in, or assumed for, the

selected year, and if she were to survive the entire childbearing period. The ultimate total fertility rate is

reached in 2032, 2027, and 2024 under alternatives III, II, and I, respectively.

b Ultimate total fertility rates used for this analysis are: 1.8 from the alternative III assumptions, 2.0 from the

alternative II assumptions, and 2.2 from the alternative I assumptions. All other assumptions used for this

analysis are from alternative II.

1.8 2.0 2.2

Summarized income rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.66 14.67 14.67

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.04 14.03 14.01

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.88 13.84 13.80

Summarized cost rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.14 16.15 16.16

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.41 16.26 16.10

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.90 16.50 16.09

Actuarial balance:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.47 -1.48 -1.50

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.36 -2.23 -2.09

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.02 -2.66 -2.28

Annual balance for 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . -5.84 -4.35 -3.03

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2034
Appendices

182

tions in death rates for the period from 2015 to 2090. These assumptions are

described in section V.A.2. The Trustees assume that the age-sex-adjusted

death rates will decline at average annual rates of 0.42 percent, 0.78 percent,

and 1.16 percent for alternatives I, II, and III, respectively. 

The variation in cost for the 25-year period is less pronounced than the variation for the 75-year period because decreases in death rates have cumulative

effects. The 25-year cost rate increases from 15.99 percent (for an average

annual death-rate reduction of 0.42 percent) to 16.32 percent (for an average

annual death-rate reduction of 1.16 percent). The 75-year cost rate increases

from 16.01 to 17.02 percent. The actuarial balance decreases from -1.32 to

-1.66 percent for the 25-year period, and from -2.18 to -3.16 percent for the

75-year period.

Lower death rates raise both the income (through increased taxable payroll)

and the cost of the OASDI program. The relative increase in cost, however,

exceeds the relative increase in taxable payroll. For any given year, reductions in the death rates for people who are age 62 and over (ages at which

death rates are the highest) increase the number of retired-worker beneficiaries (and, therefore, the amount of retirement benefits paid) without adding

significantly to the number of covered workers (and, therefore, to the taxable

payroll). Reductions for people at age 50 to retirement eligibility age result

Table VI.D2.—Sensitivity of OASDI Measures to Varying Death-Rate Assumptions

[As a percentage of taxable payroll]

Valuation period

Average annual death-rate reductiona b

a The average annual death-rate reduction is the average annual geometric rate of decline in the age-sexadjusted death rate between 2015 and 2090. The overall age-sex-adjusted death rate decreases from 2015 to

2090 by 27 percent, 44 percent, and 58 percent for alternatives I, II, and III, respectively.

b The average annual death-rate reductions used for this analysis are: 0.42 percent from the alternative I

assumptions, 0.78 percent from the alternative II assumptions, and 1.16 percent from the alternative III

assumptions. All other assumptions used for this analysis are from alternative II.

0.42 percent 0.78 percent 1.16 percent

Summarized income rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.67 14.67 14.66

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.02 14.03 14.04

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.83 13.84 13.86

Summarized cost rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.99 16.15 16.32

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.91 16.26 16.64

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.01 16.50 17.02

Actuarial balance:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.32 -1.48 -1.66

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.89 -2.23 -2.60

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.18 -2.66 -3.16

Annual balance for 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . -3.37 -4.35 -5.31

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2033
183

Long-Range Sensitivity Analysis

in significant increases to the taxable payroll. However, those increases are

not large enough to offset the sum of the additional retirement benefits mentioned above and the disability benefits paid to additional beneficiaries at

these pre-retirement ages, which are ages of high disability incidence. At

ages under 50, death rates are so low that even substantial reductions in death

rates do not result in significant increases in the numbers of covered workers

or beneficiaries. Consequently, if death rates decline by about the same relative amount for all ages, the cost increases faster than the rate of growth in

payroll, which results in higher cost rates and lower actuarial balances. Each

additional 0.1-percentage-point increase in the average annual rate of decline

in the death rate decreases the long-range actuarial balance by about

0.13 percent of taxable payroll.

3. Immigration

Table VI.D3 shows OASDI income rates, cost rates, and actuarial balances

under alternative II with various assumptions about the magnitude of net

immigration (immigration minus emigration). The Trustees assume annual

levels of immigration and emigration, with new annual immigration averaging 961,000 persons, 1,291,000 persons, and 1,629,000 persons over the

long-range period under alternatives III, II, and I, respectively.

For all three periods, when net immigration increases, the cost rate decreases.

For the 25-year period, the cost rate decreases from 16.35 percent of taxable

Table VI.D3.—Sensitivity of OASDI Measures to Varying Net-Immigration Assumptions

[As a percentage of taxable payroll]

Valuation period

Average annual net immigrationa b

a Net immigration per year is the annual net immigration to the Social Security area, including both legal and

other immigration, averaged over the 75-year projection period.

b The average annual net immigration assumptions used for this analysis are: 961,000 from the alternative III

assumptions, 1,291,000 from the alternative II assumptions, and 1,629,000 from the alternative I assumptions. All other assumptions used for this analysis are from alternative II.

961,000 1,291,000 1,629,000

Summarized income rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.70 14.67 14.64

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.06 14.03 13.99

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.88 13.84 13.81

Summarized cost rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.35 16.15 15.98

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.53 16.26 16.02

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.81 16.50 16.24

Actuarial balance:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.65 -1.48 -1.34

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.46 -2.23 -2.03

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.93 -2.66 -2.43

Annual balance for 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.81 -4.35 -3.96

Year of combined trust fund reserve depletion . . . . . . . . 2033 2034 2035
Appendices

184

payroll (for average annual net immigration of 961,000 persons) to

15.98 percent (for average annual net immigration of 1,629,000 persons).

For the 50-year period, it decreases from 16.53 percent to 16.02 percent, and

for the 75-year period, it decreases from 16.81 percent to 16.24 percent. The

actuarial balance increases from -1.65 to -1.34 percent for the 25-year

period, from -2.46 to -2.03 percent for the 50-year period, and from -2.93 to

-2.43 percent for the 75-year period.

The cost rate decreases with an increase in net immigration because immigration occurs at relatively young ages, thereby increasing the numbers of

covered workers earlier than the numbers of beneficiaries. Increasing average annual net immigration by 100,000 persons improves the long-range

actuarial balance by about 0.07 percent of taxable payroll.

4. Real-Wage Differential

Table VI.D4 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about the real-wage

differential. The Trustees assume the ultimate real-wage differential will be

0.59 percentage point, 1.21 percentage points, and 1.83 percentage points

under alternatives III, II, and I, respectively. In each case, the ultimate annual

increase in the CPI is 2.60 percent (consistent with alternative II). Therefore,

the ultimate percentage increases in average annual wages in covered

employment are 3.19, 3.81, and 4.43 percent.

For the 25-year period, the cost rate decreases from 16.92 percent (for a realwage differential of 0.59 percentage point) to 15.39 percent (for a differential

of 1.83 percentage points). For the 50-year period, it decreases from 17.36 to

15.18 percent, and for the 75-year period it decreases from 17.72 to

15.31 percent. The actuarial balance increases from -2.12 to -0.86 percent for

the 25-year period, from -3.17 to -1.31 percent for the 50-year period, and

from -3.69 to -1.64 percent for the 75-year period.
185

Long-Range Sensitivity Analysis

The cost rate decreases with increasing real-wage differentials. Higher wages

increase taxable payroll immediately, but they increase benefit levels only

gradually as new beneficiaries become entitled. In addition, cost-of-living

adjustments (COLAs) to benefits depend not on changes in wages, but on

changes in prices. Each 0.5-percentage-point increase in the real-wage differential increases the long-range actuarial balance by about 0.83 percent of

taxable payroll.

5. Consumer Price Index

Table VI.D5 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about the rate of

increase for the Consumer Price Index (CPI). The Trustees assume the

annual increase in the CPI will be 3.20 percent, 2.60 percent, and

2.00 percent under alternatives I, II, and III, respectively.1 In each case, the

ultimate real-wage differential is 1.21 percentage points (consistent with

alternative II), yielding ultimate percentage increases in average annual

wages in covered employment of 4.41, 3.81, and 3.21 percent.

Table VI.D4.—Sensitivity of OASDI Measures to Varying Real-Wage Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate percentage increase in wages-CPIa b

a The first value in each pair is the ultimate annual percentage increase in average wages in covered employment. The second value is the ultimate annual percentage increase in the Consumer Price Index. The difference between the two values is the ultimate real-wage differential.

b The ultimate real-wage differentials of 0.59, 1.21, and 1.83 percentage points are the same as in alternatives III, II, and I, respectively. All other assumptions used for this analysis are from alternative II.

3.19-2.60 3.81-2.60 4.43-2.60

Summarized income rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.80 14.67 14.54

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.19 14.03 13.87

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.03 13.84 13.67

Summarized cost rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.92 16.15 15.39

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.36 16.26 15.18

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.72 16.50 15.31

Actuarial balance:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.12 -1.48 -.86

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.17 -2.23 -1.31

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.69 -2.66 -1.64

Annual balance for 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . -6.23 -4.35 -2.69

Year of combined trust fund reserve depletion . . . . . . . . 2032 2034 2038

 1 Prior to the 2014 report, alternative I included a lower ultimate annual change in the CPI and alternative III

included a higher ultimate annual change in the CPI than was included for alternative II.
Appendices

186

For all three periods, the cost rate increases when the assumed rates of

increase in the CPI are smaller. For the 25-year period, the cost rate increases

from 16.04 (for CPI increases of 3.20 percent) to 16.25 percent (for CPI

increases of 2.00 percent). For the 50-year period, it increases from 16.12 to

16.38 percent, and for the 75-year period, it increases from 16.35 to

16.64 percent. The actuarial balance decreases from -1.40 to -1.56 percent

for the 25-year period, from -2.11 to -2.34 percent for the 50-year period, and

from -2.52 to -2.78 percent for the 75-year period.

The time lag between the effects of the CPI changes on taxable payroll and

on scheduled benefits explains these patterns. When the rate of increase in

the CPI is greater and the real-wage differential is constant, then: (1) the

effect on taxable payroll due to a greater rate of increase in average wages

occurs immediately and (2) the effect on benefits due to a larger COLA

occurs with a lag of about 1 year. As a result of these effects, the higher taxable payrolls have a stronger effect than the higher benefits, which results in

lower cost rates. Each 1.0-percentage-point decrease in the rate of the change

in the CPI decreases the long-range actuarial balance by about 0.22 percent

of taxable payroll.

Table VI.D5.—Sensitivity of OASDI Measures to Varying CPI-Increase Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate percentage increase in wages-CPIa b

a The first value in each pair is the ultimate annual percentage increase in average wages in covered employment. The second value is the ultimate annual percentage increase in the Consumer Price Index. The difference between the two values is the ultimate real-wage differential.

b The ultimate CPI increases of 3.20, 2.60, and 2.00 percent are the same as in alternatives I, II, and III,

respectively. The ultimate real-wage differential of 1.21 percentage points is the same as in alternative II. All

other assumptions used for this analysis are also from alternative II.

4.41-3.20 3.81-2.60 3.21-2.00

Summarized income rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.64 14.67 14.69

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.01 14.03 14.04

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.83 13.84 13.86

Summarized cost rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.04 16.15 16.25

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.12 16.26 16.38

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.35 16.50 16.64

Actuarial balance:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.40 -1.48 -1.56

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.11 -2.23 -2.34

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.52 -2.66 -2.78

Annual balance for 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.16 -4.35 -4.51

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2034
187

Long-Range Sensitivity Analysis

6. Real Interest Rate

Table VI.D6 shows OASDI income rates, cost rates, and actuarial balances

under alternative II with various assumptions about the annual real interest

rate (compounded semiannually) for special public-debt obligations issuable

to the trust funds. The Trustees assume that the ultimate annual real interest

rate will be 2.2 percent, 2.7 percent, and 3.2 percent under alternatives III, II,

and I, respectively. In each case, the ultimate annual increase in the CPI is

2.60 percent, which is consistent with alternative II. Therefore, the ultimate

annual yields are 4.9, 5.4, and 5.9 percent, respectively.

For the 25-year period, the cost rate decreases with increasing real interest

rates from 16.22 percent (for an ultimate real interest rate of 2.2 percent) to

16.08 percent (for an ultimate real interest rate of 3.2 percent). For the 50-

year period, it decreases from 16.34 to 16.18 percent and, for the 75-year

period, it decreases from 16.62 to 16.39 percent. The actuarial balance

increases from -1.61 to -1.36 percent for the 25-year period, from -2.39 to

-2.08 percent for the 50-year period, and from -2.85 to -2.46 percent for the

75-year period. Each 0.5-percentage-point increase in the real interest rate

increases the long-range actuarial balance by about 0.20 percent of taxable

payroll.

Table VI.D6.—Sensitivity of OASDI Measures to Varying Real-Interest Assumptions

[As a percentage of taxable payroll]

Valuation period

Ultimate annual real interest ratea b

a The ultimate real interest rate is the effective annual yield on asset reserves held by the trust funds divided

by the annual rate of growth in the CPI.

b The ultimate annual real interest rates used for this analysis are: 2.2 percent from the alternative III

assumptions, 2.7 percent from the alternative II assumptions, and 3.2 percent from the alternative I assumptions. All other assumptions used for this analysis are from alternative II.

2.2 percent 2.7 percent 3.2 percent

Summarized income rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.61 14.67 14.73

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.95 14.03 14.10

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.77 13.84 13.93

Summarized cost rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.22 16.15 16.08

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.34 16.26 16.18

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.62 16.50 16.39

Actuarial balance:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.61 -1.48 -1.36

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.39 -2.23 -2.08

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.85 -2.66 -2.46

Annual balance for 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.35 -4.35 -4.35

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2034
Appendices

188

7. Disability Incidence Rates

Table VI.D7 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions concerning future disability incidence rates. For all three alternatives, the Trustees assume that

incidence rates by age and sex will vary during the early years of the projection period before attaining ultimate levels. In comparison to the historical

period 1970 through 2015, the ultimate age-sex-adjusted incidence rate is

about 4 percent higher for alternative II, 17 percent lower for alternative I,

and 23 percent higher for alternative III.

For the 25-year period, the cost rate increases with increasing disability incidence rates, from 15.94 percent (for the relatively low rates assumed for

alternative I) to 16.36 percent (for the relatively high rates assumed for alternative III). For the 50-year period, it increases from 16.00 to 16.52 percent,

and for the 75-year period, it increases from 16.23 to 16.77 percent. The

actuarial balance decreases from -1.28 to -1.69 percent for the 25-year

period, from -1.97 to -2.48 percent for the 50-year period, and from -2.39 to

-2.92 percent for the 75-year period.

8. Disability Termination Rates

Table VI.D8 shows OASDI income rates, cost rates, and actuarial balances

on the basis of alternative II with various assumptions about future disability

Table VI.D7.—Sensitivity of OASDI Measures to 

Varying Disability Incidence Assumptions

[As a percentage of taxable payroll]

Valuation period

Disability incidence rates

based on alternative—

I II III

Summarized income rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.66 14.67 14.67

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.02 14.03 14.03

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.84 13.84 13.85

Summarized cost rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.94 16.15 16.36

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.00 16.26 16.52

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.23 16.50 16.77

Actuarial balance:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.28 -1.48 -1.69

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.97 -2.23 -2.48

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.39 -2.66 -2.92

Annual balance for 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.04 -4.35 -4.65

Year of combined trust fund reserve depletion . . . . . . . . 2035 2034 2033
189

Long-Range Sensitivity Analysis

termination rates, including deaths and recoveries up to the age at which disabled-worker beneficiaries convert to retired-worker status. 

For all three alternatives, the Trustees assume that death rates for disabledworker beneficiaries will decline throughout the long-range period. For alternative II, the age-sex-adjusted1 disability death rate declines to a level in

2090 that is about 56 percent lower than the level in 2015. For alternative I,

the age-sex-adjusted disability death rate declines to a level in 2090 that is

about 30 percent lower than the level in 2015. For alternative III, the agesex-adjusted disability death rate declines to a level in 2090 that is about

74 percent lower than the level in 2015.

For all three alternatives, ultimate recovery rates by age, sex, and duration

are attained in the twentieth year of the projection period. For alternative II,

the age-sex-adjusted1 recovery rate in 2035 is about 10 recoveries per thousand disabled-worker beneficiaries. For alternative I, the age-sex-adjusted

recovery rate in 2035 is about 13 recoveries per thousand disabled-worker

beneficiaries. For alternative III, the age-sex-adjusted recovery rate in 2035

is about 8 recoveries per thousand disabled-worker beneficiaries.

For the 25-year period, the cost rate increases with decreasing disability termination rates, from 16.12 percent (for the relatively high termination rates

assumed for alternative I) to 16.18 percent (for the relatively low termination

rates assumed for alternative III). For the 50-year period, it increases from

16.22 to 16.29 percent, and for the 75-year period, it increases from 16.47 to

 1 Age adjusted to the total disabled workers in current-payment status as of the year 2000.

Table VI.D8.—Sensitivity of OASDI Measures to 

Varying Disability Termination Assumptions

[As a percentage of taxable payroll]

Valuation period

Disability termination rates

based on alternative—

I II III

Summarized income rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.67 14.67 14.67

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.03 14.03 14.03

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.85 13.84 13.84

Summarized cost rate:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.12 16.15 16.18

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.22 16.26 16.29

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.47 16.50 16.53

Actuarial balance:

25-year: 2016-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.45 -1.48 -1.52

50-year: 2016-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.20 -2.23 -2.26

75-year: 2016-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.62 -2.66 -2.68

Annual balance for 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . -4.32 -4.35 -4.34

Year of combined trust fund reserve depletion . . . . . . . . 2034 2034 2034
Appendices

190

16.53 percent. The actuarial balance decreases from -1.45 to -1.52 percent

for the 25-year period, from -2.20 to -2.26 percent for the 50-year period,

and from -2.62 to -2.68 percent for the 75-year period.
191

Stochastic Projections 

E. STOCHASTIC PROJECTIONS AND UNCERTAINTY

Significant uncertainty surrounds the estimates under the intermediate

assumptions, especially for a period as long as 75 years. This appendix presents a way to illustrate the uncertainty of these estimates. The stochastic projections supplement the traditional methods of examining such uncertainty.

1. Background

The Trustees have traditionally shown estimates using the low-cost and highcost sets of specified assumptions to illustrate the presence of uncertainty.

These alternative estimates provide a range of possible outcomes for the projections. However, they do not provide an indication of the probability that

actual future experience will be inside or outside this range. This appendix

presents the results of a model, based on stochastic modeling techniques, that

estimates a probability distribution of future outcomes of the financial status

of the combined OASI and DI Trust Funds. This model, which was first

included in the 2003 report, is subject to further development in the future,

most notably by incorporating parameter uncertainty. This will allow the stochastic model to reflect persistent uncertainties that are now reflected in the

low-cost and high-cost alternatives.

2. Stochastic Methodology

Other sections of this report provide estimates of the financial status of the

combined OASI and DI Trust Funds using a scenario-based model. For the

scenario-based model, the Trustees use three alternative scenarios (low-cost,

intermediate, and high-cost) that make assumptions about levels of fertility,

changes in mortality, legal and other immigration levels, legal and other emigration levels, changes in the Consumer Price Index, changes in average real

wages, unemployment rates, trust fund real yield rates, and disability incidence and recovery rates. In general, the Trustees assume that each of these

variables will reach an ultimate value at a specific point during the longrange period, and will maintain that value throughout the remainder of the

period. The three alternative scenarios assume separate, specified values for

each of these variables. Chapter V contains more details about each of these

assumptions.

This appendix presents estimates of the probability that key measures of

OASDI solvency will fall in certain ranges, based on 5,000 independent stochastic simulations. Each simulation allows the above variables to vary

throughout the long-range period. The fluctuation of each variable over time

is simulated using historical data and standard time-series techniques. Gener-
Appendices

192

ally, each variable is modeled using an equation that: (1) captures a relationship between current and prior years’ values of the variable; and

(2) introduces year-by-year random variation as observed in the historical

period. For some variables, the equations also reflect relationships with other

variables. The equations contain parameters that are estimated using historical data for periods of at least 5 years and at most 112 years, depending on

the nature and quality of the available data. Each time-series equation is

designed so that, in the absence of random variation over time, the value of

the variable for each year equals its value under the intermediate assumptions.1

For each simulation, the stochastic method develops year-by-year random

variation for each variable using Monte Carlo techniques. Each simulation

produces an estimate of the financial status of the combined OASI and DI

Trust Funds. This appendix shows the distribution of results from 5,000 simulations of the model.

Readers should interpret the results from this model with caution and with an

understanding of the model’s limitations. Results are sensitive to equation

specifications, degrees of interdependence among variables, and the historical periods used for the estimates. For some variables, recent historical variation may not provide a realistic representation of the potential variation for

the future. Also, results would differ if additional variables (such as labor

force participation rates, retirement rates, marriage rates, and divorce rates)

were also allowed to vary randomly. Furthermore, more variability would

result if statistical approaches were used to model uncertainty in the central

tendencies of the variables. Time-series modeling reflects only what

occurred in the historical period. Future uncertainty exists not only for the

underlying central tendency but also for the frequency and size of occasional

longer-term shifts in the central tendency. Many experts predict, and history

suggests, that the future will likely bring substantial shifts that are not fully

reflected in the current model. As a result, readers should understand that the

true range of uncertainty is larger than indicated in this appendix.

3. Stochastic Results

This section illustrates the results for the stochastic simulations of two fundamental measures of actuarial status: the annual cost rates and the trust fund

ratio. The latter measure is highlighted in the Overview of this report.

 1 More detail on this model, and stochastic modeling in general, is available at

www.ssa.gov/OACT/stochastic/index.html.
193

Stochastic Projections 

Section 4 follows with a comparison of stochastic results to results from the

alternative scenarios for these and other measures, and an analysis of the differences. 

Figure VI.E1 displays the probability distribution of the year-by-year

OASDI cost rates (that is, cost as a percentage of taxable payroll). The range

of the annual cost rates widens as the projections move further into the

future, which reflects increasing uncertainty. Because there is relatively little

variation in income rates across the 5,000 stochastic simulations, the figure

includes the income rate only under the intermediate assumptions. The two

extreme lines in this figure illustrate the range within which future annual

cost rates are projected by the current model to occur 95 percent of the time

(i.e., a 95-percent confidence interval). In other words, the current model

indicates that there is a 2.5 percent probability that the cost rate for a given

year will exceed the upper end of this range and a 2.5 percent probability that

it will fall below the lower end of this range. Other lines in the figure delineate additional confidence intervals (80-percent, 60-percent, 40-percent, and

20-percent) around future annual cost rates. The median (50th percentile)

cost rate for each year is the rate for which half of the simulated outcomes

are higher and half are lower for that year. These lines do not represent the

results of individual stochastic simulations. Instead, for each given year, they

represent the percentile distribution of annual cost rates based on all stochastic simulations for that year. 
Appendices

194

Figure VI.E2 presents the simulated probability distribution of the annual

trust fund ratios for the combined OASI and DI Trust Funds. The lines in this

figure display the median set (50th percentile) of estimated annual trust fund

ratios and delineate the 95-percent, 80-percent, 60-percent, 40-percent, and

20-percent confidence intervals expected for future annual trust fund ratios.

Again, none of these lines represents the time path of a single simulation. For

each given year, they represent the percentile distribution of trust fund ratios

based on all stochastic simulations for that year. 

Figure VI.E2 shows that the 95-percent confidence interval for the trust fund

depletion year ranges from 2029 to 2045, and there is a 50-percent probability of trust fund depletion by the end of 2034 (the median depletion year).

The median depletion year is the same as the Trustees project under the intermediate assumptions. The figure also shows confidence intervals for the trust

fund ratio in each year. For example, the 95-percent confidence interval for

the trust fund ratio in 2025 ranges from 227 to 110 percent of annual cost. 

 Figure VI.E1.—Long-Range OASDI Cost Rates From Stochastic Modeling

5%

10%

15%

20%

25%

30%

2016 2031 2046 2061 2076 2091

Projection year 

50% 

97.5%

2.5%

90% 

10% 

Income Rate 
195

Stochastic Projections 

4. Comparison of Results: Stochastic to Low-Cost, Intermediate, and

High-Cost Alternatives

This section compares results from two different approaches for illustrating

ranges of uncertainty for trust fund actuarial status. One approach uses

results from the low-cost, intermediate, and high-cost alternative scenarios.

The other approach uses distributions of results from 5,000 independent stochastic simulations. Each of these approaches provides insights into uncertainty. Comparison of the results requires an understanding of fundamental

differences in the approaches. 

One fundamental difference relates to the presentation of distributional

results. Figure VI.E3 shows projected OASDI annual cost rates for the lowcost, intermediate, and high-cost alternatives along with the annual cost rates

at the 97.5th percentile, 50th percentile, and 2.5th percentile for the stochastic simulations. While all values on each line for the alternatives are results

from a single specified scenario, the values on each stochastic line may be

results from different simulations for different years. The one stochastic simulation (from the 5,000 simulations) that yields results closest to a particular

 Figure VI.E2.—Long-Range OASDI Trust Fund Ratios From Stochastic Modeling

0%

100%

200%

300%

400%

2016 2031 2046 2061 2076 2091

Projection year 

50% 

97.5% 

2.5% 

90% 

10% 
Appendices

196

percentile for one projected year may yield results that are distant from that

percentile in another projected year. 

Because each stochastic simulation shows substantial variability from year to

year, the range shown between the 97.5th and 2.5th percentiles is broader

than would be seen if simulations followed a smooth trend like in the alternatives. In spite of this effect, the range from high-cost to low-cost annual rates

for the stochastic distribution is generally contained slightly within the range

for the high-cost and low-cost alternatives. With introduction of parameter

uncertainty for the stochastic simulations expected in future reports, the

range for the 95-percent confidence interval is expected to expand.

Both the alternatives and the stochastic results suggest that the range of

potential cost rates above the central levels (those for the intermediate alternative and for the median, respectively) is larger than the range below these

central results. The difference between the central results and the higher cost

levels (the high-cost alternative and the upper end of the 95-percent confidence range, respectively) is about 1.5 times as large as the difference

between the central and lower cost levels for both models by the end of the

projection period.

 Figure VI.E3.—OASDI Cost Rates: Comparison of Stochastic to Low-Cost, Intermediate, 

and High-Cost Alternatives

[as a percentage of taxable payroll]

10%

15%

20%

25%

30%

2016 2031 2046 2061 2076 2091

Projection year 

Low-Cost

Intermediate

High-Cost

Stochastic 2.5%

Stochastic 50%

Stochastic 97.5%
197

Stochastic Projections 

Another fundamental difference between the alternatives and the stochastic

simulations is the method of assigning values for assumptions. For the alternatives, specific values are assigned for each of the key demographic and

economic variables. Values for all parameters that affect annual cost or payroll are assigned to the high-cost alternative in order to raise estimated

annual cost as a percent of payroll, and values are assigned to the low-cost

alternative in order to reduce it. (One parameter, the interest rate, has no

effect on annual cost as a percent of payroll.) In contrast, the stochastic

method essentially randomly assigns values for each of the key demographic

and economic variables for each year in each of the 5,000 independent stochastic simulations. For each of the stochastic simulations, randomly

assigned values for different variables result in varying and often offsetting

effects on projected cost as a percent of payroll, with some tending toward

higher cost and some tending toward lower cost. This difference tends to

reduce the range of cost as a percent of payroll across the 95-percent confidence interval. Again, the future introduction of parameter uncertainty is

expected to broaden this range.

It is important to understand that the stochastic model’s 95-percent confidence intervals for any summary measure of trust fund finances would tend

to be narrower than the range produced for the low-cost and high-cost alternatives, even if the stochastic model’s 95-percent confidence interval for

annual cost rates were identical to the range defined by the low-cost and

high-cost projections. This is true because summary measures of trust fund

finances depend on cost rates for many years, and the probability that annual

cost rates, on average for individual stochastic simulations, will be at least as

low (high) as the 2.5 (97.5) percentile line is significantly lower than

2.5 percent. As a result, the relationship between the ranges presented for

annual cost rates and summary measures of trust fund finances is fundamentally different for the stochastic model than it is for the low-cost and highcost alternatives.

Figure VI.E4 compares the ranges of trust fund (unfunded obligation) ratios

for the alternative scenarios and the 95-percent confidence interval of the

stochastic simulations. This figure extends figure VI.E2 to show unfunded

obligation ratios, expressed as negative values below the zero percent line.

An unfunded obligation ratio is the ratio of the unfunded obligation accumulated through the beginning of the year to the cost for that year.
Appendices

198

As mentioned above, a summary measure that accumulates annual values

tends to smooth the kind of annual fluctuations that occur in stochastic simulations. Therefore, one might expect the range across the stochastic confidence interval for trust fund (unfunded obligation) ratios to be narrower and

fall within the range seen across the high-cost and low-cost alternatives, as it

does for the actuarial balance measure. But this is not the case, largely due to

the way interest rates are assigned. 

For the stochastic model, real interest rates for each simulation are assigned

essentially randomly, so the rate for compounding of trust fund reserves

(unfunded obligations) is essentially uncorrelated with the level of cost as a

percent of payroll. On the other hand, real interest rates are assigned to be

higher for the low-cost alternative and lower for the high-cost alternative.

High interest rates raise the level of the positive trust fund ratio in the lowcost alternative somewhat, but this effect is limited because the magnitude of

reserves is small. However, low interest rates substantially reduce the magnitude of the unfunded obligation ratio for the high-cost alternative because the

 Figure VI.E4.—OASDI Trust Fund (Unfunded Obligation) Ratios: Comparison of 

Stochastic to Low-Cost, Intermediate, and High-Cost Alternativesa

[Asset reserves (unfunded obligation) as a percentage of annual cost]

a An unfunded obligation, shown as a negative value in this figure, is equivalent to the amount the trust

funds would need to have borrowed to date in order to pay all scheduled benefits (on a timely basis) after

trust fund asset reserves are depleted. Note that current law does not permit the trust funds to borrow.

-5000%

-4500%

-4000%

-3500%

-3000%

-2500%

-2000%

-1500%

-1000%

-500%

0%

500%

1000%

2016 2031 2046 2061 2076 2091

Projection year 

Low-Cost

Intermediate

High-Cost

Stochastic 2.5%

Stochastic 50%

Stochastic 97.5%

Trustfund asset reserves (positive) 

Unfunded obligation (negative) 
199

Stochastic Projections 

magnitude of unfunded obligations is relatively large. As a result, the trust

fund (unfunded obligation) ratios are shifted, albeit unevenly, higher (or less

negative) for both the high-cost and low-cost alternatives. 

This interest rate effect on the alternatives is not as evident for some other

summary measures of actuarial status, such as the actuarial balance. Because

the actuarial balance reflects the cumulative effects of interest in both its

numerator and denominator, the interest rate effect is much less pronounced.

In contrast, cumulative interest affects only the numerator of the trust fund

(unfunded obligation) ratio. There is also no significant interest rate effect on

the trust fund depletion date.

Other factors also contribute, to varying degrees, to the difference in ranges

between the results of the alternative scenarios and the stochastic simulations. The contrasts in results and methods do not mean that either approach

to illustrating ranges of uncertainty is superior to the other. The ranges are

different and explainable. 

Table VI.E1 displays long-range actuarial estimates for the combined

OASDI program using the two methods of illustrating uncertainty: alternative scenarios and stochastic simulations. The table shows stochastic estimates for the median (50th percentile) and for the 95-percent and 80-percent

confidence intervals. For comparison, the table shows scenario-based estimates for the intermediate, low-cost, and high-cost assumptions. Each individual stochastic estimate in the table is the level at that percentile from the

distribution of the 5,000 simulations. For each given percentile, the values in

the table for each long-range actuarial measure are generally from different

stochastic simulations.

The median stochastic estimates displayed in table VI.E1 are, in general,

slightly more pessimistic than the intermediate scenario-based estimates. The

median estimate of the long-range actuarial balance is -2.67 percent of taxable payroll, about 0.01 percentage point lower than projected under the

intermediate assumptions. The median first projected year that cost exceeds

non-interest income (as it did in 2010 through 2015), and remains in excess

of non-interest income throughout the remainder of the long-range period, is

2016. This is the same year as projected under the intermediate assumptions.

The median year that asset reserves first become depleted is 2034, also the

same as projected under the intermediate assumptions. The median estimates

of the annual cost rate for the 75th year of the projection period are

18.01 percent of taxable payroll and 6.26 percent of gross domestic product

(GDP). The comparable estimates under the intermediate assumptions are

17.68 percent of payroll and 6.14 percent of GDP.
Appendices

200

For three measures in table VI.E1 (the actuarial balance, the first year cost

exceeds non-interest income and remains in excess through 2090, and the

first projected year asset reserves become depleted), the 95-percent stochastic confidence interval is narrower than the range defined by the low-cost and

high-cost alternatives. In other words, for these measures, the range defined

by the low-cost and high-cost alternatives contains the 95-percent confidence

interval of the stochastic modeling projections. For the remaining three measures (the open group unfunded obligation, the annual cost in the 75th year

as a percent of taxable payroll, and the annual cost in the 75th year as a percent of GDP), one or both of the bounds of the 95-percent stochastic confidence interval fall outside the range defined by the low-cost and high-cost

alternatives.

Table VI.E1.—Long-Range Estimates Relating to the Actuarial Status of

the Combined OASDI Program

[Comparison of scenario-based and stochastic results]

Traditional

scenario-based model Stochastic model

IntermediateLowcostHighcost

Median

50th

percentile

80-percent

confidence interval

95-percent

confidence interval

10th

percentile

90th

percentile

2.5th

percentile

97.5th

percentile

Actuarial balance . . . . . . -2.66 0.22 -6.30 -2.67 -4.08 -1.52 -4.95 -0.93

Open group unfunded 

obligation 

(in trillions) . . . . . . . . . $11.4 -$1.9 $23.3 $11.4 $5.4 $21.2 $3.2 $30.0

First projected year cost 

exceeds non-interest 

income and remains

in excess 

through 2090a . . . . . . .

a Cost also exceeded non-interest income in 2010 through 2015.

2016 b

b The annual balance is projected to be negative for a temporary period, returning to positive levels before the

end of the projection period.

2016 2016 2016 2042 2016 2088

First year asset reserves 

become depletedc . . . .

c For some stochastic simulations, the first year in which trust fund reserves become depleted does not indicate a permanent depletion of reserves.

2034 d

d Trust fund reserves are not estimated to be depleted within the projection period.

2029 2034 2031 2040 2029 2045

Annual cost in 75th year 

(percent of taxable

payroll) . . . . . . . . . . . . 17.68 12.84 24.89 18.01 14.84 22.39 13.30 25.11

Annual cost in 75th year 

(percent of GDP). . . . . 6.14 4.85 7.96 6.26 5.19 7.71 4.67 8.62
201

Infinite Horizon Projections 

F. INFINITE HORIZON PROJECTIONS

Another measure of trust fund finances is the infinite horizon unfunded obligation, which takes account of all annual balances, even those after 75 years.

The extension of the time period past 75 years assumes that the current-law

OASDI program and the demographic and economic trends used for the

75-year projection continue indefinitely.

Table VI.F1 shows that the OASDI open group unfunded obligation over the

infinite horizon is $32.1 trillion in present value, which is $20.7 trillion

larger than for the 75-year period. The $20.7 trillion increment reflects a significant financing gap projected for OASDI for years after 2090 into perpetuity. Of course, the degree of uncertainty associated with estimates increases

substantially for years further in the future.

The $32.1 trillion infinite horizon open group unfunded obligation is equivalent to 4.0 percent of taxable payroll or 1.4 percent of GDP. These relative

measures of the unfunded obligation over the infinite horizon express its

magnitude in relation to the resources potentially available to finance the

shortfall.

The summarized shortfalls for the 75-year period and through the infinite

horizon both reflect annual cash-flow shortfalls for all years after trust fund

reserve depletion. The annual shortfalls after trust fund reserve depletion rise

slowly and reflect increases in life expectancy after 2034. The summarized

shortfalls for the 75-year period, as percentages of taxable payroll and GDP,

are lower than those for the infinite horizon principally because only about

three-quarters of the years in the 75-year period have unfunded annual shortfalls, and annual shortfalls within the 75-year period represent a smaller

share of taxable payroll and GDP than do the shortfalls in later years.

To illustrate the magnitude of the projected infinite horizon shortfall, consider that it could be eliminated with additional revenue equivalent to an

immediate increase in the combined payroll tax rate from 12.4 percent to

about 16.6 percent,1 or with cost reductions equivalent to an immediate and

permanent reduction in benefits for all current and future beneficiaries by

about 24 percent. 

 1 The indicated increase in the payroll tax rate of 4.2 percent is somewhat larger than the 4.0 percent infinite

horizon actuarial deficit because the indicated increase reflects a behavioral response to tax rate changes. In

particular, the calculation assumes that an increase in payroll taxes results in a small shift of wages and salaries to forms of employee compensation that are not subject to the payroll tax.
Appendices

202

Notes:

1. The present values of future taxable payroll for 2016-90 and for 2016 through the infinite horizon are

$455.4 trillion and $801.4 trillion, respectively.

2. The present values of GDP for 2016-90 and for 2016 through the infinite horizon are $1,270.1 trillion and

$2,361.4 trillion, respectively. Present values of GDP shown in the Medicare Trustees Report differ slightly

due to the use of interest discount rates that are specific to each program’s trust fund holdings.

Last year, the Trustees projected that the infinite horizon unfunded obligation

was $25.8 trillion in present value. If the assumptions, methods, and starting

values had not changed, moving the valuation date forward by 1 year would

have increased the unfunded obligation by about $0.9 trillion, to

$26.6 trillion. The net effects of changes in assumptions, methods, law, and

starting values increased the infinite horizon unfunded obligation by

$5.5 trillion. The major change affecting the infinite horizon unfunded obligation for this report is the reduction in the ultimate real interest rate from

2.9 percent to 2.7 percent, which provides more weight to annual shortfalls

in the more distant future. The same interest rate change also increased the

present values of future taxable payroll and GDP for this report.

The infinite horizon unfunded obligation is 0.1 percentage point higher than

in last year’s report when expressed as a share of taxable payroll, and

0.1 percentage point higher than last year when expressed as a share of GDP.

Because the reduction in the ultimate real interest rate substantially increased

taxable payroll and GDP, the infinite horizon unfunded obligation as a share

of either changed relatively little. See section IV.B.6 for details regarding

changes in law, data, methods, and assumptions.

a. Unfunded Obligations for Past, Current, and Future Participants

Table VI.F2 separates the components of the infinite horizon unfunded obligation (with the exception of General Fund reimbursements) among past,

current, and future participants. The table does not separate past General

Table VI.F1.—Unfunded OASDI Obligations Through the Infinite Horizon,

Based on Intermediate Assumptions

[Present values as of January 1, 2016; dollar amounts in trillions]

Present

value

Expressed as a percentage

of future payroll and GDP

Taxable

payroll GDP

Unfunded obligation through the infinite horizona . . . . . . . . . . . . 

a Present value of future cost less future non-interest income, reduced by the amount of trust fund asset

reserves at the beginning of 2016. Expressed as a percentage of payroll and GDP for the period 2016 through

the infinite horizon.

$32.1 4.0 1.4

Unfunded obligation through 2090b . . . . . . . . . . . . . . . . . . . . . . . 

b Present value of future cost less future non-interest income through 2090, reduced by the amount of trust

fund reserves at the beginning of 2016. Expressed as a percentage of payroll and GDP for the period 2016

through 2090.

11.4 2.5 0.9
203

Infinite Horizon Projections 

Fund reimbursements among participants because there is no clear basis for

attributing the reimbursements across generations.

Past participants are defined as those no longer alive as of the valuation date.

Current participants are those age 15 and older as of 2016. Future participants are those under age 15 or not yet born. 

The excess of the present value of cost for past and current participants over

the present value of dedicated tax income for past and current participants

produces an unfunded obligation for past and current participants of

$29.7 trillion. Table VI.F2 also shows an unfunded obligation of

$29.1 trillion for past and current participants, including past and future General Fund reimbursements. Future participants are scheduled to pay dedicated taxes of $3.0 trillion less into the system than the cost of their benefits

($76.2 trillion of dedicated tax income as compared to $79.2 trillion of cost).

The unfunded obligation for all participants through the infinite horizon thus

equals $32.1 trillion.

This accounting demonstrates that some generations are scheduled to receive

benefits with a present value exceeding the present value of their dedicated

tax income, while other generations are scheduled to receive benefits with a

present value less than the present value of their dedicated tax income,

whether past General Fund reimbursements are included or not. Making

Social Security solvent over the infinite horizon requires some combination

of increased revenue or reduced benefits for current and future participants

amounting to $32.1 trillion in present value, 4.0 percent of future taxable

payroll, or 1.4 percent of future GDP.
Appendices

204

Notes:

1. The present value of future taxable payroll for 2016 through the infinite horizon is $801.4 trillion.

2. The present value of GDP for 2016 through the infinite horizon is $2,361.4 trillion.

3. Totals do not necessarily equal the sums of rounded components.

Table VI.F2.—Present Values of OASDI Cost Less Non-interest Income

and Unfunded Obligations for Program Participants,

Based on Intermediate Assumptions

[Present values as of January 1, 2016; dollar amounts in trillions]

Present

value

Expressed as a 

percentage of future 

payroll and GDP

Taxable

payroll GDP

Present value of past cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $56.4 7.0 2.4

Less present value of past dedicated tax income . . . . . . . . . . . . . . . . . . 58.6 7.3 2.5

Plus present value of future cost for current participants . . . . . . . . . . . 62.5 7.8 2.6

Less present value of future dedicated tax income for current 

participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.6 3.8 1.3

Equals unfunded obligation for past and current participants 

excluding General Fund reimbursements . . . . . . . . . . . . . . . . . . . . . 29.7 3.7 1.3

Less present value of past General Fund reimbursementsa . . . . . . . . . . .6 .1 b

Less present value of future General Fund reimbursements over 

the infinite horizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . cdb

Equals unfunded obligation for past and current participants 

including General Fund reimbursements . . . . . . . . . . . . . . . . . . . . . 29.1 3.6 1.2

Plus present value of cost for future participants over the infinite 

horizon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79.2 9.9 3.4

Less present value of dedicated tax income for future participants 

over the infinite horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.2 9.5 3.2

Equals unfunded obligation for all participants through the infinite 

horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1 4.0 1.4

a Distribution of General Fund reimbursements among past, current, and future participants cannot be determined.

b Less than 0.05 percent of GDP.

c Less than $50 billion.

d Less than 0.05 percent of taxable payroll.
205

OASDI and HI: Percent of Payroll

G. ESTIMATES FOR OASDI AND HI, SEPARATE AND COMBINED

In this appendix, the Trustees present long-range actuarial estimates for the

OASDI and Hospital Insurance (HI) programs both separately and on a combined basis. These estimates facilitate analysis of the adequacy of the income

and asset reserves of these programs relative to their cost under current law.

This appendix does not include estimates for the Supplementary Medical

Insurance (SMI) program because adequate financing is guaranteed in the

law, and because the SMI program is not financed through a payroll tax. For

more information on Medicare estimates, please see the 2016 Medicare

Trustees Report.

The information in this appendix on combined operations, while significant,

should not obscure the analysis of the financial status of the individual trust

funds, which are legally separate and cannot be commingled. In addition, the

factors which determine the costs of the OASI, DI, and HI programs differ

substantially.

1. Estimates as a Percentage of Taxable Payroll

Comparing cost and income rates for the OASDI and HI programs as percentages of taxable payroll requires a note of caution. The taxable payrolls

for the HI program are larger than those estimated for the OASDI program

because: (1) a larger maximum taxable amount was established for the HI

program in 1991, with the maximum eliminated altogether for the HI program in 1994; (2) a larger proportion of Federal, State, and local government

employees are covered under the HI program; and (3) the earnings of railroad workers are included directly in the HI taxable payroll but not in the

OASDI taxable payroll. (Railroad contributions for the equivalent of OASDI

benefits are accounted for in a net interchange that occurs annually between

the OASDI and Railroad Retirement programs.) As a result, the HI taxable

payroll is about 25 percent larger than the OASDI taxable payroll throughout

the long-range period.

As with the OASI and DI Trust Funds, income to the HI Trust Fund comes

primarily from contributions paid by employees, employers, and selfemployed persons. Table VI.G1 shows the OASDI and HI contribution rates

that are authorized in the Federal Insurance Contributions Act.
Appendices

206

Table VI.G2 shows the Trustees’ estimates of annual income rates and cost

rates for the OASDI program and the HI program under the low-cost, intermediate, and high-cost sets of assumptions described earlier in this report.

The income rates reflect the payroll tax rates shown in table VI.G1 and reveTable VI.G1.—Payroll Tax Contribution Rates for the OASDI and HI Programs

[In percent]

Calendar years

Employees and employers, 

combineda

a Except as noted below, the combined employee/employer rate is divided equally between employees and

employers.

Employees 

only Self employedb

b Beginning in 1990, self-employed persons receive a deduction, for purposes of computing their net earnings, equal to half of the combined OASDI and HI contributions that would be payable without regard to the

contribution and benefit base. The OASDI contribution rate then applies to net earnings after this deduction,

but subject to the OASDI base.

OASDI

up to basec

c The payroll tax on earnings for the OASDI program applies to annual earnings up to a contribution and

benefit base indexed to the average wage level. The base is $118,500 for 2016.

HI

all earningsd

d Prior to 1994, the payroll tax on earnings for the HI program applied to annual earnings up to a contribution base. The HI contribution base was eliminated beginning in 1994.

HI

over limite

e Starting with Federal personal income tax returns for tax year 2013, earned income exceeding $200,000 for

individual filers and $250,000 for married couples filing jointly is subject to an additional HI tax of

0.9 percent. These income limits are not indexed after 2013.

OASDI

up to basec HIall earningsd HIover limite

1966 . . . . . . . . . . . . . 7.70 0.70 — 5.80 0.35 —

1967 . . . . . . . . . . . . . 7.80 1.00 — 5.90 .50 —

1968 . . . . . . . . . . . . . 7.60 1.20 — 5.80 .60 —

1969-70 . . . . . . . . . . 8.40 1.20 — 6.30 .60 —

1971-72 . . . . . . . . . . 9.20 1.20 — 6.90 .60 —

1973 . . . . . . . . . . . . . 9.70 2.00 — 7.00 1.00 —

1974-77 . . . . . . . . . . 9.90 1.80 — 7.00 .90 —

1978 . . . . . . . . . . . . . 10.10 2.00 — 7.10 1.00 —

1979-80 . . . . . . . . . . 10.16 2.10 — 7.05 1.05 —

1981 . . . . . . . . . . . . . 10.70 2.60 — 8.00 1.30 —

1982-83 . . . . . . . . . . 10.80 2.60 — 8.05 1.30 —

1984f. . . . . . . . . . . . .

f In 1984 only, employees received an immediate credit of 0.3 percent of taxable wages against their OASDI

payroll tax contributions. The self-employed received similar credits of 2.7 percent, 2.3 percent, and

2.0 percent against their combined OASDI and Hospital Insurance (HI) contributions on net earnings from

self-employment in 1984, 1985, and 1986-89, respectively. The General Fund of the Treasury reimbursed

the trust funds for these credits. 

11.40 2.60 — 11.40 2.60 —

1985f . . . . . . . . . . . . 11.40 2.70 — 11.40 2.70 —

1986-87f. . . . . . . . . . 11.40 2.90 — 11.40 2.90 —

1988-89f. . . . . . . . . . 12.12 2.90 — 12.12 2.90 —

1990-2010g. . . . . . . .

g Public Law 111-147 exempted most employers from paying the employer share of OASDI payroll tax on

wages paid during the period March 19, 2010 through December 31, 2010 to certain qualified individuals

hired after February 3, 2010. Public Law 111-312, Public Law 112-78, and Public Law 112-96 reduced the

OASDI payroll tax rate for 2011 and 2012 by 2 percentage points for employees and for self-employed

workers. These laws require that the General Fund of the Treasury reimburse the OASI and DI Trust Funds

for these temporary reductions in 2010, 2011, and 2012 payroll tax revenue, in order to “replicate to the

extent possible” revenue that would have been received if the combined employee/employer payroll tax

rates had remained at 12.4 percent for OASDI (10.6 percent for OASI and 1.8 percent for DI).

12.40 2.90 — 12.40 2.90 —

2011-2012g. . . . . . . . 10.40 2.90 — 10.40 2.90 —

2013 and later. . . . . . 12.40 2.90 0.90 12.40 2.90 0.90
207

OASDI and HI: Percent of Payroll

nue from taxation of OASDI benefits for both the OASDI and HI Trust

Funds. For the HI program, the income rates also reflect: (1) the additional

0.9-percent tax on employees for relatively high earnings and the portion of

total payroll to which the 0.9-percent rate applies; (2) premium revenues;

(3) monies from fraud and abuse control activities; and (4) reimbursements

from the General Fund of the Treasury, if any. Annual income and cost rates

indicate the cash-flow operation of the programs. Therefore, income rates

exclude interest earned on trust fund asset reserves. Table VI.G2 also shows

annual balances, which are the differences between annual income rates and

cost rates.

The Trustees project that the OASDI and HI cost rates will rise generally

above current levels under the intermediate and high-cost sets of assumptions. The greatest increase occurs from 2018 to 2038 under both sets of

assumptions for OASDI and under the intermediate assumptions for HI.

Under the intermediate assumptions, the OASDI cost rate increases by

26 percent from its current level by 2090, while under the high-cost assumptions, the cost rate increases by 73 percent by 2090. For HI, cost rates

increase 47 percent and 204 percent from 2016 to 2090 under the intermediate and high-cost assumptions, respectively. Under the low-cost assumptions,

the OASDI and HI cost rates decrease from 2016 to 2090 by 7 percent and

29 percent, respectively. 

The Trustees project annual deficits for every year of the projection period

under the intermediate and high-cost assumptions for the OASDI program

and for the HI program. Under the low-cost assumptions, OASDI annual balances are negative through 2047 and positive thereafter. HI annual balances

are positive throughout the projection period.
Appendices

208

Table VI.G2.—OASDI and HI Annual Income Rates, Cost Rates, and Balances,

Calendar Years 2016-2090

[As a percentage of taxable payrolla]

Calendar year

OASDI HI

Income

rate

Cost

rateb Balanceb Incomerate

Cost

rate Balance

Intermediate:

2016 . . . . . . . . . . 12.94 14.05 -1.10 3.37 3.44 -0.08

2017 . . . . . . . . . . 12.92 13.72 -.80 3.38 3.41 -.03

2018 . . . . . . . . . . 12.96 13.86 -.90 3.39 3.40 c

2019 . . . . . . . . . . 12.97 13.99 -1.02 3.41 3.42 -.01

2020 . . . . . . . . . . 12.98 14.13 -1.15 3.43 3.47 -.04

2021 . . . . . . . . . . 13.00 14.27 -1.27 3.45 3.53 -.08

2022 . . . . . . . . . . 13.03 14.49 -1.46 3.47 3.61 -.14

2023 . . . . . . . . . . 13.06 14.76 -1.70 3.49 3.69 -.20

2024 . . . . . . . . . . 13.09 15.02 -1.93 3.51 3.75 -.24

2025 . . . . . . . . . . 13.11 15.29 -2.17 3.54 3.81 -.27

2030 . . . . . . . . . . 13.18 16.10 -2.92 3.63 4.25 -.62

2035 . . . . . . . . . . 13.22 16.50 -3.28 3.71 4.57 -.87

2040 . . . . . . . . . . 13.23 16.59 -3.36 3.77 4.77 -1.00

2045 . . . . . . . . . . 13.23 16.45 -3.22 3.83 4.87 -1.04

2050 . . . . . . . . . . 13.23 16.36 -3.13 3.89 4.88 -.99

2055 . . . . . . . . . . 13.24 16.46 -3.22 3.96 4.84 -.88

2060 . . . . . . . . . . 13.26 16.71 -3.44 4.03 4.84 -.81

2065 . . . . . . . . . . 13.28 16.96 -3.68 4.10 4.89 -.79

2070 . . . . . . . . . . 13.30 17.22 -3.92 4.17 4.98 -.81

2075 . . . . . . . . . . 13.31 17.39 -4.08 4.23 5.06 -.83

2080 . . . . . . . . . . 13.31 17.40 -4.09 4.28 5.08 -.81

2085 . . . . . . . . . . 13.32 17.47 -4.15 4.32 5.08 -.76

2090 . . . . . . . . . . 13.33 17.68 -4.35 4.37 5.08 -.71

Low-cost:

2016 . . . . . . . . . . 12.89 13.86 -.97 3.36 3.35 .01

2017 . . . . . . . . . . 12.89 13.31 -.42 3.37 3.22 .14

2018 . . . . . . . . . . 12.93 13.28 -.35 3.38 3.15 .23

2019 . . . . . . . . . . 12.93 13.23 -.30 3.39 3.11 .28

2020 . . . . . . . . . . 12.94 13.22 -.28 3.41 3.10 .31

2021 . . . . . . . . . . 12.95 13.23 -.28 3.42 3.09 .33

2022 . . . . . . . . . . 12.98 13.31 -.33 3.44 3.09 .35

2023 . . . . . . . . . . 12.99 13.41 -.42 3.46 3.10 .36

2024 . . . . . . . . . . 13.02 13.51 -.49 3.48 3.09 .38

2025 . . . . . . . . . . 13.03 13.60 -.58 3.50 3.08 .42

2030 . . . . . . . . . . 13.07 13.89 -.82 3.59 3.11 .48

2035 . . . . . . . . . . 13.09 13.88 -.79 3.67 3.03 .64

2040 . . . . . . . . . . 13.08 13.62 -.53 3.75 2.86 .89

2045 . . . . . . . . . . 13.07 13.23 -.16 3.81 2.66 1.16

2050 . . . . . . . . . . 13.06 12.96 .10 3.89 2.47 1.41

2055 . . . . . . . . . . 13.06 12.91 .15 3.96 2.34 1.62

2060 . . . . . . . . . . 13.07 12.98 .09 4.03 2.27 1.76

2065 . . . . . . . . . . 13.07 13.02 .05 4.10 2.28 1.82

2070 . . . . . . . . . . 13.07 13.04 .04 4.15 2.32 1.83

2075 . . . . . . . . . . 13.07 12.96 .11 4.19 2.36 1.84

2080 . . . . . . . . . . 13.06 12.75 .31 4.23 2.37 1.86

2085 . . . . . . . . . . 13.05 12.68 .37 4.26 2.37 1.89

2090 . . . . . . . . . . 13.06 12.84 .22 4.30 2.37 1.93
209

OASDI and HI: Percent of Payroll

Notes:

1. The income rate excludes interest income.

2. The Trustees show income and cost estimates generally on a cash basis for the OASDI program and on an

incurred basis for the HI program.

3. Totals do not necessarily equal the sums of rounded components.

Table VI.G3 shows summarized values over the 25-year, 50-year, and

75-year valuation periods. For each of those periods, the summarized income

rates include beginning trust fund asset reserves, and the summarized cost

rates include the cost of accumulating an ending fund reserve equal to

100 percent of annual cost at the end of the period.

High-cost:

2016 . . . . . . . . . . 13.04 14.35 -1.32 3.37 3.58 -0.21

2017 . . . . . . . . . . 12.97 14.65 -1.67 3.39 3.67 -.28

2018 . . . . . . . . . . 12.99 14.82 -1.83 3.42 3.72 -.31

2019 . . . . . . . . . . 13.02 15.15 -2.12 3.44 3.81 -.38

2020 . . . . . . . . . . 13.04 15.44 -2.40 3.46 3.95 -.49

2021 . . . . . . . . . . 13.07 15.71 -2.64 3.48 4.09 -.61

2022 . . . . . . . . . . 13.11 16.06 -2.95 3.51 4.26 -.75

2023 . . . . . . . . . . 13.14 16.44 -3.30 3.53 4.44 -.91

2024 . . . . . . . . . . 13.18 16.83 -3.66 3.56 4.61 -1.05

2025 . . . . . . . . . . 13.21 17.24 -4.04 3.59 4.76 -1.17

2030 . . . . . . . . . . 13.30 18.66 -5.36 3.69 5.86 -2.17

2035 . . . . . . . . . . 13.36 19.61 -6.24 3.77 6.95 -3.18

2040 . . . . . . . . . . 13.41 20.24 -6.84 3.85 8.02 -4.18

2045 . . . . . . . . . . 13.43 20.54 -7.11 3.90 8.97 -5.06

2050 . . . . . . . . . . 13.45 20.79 -7.34 3.96 9.63 -5.68

2055 . . . . . . . . . . 13.48 21.22 -7.74 4.02 10.05 -6.04

2060 . . . . . . . . . . 13.52 21.78 -8.27 4.08 10.35 -6.27

2065 . . . . . . . . . . 13.56 22.39 -8.84 4.15 10.55 -6.40

2070 . . . . . . . . . . 13.60 23.09 -9.48 4.22 10.73 -6.50

2075 . . . . . . . . . . 13.64 23.71 -10.07 4.29 10.89 -6.59

2080 . . . . . . . . . . 13.67 24.14 -10.47 4.36 10.93 -6.58

2085 . . . . . . . . . . 13.69 24.52 -10.82 4.41 10.91 -6.50

2090 . . . . . . . . . . 13.72 24.89 -11.17 4.47 10.89 -6.43

a The taxable payroll for HI is significantly larger than the taxable payroll for OASDI because the HI taxable

maximum amount was eliminated beginning in 1994, and because HI covers all Federal civilian employees,

all State and local government employees hired after April 1, 1986, and railroad employees.

b OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years

were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset

reserves reflect the 12 months of benefits scheduled for payment each year.

c Between -0.005 and 0 percent of taxable payroll.

Table VI.G2.—OASDI and HI Annual Income Rates, Cost Rates, and Balances,

Calendar Years 2016-2090 (Cont.)

[As a percentage of taxable payrolla]

Calendar year

OASDI HI

Income

rate

Cost

rateb Balanceb Incomerate

Cost

rate Balance
Appendices

210

Note: Totals do not necessarily equal the sums of rounded components.

The Trustees project that the OASDI and HI programs will each experience

large actuarial deficits for the 25-year, 50-year, and 75-year valuation periods

under the high-cost assumptions. Actuarial deficits under the intermediate

assumptions are smaller than those for the high-cost assumptions for all three

valuation periods. Under the low-cost assumptions, the OASDI and HI programs have positive actuarial balances for all three valuation periods.

Table VI.G3.—Summarized OASDI and HI Income Rates and Cost Rates for Valuation 

Periods,a Calendar Years 2016-2090

[As a percentage of taxable payrollb]

Valuation

period 

OASDI HI

Income

rate

 Cost

ratec Actuarialbalance

Income

rate

 Cost

rate

Actuarial

balance

Intermediate:

25-year:

2016-40 . . . . . . 14.67 16.15 -1.48 3.67 4.24 -0.58

50-year:

2016-65 . . . . . . 14.03 16.26 -2.23 3.79 4.50 -.72

75-year:

2016-90 . . . . . . 13.84 16.50 -2.66 3.91 4.63 -.73

Low-cost:

25-year:

2016-40 . . . . . . 14.44 14.20 .24 3.63 3.19 .45

50-year:

2016-65 . . . . . . 13.80 13.61 .19 3.77 2.83 .94

75-year:

2016-90 . . . . . . 13.59 13.37 .22 3.90 2.69 1.21

High-cost:

25-year:

2016-40 . . . . . . 14.95 18.48 -3.53 3.72 5.77 -2.05

50-year:

2016-65 . . . . . . 14.31 19.53 -5.23 3.84 7.44 -3.60

75-year:

2016-90 . . . . . . 14.16 20.46 -6.30 3.95 8.20 -4.25

a Income rates include beginning trust fund asset reserves and cost rates include the cost of reaching an ending target trust fund equal to 100 percent of annual cost at the end of the period.

b The taxable payroll for HI is significantly larger than the taxable payroll for OASDI because the HI taxable

maximum amount was eliminated beginning 1994, and because HI covers all Federal civilian employees, all

State and local government employees hired after April 1, 1986, and railroad employees.

c OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years

were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset

reserves reflect the 12 months of benefits scheduled for payment each year.
211

OASDI and HI: Percent of GDP

2. Estimates as a Percentage of Gross Domestic Product

This section contains long-range projections of the operations of the combined Old-Age and Survivors Insurance and Disability Insurance (OASI and

DI) Trust Funds and of the Hospital Insurance (HI) Trust Fund, expressed as

a percentage of gross domestic product (GDP). While expressing fund operations as a percentage of taxable payroll is a very useful approach for assessing the financial status of the programs (see section IV.B.1), expressing them

as a percentage of the total value of goods and services produced in the

United States provides an additional perspective.

Table VI.G4 shows non-interest income, total cost, and the resulting balance

of the combined OASI and DI Trust Funds, of the HI Trust Fund, and of the

combined OASI, DI, and HI Trust Funds, expressed as percentages of GDP

on the basis of each of the three alternative sets of assumptions. Table VI.G4

also contains estimates of GDP. For OASDI, non-interest income consists of

payroll tax contributions, proceeds from taxation of benefits, and reimbursements from the General Fund of the Treasury, if any. Cost consists of scheduled benefits, administrative expenses, financial interchange with the

Railroad Retirement program, and payments for vocational rehabilitation

services for disabled beneficiaries. For HI, non-interest income consists of

payroll tax contributions (including contributions from railroad employment), up to an additional 0.9 percent tax on earned income for relatively

high earners, proceeds from taxation of OASDI benefits, premium revenues,

monies from fraud and abuse control activities, and reimbursements from the

General Fund of the Treasury, if any. Cost consists of outlays (benefits and

administrative expenses) for beneficiaries. The Trustees show income and

cost estimates generally on a cash basis for the OASDI program1 and on an

incurred basis for the HI program.

The Trustees project the OASDI annual balance (non-interest income less

cost) as a percentage of GDP to be negative throughout the projection period

under the intermediate and high-cost assumptions, and to be negative

through 2047 and positive thereafter under the low-cost assumptions. Under

the low-cost assumptions, the OASDI annual deficit as a percentage of GDP

decreases through 2021. After 2021, deficits increase to a peak in 2032,

decrease through 2047, and then the annual balance becomes positive starting in 2048. The positive annual balances increase through 2054, decrease

 1 OASDI benefits paid for entitlement for a particular month are generally paid in the succeeding month.

There are two primary exceptions to this general rule. First, payments can occur with a greater delay when a

benefit award is made after the month of initial benefit entitlement. At the time of benefit award, benefits

owed for months of prior entitlement are then also paid to the beneficiary. For the projections in this report,

such retroactive payments are included in the period where they are paid (at time of award). Second, when

benefit payments scheduled for January 3 are paid on the prior December 31, because January 3 falls on a

Sunday, such payments are shown in this report for the period they were scheduled to be paid.
Appendices

212

through 2070, and fluctuate thereafter. Under the intermediate assumptions,

annual deficits decrease from 2016 to 2017, increase through 2038, decrease

from 2038 through 2051, and mostly increase thereafter. Under the high-cost

assumptions, annual deficits increase throughout the projection period.

The Trustees project that the HI balance as a percentage of GDP will be positive throughout the projection period under the low-cost assumptions. Under

the intermediate assumptions, the HI balance is negative for each year of the

projection period. Annual deficits decrease from 2016 to 2018, increase

through 2045, and then generally decline thereafter. Under the high-cost

assumptions, the HI balance is negative for all years of the projection period.

Annual deficits reach a peak in 2074 and decline slowly thereafter.

The combined OASDI and HI annual balance as a percentage of GDP is negative throughout the projection period under both the intermediate and highcost assumptions. Under the low-cost assumptions, the combined OASDI

and HI balance is negative from 2016 through 2018, positive from 2019

through 2023, negative from 2024 through 2034, and then positive and

mostly rising thereafter. Under the intermediate assumptions, combined

OASDI and HI annual deficits decline from 2016 to 2017, increase from

2017 through 2039, and decrease through 2054. After 2054, annual deficits

generally rise, reaching 1.82 percent of GDP by 2090. Under the high-cost

assumptions, combined annual deficits rise throughout the projection period.

By 2090, the combined OASDI and HI annual balances as percentages of

GDP range from a positive balance of 0.98 percent for the low-cost assumptions to a deficit of 6.21 percent for the high-cost assumptions. Balances differ by a much smaller amount for the tenth projection year, 2025, ranging

from a deficit of 0.02 percent for the low-cost assumptions to a deficit of

1.99 percent for the high-cost assumptions.

The summarized long-range (75-year) balance as a percentage of GDP for

the combined OASDI and HI programs varies among the three alternatives

by a relatively large amount, from a positive balance of 0.64 percent under

the low-cost assumptions to a deficit of 4.05 percent under the high-cost

assumptions. The 25-year summarized balance varies by a smaller amount,

from a positive balance of 0.30 percent to a deficit of 2.19 percent. Summarized rates are calculated on a present-value basis. They include the trust

fund balances on January 1, 2016 and the cost of reaching a target trust fund

level equal to 100 percent of the following year’s annual cost at the end of

the period. (See section IV.B.4 for further explanation.)
213

OASDI and HI: Percent of GDP

Table VI.G4.—OASDI and HI Annual and Summarized Income, Cost, and Balance

as a Percentage of GDP, Calendar Years 2016-2090

Calendar year

Percentage of GDP GDP in

dollars

(billions)

OASDI HI Combined

Incomea Costb Balanceb Incomea Cost Balance Incomea Costb Balanceb

Intermediate:

2016 . . . . . 4.59 4.98 -0.39 1.51 1.54 -0.03 6.09 6.52 -0.43 $18,659

2017 . . . . . 4.62 4.91 -.29 1.52 1.54 -.01 6.14 6.44 -.30 19,677

2018 . . . . . 4.65 4.98 -.32 1.54 1.54 c 6.19 6.52 -.32 20,745

2019 . . . . . 4.68 5.05 -.37 1.55 1.56 c 6.23 6.60 -.37 21,836

2020 . . . . . 4.70 5.12 -.42 1.57 1.59 -.02 6.27 6.70 -.44 22,948

2021 . . . . . 4.72 5.18 -.46 1.58 1.62 -.04 6.30 6.80 -.50 24,081

2022 . . . . . 4.75 5.28 -.53 1.59 1.65 -.06 6.34 6.93 -.59 25,204

2023 . . . . . 4.77 5.39 -.62 1.60 1.69 -.09 6.37 7.08 -.71 26,327

2024 . . . . . 4.79 5.50 -.71 1.62 1.73 -.11 6.41 7.22 -.82 27,499

2025 . . . . . 4.81 5.60 -.80 1.63 1.75 -.13 6.43 7.36 -.92 28,719

2030 . . . . . 4.81 5.87 -1.07 1.66 1.94 -.28 6.47 7.81 -1.35 35,680

2035 . . . . . 4.79 5.98 -1.19 1.68 2.08 -.40 6.48 8.06 -1.58 44,187

2040 . . . . . 4.78 5.99 -1.21 1.71 2.16 -.45 6.48 8.15 -1.67 54,881

2045 . . . . . 4.76 5.92 -1.16 1.73 2.20 -.47 6.49 8.12 -1.63 68,304

2050 . . . . . 4.75 5.87 -1.12 1.75 2.20 -.44 6.50 8.07 -1.57 84,817

2055 . . . . . 4.74 5.90 -1.15 1.78 2.18 -.40 6.52 8.07 -1.55 105,031

2060 . . . . . 4.74 5.97 -1.23 1.81 2.17 -.36 6.54 8.13 -1.59 129,808

2065 . . . . . 4.72 6.03 -1.31 1.83 2.18 -.35 6.55 8.21 -1.66 160,417

2070 . . . . . 4.71 6.09 -1.39 1.85 2.21 -.36 6.56 8.30 -1.75 198,390

2075 . . . . . 4.69 6.13 -1.44 1.87 2.23 -.37 6.56 8.36 -1.80 245,548

2080 . . . . . 4.66 6.10 -1.43 1.88 2.24 -.35 6.54 8.33 -1.79 303,911

2085 . . . . . 4.64 6.09 -1.45 1.89 2.22 -.33 6.54 8.32 -1.78 375,722

2090 . . . . . 4.63 6.14 -1.51 1.90 2.21 -.31 6.54 8.36 -1.82 463,784

Summarized rates: d

25-year:

 2016-40 . . 5.32 5.86 -.54 1.67 1.94 -.26 7.00 7.80 -.80

50-year:

 2016-65 . . 5.06 5.87 -.81 1.72 2.04 -.32 6.78 7.91 -1.13

75-year:

 2016-90 . . 4.96 5.92 -.95 1.76 2.08 -.33 6.72 8.00 -1.28

Low-cost:

2016 . . . . . 4.57 4.92 -.34 1.51 1.50 c 6.08 6.42 -.34 18,843

2017 . . . . . 4.62 4.77 -.15 1.52 1.46 .06 6.14 6.23 -.09 20,219

2018 . . . . . 4.66 4.79 -.13 1.54 1.43 .10 6.20 6.22 -.02 21,655

2019 . . . . . 4.70 4.80 -.11 1.55 1.42 .13 6.25 6.22 .02 23,097

2020 . . . . . 4.73 4.83 -.10 1.56 1.42 .14 6.29 6.25 .04 24,560

2021 . . . . . 4.76 4.86 -.10 1.57 1.42 .15 6.33 6.28 .05 26,035

2022 . . . . . 4.79 4.91 -.12 1.58 1.42 .16 6.37 6.33 .04 27,550

2023 . . . . . 4.82 4.97 -.15 1.59 1.42 .16 6.41 6.40 .01 29,135

2024 . . . . . 4.85 5.03 -.18 1.60 1.42 .18 6.45 6.46 -.01 30,806

2025 . . . . . 4.87 5.09 -.22 1.61 1.42 .19 6.49 6.51 -.02 32,556

2030 . . . . . 4.88 5.19 -.31 1.65 1.43 .22 6.53 6.62 -.09 42,912

2035 . . . . . 4.88 5.17 -.29 1.68 1.39 .29 6.56 6.56 c 56,428

2040 . . . . . 4.88 5.08 -.20 1.72 1.31 .41 6.59 6.39 .21 74,581

2045 . . . . . 4.88 4.94 -.06 1.75 1.22 .53 6.63 6.16 .47 99,022

2050 . . . . . 4.89 4.85 .04 1.79 1.14 .65 6.68 5.99 .69 131,321

2055 . . . . . 4.90 4.84 .06 1.83 1.08 .75 6.73 5.92 .80 173,643

2060 . . . . . 4.91 4.88 .03 1.86 1.05 .82 6.78 5.93 .85 229,200

2065 . . . . . 4.92 4.90 .02 1.90 1.05 .84 6.81 5.95 .86 302,759

2070 . . . . . 4.92 4.91 .01 1.92 1.07 .85 6.85 5.98 .86 400,758

2075 . . . . . 4.93 4.88 .04 1.94 1.09 .85 6.87 5.98 .89 531,492

2080 . . . . . 4.92 4.81 .12 1.96 1.10 .86 6.88 5.91 .98 705,051

2085 . . . . . 4.93 4.79 .14 1.98 1.10 .88 6.90 5.89 1.02 933,466

2090 . . . . . 4.94 4.85 .09 2.00 1.10 .90 6.94 5.96 .98 1,232,721
Appendices

214

Notes:

1. The Trustees show income and cost estimates generally on a cash basis for the OASDI program and on an

incurred basis for the HI program.

2. Totals do not necessarily equal the sums of rounded components.

Low-cost (Cont.):

Summarized rates: d

25-year:

 2016-40 . . 5.35 5.26 0.09 1.67 1.46 0.21 7.02 6.72 0.30

50-year:

 2016-65 . . 5.14 5.07 .07 1.73 1.30 .44 6.88 6.37 .51

75-year:

 2016-90 . . 5.08 5.00 .08 1.80 1.24 .56 6.88 6.24 .64

High-cost:

2016 . . . . . 4.62 5.09 -.47 1.51 1.60 -.10 6.13 6.69 -.56 $18,299

2017 . . . . . 4.58 5.17 -.59 1.52 1.64 -.12 6.10 6.81 -.71 18,757

2018 . . . . . 4.63 5.29 -.65 1.54 1.68 -.14 6.17 6.96 -.79 19,490

2019 . . . . . 4.65 5.41 -.76 1.56 1.73 -.17 6.21 7.13 -.93 20,275

2020 . . . . . 4.67 5.53 -.86 1.57 1.79 -.22 6.24 7.32 -1.08 21,065

2021 . . . . . 4.69 5.64 -.95 1.59 1.87 -.28 6.28 7.51 -1.23 21,862

2022 . . . . . 4.71 5.77 -1.06 1.60 1.95 -.35 6.31 7.72 -1.41 22,670

2023 . . . . . 4.73 5.91 -1.19 1.62 2.04 -.42 6.35 7.95 -1.60 23,483

2024 . . . . . 4.74 6.06 -1.32 1.64 2.12 -.48 6.38 8.17 -1.80 24,309

2025 . . . . . 4.75 6.20 -1.45 1.65 2.19 -.54 6.40 8.39 -1.99 25,140

2030 . . . . . 4.74 6.66 -1.91 1.68 2.67 -.99 6.42 9.33 -2.90 29,477

2035 . . . . . 4.72 6.93 -2.21 1.70 3.14 -1.44 6.42 10.07 -3.64 34,409

2040 . . . . . 4.70 7.09 -2.40 1.72 3.59 -1.87 6.42 10.68 -4.27 40,162

2045 . . . . . 4.67 7.14 -2.47 1.74 3.99 -2.25 6.41 11.13 -4.72 46,875

2050 . . . . . 4.64 7.18 -2.54 1.75 4.25 -2.51 6.39 11.43 -5.04 54,511

2055 . . . . . 4.62 7.27 -2.65 1.76 4.41 -2.65 6.38 11.68 -5.30 63,148

2060 . . . . . 4.60 7.41 -2.81 1.78 4.50 -2.73 6.37 11.91 -5.54 72,980

2065 . . . . . 4.57 7.54 -2.98 1.79 4.55 -2.76 6.35 12.09 -5.73 84,250

2070 . . . . . 4.53 7.69 -3.16 1.80 4.58 -2.77 6.34 12.27 -5.94 97,193

2075 . . . . . 4.50 7.82 -3.32 1.81 4.60 -2.78 6.31 12.42 -6.10 112,090

2080 . . . . . 4.46 7.88 -3.42 1.82 4.57 -2.75 6.28 12.44 -6.16 129,172

2085 . . . . . 4.42 7.92 -3.50 1.83 4.51 -2.69 6.25 12.43 -6.18 148,733

2090 . . . . . 4.39 7.96 -3.57 1.83 4.47 -2.63 6.22 12.43 -6.21 171,138

Summarized rates: d

25-year:

 2016-40 . . 5.32 6.58 -1.26 1.69 2.62 -.93 7.01 9.20 -2.19

50-year:

 2016-65 . . 5.02 6.85 -1.83 1.72 3.33 -1.61 6.74 10.18 -3.44

75-year:

 2016-90 . . 4.89 7.06 -2.18 1.74 3.61 -1.87 6.63 10.68 -4.05

a Income for individual years excludes interest on the trust funds. Interest is implicit in all summarized values.

b OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years were

actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset reserves reflect the

12 months of benefits scheduled for payment each year.

c Between -0.005 and 0.005 percent of GDP.

d Summarized rates are calculated on a present-value basis. They include the value of the trust funds on

January 1, 2016 and the cost of reaching a target trust fund level equal to 100 percent of annual cost at the end

of the period.

Table VI.G4.—OASDI and HI Annual and Summarized Income, Cost, and Balance

as a Percentage of GDP, Calendar Years 2016-2090 (Cont.)

Calendar year

Percentage of GDP GDP in

dollars

(billions)

OASDI HI Combined

Incomea Costb Balanceb Incomea Cost Balance Incomea Costb Balanceb
215

OASDI and HI: Percent of GDP

To compare trust fund operations expressed as percentages of taxable payroll

and those expressed as percentages of GDP, table VI.G5 displays ratios of

OASDI taxable payroll to GDP. HI taxable payroll is about 25 percent larger

than the OASDI taxable payroll throughout the long-range period; see section 1 of this appendix for a detailed description of the difference. The cost

as a percentage of GDP is equal to the cost as a percentage of taxable payroll

multiplied by the ratio of taxable payroll to GDP.

Projections of GDP reflect projected increases in U.S. employment, labor

productivity, average hours worked, and the GDP deflator. Projections of

taxable payroll reflect the components of growth in GDP along with assumed

changes in the ratio of worker compensation to GDP, the ratio of earnings to

worker compensation, the ratio of OASDI covered earnings to total earnings,

and the ratio of taxable to total covered earnings.

Over the long-range period, the ratio of OASDI taxable payroll to GDP is

projected to decline mostly due to a projected decline in the ratio of wages to

employee compensation. Over the last five complete economic cycles, the

ratio of wages to employee compensation declined at an average annual rate

of 0.23 percent. Over the 65-year period ending in 2090, the ratio of wages to

employee compensation is projected to decline at an average annual rate of

0.07 and 0.17 percent for the intermediate and high-cost assumptions,

respectively, and to increase at an average annual rate of 0.03 percent for the

low-cost assumptions.

Table VI.G5.—Ratio of OASDI Taxable Payroll to GDP, Calendar Years 2016-2090 

Calendar year Intermediate Low-cost High-cost

2016 . . . . . . . . . . . . . . . . . . . . . . . . . 0.354 0.355 0.355

2017 . . . . . . . . . . . . . . . . . . . . . . . . . .358 .359 .353

2018 . . . . . . . . . . . . . . . . . . . . . . . . . .359 .361 .357

2019 . . . . . . . . . . . . . . . . . . . . . . . . . .361 .363 .357

2020 . . . . . . . . . . . . . . . . . . . . . . . . . .362 .365 .358

2021 . . . . . . . . . . . . . . . . . . . . . . . . . .363 .367 .359

2022 . . . . . . . . . . . . . . . . . . . . . . . . . .364 .369 .359

2023 . . . . . . . . . . . . . . . . . . . . . . . . . .365 .371 .360

2024 . . . . . . . . . . . . . . . . . . . . . . . . . .366 .373 .360

2025 . . . . . . . . . . . . . . . . . . . . . . . . . .367 .374 .360

2030 . . . . . . . . . . . . . . . . . . . . . . . . . .365 .374 .357

2035 . . . . . . . . . . . . . . . . . . . . . . . . . .363 .373 .353

2040 . . . . . . . . . . . . . . . . . . . . . . . . . .361 .373 .350

2045 . . . . . . . . . . . . . . . . . . . . . . . . . .360 .373 .348

2050 . . . . . . . . . . . . . . . . . . . . . . . . . .359 .374 .345

2055 . . . . . . . . . . . . . . . . . . . . . . . . . .358 .375 .343

2060 . . . . . . . . . . . . . . . . . . . . . . . . . .357 .376 .340

2065 . . . . . . . . . . . . . . . . . . . . . . . . . .356 .376 .337

2070 . . . . . . . . . . . . . . . . . . . . . . . . . .354 .377 .333

2075 . . . . . . . . . . . . . . . . . . . . . . . . . .352 .377 .330

2080 . . . . . . . . . . . . . . . . . . . . . . . . . .350 .377 .326

2085 . . . . . . . . . . . . . . . . . . . . . . . . . .349 .377 .323

2090 . . . . . . . . . . . . . . . . . . . . . . . . . .348 .378 .320
Appendices

216

3. Estimates in Dollars

This section contains long-range projections, in dollars, of the operations of

the combined OASI and DI Trust Funds and in some cases the HI Trust

Fund. Comparing current dollar values over long periods of time is difficult

because of the effect of inflation. In order to compare dollar values in a

meaningful way, table VI.G6 provides several economic series or indices

which can be used to adjust current dollars for changes in prices, wages, or

other aspects of economic growth during the projection period. Any series of

values can be adjusted by dividing the value for each year by the corresponding index value for the year.

One of the most common forms of standardization is price indexing, which

uses some measure of change in the prices of consumer goods. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W,

hereafter referred to as CPI), published by the Bureau of Labor Statistics,

Department of Labor, is one such price index. The Social Security Administration (SSA) uses this index to determine the annual cost-of-living increases

for OASDI monthly benefits. The ultimate annual rate of increase in the CPI

is assumed to be 3.2, 2.6, and 2.0 percent for the low-cost, intermediate, and

high-cost sets of assumptions, respectively. Table VI.G7 provides CPIindexed dollar values (those adjusted using the CPI in table VI.G6), which

indicate the relative purchasing power of the values over time.

Wage indexing is another type of standardization. It combines the effects of

price inflation and real-wage growth. The wage index presented here is the

national average wage index, as defined in section 209(k)(1) of the Social

Security Act. SSA uses this index to annually adjust the contribution and

benefit base and other earnings-related program amounts. The average wage

is assumed to grow by an average rate of 5.0, 3.8, and 2.6 percent under the

low-cost, intermediate, and high-cost assumptions, respectively, between

2025 and 2090. Wage-indexed values indicate the level of a series relative to

the changing standard of living of workers over time.

The taxable payroll index adjusts for the effects of changes in the number of

workers and changes in the proportion of earnings that are taxable, as well as

for the effects of price inflation and real-wage growth. The OASDI taxable

payroll consists of all earnings subject to OASDI taxation, with an adjustment for the lower effective tax rate on multiple-employer excess wages. A

series of values, divided by the taxable payroll, indicates the percentage of

payroll that each value represents, and thus the extent to which the series of

values increases or decreases as a percent of payroll over time.
217

OASDI and HI: Estimates in Dollars

The GDP index adjusts for the growth in the aggregate amount of goods and

services produced in the United States. Values adjusted by GDP (see

section 2 of this appendix) indicate their relative share of the total output of

the economy. No explicit assumption is made about growth in taxable payroll

or GDP. These series reflect the basic demographic and economic assumptions, as discussed in sections V.A and V.B, respectively.

Discounting at the rate of interest is another way of adjusting current dollars.

The compound new-issue interest factor shown in table VI.G6 increases each

year by the assumed annualized nominal yield for special public-debt obligations issuable to the trust funds in the 12 months of the prior year. The compound effective trust-fund interest factor shown in table VI.G6 uses the

effective annual yield on all currently-held securities in the combined OASI

and DI Trust Funds. The reciprocal of the compound effective trust-fund

interest factor approximates the cumulative discount factor used to convert

nominal dollar values to present values as of the start of the valuation period

in order to create summarized values for this report.
Appendices

218

Table VI.G6.—Selected Economic Variables, Calendar Years 2015-2090

[GDP and taxable payroll in billions]

Calendar year

Adjusted

CPIa Averagewage index

Taxable

payrollb

Gross

domestic

product

Compound

new-issue

interest

factorc

Compound

effective

trust-fund

interest

factord

Intermediate:

2015. . . . . . . . 99.14 $47,730.20 $6,370 $17,956 0.9801 0.9834

2016. . . . . . . . 100.00 49,121.32 6,611 18,659 1.0000 1.0159

2017. . . . . . . . 102.76 51,467.41 7,038 19,677 1.0244 1.0479

2018. . . . . . . . 105.48 53,929.00 7,452 20,745 1.0617 1.0806

2019. . . . . . . . 108.23 56,341.78 7,876 21,836 1.1068 1.1148

2020. . . . . . . . 111.04 58,754.57 8,310 22,948 1.1567 1.1505

2021. . . . . . . . 113.93 61,237.90 8,748 24,081 1.2112 1.1879

2022. . . . . . . . 116.89 63,735.69 9,182 25,204 1.2702 1.2269

2023. . . . . . . . 119.93 66,277.05 9,614 26,327 1.3345 1.2680

2024. . . . . . . . 123.05 68,952.47 10,066 27,499 1.4043 1.3119

2025. . . . . . . . 126.25 71,668.95 10,528 28,719 1.4790 1.3587

2030. . . . . . . . 143.53 86,735.71 13,009 35,680 1.9212 1.6916

2035. . . . . . . . 163.19 104,911.08 16,021 44,187 2.4955 2.1973

2040. . . . . . . . 185.53 126,583.75 19,809 54,881 3.2416 2.8542

2045. . . . . . . . 210.94 152,870.45 24,583 68,304 4.2106 3.7074

2050. . . . . . . . 239.83 184,745.46 30,455 84,817 5.4693 4.8157

2055. . . . . . . . 272.67 223,035.42 37,622 105,031 7.1043 6.2553

2060. . . . . . . . 310.01 268,973.83 46,355 129,808 9.2280 8.1253

2065. . . . . . . . 352.46 323,866.96 57,050 160,417 11.9867 10.5542

2070. . . . . . . . 400.73 389,381.61 70,219 198,390 15.5700 13.7093

2075. . . . . . . . 455.60 467,975.33 86,490 245,548 20.2245 17.8076

2080. . . . . . . . 517.99 562,255.34 106,495 303,911 26.2704 23.1310

2085. . . . . . . . 588.92 675,560.16 131,067 375,722 34.1236 30.0457

2090. . . . . . . . 669.57 812,158.51 161,175 463,784 44.3245 39.0276

Low-cost:

2015. . . . . . . . 98.79 47,738.57 6,370 17,960 0.9801 0.9834

2016. . . . . . . . 100.00 49,447.98 6,685 18,843 1.0000 1.0161

2017. . . . . . . . 103.63 52,465.16 7,250 20,219 1.0322 1.0489

2018. . . . . . . . 107.03 55,650.39 7,809 21,655 1.0838 1.0839

2019. . . . . . . . 110.46 58,743.24 8,388 23,097 1.1411 1.1217

2020. . . . . . . . 113.99 61,849.15 8,976 24,560 1.2030 1.1623

2021. . . . . . . . 117.64 65,032.70 9,566 26,035 1.2706 1.2061

2022. . . . . . . . 121.40 68,392.20 10,172 27,550 1.3437 1.2536

2023. . . . . . . . 125.29 71,951.98 10,805 29,135 1.4252 1.3056

2024. . . . . . . . 129.30 75,746.74 11,479 30,806 1.5157 1.3633

2025. . . . . . . . 133.43 79,674.91 12,183 32,556 1.6142 1.4270

2030. . . . . . . . 156.19 102,353.16 16,031 42,912 2.2117 1.8798

2035. . . . . . . . 182.84 131,327.31 21,040 56,428 3.0306 2.5758

2040. . . . . . . . 214.02 167,921.92 27,797 74,581 4.1526 3.5295

2045. . . . . . . . 250.53 214,861.87 36,962 99,022 5.6901 4.8362

2050. . . . . . . . 293.26 275,323.92 49,138 131,321 7.7968 6.6268

2055. . . . . . . . 343.29 352,602.26 65,137 173,643 10.6834 9.0803

2060. . . . . . . . 401.84 451,078.57 86,155 229,200 14.6389 12.4421

2065. . . . . . . . 470.39 576,054.69 113,939 302,759 20.0588 17.0487

2070. . . . . . . . 550.62 734,521.01 150,927 400,758 27.4854 23.3609

2075. . . . . . . . 644.54 936,225.61 200,313 531,492 37.6616 32.0100

2080. . . . . . . . 754.48 1,192,904.72 265,851 705,051 51.6055 43.8615

2085. . . . . . . . 883.18 1,520,008.42 352,357 933,466 70.7119 60.1008

2090. . . . . . . . 1,033.82 1,937,676.32 466,117 1,232,721 96.8924 82.3525
219

OASDI and HI: Estimates in Dollars

Table VI.G7 shows the operations of the combined OASI and DI Trust Funds

in CPI-indexed 2016 dollars—that is, adjusted by the CPI indexing series as

discussed above. The following items are presented in the table: (1) noninterest income, (2) interest income, (3) total income, (4) cost, and (5) asset

reserves at the end of the year. Non-interest income consists of payroll tax

contributions, income from taxation of benefits, and reimbursements from

the General Fund of the Treasury, if any. Cost consists of scheduled benefits,

administrative expenses, financial interchange with the Railroad Retirement

program, and payments for vocational rehabilitation services for disabled

beneficiaries. Table VI.G7 shows trust fund operations under the low-cost,

intermediate, and high-cost sets of assumptions.

High-cost:

2015. . . . . . . . 99.98 $47,686.76 $6,366 $17,943 0.9801 0.9834

2016. . . . . . . . 100.00 48,298.98 6,488 18,299 1.0000 1.0158

2017. . . . . . . . 102.44 49,518.62 6,617 18,757 1.0169 1.0469

2018. . . . . . . . 104.63 51,416.70 6,952 19,490 1.0404 1.0778

2019. . . . . . . . 106.72 53,305.83 7,241 20,275 1.0755 1.1091

2020. . . . . . . . 108.86 55,122.98 7,544 21,065 1.1151 1.1407

2021. . . . . . . . 111.03 56,973.96 7,845 21,862 1.1579 1.1724

2022. . . . . . . . 113.25 58,817.79 8,146 22,670 1.2039 1.2038

2023. . . . . . . . 115.52 60,655.65 8,447 23,483 1.2540 1.2349

2024. . . . . . . . 117.83 62,523.17 8,749 24,309 1.3079 1.2658

2025. . . . . . . . 120.19 64,321.07 9,042 25,140 1.3641 1.2964

2030. . . . . . . . 132.70 73,319.47 10,513 29,477 1.6791 1.5462

2035. . . . . . . . 146.51 83,570.21 12,159 34,409 2.0670 1.9034

2040. . . . . . . . 161.75 95,135.81 14,071 40,162 2.5445 2.3431

2045. . . . . . . . 178.59 108,367.47 16,302 46,875 3.1322 2.8843

2050. . . . . . . . 197.18 123,500.22 18,824 54,511 3.8557 3.5506

2055. . . . . . . . 217.70 140,558.33 21,645 63,148 4.7464 4.3707

2060. . . . . . . . 240.36 159,754.04 24,810 72,980 5.8428 5.3803

2065. . . . . . . . 265.38 181,290.58 28,370 84,250 7.1924 6.6231

2070. . . . . . . . 293.00 205,436.00 32,392 97,193 8.8538 8.1530

2075. . . . . . . . 323.49 232,710.81 36,967 112,090 10.8989 10.0363

2080. . . . . . . . 357.16 263,552.88 42,139 129,172 13.4165 12.3546

2085. . . . . . . . 394.33 298,548.17 48,028 148,733 16.5156 15.2084

2090. . . . . . . . 435.38 338,407.02 54,747 171,138 20.3306 18.7214

a CPI-W indexed to calendar year 2016.

b Total earnings subject to OASDI contribution rates, adjusted to reflect the lower effective contribution

rates (compared to the combined employee-employer rate) that apply to multiple-employer “excess

wages.”

c For each alternative, incorporates the average of the assumed annual yield for special public-debt obligations issuable to the trust funds in the 12 months of the prior year.

d For each alternative, incorporates the annual effective yield for all outstanding special public-debt obligations held by the trust fund, with a half-year’s interest effect in each row. The effective yield for a period

equals total interest earned during the period divided by the total exposure to interest on asset reserves and

all income and outgo items during the period. The reciprocals of the factors approximate the discounting/

accumulation factors that are used to calculate summarized rates and balances in this report.

Table VI.G6.—Selected Economic Variables, Calendar Years 2015-2090 (Cont.)

[GDP and taxable payroll in billions]

Calendar year

Adjusted

CPIa Average

wage index

Taxable

payrollb

Gross

domestic

product

Compound

new-issue

interest

factorc

Compound

effective

trust-fund

interest

factord
Appendices

220

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.G7.—Operations of the Combined OASI and DI Trust Funds,

in CPI-indexed 2016 Dollars,a Calendar Years 2016-2090

[In billions]

a CPI-indexed 2016 dollars equal current dollars adjusted by the CPI indexing series in table VI.G6.

Calendar year

Non-interest

income

Interest

income

Total

income Costb

b Benefit payments which were scheduled to be paid on January 3 for some past and future years were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the

values for historical years and the projections in this report, all trust fund operations and asset reserves

reflect the 12 months of benefits scheduled for payment each year.

Asset

reserves at

end of yearb

Intermediate:

2016 . . . . . . . . . . . . . $855.8 $88.8 $944.6 $928.9 $2,828.2

2017 . . . . . . . . . . . . . 884.6 85.2 969.8 939.6 2,782.5

2018 . . . . . . . . . . . . . 915.3 84.6 999.9 978.9 2,731.7

2019 . . . . . . . . . . . . . 943.7 84.1 1,027.8 1,017.9 2,672.4

2020 . . . . . . . . . . . . . 971.5 83.4 1,054.8 1,057.7 2,601.8

2021 . . . . . . . . . . . . . 998.5 81.7 1,080.2 1,095.8 2,520.2

2022 . . . . . . . . . . . . . 1,023.9 80.1 1,104.0 1,138.3 2,422.0

2023 . . . . . . . . . . . . . 1,046.8 78.7 1,125.5 1,183.1 2,303.1

2024 . . . . . . . . . . . . . 1,071.0 76.8 1,147.8 1,229.0 2,163.6

2025 . . . . . . . . . . . . . 1,093.3 74.0 1,167.3 1,274.6 2,001.4

2030c . . . . . . . . . . . .

c The combined OASI and DI Trust Funds become depleted in 2034 under the intermediate assumptions and

in 2029 under the high-cost assumptions, so estimates for later years are not shown.

1,194.6 57.8 1,252.4 1,459.4 973.3

Low-cost: 

2016 . . . . . . . . . . . . . 861.6 89.7 951.4 926.3 2,837.5

2017 . . . . . . . . . . . . . 902.0 89.3 991.3 931.3 2,798.2

2018 . . . . . . . . . . . . . 943.1 92.5 1,035.6 968.8 2,776.0

2019 . . . . . . . . . . . . . 981.8 95.8 1,077.6 1,004.6 2,763.0

2020 . . . . . . . . . . . . . 1,018.6 99.3 1,117.9 1,041.0 2,754.2

2021 . . . . . . . . . . . . . 1,053.3 102.7 1,156.0 1,075.8 2,749.0

2022 . . . . . . . . . . . . . 1,087.3 107.7 1,194.9 1,114.8 2,743.9

2023 . . . . . . . . . . . . . 1,120.5 114.0 1,234.4 1,156.3 2,737.0

2024 . . . . . . . . . . . . . 1,155.7 120.7 1,276.3 1,199.1 2,729.3

2025 . . . . . . . . . . . . . 1,189.4 127.1 1,316.5 1,242.0 2,719.2

2030 . . . . . . . . . . . . . 1,341.8 169.4 1,511.2 1,426.1 2,699.9

2035 . . . . . . . . . . . . . 1,506.1 167.9 1,674.0 1,596.8 2,669.1

2040 . . . . . . . . . . . . . 1,699.3 168.7 1,868.0 1,768.6 2,686.7

2045 . . . . . . . . . . . . . 1,928.1 182.3 2,110.4 1,951.9 2,927.4

2050 . . . . . . . . . . . . . 2,188.1 213.1 2,401.2 2,172.0 3,446.9

2055 . . . . . . . . . . . . . 2,478.1 259.0 2,737.1 2,450.1 4,197.8

2060 . . . . . . . . . . . . . 2,801.7 312.5 3,114.1 2,783.3 5,060.0

2065 . . . . . . . . . . . . . 3,166.3 372.3 3,538.6 3,153.5 6,028.2

2070 . . . . . . . . . . . . . 3,583.7 441.2 4,024.9 3,573.5 7,144.7

2075 . . . . . . . . . . . . . 4,062.3 524.5 4,586.8 4,027.5 8,510.6

2080 . . . . . . . . . . . . . 4,601.6 639.2 5,240.8 4,494.0 10,412.8

2085 . . . . . . . . . . . . . 5,208.5 796.3 6,004.7 5,060.2 12,992.2

2090 . . . . . . . . . . . . . 5,890.3 979.4 6,869.7 5,788.8 15,951.5

High-cost:

2016 . . . . . . . . . . . . . 845.9 87.7 933.6 931.2 2,814.9

2017 . . . . . . . . . . . . . 838.1 80.8 918.9 946.0 2,720.6

2018 . . . . . . . . . . . . . 863.0 76.5 939.5 984.7 2,618.6

2019 . . . . . . . . . . . . . 883.6 72.3 955.9 1,027.6 2,495.5

2020 . . . . . . . . . . . . . 903.8 67.2 971.0 1,069.8 2,347.8

2021 . . . . . . . . . . . . . 923.5 60.9 984.4 1,110.1 2,176.1

2022 . . . . . . . . . . . . . 942.7 53.8 996.5 1,155.0 1,975.0

2023 . . . . . . . . . . . . . 960.6 46.7 1,007.3 1,202.0 1,741.5

2024 . . . . . . . . . . . . . 978.5 39.2 1,017.7 1,249.9 1,475.1

2025c . . . . . . . . . . . . 993.6 31.3 1,024.9 1,297.5 1,173.6
221

OASDI and HI: Estimates in Dollars

Figure VI.G1 compares annual cost with annual total income and annual

non-interest income. The figure shows only the OASDI program under intermediate assumptions, and presents values in CPI-indexed 2016 dollars, consistent with table VI.G7. The difference between the income values for each

year is equal to the trust fund interest earnings. The figure illustrates that,

under intermediate assumptions: (1) annual cost exceeds non-interest income

in each year of the projection period; (2) total annual income, which includes

interest earnings on trust fund asset reserves, is sufficient to cover annual

cost for years 2016 through 2019; and (3) total annual income is not sufficient to cover annual cost for years beginning in 2020. From 2020 through

2033 (the year preceding the year of trust fund reserve depletion), annual

cost is covered by drawing down combined trust fund reserves.

Table VI.G8 shows the operations of the combined OASI and DI Trust Funds

in current, or nominal, dollars—that is, in dollars unadjusted for inflation.

The following items are presented in the table: (1) non-interest income, (2)

interest income, (3) total income, (4) cost, and (5) asset reserves at the end of

the year. The Trustees present these estimates using the low-cost, intermediate, and high-cost sets of demographic and economic assumptions to facilitate independent analysis.

 Figure VI.G1.—Estimated OASDI Income and Cost in CPI-indexed 2016 Dollars,

Based on Intermediate Assumptions

[In billions]

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

2015 2020 2025 2030 2035

Calendar year 

Cost 

Total income 

Non-interest income
Appendices

222

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.G8.—Operations of the Combined OASI and DI Trust Funds, 

in Current Dollars, Calendar Years 2016-2090

[In billions]

Calendar year

Non-interest

income

Interest

income

Total

income Costa

a Benefit payments which were scheduled to be paid on January 3 for some past and future years were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when

the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the

values for historical years and the projections in this report, all trust fund operations and asset reserves

reflect the 12 months of benefits scheduled for payment each year.

Asset

reserves at

end of yeara

Intermediate:

2016 . . . . . . . . . . . . . $855.8 $88.8 $944.6 $928.9 $2,828.2

2017 . . . . . . . . . . . . . 909.1 87.6 996.6 965.5 2,859.3

2018 . . . . . . . . . . . . . 965.4 89.2 1,054.7 1,032.5 2,881.5

2019 . . . . . . . . . . . . . 1,021.3 91.1 1,112.4 1,101.6 2,892.2

2020 . . . . . . . . . . . . . 1,078.7 92.6 1,171.3 1,174.5 2,889.0

2021 . . . . . . . . . . . . . 1,137.5 93.1 1,230.6 1,248.4 2,871.2

2022 . . . . . . . . . . . . . 1,196.8 93.6 1,290.4 1,330.5 2,831.1

2023 . . . . . . . . . . . . . 1,255.4 94.4 1,349.8 1,418.8 2,762.1

2024 . . . . . . . . . . . . . 1,317.8 94.6 1,412.4 1,512.2 2,662.2

2025 . . . . . . . . . . . . . 1,380.2 93.5 1,473.7 1,609.2 2,526.7

2030b . . . . . . . . . . . .

b The combined OASI and DI Trust Funds become depleted in 2034 under the intermediate assumptions and

in 2029 under the high-cost assumptions, so estimates for later years are not shown.

1,714.7 83.0 1,797.7 2,094.8 1,397.0

Low-cost:

2016 . . . . . . . . . . . . . 861.6 89.7 951.4 926.3 2,837.5

2017 . . . . . . . . . . . . . 934.8 92.5 1,027.3 965.1 2,899.7

2018 . . . . . . . . . . . . . 1,009.4 99.0 1,108.4 1,036.9 2,971.2

2019 . . . . . . . . . . . . . 1,084.5 105.8 1,190.2 1,109.6 3,051.9

2020 . . . . . . . . . . . . . 1,161.1 113.2 1,274.3 1,186.7 3,139.5

2021 . . . . . . . . . . . . . 1,239.1 120.8 1,359.9 1,265.5 3,233.9

2022 . . . . . . . . . . . . . 1,320.0 130.7 1,450.7 1,353.4 3,331.2

2023 . . . . . . . . . . . . . 1,403.8 142.8 1,546.6 1,448.7 3,429.1

2024 . . . . . . . . . . . . . 1,494.2 156.0 1,650.2 1,550.4 3,528.9

2025 . . . . . . . . . . . . . 1,587.1 169.6 1,756.7 1,657.3 3,628.3

2030 . . . . . . . . . . . . . 2,095.8 264.5 2,360.4 2,227.4 4,217.0

2035 . . . . . . . . . . . . . 2,753.7 307.1 3,060.8 2,919.5 4,880.1

2040 . . . . . . . . . . . . . 3,637.0 361.0 3,998.0 3,785.2 5,750.1

2045 . . . . . . . . . . . . . 4,830.6 456.7 5,287.2 4,890.1 7,334.1

2050 . . . . . . . . . . . . . 6,416.9 625.1 7,042.0 6,369.8 10,108.4

2055 . . . . . . . . . . . . . 8,506.9 889.3 9,396.2 8,410.8 14,410.4

2060 . . . . . . . . . . . . . 11,258.3 1,255.6 12,514.0 11,184.3 20,333.3

2065 . . . . . . . . . . . . . 14,893.9 1,751.2 16,645.1 14,833.6 28,355.8

2070 . . . . . . . . . . . . . 19,732.6 2,429.2 22,161.8 19,676.6 39,340.3

2075 . . . . . . . . . . . . . 26,183.3 3,380.7 29,564.0 25,959.1 54,854.5

2080 . . . . . . . . . . . . . 34,718.6 4,822.5 39,541.1 33,906.8 78,562.7

2085 . . . . . . . . . . . . . 46,000.0 7,032.6 53,032.6 44,690.8 114,744.4

2090 . . . . . . . . . . . . . 60,894.9 10,125.4 71,020.2 59,846.2 164,910.6

High-cost:

2016 . . . . . . . . . . . . . 845.9 87.7 933.6 931.2 2,814.9

2017 . . . . . . . . . . . . . 858.5 82.8 941.3 969.2 2,787.1

2018 . . . . . . . . . . . . . 903.0 80.0 983.0 1,030.3 2,739.8

2019 . . . . . . . . . . . . . 943.0 77.2 1,020.2 1,096.7 2,663.3

2020 . . . . . . . . . . . . . 983.8 73.2 1,057.0 1,164.5 2,555.7

2021 . . . . . . . . . . . . . 1,025.3 67.7 1,093.0 1,232.6 2,416.2

2022 . . . . . . . . . . . . . 1,067.7 60.9 1,128.6 1,308.1 2,236.7

2023 . . . . . . . . . . . . . 1,109.7 53.9 1,163.6 1,388.6 2,011.8

2024 . . . . . . . . . . . . . 1,153.0 46.2 1,199.2 1,472.8 1,738.1

2025b . . . . . . . . . . . . 1,194.1 37.6 1,231.8 1,559.4 1,410.5
223

OASDI and HI: Estimates in Dollars

Table VI.G9 shows values in CPI-indexed 2016 dollars—that is, adjusted by

the CPI indexing series discussed at the beginning of this section. This table

contains the annual non-interest income and cost of the combined OASI and

DI Trust Funds, of the HI Trust Fund, and of the combined OASI, DI, and HI

Trust Funds, based on the low-cost, intermediate, and high-cost sets of

assumptions. For OASDI, non-interest income consists of payroll tax contributions, proceeds from taxation of OASDI benefits, and reimbursements

from the General Fund of the Treasury, if any. Cost consists of scheduled

benefits, administrative expenses, financial interchange with the Railroad

Retirement program, and payments for vocational rehabilitation services for

disabled beneficiaries. For HI, non-interest income consists of payroll tax

contributions (including contributions from railroad employment), up to an

additional 0.9 percent tax on earned income for relatively high earners, proceeds from the taxation of OASDI benefits, premium revenues, monies from

fraud and abuse control activities, and reimbursements from the General

Fund of the Treasury, if any. Total cost consists of outlays (scheduled benefits and administrative expenses) for beneficiaries. The Trustees show

income and cost estimates generally on a cash basis for the OASDI program1 and on an incurred basis for the HI program. Table VI.G9 also shows

the balance, which equals the difference between non-interest income and

cost.

 1 OASDI benefits paid for entitlement for a particular month are generally paid in the succeeding month.

There are two primary exceptions to this general rule. First, payments can occur with a greater delay when a

benefit award is made after the month of initial benefit entitlement. At the time of benefit award, benefits

owed for months of prior entitlement are then also paid to the beneficiary. For the projections in this report,

such retroactive payments are included in the period where they are paid (at time of award). Second, when

benefit payments scheduled for January 3 are paid on the prior December 31, because January 3 falls on a

Sunday, such payments are shown in this report for the period they were scheduled to be paid.
Appendices

224

Table VI.G9.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2016-2090

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Costa Balancea

Noninterest

income Cost Balance

Noninterest

income Costa Balancea

Intermediate:

2016 . . . . . $856 $929 -$73 $281 $288 -$6 $1,137 $1,217 -$80

2017 . . . . . 885 940 -55 291 294 -3 1,176 1,234 -58

2018 . . . . . 915 979 -64 303 303 b 1,218 1,282 -64

2019 . . . . . 944 1,018 -74 314 314 -1 1,257 1,332 -75

2020 . . . . . 971 1,058 -86 324 328 -4 1,295 1,386 -90

2021 . . . . . 998 1,096 -97 334 342 -8 1,332 1,438 -105

2022 . . . . . 1,024 1,138 -114 343 357 -14 1,367 1,495 -128

2023 . . . . . 1,047 1,183 -136 352 372 -20 1,399 1,555 -156

2024 . . . . . 1,071 1,229 -158 361 386 -25 1,432 1,615 -183

2025 . . . . . 1,093 1,275 -181 370 399 -29 1,463 1,673 -210

2030 . . . . . 1,195 1,459 -265 413 483 -70 1,607 1,942 -335

2035 . . . . . 1,297 1,619 -322 456 563 -107 1,754 2,183 -429

2040 . . . . . 1,413 1,771 -359 505 639 -134 1,918 2,410 -493

2045 . . . . . 1,542 1,917 -375 559 712 -152 2,101 2,629 -527

2050 . . . . . 1,680 2,077 -397 619 776 -157 2,300 2,854 -554

2055 . . . . . 1,827 2,272 -444 685 838 -153 2,512 3,109 -597

2060 . . . . . 1,983 2,498 -515 756 908 -152 2,739 3,406 -667

2065 . . . . . 2,149 2,744 -595 833 993 -160 2,982 3,738 -755

2070 . . . . . 2,330 3,017 -687 917 1,094 -178 3,247 4,111 -865

2075 . . . . . 2,527 3,302 -775 1,007 1,204 -197 3,534 4,506 -972

2080 . . . . . 2,737 3,578 -841 1,103 1,311 -208 3,840 4,889 -1,049

2085 . . . . . 2,963 3,888 -924 1,206 1,418 -212 4,170 5,306 -1,136

2090 . . . . . 3,208 4,255 -1,047 1,319 1,534 -215 4,527 5,789 -1,261

Low-cost:

2016 . . . . . 862 926 -65 284 283 1 1,145 1,210 -64

2017 . . . . . 902 931 -29 297 284 13 1,199 1,216 -17

2018 . . . . . 943 969 -26 311 290 21 1,254 1,259 -5

2019 . . . . . 982 1,005 -23 324 297 27 1,306 1,302 4

2020 . . . . . 1,019 1,041 -22 336 305 31 1,355 1,346 8

2021 . . . . . 1,053 1,076 -22 347 313 34 1,400 1,389 11

2022 . . . . . 1,087 1,115 -28 358 322 36 1,446 1,437 9

2023 . . . . . 1,120 1,156 -36 370 331 38 1,490 1,488 2

2024 . . . . . 1,156 1,199 -43 381 339 42 1,537 1,538 -1

2025 . . . . . 1,189 1,242 -53 393 346 47 1,583 1,588 -5

2030 . . . . . 1,342 1,426 -84 453 393 61 1,795 1,819 -24

2035 . . . . . 1,506 1,597 -91 520 429 91 2,026 2,025 b

2040 . . . . . 1,699 1,769 -69 599 457 142 2,298 2,225 73

2045 . . . . . 1,928 1,952 -24 692 482 210 2,620 2,434 187

2050 . . . . . 2,188 2,172 16 801 510 291 2,989 2,682 307

2055 . . . . . 2,478 2,450 28 924 546 379 3,403 2,996 407

2060 . . . . . 2,802 2,783 18 1,063 598 465 3,865 3,382 483

2065 . . . . . 3,166 3,153 13 1,220 678 542 4,386 3,831 555

2070 . . . . . 3,584 3,574 10 1,398 781 617 4,982 4,355 628

2075 . . . . . 4,062 4,028 35 1,602 900 702 5,664 4,928 737

2080 . . . . . 4,602 4,494 108 1,830 1,027 804 6,432 5,521 911

2085 . . . . . 5,208 5,060 148 2,089 1,162 927 7,297 6,222 1,075

2090 . . . . . 5,890 5,789 101 2,383 1,313 1,070 8,274 7,102 1,171
225

OASDI and HI: Estimates in Dollars

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.G10 shows values in current, or nominal, dollars—that is, in dollars

unadjusted for inflation. This table contains the annual non-interest income,

cost, and balance of the combined OASI and DI Trust Funds, of the HI Trust

Fund, and of the combined OASI, DI, and HI Trust Funds, based on the lowcost, intermediate, and high-cost sets of assumptions.

High-cost:

2016 . . . . . $846 $931 -$85 $276 $293 -$17 $1,122 $1,225 -$103

2017 . . . . . 838 946 -108 278 301 -23 1,116 1,247 -131

2018 . . . . . 863 985 -122 286 312 -26 1,149 1,297 -147

2019 . . . . . 884 1,028 -144 295 328 -32 1,179 1,355 -176

2020 . . . . . 904 1,070 -166 304 347 -43 1,208 1,417 -209

2021 . . . . . 923 1,110 -187 313 368 -55 1,236 1,478 -242

2022 . . . . . 943 1,155 -212 321 390 -69 1,264 1,545 -281

2023 . . . . . 961 1,202 -241 329 414 -85 1,290 1,616 -326

2024 . . . . . 978 1,250 -271 337 437 -99 1,316 1,687 -371

2025 . . . . . 994 1,297 -304 345 458 -113 1,339 1,756 -417

2030 . . . . . 1,054 1,479 -425 373 593 -220 1,427 2,072 -645

2035 . . . . . 1,109 1,627 -518 400 737 -337 1,509 2,364 -856

2040 . . . . . 1,166 1,761 -595 428 892 -464 1,594 2,653 -1,059

2045 . . . . . 1,226 1,875 -649 455 1,046 -591 1,681 2,921 -1,240

2050 . . . . . 1,284 1,985 -701 483 1,176 -693 1,767 3,161 -1,394

2055 . . . . . 1,340 2,110 -769 511 1,278 -768 1,851 3,388 -1,537

2060 . . . . . 1,395 2,249 -853 539 1,367 -828 1,935 3,615 -1,681

2065 . . . . . 1,449 2,394 -945 568 1,443 -875 2,017 3,837 -1,820

2070 . . . . . 1,504 2,552 -1,049 598 1,518 -920 2,101 4,070 -1,969

2075 . . . . . 1,559 2,710 -1,151 628 1,593 -964 2,187 4,303 -2,115

2080 . . . . . 1,613 2,849 -1,236 658 1,652 -994 2,271 4,501 -2,229

2085 . . . . . 1,668 2,986 -1,318 689 1,703 -1,014 2,356 4,689 -2,332

2090 . . . . . 1,725 3,130 -1,405 720 1,756 -1,036 2,445 4,885 -2,440

a OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years

were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset

reserves reflect the 12 months of benefits scheduled for payment each year.

b Between -$500 million and $500 million.

Table VI.G9.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2016-2090 (Cont.)

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Costa Balancea

Noninterest

income Cost Balance

Noninterest

income Costa Balancea
Appendices

226

Table VI.G10.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in Current Dollars, Calendar Years 2016-2090

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Costa Balancea

Noninterest

income Cost Balance

Noninterest

income Costa Balancea

Intermediate:

2016 . . . . . $856 $929 -$73 $281 $288 -$6 $1,137 $1,217 -$80

2017 . . . . . 909 966 -56 300 302 -3 1,209 1,268 -59

2018 . . . . . 965 1,033 -67 320 320 b 1,285 1,352 -67

2019 . . . . . 1,021 1,102 -80 339 340 -1 1,361 1,442 -81

2020 . . . . . 1,079 1,175 -96 360 364 -4 1,438 1,539 -100

2021 . . . . . 1,138 1,248 -111 380 390 -9 1,518 1,638 -120

2022 . . . . . 1,197 1,331 -134 401 417 -16 1,598 1,748 -150

2023 . . . . . 1,255 1,419 -163 422 446 -24 1,677 1,865 -187

2024 . . . . . 1,318 1,512 -194 444 475 -30 1,762 1,987 -225

2025 . . . . . 1,380 1,609 -229 467 503 -36 1,847 2,112 -265

2030 . . . . . 1,715 2,095 -380 592 693 -101 2,307 2,788 -481

2035 . . . . . 2,117 2,643 -526 744 919 -175 2,862 3,562 -700

2040 . . . . . 2,621 3,286 -665 937 1,186 -249 3,558 4,472 -914

2045 . . . . . 3,252 4,044 -791 1,180 1,501 -321 4,432 5,545 -1,112

2050 . . . . . 4,030 4,982 -952 1,485 1,862 -377 5,515 6,844 -1,329

2055 . . . . . 4,982 6,194 -1,212 1,868 2,285 -417 6,850 8,479 -1,629

2060 . . . . . 6,148 7,744 -1,597 2,344 2,814 -470 8,492 10,559 -2,067

2065 . . . . . 7,576 9,673 -2,097 2,936 3,501 -565 10,512 13,174 -2,662

2070 . . . . . 9,337 12,090 -2,753 3,673 4,386 -713 13,010 16,476 -3,466

2075 . . . . . 11,512 15,042 -3,530 4,589 5,488 -898 16,101 20,530 -4,429

2080 . . . . . 14,176 18,532 -4,356 5,714 6,793 -1,079 19,890 25,324 -5,434

2085 . . . . . 17,452 22,896 -5,444 7,105 8,354 -1,248 24,557 31,249 -6,692

2090 . . . . . 21,482 28,490 -7,008 8,831 10,269 -1,438 30,313 38,759 -8,446

Low-cost:

2016 . . . . . 862 926 -65 284 283 1 1,145 1,210 -64

2017 . . . . . 935 965 -30 308 295 13 1,242 1,260 -17

2018 . . . . . 1,009 1,037 -28 333 311 22 1,343 1,348 -5

2019 . . . . . 1,084 1,110 -25 358 328 30 1,442 1,438 5

2020 . . . . . 1,161 1,187 -26 383 348 35 1,544 1,535 10

2021 . . . . . 1,239 1,266 -26 408 369 40 1,648 1,634 13

2022 . . . . . 1,320 1,353 -33 435 391 44 1,755 1,745 11

2023 . . . . . 1,404 1,449 -45 463 415 48 1,867 1,864 3

2024 . . . . . 1,494 1,550 -56 493 439 54 1,987 1,989 -2

2025 . . . . . 1,587 1,657 -70 525 462 63 2,112 2,119 -7

2030 . . . . . 2,096 2,227 -132 708 613 95 2,804 2,841 -37

2035 . . . . . 2,754 2,919 -166 950 784 166 3,704 3,703 1

2040 . . . . . 3,637 3,785 -148 1,281 977 304 4,918 4,762 156

2045 . . . . . 4,831 4,890 -60 1,735 1,207 527 6,565 6,097 468

2050 . . . . . 6,417 6,370 47 2,349 1,496 853 8,766 7,866 901

2055 . . . . . 8,507 8,411 96 3,174 1,873 1,300 11,680 10,284 1,396

2060 . . . . . 11,258 11,184 74 4,273 2,405 1,868 15,531 13,589 1,942

2065 . . . . . 14,894 14,834 60 5,738 3,187 2,550 20,631 18,021 2,610

2070 . . . . . 19,733 19,677 56 7,700 4,301 3,400 27,433 23,977 3,456

2075 . . . . . 26,183 25,959 224 10,326 5,802 4,524 36,509 31,761 4,749

2080 . . . . . 34,719 33,907 812 13,810 7,745 6,064 48,528 41,652 6,876

2085 . . . . . 46,000 44,691 1,309 18,447 10,263 8,184 64,447 54,954 9,493

2090 . . . . . 60,895 59,846 1,049 24,639 13,578 11,061 85,534 73,424 12,110
227

OASDI and HI: Estimates in Dollars

High-cost:

2016 . . . . . $846 $931 -$85 $276 $293 -$17 $1,122 $1,225 -$103

2017 . . . . . 859 969 -111 285 308 -23 1,143 1,277 -134

2018 . . . . . 903 1,030 -127 300 326 -27 1,203 1,357 -154

2019 . . . . . 943 1,097 -154 315 350 -35 1,258 1,447 -188

2020 . . . . . 984 1,165 -181 331 378 -47 1,315 1,542 -227

2021 . . . . . 1,025 1,233 -207 347 408 -61 1,373 1,641 -268

2022 . . . . . 1,068 1,308 -240 364 442 -78 1,432 1,750 -319

2023 . . . . . 1,110 1,389 -279 380 478 -98 1,490 1,867 -377

2024 . . . . . 1,153 1,473 -320 398 514 -117 1,551 1,987 -437

2025 . . . . . 1,194 1,559 -365 415 551 -136 1,609 2,110 -501

2030 . . . . . 1,398 1,962 -564 495 787 -292 1,893 2,749 -856

2035 . . . . . 1,625 2,384 -759 586 1,080 -494 2,210 3,464 -1,254

2040 . . . . . 1,887 2,848 -962 692 1,443 -751 2,578 4,291 -1,713

2045 . . . . . 2,189 3,348 -1,159 813 1,868 -1,055 3,003 5,217 -2,214

2050 . . . . . 2,532 3,914 -1,383 952 2,319 -1,366 3,484 6,233 -2,749

2055 . . . . . 2,918 4,593 -1,675 1,112 2,783 -1,671 4,030 7,376 -3,346

2060 . . . . . 3,354 5,405 -2,051 1,296 3,285 -1,989 4,650 8,690 -4,040

2065 . . . . . 3,846 6,353 -2,507 1,507 3,829 -2,322 5,354 10,183 -4,829

2070 . . . . . 4,406 7,478 -3,072 1,751 4,448 -2,696 6,157 11,926 -5,768

2075 . . . . . 5,043 8,766 -3,723 2,033 5,153 -3,120 7,076 13,918 -6,842

2080 . . . . . 5,760 10,174 -4,414 2,351 5,900 -3,549 8,112 16,075 -7,963

2085 . . . . . 6,577 11,775 -5,199 2,715 6,714 -3,999 9,292 18,490 -9,197

2090 . . . . . 7,510 13,626 -6,116 3,135 7,644 -4,509 10,645 21,270 -10,625

a OASDI benefit payments which were scheduled to be paid on January 3 for some past and future years

were actually paid on December 31 as required by the statutory provision for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday, or legal public holiday. For comparability with the values for historical years and the projections in this report, all trust fund operations and asset

reserves reflect the 12 months of benefits scheduled for payment each year.

b Between -$500 million and $0.

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.G10.—OASDI and HI Annual Non-interest Income, Cost, and

Balance in Current Dollars, Calendar Years 2016-2090 (Cont.)

[In billions]

Calendar

year

OASDI HI Combined

Noninterest

income Costa Balancea

Noninterest

income Cost Balance

Noninterest

income Costa Balancea
Appendices

228

H. ANALYSIS OF BENEFIT DISBURSEMENTS FROM THE OASI 

TRUST FUND WITH RESPECT TO DISABLED BENEFICIARIES

(Required by section 201(c) of the Social Security Act)

Effective January 1957, the OASI Trust Fund pays monthly benefits to disabled children aged 18 and over of retired and deceased workers if the disability began before age 18. The age by which disability must have begun

was later changed to age 22. Effective February 1968, the OASI Trust Fund

pays reduced monthly benefits to disabled widows and widowers at ages 50

and over. Effective January 1991, the requirements for the disability of the

widow or widower were made less restrictive.

At the end of 2015, the OASI Trust Fund was providing monthly benefit payments to about 1,096,000 people because of their disabilities or the disabilities of children. This total includes approximately 25,000 mothers and

fathers (wives or husbands under normal retirement age of retired-worker

beneficiaries and widows or widowers of deceased insured workers) who

met all other qualifying requirements and were receiving unreduced benefits

solely because they had disabled-child beneficiaries (or disabled children

aged 16 or 17) in their care. In calendar year 2015, the OASI Trust Fund paid

a total of $10,7361 million to the people described above. Table VI.H1

shows OASI scheduled benefits for disability for selected calendar years

during 1960 through 2015 and estimates for 2016 through 2025 based on the

intermediate set of assumptions.

 1 Benefit payments which were scheduled to be paid on January 3, 2016 were actually paid on

December 31, 2015 as required by the statutory provision for early delivery of benefit payments when the

normal payment delivery date is a Saturday, Sunday, or public holiday. For comparability with the values for

historical years and the projections in this report, all benefit amounts in this section reflect the 12 months of

benefits scheduled for payment in each year.
229

OASI Expenditures for the Disabled

Table VI.H1.—Scheduled Benefit Disbursements From the OASI Trust Fund

With Respect to Disabled Beneficiaries

[Beneficiaries in thousands; scheduled benefits in millions]

Calendar year

Disabled beneficiaries, end of year Amount of scheduled benefitsa b

Total Children c Widowswidowers d Total Childrenc Widowswidowers e

Historical data:

1960 . . . . . . . . . 117 117 — $59 $59 —

1965 . . . . . . . . . 214 214 — 134 134 —

1970 . . . . . . . . . 316 281 36 301 260 $41

1975 . . . . . . . . . 435 376 58 664 560 104

1980 . . . . . . . . . 519 460 59 1,223 1,097 126

1985 . . . . . . . . . 594 547 47 2,072 1,885 187

1990 . . . . . . . . . 662 613 49 2,882 2,649 233

1991 . . . . . . . . . 687 627 61 3,179 2,875 304

1992 . . . . . . . . . 715 643 72 3,459 3,079 380

1993 . . . . . . . . . 740 659 81 3,752 3,296 456

1994 . . . . . . . . . 758 671 86 3,973 3,481 492

1995 . . . . . . . . . 772 681 91 4,202 3,672 531

1996 . . . . . . . . . 782 687 94 4,410 3,846 565

1997 . . . . . . . . . 789 693 96 4,646 4,050 596

1998 . . . . . . . . . 797 698 99 4,838 4,210 627

1999 . . . . . . . . . 805 702 102 4,991 4,336 655

2000 . . . . . . . . . 811 707 104 5,203 4,523 680

2001 . . . . . . . . . 817 712 105 5,520 4,802 718

2002 . . . . . . . . . 823 717 106 5,773 5,024 749

2003 . . . . . . . . . 827 722 105 5,950 5,184 764

2004 . . . . . . . . . 828 723 105 6,099 5,316 781

2005 . . . . . . . . . 836 728 108 6,449 5,556 834

2006 . . . . . . . . . 840 732 108 6,720 5,852 864

2007 . . . . . . . . . 851 744 107 7,053 6,181 869

2008 . . . . . . . . . 922 813 109 7,688 6,776 908

2009 . . . . . . . . . 969 857 112 8,595 7,618 974

2010 . . . . . . . . . 996 879 117 8,858 7,848 1,008

2011 . . . . . . . . . 1,020 899 121 9,136 8,085 1,050

2012 . . . . . . . . . 1,045 920 125 9,698 8,595 1,102

2013 . . . . . . . . . 1,065 939 126 9,953 8,840 1,109

2014 . . . . . . . . . 1,079 954 125 10,326 9,217 1,108

2015 . . . . . . . . . 1,096 972 124 10,736 9,624 1,109
Appendices

230

Note: Totals do not necessarily equal the sums of rounded components.

Under the intermediate assumptions, estimated total scheduled benefits from

the OASI Trust Fund with respect to disabled beneficiaries will increase

from $10,970 million in calendar year 2016 to $16,383 million in calendar

year 2025.

In calendar year 2015, benefit payments (including expenditures for vocational rehabilitation services) with respect to disabled persons from the OASI

Trust Fund and from the DI Trust Fund (including payments from the DI

fund to all children and spouses of disabled-worker beneficiaries) totaled

$154,124 million. Of this amount, $10,736 million, or 7.0 percent, represented payments from the OASI Trust Fund. Table VI.H2 contains these and

similar figures for selected calendar years during 1960 through 2015 and

estimates for calendar years 2016 through 2025.

Estimates under the intermediate assumptions:

2016 . . . . . . . . . 1,113 991 121 $10,970 $9,881 $1,086

2017 . . . . . . . . . 1,128 1,010 118 11,220 10,162 1,055

2018 . . . . . . . . . 1,144 1,028 116 11,790 10,724 1,063

2019 . . . . . . . . . 1,159 1,046 113 12,343 11,272 1,066

2020 . . . . . . . . . 1,176 1,064 112 12,923 11,838 1,081

2021 . . . . . . . . . 1,193 1,081 112 13,544 12,430 1,110

2022 . . . . . . . . . 1,209 1,098 112 14,197 13,050 1,142

2023 . . . . . . . . . 1,226 1,114 112 14,881 13,701 1,175

2024 . . . . . . . . . 1,243 1,130 113 15,621 14,390 1,225

2025 . . . . . . . . . 1,260 1,146 114 16,383 15,110 1,268

a Beginning in 1966, includes payments for vocational rehabilitation services.

b Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly

scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as

required by the statutory provision for early benefit payments when the normal delivery date is on a Saturday, Sunday, or public holiday. Such shifts in payments across calendar years occur periodically whenever

January 3rd falls on a Sunday. In order to provide a consistent perspective on scheduled benefits over time,

scheduled benefits in each year reflect the 12 months of benefits that are regularly scheduled for payment in

that year.

c Also includes certain mothers and fathers (see text).

d In 1984 and later years, includes only disabled widows and widowers aged 50-59, because disabled widows and widowers age 60 and older are eligible for the same benefit as a nondisabled aged widow or widower. Therefore, they are not receiving benefits solely because of a disability.

e In 1983 and prior years, includes the offsetting effect of lower benefits payable to disabled widows and

widowers who continued to receive benefits after attaining age 60 (62, for disabled widowers prior to 1973),

compared to the higher nondisabled widow’s and widower’s benefits that would otherwise be payable. In

1984 and later years, includes only scheduled benefits to disabled widows and widowers aged 50-59 (see

footnote d).

Table VI.H1.—Scheduled Benefit Disbursements From the OASI Trust Fund

With Respect to Disabled Beneficiaries (Cont.)

[Beneficiaries in thousands; scheduled benefits in millions]

Calendar year

Disabled beneficiaries, end of year Amount of scheduled benefitsa b

Total Children c Widowswidowers d Total Childrenc Widowswidowers e
231

OASI Expenditures for the Disabled

Note: Totals do not necessarily equal the sums of rounded components.

Table VI.H2.—Scheduled Benefit Disbursementsa Under the OASDI Program

With Respect to Disabled Beneficiaries

[Amounts in millions]

a Amounts for 2015 and 2016 are adjusted to include in 2016 operations those benefit payments regularly

scheduled in the law to be paid on January 3, 2016, which were actually paid on December 31, 2015 as

required by the statutory provision for early benefit payments when the normal delivery date is on a Saturday, Sunday, or public holiday. Such shifts in payments across calendar years occur periodically whenever

January 3rd falls on a Sunday. In order to provide a consistent perspective on scheduled benefits over time,

scheduled benefits in each year reflect the 12 months of benefits that are regularly scheduled for payment in

that year.

Calendar year Totalb

b Beginning in 1966, includes payments for vocational rehabilitation services.

DI Trust Fund c

c Scheduled benefits for disabled workers and their children and spouses.

OASI Trust Fund

Amount d

d Scheduled benefits for disabled children aged 18 and over, for certain mothers and fathers (see text), and

for disabled widows and widowers (see footnote e, table VI.H1).

Percentage of total

Historical data:

1960 . . . . . . . . . $627 $568 $59 9.4

1965 . . . . . . . . . 1,707 1,573 134 7.9

1970 . . . . . . . . . 3,386 3,085 301 8.9

1975 . . . . . . . . . 9,169 8,505 664 7.2

1980 . . . . . . . . . 16,738 15,515 1,223 7.3

1985 . . . . . . . . . 20,908 18,836 2,072 9.9

1990 . . . . . . . . . 27,717 24,835 2,882 10.4

1991 . . . . . . . . . 30,877 27,698 3,179 10.3

1992 . . . . . . . . . 34,583 31,124 3,459 10.0

1993 . . . . . . . . . 38,378 34,626 3,752 9.8

1994 . . . . . . . . . 41,730 37,757 3,973 9.5

1995 . . . . . . . . . 45,140 40,937 4,202 9.3

1996 . . . . . . . . . 48,615 44,205 4,410 9.1

1997 . . . . . . . . . 50,358 45,712 4,646 9.2

1998 . . . . . . . . . 53,062 48,224 4,838 9.1

1999 . . . . . . . . . 56,390 51,399 4,991 8.9

2000 . . . . . . . . . 60,204 55,001 5,203 8.6

2001 . . . . . . . . . 65,157 59,637 5,520 8.5

2002 . . . . . . . . . 71,493 65,721 5,773 8.1

2003 . . . . . . . . . 76,902 70,952 5,950 7.7

2004 . . . . . . . . . 84,350 78,251 6,099 7.2

2005 . . . . . . . . . 91,835 85,386 6,449 7.0

2006 . . . . . . . . . 99,165 92,446 6,720 6.8

2007 . . . . . . . . . 106,200 99,147 7,053 6.6

2008 . . . . . . . . . 114,064 106,376 7,688 6.7

2009 . . . . . . . . . 127,002 118,407 8,595 6.8

2010 . . . . . . . . . 133,103 124,245 8,858 6.7

2011 . . . . . . . . . 138,115 128,979 9,136 6.6

2012 . . . . . . . . . 146,623 136,925 9,698 6.6

2013 . . . . . . . . . 150,108 140,155 9,953 6.6

2014 . . . . . . . . . 152,031 141,705 10,326 6.8

2015 . . . . . . . . . 154,124 143,388 10,736 7.0

Estimates under the intermediate assumptions:

2016 . . . . . . . . . 157,679 146,709 10,970 7.0

2017 . . . . . . . . . 160,598 149,378 11,220 7.0

2018 . . . . . . . . . 167,864 156,074 11,790 7.0

2019 . . . . . . . . . 174,860 162,517 12,343 7.1

2020 . . . . . . . . . 181,682 168,759 12,923 7.1

2021 . . . . . . . . . 189,761 176,217 13,544 7.1

2022 . . . . . . . . . 198,324 184,127 14,197 7.2

2023 . . . . . . . . . 207,097 192,215 14,881 7.2

2024 . . . . . . . . . 215,864 200,243 15,621 7.2

2025 . . . . . . . . . 225,221 208,838 16,383 7.3
Appendices

232

I. GLOSSARY

Actuarial balance. The difference between the summarized income rate and

the summarized cost rate as a percentage of taxable payroll over a given valuation period.

Actuarial deficit. A negative actuarial balance.

Administrative expenses. Expenses incurred by the Social Security Administration and the Department of the Treasury in administering the OASDI

program and the provisions of the Internal Revenue Code relating to the collection of contributions. Such administrative expenses are paid from the

OASI and DI Trust Funds.

Advance tax transfers. Amounts representing the estimated total OASDI

tax contributions for a given month. From May 1983 through November

1990, such amounts were credited to the OASI and DI Trust Funds at the

beginning of each month. The trust funds reimbursed the General Fund of

the Treasury for the associated loss of interest. Advance tax transfers are no

longer made unless needed in order to pay benefits.

Alternatives I, II, or III. See “Assumptions.”

Annual balance. The difference between the income rate and the cost rate

for a given year.

Asset reserves. Treasury notes and bonds, other securities guaranteed by the

Federal Government, certain Federally sponsored agency obligations, and

cash, held by the trust funds for investment purposes.

Assumptions. Values related to future trends in key factors that affect the

trust funds. Demographic assumptions include fertility, mortality, net immigration, marriage, and divorce. Economic assumptions include unemployment rates, average earnings, inflation, interest rates, and productivity.

Program-specific assumptions include retirement patterns, and disability

incidence and termination rates. This report presents three sets of demographic, economic, and program-specific assumptions:

 • Alternative II is the intermediate set of assumptions, and represents the

Trustees’ best estimates of likely future demographic, economic, and

program-specific conditions.

 • Alternative I is a low-cost set of assumptions—it assumes relatively

rapid economic growth, high inflation, and favorable (from the standpoint of program financing) demographic and program-specific conditions.

 • Alternative III is a high-cost set of assumptions—it assumes relatively

slow economic growth, low inflation, and unfavorable (from the standpoint of program financing) demographic and program-specific conditions.

See tables V.A2, V.B1, and V.B2.
233

Glossary

Automatic cost-of-living benefit increase. The annual increase in benefits,

effective for December, reflecting the increase, if any, in the cost of living. A

benefit increase is applicable only after a beneficiary becomes eligible for

benefits. In general, the benefit increase equals the percentage increase in the

Consumer Price Index for Urban Wage Earners and Clerical Workers

(CPI-W) measured from the third quarter of the previous year to the third

quarter of the current year. If there is no increase in the CPI-W, there is no

cost-of-living benefit increase. See table V.C1.

Auxiliary benefits. Monthly benefits payable to a spouse or child of a

retired or disabled worker, or to a survivor of a deceased worker.

Average indexed monthly earnings—AIME. The measure of lifetime

earnings used in determining the primary insurance amount (PIA) for most

workers who attain age 62, become disabled, or die after 1978. A worker’s

actual past earnings are adjusted by changes in the average wage index, in

order to bring them up to their approximately equivalent value at the time of

retirement or other eligibility for benefits.

Average wage index—AWI. A series that generally increases with the average amount of total wages for each year after 1950, including wages in noncovered employment and wages in covered employment in excess of the

OASDI contribution and benefit base. (See Title 20, Chapter III,

section 404.211(c) of the Code of Federal Regulations for a more precise

definition.) These average wage amounts are used to index the taxable earnings of most workers first becoming eligible for benefits in 1979 or later, and

for automatic adjustments in the contribution and benefit base, bend points,

earnings test exempt amounts, and other wage-indexed amounts. See

table V.C1.

Award. An administrative determination that an individual is entitled to

receive a specified type of OASDI benefit. Awards can represent not only

new entrants to the benefit rolls but also persons already on the rolls who

become entitled to a different type of benefit. Awards usually result in the

immediate payment of benefits, although payments may be deferred or withheld depending on the individual’s particular circumstances.

Baby boom. The period from the end of World War II (1946) through 1965

marked by unusually high birth rates.

Bend points. The dollar amounts defining the AIME or PIA brackets in the

benefit formulas. For the bend points for years 1979 and later, see

table V.C2.

Beneficiary. A person who has been awarded benefits on the basis of his or

her own or another’s earnings record. The benefits may be either in currentpayment status or withheld.

Benefit award. See “Award.”
Appendices

234

Benefit conversion. See “Disability conversion.”

Benefit payments. The amounts disbursed for OASI and DI benefits by the

Department of the Treasury.

Benefit termination. See “Termination.”

Best estimate assumptions. See “Assumptions.”

Board. See “Board of Trustees.”

Board of Trustees. A Board established by the Social Security Act to oversee the financial operations of the Federal Old-Age and Survivors Insurance

Trust Fund and the Federal Disability Insurance Trust Fund. The Board is

composed of six members. Four members serve by virtue of their positions

in the Federal Government: the Secretary of the Treasury, who is the Managing Trustee; the Secretary of Labor; the Secretary of Health and Human Services; and the Commissioner of Social Security. The President appoints and

the Senate confirms the other two members to serve as public representatives. Also referred to as the “Board” or the “Trustees.”

Cash flow. Actual or projected revenue and costs reflecting the levels of

payroll tax contribution rates and benefits scheduled in the law. Net cash

flow is the difference between non-interest income and cost.

Consumer Price Index—CPI. An official measure of inflation in consumer

prices. In this report, CPI refers to the Consumer Price Index for Urban Wage

Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics,

Department of Labor, publishes historical values for the CPI-W.

Contribution and benefit base. Annual dollar amount above which earnings in employment covered under the OASDI program are neither taxable

nor creditable for benefit-computation purposes. (Also referred to as maximum contribution and benefit base, annual creditable maximum, taxable

maximum, and maximum taxable.) See tables V.C1 and V.C6. See “Hospital

Insurance (HI) contribution base.”

Contributions. See “Payroll tax contributions.”

Conversion. See “Disability conversion.”

Cost. The cost shown for a year includes benefits scheduled for payment in

the year, administrative expenses, financial interchange with the Railroad

Retirement program, and payments for vocational rehabilitation services for

disabled beneficiaries.

Cost-of-living adjustment. See “Automatic cost-of-living benefit increase.”

Cost rate. The cost rate for a year is the ratio of the cost of the program to

the taxable payroll for the year.

Covered earnings. Wages or earnings from self-employment covered by the

OASDI program.
235

Glossary

Covered employment. All employment for which earnings are creditable

for Social Security purposes. The program covers almost all employment.

Some exceptions are:

 • State and local government employees whose employer has not elected

to be covered under Social Security and who are participating in an

employer-provided pension plan.

 • Current Federal civilian workers hired before 1984 who have not

elected to be covered.

 • Self-employed workers earning less than $400 in a calendar year.

Covered worker. A person who has earnings creditable for Social Security

purposes based on services for wages in covered employment or income

from covered self-employment.

CPI-indexed dollars. Amounts adjusted by the CPI to the value of the dollar

in a particular year.

Creditable earnings. Wages or self-employment earnings posted to a

worker’s earnings record. Such earnings determine eligibility for benefits

and the amount of benefits on that worker’s record. The contribution and

benefit base is the maximum amount of creditable earnings for each worker

in a calendar year.

Current-cost financing. See “Pay-as-you-go financing.”

Current dollars. Amounts expressed in nominal dollars with no adjustment

for inflation.

Currently insured status. A worker acquires currently insured status when

he or she has accumulated six quarters of coverage during the 13-quarter

period ending with the current quarter.

Current-payment status. Status of a beneficiary to whom a benefit is being

paid for a given month (with or without deductions, provided the deductions

add to less than a full month’s benefit).

Deemed filing. Under certain circumstances, a person applying for or receiving either an aged-spouse benefit or a retired-worker benefit is required to

also file for the other of these two types of benefits. For those first eligible

for benefits before 2016, this requirement applies to any person under normal

retirement age who is eligible for the other benefit as of the starting month

for the first benefit. For those first eligible for benefits in 2016 and later, this

requirement applies whenever the person is eligible for the other benefit.

This can occur at any age, and in months after the starting month of the first

benefit.

Deemed wage credit. See “Military service wage credits.”

Delayed retirement credits. Increases in the benefit amount for certain individuals who did not receive benefits for months after attaining normal retirement age but before age 70. Delayed retirement credits apply to benefits for
Appendices

236

January of the year following the year they are earned or for the month of

attainment of age 70, whichever comes first. See table V.C3.

Demographic assumptions. See “Assumptions.”

Disability. For Social Security purposes, the inability to engage in substantial gainful activity (see “Substantial gainful activity—SGA”) by reason of

any medically determinable physical or mental impairment that can be

expected to result in death or to last for a continuous period of not less than

12 months. Special rules apply for workers at ages 55 and over whose disability is based on blindness.

The law generally requires that a person be disabled continuously for

5 months before he or she can qualify for a disabled-worker benefit.

Disability conversion ratio. For a given year, the ratio of the number of disability conversions to the average number of disabled-worker beneficiaries at

all ages during the year.

Disability conversion. Upon attainment of normal retirement age, a disabled-worker beneficiary is automatically converted to retired-worker status.

Disability incidence rate. The proportion of workers in a given year,

insured for but not receiving disability benefits, who apply for and are

awarded disability benefits.

Disability Insurance (DI) Trust Fund. See “Trust fund.”

Disability insured status. A worker acquires disability insured status if he

or she is: (1) a fully insured worker who has accumulated 20 quarters of coverage during the 40-quarter period ending with the current quarter, (2) a fully

insured worker aged 24-30 who has accumulated quarters of coverage during

one-half of the quarters elapsed after the quarter of attainment of age 21 and

up to and including the current quarter, or (3) a fully insured worker under

age 24 who has accumulated six quarters of coverage during the 12-quarter

period ending with the current quarter.

Disability prevalence rate. The proportion of persons insured for disability

benefits who are disabled-worker beneficiaries in current-payment status.

Disability termination rate. The proportion of disabled-worker beneficiaries in a given year whose disability benefits terminate as a result of their

recovery or death.

Disabled-worker benefit. A monthly benefit payable to a disabled worker

under normal retirement age and insured for disability. Before

November 1960, disability benefits were limited to disabled workers

aged 50-64.

Disbursements. Actual expenditures (outgo) made or expected to be made

under current law, including benefits paid or payable, administrative

expenses, financial interchange with the Railroad Retirement program, and

payments for vocational rehabilitation services for disabled beneficiaries.
237

Glossary

Earnings. Unless otherwise qualified, all wages from employment and net

earnings from self-employment, whether or not they are taxable or covered.

Earnings test. The provision requiring the withholding of benefits if beneficiaries under normal retirement age have earnings in excess of certain

exempt amounts. See table V.C1.

Economic assumptions. See “Assumptions.”

Effective interest rate. See “Interest rate.”

Excess wages. Wages in excess of the contribution and benefit base on

which a worker initially makes payroll tax contributions, usually as a result

of working for more than one employer during a year. Employee payroll

taxes on excess wages are refundable to affected employees, while the

employer taxes are not refundable.

Expenditures. See “Disbursements.”

Federal Insurance Contributions Act—FICA. Provision authorizing payroll taxes on the wages of employed persons to provide for Old-Age, Survivors, and Disability Insurance, and for Hospital Insurance. Workers and their

employers generally pay the tax in equal amounts.

File and suspend. The ability to apply for a retired-worker benefit at or after

normal retirement age, then voluntarily suspend it, allowing the worker to

earn delayed retirement credits and a spouse or child to receive benefits on

the worker’s record. Voluntary suspensions which are requested after

April 29, 2016 will no longer allow spouses (other than divorced spouses)

and children to receive benefits while the worker’s benefit is suspended. 

Financial interchange. Provisions of the Railroad Retirement Act providing

for transfers between the trust funds and the Social Security Equivalent Benefit Account of the Railroad Retirement program in order to place each trust

fund in the same financial position it would have been had railroad employment always been covered under Social Security.

Fiscal year. The accounting year of the United States Government. A fiscal

year is the 12-month period ending September 30. For example, fiscal year

2016 began October 1, 2015, and will end September 30, 2016.

Full advance funding. A financing method in which contributions are established to match the full cost of future benefits as these costs are incurred

through current service. Such financing methods also provide for amortization over a fixed period of any financial obligation that is incurred at the

beginning of the program (or subsequent modification) as a result of granting

credit for past service.

Fully insured status. A worker acquires fully insured status when his or her

total number of quarters of coverage is greater than or equal to the number of

years elapsed after the year of attainment of age 21 (but not less than six).
Appendices

238

Once a worker has accumulated 40 quarters of coverage, he or she remains

permanently fully insured.

General Fund of the Treasury. Funds held by the Treasury of the United

States, other than receipts collected for a specific purpose (such as Social

Security), and maintained in a separate account for that purpose.

General Fund reimbursements. Payments from the General Fund of the

Treasury to the trust funds for specific purposes defined in the law, including:

 • The cost of noncontributory wage credits for military service before

1957, and periodic adjustments of previous determinations.

 • The cost in 1971-82 of deemed wage credits for military service performed after 1956.

 • The cost of benefits to certain uninsured persons who attained age 72

before 1968.

 • The cost of payroll tax credits provided to employees in 1984 and selfemployed persons in 1984-89 by Public Law 98-21.

 • The cost in 2009-17 of excluding certain self-employment earnings

from SECA taxes under Public Law 110-246.

 • Payroll tax revenue forgone under the provisions of Public Laws 111-

147, 111-312, 112-78, and 112-96.

The General Fund also reimburses the trust funds for various other items,

including interest on checks which are not negotiated 6 months after the

month of issue and costs incurred in performing certain legislatively mandated activities not directly related to administering the OASI and DI programs.

Gross domestic product—GDP. The total dollar value of all goods and services produced by labor and property located in the United States, regardless

of who supplies the labor or property.

Hospital Insurance (HI) contribution base. Annual dollar amount above

which earnings in employment covered under the HI program are not taxable. (Also referred to as maximum contribution base, taxable maximum,

and maximum taxable.) Beginning in 1994, the HI contribution base was

eliminated.

High-cost assumptions. See “Assumptions.”

Hospital Insurance (HI) Trust Fund. See “Trust fund.”

Immigration. See “Legal immigration” and “Other immigration.”

Income. Income for a given year is the sum of tax revenue on a cash basis

(payroll tax contributions and income from the taxation of scheduled benefits), reimbursements from the General Fund of the Treasury, if any, and

interest credited to the trust funds.
239

Glossary

Income rate. Ratio of non-interest income to the OASDI taxable payroll for

the year.

Infinite horizon. The period extending indefinitely into the future.

Inflation. An increase in the general price level of goods and services.

Insured status. The state or condition of having sufficient quarters of coverage to meet the eligibility requirements for retired-worker or disabled-worker

benefits, or to permit the worker’s spouse and children or survivors to establish eligibility for benefits in the event of his or her disability, retirement, or

death. See “Quarters of coverage.”

Interest. A payment in exchange for the use of money during a specified

period.

Interest rate. Interest rates on new public-debt obligations issuable to Federal trust funds (see “Special public-debt obligation”) are determined

monthly. Such rates are equal to the average market yield on all outstanding

marketable U.S. securities not due or callable until after 4 years from the date

the rate is determined. See table V.B2 for historical and assumed future interest rates on new special-issue securities. The effective interest rate for a trust

fund is the ratio of the interest earned by the fund over a given period of time

to the average level of asset reserves held by the fund during the period. The

effective rate of interest thus represents a measure of the overall average

interest earnings on the fund’s portfolio of investments.

Interfund borrowing. The borrowing of asset reserves by a trust fund

(OASI, DI, or HI) from another trust fund when the first fund is in danger of

depletion. The Social Security Act permitted interfund borrowing only

during 1982 through 1987, and required all amounts borrowed to be repaid

prior to the end of 1989. The only exercise of this authority occurred in 1982,

when the OASI Trust Fund borrowed from the DI and HI Trust Funds. The

final repayment of borrowed amounts occurred in 1986.

Intermediate assumptions. See “Assumptions.”

Legal emigration. Legal emigration for a given year consists of those legal

permanent residents and native-born citizens who leave the Social Security

area during the year.

Legal immigration. Consistent with the definition used by the Department

of Homeland Security, legal immigration for a given year consists of foreignborn individuals who are granted legal permanent resident status during the

year.

Life expectancy. Average remaining number of years expected prior to

death. Period life expectancy is calculated for a given year using the actual or

expected death rates at each age for that year. Cohort life expectancy, sometimes referred to as generational life expectancy, is calculated for individuals

at a specific age in a given year using actual or expected death rates from the

years in which the individuals would actually reach each succeeding age if

they survive.
Appendices

240

Long-range. The next 75 years. The Trustees make long-range actuarial estimates for this period because it covers approximately the maximum remaining lifetime for virtually all current Social Security participants.

Low-cost assumptions. See “Assumptions.”

Lump-sum death payment. A lump sum, generally $255, payable on the

death of a fully or currently insured worker. The lump sum is payable to the

surviving spouse of the worker, under most circumstances, or to the worker’s

children.

Maximum family benefit. The maximum monthly amount that can be paid

on a worker’s earnings record. Whenever the total of the individual monthly

benefits payable to all the beneficiaries entitled on one earnings record

exceeds the maximum, each dependent’s or survivor’s benefit is proportionately reduced. Benefits payable to divorced spouses or surviving divorced

spouses are not reduced under the family maximum provision.

Medicare. A nationwide, Federally administered health insurance program

authorized in 1965 under Title XVIII of the Social Security Act to cover the

cost of hospitalization, medical care, and some related services for most people age 65 and over. In 1972, lawmakers extended coverage to people receiving Social Security Disability Insurance payments for 2 years and people

with End-Stage Renal Disease. (For beneficiaries whose primary or secondary diagnosis is Amyotrophic Lateral Sclerosis, the 2-year waiting period is

waived.) In 2010, people exposed to environmental health hazards within

areas under a corresponding emergency declaration became Medicare-eligible. In 2006, prescription drug coverage was added as well. Medicare consists of two separate but coordinated trust funds—Hospital Insurance (HI,

Part A) and Supplementary Medical Insurance (SMI). The SMI trust fund is

composed of two separate accounts—the Part B account and the Part D

account. Almost all persons who are aged 65 and over or disabled and who

are entitled to HI are eligible to enroll in Part B and Part D on a voluntary

basis by paying monthly premiums.

Military service wage credits. Credits toward OASDI earnings records for

benefit computation purposes, recognizing that military personnel receive

non-wage compensation (such as food and shelter) in addition to their basic

pay and other cash payments. Military personnel do not pay payroll taxes on

these credits. Noncontributory wage credits of $160 were provided for each

month of active military service from September 16, 1940, through December 31, 1956. For years after 1956, the basic pay of military personnel is covered under the Social Security program on a contributory basis. In addition to

the contributory credits for basic pay, noncontributory wage credits of $300

were granted for each calendar quarter, from January 1957 through December 1977, in which a person received pay for military service. Noncontributory wage credits of $100 were granted for each $300 of military wages, up
241

Glossary

to a maximum credit of $1,200 per calendar year, from January 1978 through

December 2001.

National average wage index—AWI. See “Average wage index—AWI.”

Non-interest income. Non-interest income for a given year is the sum of tax

revenue on a cash basis (payroll tax contributions and income from the taxation of scheduled benefits) and reimbursements from the General Fund of the

Treasury, if any.

Normal retirement age—NRA. The age at which a person may first

become entitled to retirement benefits without reduction based on age. For

persons reaching age 62 before 2000, the normal retirement age is 65. It will

increase gradually to 67 for persons reaching that age in 2027 or later, beginning with an increase to 65 years and 2 months for persons reaching age 65

in 2003. See table V.C3.

Old-Age and Survivors Insurance (OASI) Trust Fund. See “Trust fund.”

Old-law base. Amount the contribution and benefit base would have been if

the 1977 amendments had not provided for ad hoc increases. The Social

Security Amendments of 1972 provided for automatic annual indexing of the

contribution and benefit base. The Social Security Amendments of 1977

specified ad hoc bases for 1978-81, with subsequent bases updated in accordance with the normal indexing procedure. See table V.C2.

Open group unfunded obligation. See “Unfunded obligation.”

Other emigration. Other emigration for a given year consists of individuals

from the other-immigrant population who leave the Social Security area

during the year or who adjust status to become legal permanent residents

during the year.

Other immigration. Other immigration for a given year consists of individuals who enter the Social Security area and stay 6 months or more but without legal permanent resident status, such as undocumented immigrants and

temporary workers and students.

Outgo. See “Disbursements.”

Par value. The value printed on the face of a bond. For both public and special issues held by the trust funds, par value is also the redemption value at

maturity.

Partial advance funding. A financing method in which contributions are

established to provide a substantial accumulation of trust fund asset reserves,

thereby generating additional interest income to the trust funds and reducing

the need for payroll tax increases in periods when costs are relatively high.

Higher general contributions or additional borrowing may be required, however, to support the payment of such interest. While substantial, the trust

fund buildup under partial advance funding is much smaller than it would be

with full advance funding.
Appendices

242

Pay-as-you-go financing. A financing method in which contributions are

established to produce just as much income as required to pay current benefits, with trust fund asset reserves built up only to the extent needed to prevent depletion of the fund by random economic fluctuations.

Payment cycling. Beneficiaries who applied for benefits before

May 1, 1997, are scheduled to be paid on the third of the month. Persons

applying for OASDI benefits after April 1997 generally are scheduled to be

paid on the second, third, or fourth Wednesday of the month following the

month for which payment is due. The particular Wednesday payment date is

based on the earner’s date of birth. For those born on the first through tenth,

the scheduled benefit payment day is the second Wednesday of the month;

for those born on the eleventh through the twentieth, the scheduled benefit

payment day is the third Wednesday of the month; and for those born after

the twentieth of the month, the scheduled payment day is the fourth Wednesday of the month.

Payroll tax contributions. The amount based on a percent of earnings, up to

an annual maximum, that must be paid by:

 • employers and employees on wages from employment under the Federal Insurance Contributions Act,

 • the self-employed on net earnings from self-employment under the

Self-Employment Contributions Act, and

 • States on the wages of State and local government employees covered

under the Social Security Act through voluntary agreements under section 218 of the act. 

Also referred to as payroll taxes.

Population in the Social Security area. See “Social Security area population.”

Present value. The equivalent value, at the present time, of a stream of values (either income or cost, past or future). Present values are used widely in

calculations involving financial transactions over long periods of time to

account for the time value of money, by discounting or accumulating these

transactions at the rate of interest. Present-value calculations for this report

use the effective yield on trust fund asset reserves.

Primary insurance amount—PIA. The monthly amount payable to a

retired worker who begins to receive benefits at normal retirement age or,

generally, to a disabled worker. This amount, which is typically related to the

worker’s average monthly wage or average indexed monthly earnings, is also

used as a base for computing all types of benefits payable on an individual’s

earnings record.

Primary-insurance-amount formula. The mathematical formula relating

the PIA to the AIME for workers who attain age 62, become disabled, or die
243

Glossary

after 1978. The PIA is equal to the sum of 90 percent of AIME up to the first

bend point, plus 32 percent of AIME above the first bend point up to the second bend point, plus 15 percent of AIME in excess of the second bend point.

Automatic benefit increases are applied beginning with the year of eligibility.

See table V.C2 for historical and assumed future bend points and table V.C1

for historical and assumed future benefit increases.

Quarters of coverage. Basic unit of measurement for determining insured

status. In 2016, a worker receives one quarter of coverage (up to a total of

four) for each $1,260 of annual covered earnings. For years after 1978, the

amount of earnings required for a quarter of coverage is subject to annual

automatic increases in proportion to increases in average wages. See

table V.C2. 

Railroad Retirement. A Federal insurance program, similar to Social Security, designed for workers in the railroad industry. The provisions of the Railroad Retirement Act provide for a system of coordination and financial

interchange between the Railroad Retirement program and the Social Security program.

Reallocation of payroll tax rates. An increase in the payroll tax rate for

either the OASI or DI Trust Fund, with a corresponding reduction in the rate

for the other fund, so that the total OASDI payroll tax rate is not changed. 

Real-wage differential. The difference between the percentage increases in:

(1) the average annual wage in covered employment and (2) the average

annual Consumer Price Index. See table V.B1.

Recession. A period of adverse economic conditions; in particular, two or

more successive calendar quarters of negative growth in gross domestic

product.

Reserves. See “Asset reserves.”

Retired-worker benefit. A monthly benefit payable to a fully insured retired

worker aged 62 or older or to a person entitled under the transitionally

insured status provision in the law.

Retirement earnings test. See “Earnings test.”

Retirement eligibility age. The age, currently age 62, at which a fully

insured individual first becomes eligible to receive retired-worker benefits.

Retirement test. See “Earnings test.”

Scheduled benefits. The level of benefits specified under current law.

Scenario-based model. A model with specified assumptions for and relationships among variables. Under such a model, any specified set of assumptions determines a single outcome directly reflecting the specifications.

Self-employment. Operation of a trade or business by an individual or by a

partnership in which an individual is a member.
Appendices

244

Self-Employment Contributions Act–SECA. Provision authorizing Social

Security payroll taxes on the net earnings of most self-employed persons.

Short-range. The next 10 years. The Trustees prepare short-range actuarial

estimates for this period because of the test of short-range financial adequacy. The Social Security Act requires estimates for 5 years; the Trustees

prepare estimates for an additional 5 years to help clarify trends which are

only starting to develop in the mandated first 5-year period. 

Social Security Act. Provisions of the law governing most operations of the

Social Security program. The original Social Security Act is Public

Law 74-271, enacted August 14, 1935. With subsequent amendments, the

Social Security Act consists of 21 titles, of which three have been repealed.

Title II of the Social Security Act authorized the Old-Age, Survivors, and

Disability Insurance program.

Social Security area population. The population comprised of: (1) residents

of the 50 States and the District of Columbia (adjusted for net census undercount); (2) civilian residents of Puerto Rico, the Virgin Islands, Guam,

American Samoa and the Northern Mariana Islands; (3) Federal civilian

employees and persons in the U.S. Armed Forces abroad and their dependents; (4) non-citizens living abroad who are insured for Social Security benefits; and (5) all other U.S. citizens abroad.

Solvency. A program is solvent at a point in time if it is able to pay scheduled benefits when due with scheduled financing. For example, the OASDI

program is solvent over any period for which the trust funds maintain a positive level of asset reserves.

Special public-debt obligation. Securities of the United States Government

issued exclusively to the OASI, DI, HI, and SMI Trust Funds and other Federal trust funds. Section 201(d) of the Social Security Act provides that the

public-debt obligations issued for purchase by the OASI and DI Trust Funds

shall have maturities fixed with due regard for the needs of the funds. The

usual practice has been to spread the holdings of special issues, as of each

June 30, so that the amounts maturing in each of the next 15 years are

approximately equal. Special public-debt obligations are redeemable at par

value at any time and carry interest rates determined by law (see “Interest

rate”). See tables VI.A4 and VI.A5 for a listing of the obligations held by the

OASI and DI Trust Funds, respectively.

Statutory blindness. Central visual acuity of 20/200 or less in the better eye

with the use of a correcting lens or tunnel vision of 20 degrees or less.

Stochastic model. A model used for projecting a probability distribution of

potential outcomes. Such models allow for random variation in one or more

variables through time. The random variation is generally based on fluctuations observed in historical data for a selected period. A large number of simulations, each of which reflects random variation in the variable(s), produce

a distribution of potential outcomes.
245

Glossary

Substantial gainful activity—SGA. The level of work activity used to

establish disability. A finding of disability requires that a person be unable to

engage in substantial gainful activity. A person who earns more than a certain monthly amount (net of impairment-related work expenses) is ordinarily

considered to be engaging in SGA. The amount of monthly earnings considered as SGA depends on the nature of a person’s disability. The Social Security Act specifies a higher SGA amount for statutorily blind individuals;

Federal regulations specify a lower SGA amount for non-blind individuals.

Both SGA amounts increase with increases in the national average wage

index.

Summarized balance. The difference between the summarized income rate

and the summarized cost rate, expressed as a percentage of GDP. The difference between the summarized income rate and cost rate as a percentage of

taxable payroll is referred to as the actuarial balance.

Summarized cost rate. The ratio of the present value of cost to the present

value of the taxable payroll (or GDP) for the years in a given period,

expressed as a percentage. To evaluate the financial adequacy of the program, the summarized cost rate is adjusted to include the cost of reaching

and maintaining a target trust fund level. A trust fund level of about 1 year’s

cost is considered to be an adequate reserve for unforeseen contingencies;

therefore, the targeted trust fund ratio is 100 percent of annual cost. Accordingly, the adjusted summarized cost rate is equal to the ratio of: (1) the sum

of the present value of the cost during the period plus the present value of the

targeted ending trust fund level to (2) the present value of the taxable payroll

(or GDP) during the projection period.

Summarized income rate. The ratio of the present value of scheduled noninterest income to the present value of taxable payroll (or GDP) for the years

in a given period, expressed as a percentage. To evaluate the financial adequacy of the program, the summarized income rate is adjusted to include

asset reserves on hand at the beginning of the period. Accordingly, the

adjusted summarized income rate equals the ratio of: (1) the sum of the trust

fund reserve at the beginning of the period plus the present value of noninterest income during the period to (2) the present value of the taxable payroll (or GDP) for the years in the period.

Supplemental Security Income—SSI. A Federally administered program

(often with State supplementation) of cash assistance for needy aged, blind,

or disabled persons. The General Fund of the Treasury funds SSI and the

Social Security Administration administers it.

Supplementary Medical Insurance (SMI) Trust Fund. See “Trust fund.”

Survivor benefit. Benefit payable to a survivor of a deceased worker.

Sustainable solvency. Sustainable solvency for the financing of the program

under a specified set of assumptions is achieved when the projected trust
Appendices

246

fund ratio is positive throughout the 75-year projection period and is either

stable or rising at the end of the period.

Taxable earnings. Wages or self-employment income, in employment covered by the OASDI or HI programs, that is under the applicable annual maximum taxable limit. For 1994 and later, no maximum taxable limit applies to

the HI program.

Taxable payroll. A weighted sum of taxable wages and taxable self-employment income. When multiplied by the combined employee-employer payroll

tax rate, taxable payroll yields the total amount of payroll taxes incurred by

employees, employers, and the self-employed for work during the period.

Taxable self-employment income. The maximum amount of net earnings

from self-employment by an earner which, when added to any taxable

wages, does not exceed the contribution and benefit base. For HI beginning

in 1994, all net earnings from self-employment.

Taxable wages. See “Taxable earnings.”

Taxation of benefits. Beginning in 1984, Federal law subjected up to

50 percent of an individual’s or a couple’s OASDI benefits to Federal income

taxation under certain circumstances. Treasury allocates the revenue derived

from this provision to the OASI and DI Trust Funds on the basis of the

income taxes paid on the benefits from each fund. Beginning in 1994, the

law increased the maximum percentage from 50 percent to 85 percent. The

HI Trust Fund receives the additional tax revenue resulting from the increase

to 85 percent.

Taxes. See “Payroll tax contributions” and “Taxation of benefits.”

Termination. Cessation of payment because the beneficiary is no longer

entitled to receive a specific type of benefit. For example, benefits might terminate as a result of the death of the beneficiary, the recovery of a disabled

beneficiary, or the attainment of age 18 by a child beneficiary. In some cases,

an individual may cease one benefit and this is not a termination because

they become immediately entitled to another type of benefit, such as the conversion of a disabled-worker beneficiary at normal retirement age to a

retired-worker beneficiary.

Test of long-range close actuarial balance. The conditions required to

meet this test are: 

 • The trust fund satisfies the test of short-range financial adequacy; and 

 • The trust fund ratios stay above zero throughout the 75-year projection

period, such that benefits would be payable in a timely manner throughout the period. 

The Trustees apply the test to OASI, DI, and the combined OASDI program

based on the intermediate set of assumptions.
247

Glossary

Test of short-range financial adequacy. The conditions required to meet

this test are:

 • If the trust fund ratio for a fund is at least 100 percent at the beginning

of the projection period, the test requires that it remain at or above

100 percent throughout the 10-year projection period;

 • If the ratio is initially less than 100 percent, then it must reach at least

100 percent within 5 years (without asset reserve depletion at any time

during this period) and then remain at or above 100 percent throughout

the remainder of the 10-year period. 

The Trustees apply the test to OASI, DI, and the combined OASDI program

based on the intermediate set of assumptions.

Total-economy productivity. The ratio of real GDP to hours worked by all

workers. Also referred to as “labor productivity.”

Total fertility rate. The sum of the single year of age birth rates for women

aged 14 through 49, where the rate for age 14 includes births to women

aged 14 and under, and the rate for age 49 includes births to women aged 49

and over. The total fertility rate may be interpreted as the average number of

children that would be born to a woman in her lifetime if she were to experience, at each age of her life, the birth rate observed in, or assumed for, a

specified year, and if she were to survive the entire childbearing period.

Trust fund. Separate accounts in the United States Treasury which hold the

payroll taxes received under the Federal Insurance Contributions Act and the

Self-Employment Contributions Act; payroll taxes resulting from coverage

of State and local government employees; any sums received under the

financial interchange with the railroad retirement account; voluntary hospital

and medical insurance premiums; and reimbursements or payments from the

General Fund of the Treasury. As required by law, the Department of the

Treasury invests funds not required to meet current expenditures in interestbearing securities backed by the full faith and credit of the U.S. Government.

The interest earned is also deposited in the trust funds.

 • Old-Age and Survivors Insurance (OASI). The trust fund used for

paying monthly benefits to retired-worker (old-age) beneficiaries, their

spouses and children, and to survivors of deceased insured workers.

 • Disability Insurance (DI). The trust fund used for paying monthly benefits to disabled-worker beneficiaries, their spouses and children, and

for providing rehabilitation services to the disabled.

 • Hospital Insurance (HI). The trust fund used for paying part of the

costs of inpatient hospital services and related care for aged and disabled individuals who meet the eligibility requirements. Also known as

Medicare Part A.
Appendices

248

 • Supplementary Medical Insurance (SMI). The Medicare trust fund

composed of the Part B Account, the Part D Account, and the Transitional Assistance Account. The Part B Account pays for a portion of the

costs of physicians’ services, outpatient hospital services, and other

related medical and health services for voluntarily enrolled aged and

disabled individuals. The Part D Account pays private plans to provide

prescription drug coverage, beginning in 2006. The Transitional Assistance Account paid for transitional assistance under the prescription

drug card program in 2004 and 2005.

The trust funds are distinct legal entities which operate independently. Fund

operations are sometimes combined on a hypothetical basis.

Trust fund ratio. A measure of trust fund adequacy. The asset reserves at

the beginning of a year, which do not include advance tax transfers,

expressed as a percentage of the cost for the year. The trust fund ratio represents the proportion of a year’s cost which could be paid solely with the

reserves at the beginning of the year.

Trustees. See “Board of Trustees.”

Undisbursed balances. In general, refers to the cumulative differences

between the actual cash expenditures that the Social Security Administration

(SSA) made each month compared to security redemptions from the Trust

Fund reserves made on a preliminary basis to cover such cash expenditures

during the same month. On a monthly basis, SSA pays benefits and makes

payments for other programmatic expenses associated with the Trust Funds.

During each month, SSA draws cash from the Trust Funds on a preliminary

basis, which results in Treasury redeeming invested securities to cover these

expenditures. This monthly difference can be either positive or negative

depending on net monthly activity, and is added to the balance at the end of

the prior month. 

A net positive undisbursed balance represents a situation where cumulative

redemptions from the Trust Fund’s securities are more than was needed to

cover actual program cash expenditures through the end of the month. A net

negative balance represents a situation where cumulative program cash

expenditures exceeded the amount redeemed from the invested securities. A

negative value requires future redemption of additional invested securities. 

In addition, about every seven years, when January 3 falls on a Sunday, benefit payments scheduled to be paid on January 3rd are actually paid on

December 31 of the preceding year, as required by the statutory provision

included in the 1977 Social Security Amendments for early delivery of benefit payments when the normal payment delivery date is a Saturday, Sunday,

or legal public holiday. Consistent with practice in prior reports and for comparability with other historical years and the projections in this report, all

trust fund operations and asset reserves reflect the 12 months of benefits
249

Glossary

scheduled for payment in each year. Therefore, such advance payments are

included as positive values in the undisbursed balance at the end of the calendar years in which the advance payments are made.

Unfunded obligation. A measure of the shortfall of trust fund income to

fully cover program cost through a specified date after depletion of trust fund

asset reserves. This measure can be expressed in present value dollars, discounted to the beginning of the valuation period, by computing the excess of

the present value of the projected cost of the program through a specified

date over the sum of: (1) the value of trust fund reserves at the beginning of

the valuation period; and (2) the present value of the projected non-interest

income of the program through a specified date, assuming scheduled tax

rates and benefit levels. This measure can apply for all participants through a

specified date, i.e., the open group, or be limited to a specified subgroup of

participants.

Unfunded obligation ratio. The unfunded obligation accumulated through

the beginning of a year expressed as a percentage of the cost for the year.

Unnegotiated check. A check which has not been cashed 6 months after the

end of the month in which the check was issued. When a check has been outstanding for a year, the Department of the Treasury administratively cancels

the check and reimburses the issuing trust fund separately for the amount of

the check and interest for the period the check was outstanding. The appropriate trust fund also receives an interest adjustment for the time the check

was outstanding if it is cashed 6-12 months after the month of issue. If a

check is presented for payment after it has been administratively canceled, a

replacement check is issued.

Valuation period. A period of years which is considered as a unit for purposes of calculating the financial status of a trust fund.

Vocational rehabilitation. Services provided to disabled persons to help

them to return to gainful employment. The trust funds reimburse the providers of such services only in those cases where the services contributed to the

successful rehabilitation of the beneficiaries.

Year of depletion. The year in which a trust fund becomes unable to pay

benefits when due because the fund’s asset reserves have been used up.
List of Tables

250

LIST OF TABLES

II. OVERVIEW

II.B1 Summary of 2015 Trust Fund Financial Operations . . . . . . . . 7

II.B2 Payroll Tax Contribution Rates for 2015 . . . . . . . . . . . . . . . . 8

II.C1 Long-Range Values of Key Assumptions for the 

75-year Projection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

II.D1 Projected Maximum Trust Fund Ratios During the Long-Range 

Period and Trust Fund Reserve Depletion Dates. . . . . . . . . . . 16

II.D2 Reasons for Change in the 75-Year Actuarial Balance,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 22

III. FINANCIAL OPERATIONS OF THE TRUST FUNDS AND

LEGISLATIVE CHANGES IN THE LAST YEAR

III.A1 Operations of the OASI Trust Fund, Calendar Year 2015 . . . . 28

III.A2 Operations of the DI Trust Fund, Calendar Year 2015 . . . . . . . 32

III.A3 Operations of the Combined OASI and DI Trust Funds, 

Calendar Year 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

III.A4 Comparison of Actual Calendar Year 2015 Trust Fund 

Operations With Estimates Made in Prior Reports, Based on 

Intermediate Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 35

III.A5 Distribution of Benefit Payments by Type of Beneficiary or 

Payment, Calendar Years 2014 and 2015 . . . . . . . . . . . . . . . . 36

III.A6 Administrative Expenses as a Percentage of Non-interest Income 

and of Total Expenditures, Calendar Years 2011-2015 . . . . . . 37

III.A7 Trust Fund Investment Transactions, Calendar Year 2015 . . . . 37

IV. ACTUARIAL ESTIMATES

IV.A1 Operations of the OASI Trust Fund, 

Calendar Years 2011-2025 . . . . . . . . . . . . . . . . . . . . . . . . . . 42

IV.A2 Operations of the DI Trust Fund, Calendar Years 2011-2025 . . 46

IV.A3 Operations of the Combined OASI and DI Trust Funds,

Calendar Years 2011-2025 . . . . . . . . . . . . . . . . . . . . . . . . . . 48

IV.A4 Reasons for Change in Trust Fund (Unfunded Obligation) Ratios 

at the Beginning of the Tenth Year of Projection Under 

Intermediate Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . 51

IV.B1 Annual Income Rates, Cost Rates, and Balances,

Calendar Years 1990-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 55

IV.B2 Components of Annual Income Rates, 

Calendar Years 1990-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 60
List of Tables

251

IV.B3 Covered Workers and Beneficiaries, 

Calendar Years 1945-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 63

IV.B4 Trust Fund Ratios, Calendar Years 2016-2090 . . . . . . . . . . . . 68

IV.B5 Components of Summarized Income Rates and Cost Rates, 

Calendar Years 2016-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 72

IV.B6 Components of 75-Year Actuarial Balance 

and Unfunded Obligation Under Intermediate Assumptions . . 75

IV.B7 Reasons for Change in the 75-Year Actuarial Balance,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 76

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES

V.A1 Fertility and Mortality Assumptions, 

Calendar Years 1940-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 87

V.A2 Immigration Assumptions, Calendar Years 1940-2090 . . . . . . 92

V.A3 Social Security Area Population on July 1 and 

Dependency Ratios, Calendar Years 1945-2090 . . . . . . . . . . . 95

V.A4 Period Life Expectancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

V.A5 Cohort Life Expectancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

V.B1 Principal Economic Assumptions . . . . . . . . . . . . . . . . . . . . . 107

V.B2 Additional Economic Factors . . . . . . . . . . . . . . . . . . . . . . . . 113

V.C1 Cost-of-Living Benefit Increases, Average Wage Index, 

Contribution and Benefit Bases, and Retirement 

Earnings Test Exempt Amounts, 1975-2025 . . . . . . . . . . . . . 118

V.C2 Values for Selected Wage-Indexed Program Parameters, 

Calendar Years 1978-2025 . . . . . . . . . . . . . . . . . . . . . . . . . . 122

V.C3 Legislated Changes in Normal Retirement Age and Delayed 

Retirement Credits for Persons Reaching Age 62 in 

Each Year 1986 and Later . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

V.C4 OASI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1945-2090 . . . . . . . . . . . . . . . . 132

V.C5 DI Beneficiaries With Benefits in Current-Payment Status

at the End of Calendar Years 1960-2090 . . . . . . . . . . . . . . . . 141

V.C6 Contribution and Benefit Base and 

Payroll Tax Contribution Rates . . . . . . . . . . . . . . . . . . . . . . 148

V.C7 Annual Scheduled Benefit Amounts for Retired Workers 

With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, 

Calendar Years 2016-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 152
List of Tables

252

VI. APPENDICES

A. HISTORY OF OASI AND DI TRUST FUND OPERATIONS

VI.A1 Operations of the OASI Trust Fund, 

Calendar Years 1937-2015 . . . . . . . . . . . . . . . . . . . . . . . . . . 158

VI.A2 Operations of the DI Trust Fund, Calendar Years 1957-2015 . . 160

VI.A3 Operations of the Combined OASI and DI Trust Funds,

Calendar Years 1957-2015 . . . . . . . . . . . . . . . . . . . . . . . . . . 162

VI.A4 OASI Trust Fund Asset Reserves, End of 

Calendar Years 2014 and 2015 . . . . . . . . . . . . . . . . . . . . . . . 164

VI.A5 DI Trust Fund Asset Reserves, End of 

Calendar Years 2014 and 2015 . . . . . . . . . . . . . . . . . . . . . . . 165

B. HISTORY OF ACTUARIAL STATUS ESTIMATES

VI.B1 Long-Range OASDI Actuarial Balances and 

Trust Fund Reserve Depletion Dates as Shown in the 

Trustees Reports for 1982-2016 . . . . . . . . . . . . . . . . . . . . . . 168

C. FISCAL YEAR HISTORICAL AND PROJECTED 

TRUST FUND OPERATIONS THROUGH 2025

VI.C1 Operations of the OASI Trust Fund, Fiscal Year 2015 . . . . . . . 174

VI.C2 Operations of the DI Trust Fund, Fiscal Year 2015 . . . . . . . . . 175

VI.C3 Operations of the Combined OASI and DI Trust Funds, 

Fiscal Year 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

VI.C4 Operations of the OASI Trust Fund, Fiscal Years 2011-2025 . . 177

VI.C5 Operations of the DI Trust Fund, Fiscal Years 2011-2025 . . . . 178

VI.C6 Operations of the Combined OASI and DI Trust Funds,

Fiscal Years 2011-2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

D. LONG-RANGE SENSITIVITY ANALYSIS

VI.D1 Sensitivity of OASDI Measures to Varying 

Fertility Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181

VI.D2 Sensitivity of OASDI Measures to Varying 

Death-Rate Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

VI.D3 Sensitivity of OASDI Measures to Varying 

Net-Immigration Assumptions . . . . . . . . . . . . . . . . . . . . . . . 183

VI.D4 Sensitivity of OASDI Measures to Varying 

Real-Wage Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

VI.D5 Sensitivity of OASDI Measures to Varying 

CPI-Increase Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 186

VI.D6 Sensitivity of OASDI Measures to Varying 

Real-Interest Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 187
List of Tables

253

VI.D7 Sensitivity of OASDI Measures to Varying 

Disability Incidence Assumptions . . . . . . . . . . . . . . . . . . . . . 188

VI.D8 Sensitivity of OASDI Measures to Varying 

Disability Termination Assumptions . . . . . . . . . . . . . . . . . . . 189

E. STOCHASTIC PROJECTIONS AND UNCERTAINTY

VI.E1 Long-Range Estimates Relating to the Actuarial Status of

the Combined OASDI Program. . . . . . . . . . . . . . . . . . . . . . . 200

F. INFINITE HORIZON PROJECTIONS

VI.F1 Unfunded OASDI Obligations Through the Infinite Horizon,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 202

VI.F2 Present Values of OASDI Cost Less Non-interest Income

and Unfunded Obligations for Program Participants,

Based on Intermediate Assumptions . . . . . . . . . . . . . . . . . . . 204

G. ESTIMATES FOR OASDI AND HI, 

SEPARATE AND COMBINED

VI.G1 Payroll Tax Contribution Rates for the OASDI and 

HI Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206

VI.G2 OASDI and HI Annual Income Rates, Cost Rates, and 

Balances, Calendar Years 2016-2090 . . . . . . . . . . . . . . . . . . . 208

VI.G3 Summarized OASDI and HI Income Rates and Cost Rates 

for Valuation Periods, Calendar Years 2016-2090 . . . . . . . . . . 210

VI.G4 OASDI and HI Annual and Summarized Income, 

Cost, and Balance as a Percentage of GDP, 

Calendar Years 2016-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 213

VI.G5 Ratio of OASDI Taxable Payroll to GDP, 

Calendar Years 2016-2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 215

VI.G6 Selected Economic Variables, Calendar Years 2015-2090 . . . . 218

VI.G7 Operations of the Combined OASI and DI Trust Funds,

in CPI-indexed 2016 Dollars, Calendar Years 2016-2090 . . . . 220

VI.G8 Operations of the Combined OASI and DI Trust Funds, 

in Current Dollars, Calendar Years 2016-2090 . . . . . . . . . . . . 222

VI.G9 OASDI and HI Annual Non-interest Income, Cost, and

Balance in CPI-Indexed Dollars, Calendar Years 2016-2090 . . 224

VI.G10 OASDI and HI Annual Non-interest Income, Cost, and

Balance in Current Dollars, Calendar Years 2016-2090. . . . . . 226
List of Tables

254

H. ANALYSIS OF BENEFIT DISBURSEMENTS FROM THE OASI 

TRUST FUND WITH RESPECT TO DISABLED BENEFICIARIES

VI.H1 Scheduled Benefit Disbursements From the OASI Trust Fund

With Respect to Disabled Beneficiaries . . . . . . . . . . . . . . . . . 229

VI.H2 Scheduled Benefit Disbursements Under the OASDI Program

With Respect to Disabled Beneficiaries . . . . . . . . . . . . . . . . . 231
List of Figures

255

LIST OF FIGURES

II. OVERVIEW

II.D1 Short-Range OASI and DI Combined Trust Fund Ratio . . . . . 11

II.D2 OASDI Income, Cost, and Expenditures as Percentages 

of Taxable Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

II.D3 DI Income, Cost, and Expenditures as Percentages 

of Taxable Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

II.D4 Number of Covered Workers Per OASDI Beneficiary. . . . . . . 15

II.D5 OASDI Cost and Non-interest Income as a Percentage 

of GDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

II.D6 Cumulative Scheduled OASDI Income Less Cost,

From Program Inception Through Years 2015-2090 . . . . . . . . 18

II.D7 Long-Range OASI and DI Combined Trust Fund Ratios 

Under Alternative Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . 20

II.D8 Long-Range OASI and DI Combined Trust Fund Ratios 

From Stochastic Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . 21

II.D9 OASDI Annual Balances: 2015 and 2016 Trustees Reports. . . 23

IV. ACTUARIAL ESTIMATES

IV.A1 Short-Range OASI and DI Trust Fund Ratios. . . . . . . . . . . . . 44

IV.B1 Long-Range OASI and DI Annual Income Rates 

and Cost Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

IV.B2 Number of OASDI Beneficiaries Per 100 Covered Workers . . 65

IV.B3 Long-Range OASI and DI Trust Fund Ratios . . . . . . . . . . . . . 69

IV.B4 OASDI Annual Balances: 2015 and 2016 Trustees Reports. . . 81

V. ASSUMPTIONS AND METHODS UNDERLYING

ACTUARIAL ESTIMATES

V.C1 Primary-Insurance-Amount Formula for 

Those Newly Eligible in 2016. . . . . . . . . . . . . . . . . . . . . . . . 120

V.C2 OASI Maximum-Family-Benefit Formula for 

Those Newly Eligible in 2016. . . . . . . . . . . . . . . . . . . . . . . . 121

V.C3 DI Disability Incidence Rates, 1970-2090 . . . . . . . . . . . . . . . 137

V.C4 DI Disability Termination Rates, 1970-2090 . . . . . . . . . . . . . 139

V.C5 Comparison of DI Disability Incidence Rates, 

Termination Rates and Conversion Ratios Under 

Intermediate Assumptions, 1970-2090 . . . . . . . . . . . . . . . . . . 140

V.C6 DI Disability Prevalence Rates, 1970-2090 . . . . . . . . . . . . . . 143
List of Figures

256

VI. APPENDICES

VI.E1 Long-Range OASDI Cost Rates From Stochastic Modeling . . 194

VI.E2 Long-Range OASDI Trust Fund Ratios From 

Stochastic Modeling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

VI.E3 OASDI Cost Rates: Comparison of Stochastic to Low-Cost, 

Intermediate, and High-Cost Alternatives . . . . . . . . . . . . . . . 196

VI.E4 OASDI Trust Fund (Unfunded Obligation) Ratios: 

Comparison of Stochastic to Low-Cost, Intermediate, 

and High-Cost Alternatives. . . . . . . . . . . . . . . . . . . . . . . . . . 198

VI.G1 Estimated OASDI Income and Cost in CPI-indexed 

2016 Dollars, Based on Intermediate Assumptions . . . . . . . . . 221
257

Index

INDEX

A

Actuarial balance 11, 17, 54, 168, 182

Actuarial deficit 5, 17, 24, 73, 212

Actuarial estimates, LR 54

Actuarial estimates, SR 42

Adjusted program amounts 118

Administrative expenses 7, 38, 55, 155, 159, 176, 213, 221

Advance tax transfers 42, 68, 161

Amendments 40

Annual balance 22, 54, 78

Asset reserves 2, 7, 10, 30, 176, 189, 207

Assumptions 10, 84, 102, 118, 168, 182, 208, 213, 218, 230

Automatic cost-of-living benefit increase 47, 103, 118

Auxiliary benefits 128

Average benefits 152

Average earnings assumptions 105

Average indexed monthly earnings (AIME) 122

Average wage index 118, 218

Award 130

B

Baby-boom generation 4, 24, 56, 64, 111, 137

Bend points 122

Beneficiaries, DI 136

Beneficiary 14, 47, 64, 84, 119, 171, 183, 213, 221, 230

Beneficiary, OASI 129

Benefit payments 7, 55, 152, 159, 176

Benefit termination 9

Best estimate 9, 42, 84

Board of Trustees 42, 102, 157

C

Constant dollars 223

Consumer Price Index 103, 187, 218, 235

Contribution and benefit base 46, 105, 119, 235

Contributions 7, 157, 176, 207, 213, 221, 234

Cost 3, 49

Cost rate 4, 55, 207

Cost-of-living adjustment 118

Covered earnings 7, 118, 217

Covered employment 9, 46, 105, 126, 157, 186

Covered worker 66, 126, 184

Creditable earnings 237

Current dollars 218
Index

258

Current-payment status 49, 141, 142, 143, 235

D

Deemed wage credit 55

Delayed retirement credit 125

Demographic assumptions 9, 22, 42, 85, 111, 118, 168, 219, 234

Deterministic model 193, 202

DI beneficiaries 136

Disability 157, 185, 230

Disability conversion ratio 141

Disability incidence rate 84, 136, 139, 185, 190, 234

Disability Insurance Trust Fund 236

Disability prevalence rate 143, 145

Disability termination rate 190

Disabled-worker benefit 139, 238

Disbursements 26, 28, 29, 31, 33, 36, 42, 176, 177, 178, 231, 233

E

Earnings 2, 7, 46, 55, 105, 119, 157, 169, 207, 217, 218, 234

Earnings test 105, 119, 235

Economic assumptions 9, 22, 42, 52, 102, 111, 118, 168, 219, 234

Excess wages 55, 218

Expenditures 7, 9, 30, 39, 42, 159, 238

F

Federal Insurance Contributions Act 207, 244

Fertility assumptions 85

Financial interchange 7, 155, 159

Fiscal year 161, 175

Full advance funding 239

G

General Fund of the Treasury 45, 47, 49, 51, 161, 163, 165, 179, 180, 181,

234

General fund reimbursement 240

Gross domestic product 5, 11, 61, 84, 103, 113, 213

Gross domestic product projections 113

H

High-cost assumptions 9, 19, 42, 44, 56, 84, 102, 140, 182, 201, 208, 214,

218, 234

Hospital Insurance program 149, 207, 242

Hospital Insurance Trust Fund 213

I

Immigration 9, 84, 90, 185, 193, 234, 240
259

Index

Immigration assumptions 90

Income rate 4, 12, 55, 207

Infinite horizon 11

Inflation 9, 84, 103, 218, 234

Inflation assumptions 103

Insured population 9, 127

Insured status 123

Interest 46, 114, 158, 168, 176, 209, 234

Interest rate 84, 168, 189, 234

Interest rate projections 114

Interest rates 9

Interfund borrowing 161, 241

Intermediate assumptions 9, 42, 48, 56, 84, 139, 182, 209, 214, 218, 222,

223, 224, 230, 234

L

Labor force projections 110

Legal immigration 91, 241

Life expectancy 4, 24, 84, 98, 110, 241

Life expectancy estimates 98

Long range 11, 54, 85, 130, 168, 207, 213

Low-cost assumptions 9, 19, 42, 56, 84, 102, 139, 182, 201, 208, 218, 234

Lump-sum death payment 153

M

Medicare 86, 242

Military service 45, 49, 51, 55, 156, 157, 161, 163, 165, 179, 180, 181

N

National average wage index 118, 218

Normal retirement age 119, 136, 153, 237

O

OASI beneficiaries 129

Old-Age and Survivors Insurance Trust Fund 157, 236

Old-law base 123

Other immigration 90, 185, 243

P

Par value 159

Partial advance funding 243

Pay-as-you-go financing 168

Payroll taxes 2, 118, 146, 171, 203, 207, 221

Population estimates 96

Population in the Social Security area 46, 67, 96, 126, 185

Present value 168
Index

260

Primary insurance amount (PIA) 122

Productivity assumptions 103

Q

Quarters of coverage 127

R

Railroad Retirement 55, 72, 123, 155, 159, 176, 177, 178, 207, 213, 221,

236

Reallocation of tax rates 245

Real-wage differential 108, 186

Retired-worker benefit 130, 184, 230

Retirement age 119, 153, 237

Retirement earnings test 105, 119

Retirement eligibility age 184

S

Scenario-based model 245

Scheduled benefits 188, 213, 221, 232, 245

scheduled benefits 43

Self-employment 55, 104, 208, 244

Self-Employment Contributions Act 244, 246

Sensitivity analysis 182

Short range 10, 42, 130

Social Security Act 118, 158, 218, 230, 236

Social Security amendments 40

Solvency 246

Special public-debt obligation 117, 158, 189

Stochastic projections 193

Substantial gainful activity 136, 238

Summarized balance 214

Summarized income and cost rates 72, 168, 182, 211, 234

Supplemental Security Income 176

Supplementary Medical Insurance program 207, 242

Survivor benefit 2, 8, 133, 235

Sustainable solvency 68, 69

T

Taxable earnings 46, 67, 119, 169, 235

Taxable payroll 5, 24, 55, 104, 127, 168, 183, 207, 213, 218, 236

Taxable self-employment income 248

Taxable wages 151, 208, 248

Taxation of benefits 7, 151, 213, 221, 240

Taxes 7, 118, 208

Termination 84
261

Index

Termination rate 9, 130, 190, 234

Test of short-range financial adequacy 43, 44, 246

Total fertility rate 85, 182

Trust fund financial operations 7, 26, 43, 157

Trust fund ratio 10, 42, 54, 68, 161, 179, 250

Trust fund reserves 42

U

Unemployment projections 110

Unfunded obligation 5, 11, 17, 19, 54, 75, 76, 204, 205, 206, 243, 250, 251

Unnegotiated check 176

V

Valuation period 17, 52, 54, 168, 182, 211, 234

Vocational rehabilitation 55, 159, 177, 213, 221, 232, 236

Y

Year of depletion 12, 16, 54, 70
262

STATEMENT OF ACTUARIAL OPINION

It is my opinion that, with the important caveat noted below: (1) the techniques and methodology used herein to evaluate the actuarial status of the

Federal Old-Age and Survivors Insurance and Disability Insurance Trust

Funds are based upon sound principles of actuarial practice and are generally

accepted within the actuarial profession; and (2) the assumptions used and

the resulting actuarial estimates are, individually and in the aggregate, reasonable for the purpose of evaluating the actuarial status of the trust funds,

taking into consideration the past experience and future expectations for the

population, the economy, and the program. I am an Associate of the Society

of Actuaries, a member of the American Academy of Actuaries, and I meet

the Qualification Standards of the American Academy of Actuaries to render

the actuarial opinion contained herein.

Federal Budget Accounting

This report focuses on the actuarial status of the OASI and DI Trust Funds,

as required by law. It includes important information on (1) the years in

which trust fund asset reserves are projected to be depleted and (2) the

degree to which benefits scheduled in the law would no longer be fully payable on a timely basis after reserve depletion. However, the footnote on

page 45 of this report directs the reader to an appendix in the Medicare Trustees Report, which states, “The trust fund perspective does not encompass the

interrelationship between the Medicare and Social Security trust funds and

the overall Federal budget.” The reader of this report should consider this

“overall” Federal unified budget perspective with care because the assumptions underlying unified budget accounting are inconsistent with the assumptions of trust fund accounting.

In particular, trust fund accounting accurately reflects the law, under which

benefits cannot be paid in full on a timely basis after reserve depletion. In

contrast, unified budget accounting assumes that full scheduled benefits will

continue to be paid through transfers from the General Fund of the Treasury,

thus representing “a draw on other Federal resources for which there is no

earmarked source of revenue from the public.” Not only are such “draws”

not permissible under the law, no precedent exists for a change in the Social

Security Act to finance unfunded trust fund obligations with such draws on

other Federal resources. Under this unified budget accounting assumption,

$11.4 trillion of OASDI unfunded obligations, which are not payable under

the law over the next 75 years, are referred to as “expenditures” requiring a

“draw” from the General Fund of the Treasury.
263

In addition, unified budget accounting treats redemptions of trust fund

reserves as an addition to annual Federal deficits, referring to these redemptions also as “a draw on other Federal resources.” In fact, redemptions of

trust fund reserves represent a deferred use of revenues earmarked for the

trust fund program alone, which have been collected in prior years and saved

for later use. These redemptions utilize the entire $2.8 trillion accumulation

of net past earmarked revenue for OASDI, but are referred to as draws on the

General Fund of the Treasury under the unified budget perspective.

Therefore, the actual operations of the trust funds under current law do not

draw on other Federal resources. Expenditures can only be paid from current

or deferred earmarked resources for the specific program financed from the

trust fund. Assertions that trust fund reserve redemption and shortfalls after

reserve depletion represent draws on other Federal resources are based on

assumptions that are inconsistent with the law and with actual trust fund

annual cash-flow operations.

In addition to Federal budget annual cash flows, the budget perspective is

equally concerned with the build-up of Federal debt. The total Federal debt

subject to limit includes trust fund reserves. Thus, as trust fund reserves are

accumulated or redeemed, they are offset in the total Federal debt by securities issued to the public, with no net effect on the total Federal debt. Moreover, even in considering the Federal debt owed to (held by) the public, there

is no net direct effect on that debt from accumulating and then redeeming

trust fund asset reserves. However, budget analysis frequently refers to both

trust fund reserve redemptions and trust fund obligations not payable under

the law after reserve depletion as factors that increase the Federal debt held

by the public in the future. This assertion is not consistent with a full assessment of the investment and redemption flows of the trust funds or with the

limitations in the law on paying benefits after trust fund reserves are

depleted. 

Stephen C. Goss

Associate of the Society of Actuaries

Member of the American Academy of Actuaries

Chief Actuary, Social Security Administration