Higher returns can also be demonstrated as long as there is some simultaneous recognition of risk. Needed Information To evaluate the sustainability of Social Security, analysts look at its actuarial balance, that is, the difference between the money going into the program and the money going out. Often, they look only at the Social Security Administration s estimates of actuarial balance for a 75-year period. This practice is not a reliable measure of long-term sustainability, the panel concluded, because each new year s balance changes the overall average. By also focusing on other measures of sustainability, such as whether revenues and expenditures are in balance in the later years of the period, the problem caused by using an average could be alleviated, the panel noted.
Projections are uncertain and can vary under a range of assumptions.
A particular reform may look superior to others under one set of assumptions, yet have a much higher probability of being substantially out of balance under alternative assumptions. The panel noted that uncertainty itself can be a target of policy reform. For example, Social Security can be designed so that its balance between revenues and expenditures is not so sensitive to changes in certain projections, such as life expectancy. A large source of growth in the cost of Social Security over time is increased life expectancy. Thus, the typical comparison of today s annual benefits to future annual benefits understates the growth in value of a retiree s overall benefit package.