2004 OASDI Trustees Report

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IV. ACTUARIAL ESTIMATES

This chapter presents actuarial estimates of the future financial condition of the Social Security program. These estimates include projected income and cost of the OASI and DI Trust Funds, in dollars over the next 10 years and as a percentage of taxable payroll or in present-value dollars over the full 75-year period, along with a discussion of a variety of measures of the adequacy of current program financing. In this report we carefully distinguish between (1) the cost (or obligations) of the program, which includes, for the future, all benefits scheduled under current law, and (2) expenditures (disbursements or outgo), which include actual payments for the past and only the portion of the cost of the program that is projected to be payable with the financing provisions in current law.

As described in the Overview section of this report, these estimates depend upon a broad set of demographic, economic, and programmatic factors. Since assumptions related to these factors are subject to uncertainty, the estimates presented in this section are prepared under three sets of assumptions, to show a range of possible outcomes. The intermediate set of assumptions, designated as alternative II, reflects the Trustees' best estimates of future experience; the low cost alternative I is more optimistic and the high cost alternative III more pessimistic for the trust funds' future financial outlook. The intermediate estimates are shown first in the tables in this report, followed by the low cost and high cost estimates. These sets of assumptions, along with actuarial methods used to produce the estimates, are described in chapter V. In this chapter, the estimates and measures of trust fund financial adequacy for the short range (2004-13) are presented first, followed by estimates and measures of actuarial status for the long range (2004-78) and for the infinite future. As an additional illustration of uncertainty, estimated probability distributions of certain measures are presented in appendix E.

A. SHORT-RANGE ESTIMATES

In the short range, the adequacy of the trust fund level is generally measured by the "trust fund ratio," which is defined to be the assets at the beginning of the year expressed as a percentage of the projected cost for the year. Thus, the trust fund ratio represents the proportion of a year's cost which can be paid with the funds available at the beginning of the year. During periods when trust fund income exceeds disbursements, the excess is held in the trust funds which serve to advance fund a portion of the Social Security program's future financial obligations. During periods when trust fund disbursements exceed income, as might happen during an economic recession, trust fund assets are used to meet the shortfall. In the event of recurring shortfalls for an extended period, the trust funds can allow time for the development, enactment, and implementation of legislation to restore financial stability to the program.

The test of financial adequacy over the short-range projection period is applicable to the OASI and DI Trust Funds individually and on a combined basis. The requirements of this test are as follows: If the estimated trust fund ratio is at least 100 percent at the beginning of the projection period, then it must be projected to remain at or above 100 percent throughout the 10-year projection period. Alternatively, if the ratio is initially less than 100 percent, then it must be projected to reach a level of at least 100 percent by the beginning of the sixth year and to remain at or above 100 percent throughout the remainder of the 10-year period. In addition, the fund's estimated assets at the beginning of each month of the 10-year period must be sufficient to cover that month's disbursements. This test is applied on the basis of the intermediate estimates. Failure to meet this test by either trust fund is an indication that solvency of the program over the next 10 years is in question and that legislative action is needed to improve the short-range financial adequacy of the program.

1. Operations of the OASI Trust Fund

This subsection presents estimates of the operations and financial status of the OASI Trust Fund for the period 2004-13, based on the assumptions described in chapter V. No changes are assumed to occur in the present statutory provisions and regulations under which the OASDI program operates.1

These estimates are shown in table IV.A1 and indicate that the assets of the OASI Trust Fund would continue to increase rapidly throughout the next 10 years under all three sets of assumptions. Also, based on the intermediate assumptions, the assets of the OASI Trust Fund would continue to exceed 100 percent of annual expenditures by a steadily increasing amount through the end of 2013. Consequently, the OASI Trust Fund satisfies the test of short-range financial adequacy by a wide margin. The estimates in table IV.A1 also indicate that the short-range test would be satisfied even under the high cost assumptions (see figure IV.A1 for graphical illustration of these results).

The increases in estimated income shown in table IV.A1 under each set of assumptions reflect increases in estimated OASDI taxable earnings and growth in interest earnings on the invested assets of the trust fund. For each alternative, employment and earnings are assumed to increase in every year through 2013. The number of persons with taxable earnings would increase on the basis of alternatives I, II, and III from 154 million during calendar year 2003 to about 174 million, 171 million, and 169 million, respectively, in 2013. The total annual amount of taxable earnings is projected to increase from $4,352 billion in 2003 to $6,866 billion, $6,926 billion, and $7,289 billion, in 2013, on the basis of alternatives I, II, and III, respectively.2 These increases in taxable earnings are due primarily to (1) projected increases in employment levels as the working age (20-64) population increases, (2) increases in average earnings in covered employment (reflecting both real growth and price inflation), and (3) increases in the contribution and benefit base in 2004-13  under the automatic-adjustment provisions.

Growth in interest earnings represents a significant component of the overall increase in trust fund income during this period. Although interest rates payable on trust fund investments are not assumed to change substantially from current levels, the continuing rapid increase in OASI assets will result in a corresponding increase in interest income. By 2013, interest income to the OASI Trust Fund is projected to be about 20 percent of total trust fund income on the basis of the intermediate assumptions, as compared to 13.8 percent in 2003.

Figure IV.A1.--Short-Range OASI and DI Trust Fund Ratios

[Assets as a percentage of annual cost]

[D]

Table IV.A1.--Operations of the OASI Trust Fund, Calendar Years 1999-2013 1 

[Amounts in billions]

Calendar
year
Income
 
Cost
 
Assets
Total 2
Net
contri-
butions
Taxa-
tion of
benefits
Net
inter-
est 
Total
Benefit
pay-
ments 
Admin-
istra-
tive
costs
RRB
inter-
change
Net
increase
during
year
Amount
at end
of year
Trust
fund
ratio 3
Historical data:
 
1999
$457.0
$396.4
$10.9
$49.8
 
$339.9
$334.4
$1.8
$3.7
 
$117.2
$798.8
201
 
2000
490.5
421.4
11.6
57.5
 
358.3
352.7
2.1
3.5
 
132.2
931.0
223
 
2001
518.1
441.5
11.9
64.7
 
377.5
372.3
2.0
3.3
 
140.6
1,071.5
247
 
2002
539.7
455.2
12.9
71.2
 
393.7
388.1
2.1
3.5
 
146.0
1,217.5
272
 
2003
543.8
456.1
12.5
75.2
 
406.0
399.8
2.6
3.6
 
137.8
1,355.3
300
Intermediate:
 
2004
562.7
471.0
12.8
78.9
 
421.5
415.2
2.7
3.6
 
141.2
1,496.6
322
 
2005
603.5
504.2
14.4
85.0
 
433.7
427.3
2.7
3.6
 
169.9
1,666.4
345
 
2006
636.5
528.1
15.4
92.9
 
449.3
443.2
2.6
3.5
 
187.2
1,853.6
371
 
2007
675.1
554.8
16.9
103.3
 
468.6
462.4
2.6
3.6
 
206.5
2,060.1
396
 
2008
717.6
581.8
19.7
116.1
 
492.4
486.2
2.6
3.6
 
225.2
2,285.3
418
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
759.9
610.0
20.0
129.9
 
521.3
515.0
2.6
3.6
 
238.6
2,523.9
438
 
2010
805.7
639.2
22.1
144.4
 
554.1
547.7
2.7
3.7
 
251.7
2,775.6
456
 
2011
855.5
669.6
26.1
159.8
 
589.8
583.5
2.7
3.6
 
265.7
3,041.3
471
 
2012
904.5
699.9
29.0
175.5
 
630.0
623.4
2.7
3.9
 
274.4
3,315.7
483
 
2013
953.3
729.8
32.1
191.4
 
673.8
667.0
2.8
4.0
 
279.5
3,595.2
492
Low Cost:
 
2004
563.8
472.0
12.8
78.9
 
421.3
415.0
2.7
3.6
 
142.5
1,497.8
322
 
2005
607.2
508.0
14.3
84.9
 
432.2
425.9
2.7
3.6
 
175.0
1,672.8
347
 
2006
639.2
531.3
15.3
92.5
 
445.1
439.0
2.6
3.4
 
194.1
1,866.9
376
 
2007
677.5
558.4
16.7
102.4
 
460.8
454.6
2.6
3.6
 
216.7
2,083.7
405
 
2008
718.6
585.1
19.2
114.3
 
479.9
473.8
2.6
3.5
 
238.6
2,322.3
434
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
759.5
612.7
19.3
127.5
 
502.7
496.6
2.6
3.5
 
256.8
2,579.1
462
 
2010
803.9
640.9
21.1
141.9
 
528.8
522.7
2.6
3.5
 
275.1
2,854.2
488
 
2011
852.5
670.4
24.7
157.4
 
557.3
551.2
2.6
3.4
 
295.2
3,149.5
512
 
2012
899.1
698.1
27.2
173.9
 
589.5
583.2
2.7
3.6
 
309.6
3,459.0
534
 
2013
944.7
723.9
29.7
191.1
 
624.5
618.2
2.7
3.7
 
320.1
3,779.1
554
High Cost:
 
2004
558.0
466.7
12.8
78.4
 
421.7
415.4
2.7
3.6
 
136.3
1,491.6
321
 
2005
598.3
497.2
14.6
86.5
 
440.8
434.5
2.7
3.7
 
157.5
1,649.1
338
 
2006
636.1
524.5
15.9
95.8
 
461.4
455.2
2.6
3.5
 
174.8
1,823.9
357
 
2007
669.0
546.6
17.4
105.1
 
482.2
475.9
2.6
3.7
 
186.8
2,010.7
378
 
2008
715.6
575.2
20.5
119.9
 
514.0
507.5
2.7
3.8
 
201.6
2,212.3
391
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
785.7
620.0
21.4
144.3
 
558.2
551.6
2.8
3.8
 
227.6
2,439.9
396
 
2010
847.5
659.5
24.2
163.8
 
607.0
600.2
2.8
4.1
 
240.4
2,680.3
402
 
2011
903.1
695.6
29.1
178.4
 
656.2
649.2
2.9
4.2
 
246.9
2,927.3
408
 
2012
956.4
731.6
32.6
192.2
 
706.8
699.3
2.9
4.6
 
249.6
3,176.8
414
 
2013
1,010.7
767.7
36.2
206.7
 
761.3
753.5
3.0
4.8
 
249.4
3,426.2
417

1A detailed description of the components of income and cost, along with complete historical values, is presented in appendix A.

2"Total Income" column includes transfers made between the OASI Trust Fund and the General Fund of the Treasury that are not included in the separate components of income shown. These transfers consist of payments for (1) the cost of noncontributory wage credits for military service before 1957, and (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968. In February 2002, $414 million was transferred from the General Fund of the Treasury to the OASI Trust Fund for the cost of pre-1957 military service wage credits. Such transfers are estimated to be less than $500,000 in each year of the projection period.

3The "Trust fund ratio" column represents assets at the beginning of a year (which are identical to assets at the end of the prior year shown in the "Amount at end of year" column) as a percentage of cost for the year.

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

Rising expenditures during 2004-13 reflect automatic benefit increases as well as the upward trend in the number of beneficiaries and in the average monthly earnings underlying benefits payable by the program. The growth in the number of beneficiaries in the past and the expected growth in the future result both from the increase in the aged population and from the increase in the proportion of the population which is eligible for benefits.

The estimates under all three sets of assumptions shown in table IV.A1 indicate that income to the OASI Trust Fund would substantially exceed expenditures in every year of the short-range projection period, and assets are therefore estimated to increase substantially.

The portion of the OASI Trust Fund that is not needed to meet day-to-day expenditures is used to purchase financial securities, generally special public-debt obligations of the U.S. Government. The cash used to make these purchases flows to the General Fund of the Treasury and is used to meet various Federal outlays or to reduce the amount of publicly-held Federal debt. Interest on these securities is paid to the trust fund and, when the securities mature or are redeemed prior to maturity, general fund revenues flow to the trust fund. Thus, the investment operations of the trust fund result in various cash flows between the trust fund and the General Fund of the Treasury.

Currently, the excess of tax income to the OASI Trust Fund over the fund's expenditures is borrowed by the general fund, resulting in a substantial net cash flow to the general fund. As discussed in the following section, this cash flow will reverse sometime in the next 10-20 years. Thereafter, increasingly larger amounts will be needed from trust fund assets to meet benefit payments and other expenditures. Revenue from the General Fund of the Treasury will be drawn upon to provide the necessary cash. The accumulation and subsequent redemption of substantial trust fund assets has important public policy and economic implications that extend well beyond the operation of the OASDI program itself.

2. Operations of the DI Trust Fund

The estimated operations and financial status of the DI Trust Fund during calendar years 2004-13 under the three sets of assumptions are shown in table IV.A2, together with figures on actual experience in 1999-2003. Income is generally projected to increase steadily under each alternative, reflecting most of the same factors described previously in connection with the OASI Trust Fund. The estimates indicate that the assets of the DI Trust Fund would also continue to increase throughout the next 10 years under the intermediate and low cost assumptions, but at a lower rate than for the OASI Trust Fund. Under the high cost assumptions, DI assets would increase through 2006 and decline steadily thereafter.

Expenditures are estimated to increase because of automatic benefit increases and projected increases in the amounts of average monthly earnings on which benefits are based. In addition, under all three sets of assumptions, the number of DI beneficiaries in current-payment status is projected to continue increasing throughout the short-range projection period. Over the period 2003-13, the projected annual average growth rate in the number of DI worker beneficiaries is roughly 1.9, 3.0, and 4.6 percent under alternatives I, II, and III, respectively. Growth is largely attributable to the gradual progression of the baby-boom generation through ages 50-65, at which higher rates of disability incidence are experienced.

Recent sharp annual increases in incidence rates over the period 2000-02 represented a notable departure from the experience of the preceding 8 years, which generally showed modest annual declines in the age-sex-adjusted disability incidence rate.3 These increases were likely due in large part to the slowdown in economic growth experienced during that period. However, a special administrative activity undertaken by SSA beginning in 2001 has also contributed slightly to the upsurge in disabled worker awards. This special workload was the result of discovering a substantial number of current or former recipients of Supplemental Security Income (SSI) benefits whose disability-insured status under the DI program was not previously recognized. As this special disability workload is processed over the next several years, the resulting disability awards will contribute to temporarily higher incidence rates than would have been expected as part of longer term underlying trends.

Estimates of the size of this special workload remain roughly the same as assumed for the 2003 report, although, due to limitations on available administrative resources, estimates of the time required to process these claims have been revised upward since last year. After the last of the special workload cases is processed, the incidence rates projected in this report are projected to drop back somewhat from recent levels, consistent with an assumed return to faster economic growth. Incidence rates are then expected to return to levels roughly in line with those assumed in last year's report under the three alternative sets of assumptions.

Table IV.A2.--Operations of the DI Trust Fund, Calendar Years 1999-2013 1 

[Amounts in billions]

Calendar
year
Income 
 
Cost
 
Assets
Total 2
Net
contri-
butions
Taxa-
tion of
benefits
Net
inter-
est 
Total
Benefit
pay-
ments 
Admin-
istra-
tive
costs
RRB
inter-
change
Net
increase
during
year
Amount
at end
of year
Trust
fund
ratio 3
Historical data:
 
1999
$69.5
$63.2
$0.7
$5.7
 
$53.0
$51.4
$1.5
$0.1
 
$16.5
$97.3
152
 
2000
77.9
71.1
.7
6.9
 
56.8
55.0
1.6
.2
 
21.1
118.5
171
 
2001
83.9
74.9
.8
8.2
 
61.4
59.6
1.7
4/
 
22.5
141.0
193
 
2002
87.4
77.3
.9
9.2
 
67.9
65.7
2.0
.2
 
19.5
160.5
208
 
2003
88.1
77.4
.9
9.7
 
73.1
70.9
2.0
.2
 
15.0
175.4
219
Intermediate:
 
2004
90.9
79.9
1.0
10.0
 
78.8
76.6
2.0
.2
 
12.1
187.6
223
 
2005
97.2
85.6
1.1
10.5
 
83.9
81.4
2.2
.2
 
13.3
200.9
224
 
2006
102.0
89.7
1.3
11.1
 
88.9
86.4
2.3
.2
 
13.1
214.0
226
 
2007
107.4
94.2
1.4
11.7
 
94.9
92.2
2.4
.3
 
12.5
226.4
226
 
2008
112.9
98.8
1.7
12.4
 
101.6
98.8
2.5
.3
 
11.4
237.8
223
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
118.4
103.6
1.8
13.0
 
110.4
107.4
2.6
.3
 
8.0
245.9
215
 
2010
124.1
108.5
2.0
13.5
 
116.0
112.8
2.8
.3
 
8.2
254.0
212
 
2011
130.2
113.7
2.4
14.0
 
122.1
118.8
2.9
.4
 
8.0
262.1
208
 
2012
136.1
118.9
2.8
14.5
 
130.3
126.9
3.1
.4
 
5.8
267.8
201
 
2013
141.9
123.9
3.1
14.8
 
137.8
134.2
3.2
.4
 
4.1
271.9
194
Low Cost:
 
2004
91.1
80.1
1.0
10.0
 
77.5
75.3
2.0
.2
 
13.6
189.0
226
 
2005
98.0
86.2
1.1
10.6
 
81.5
79.1
2.2
.2
 
16.4
205.5
232
 
2006
102.7
90.2
1.2
11.3
 
85.1
82.6
2.3
.2
 
17.6
223.1
241
 
2007
108.3
94.8
1.3
12.2
 
89.4
86.8
2.4
.3
 
18.9
242.0
249
 
2008
114.1
99.4
1.6
13.2
 
94.2
91.4
2.5
.3
 
19.9
261.9
257
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
119.9
104.0
1.6
14.2
 
100.5
97.6
2.6
.3
 
19.4
281.3
261
 
2010
126.0
108.8
1.8
15.3
 
103.7
100.7
2.7
.3
 
22.3
303.6
271
 
2011
132.6
113.8
2.1
16.6
 
107.1
104.0
2.8
.3
 
25.4
329.0
283
 
2012
138.9
118.5
2.4
18.0
 
112.1
108.8
3.0
.3
 
26.8
355.8
293
 
2013
145.1
122.9
2.6
19.5
 
116.3
112.8
3.1
.3
 
28.8
384.6
306
High Cost:
 
2004
90.1
79.2
1.0
9.9
 
81.4
79.2
2.0
.2
 
8.7
184.1
215
 
2005
95.9
84.4
1.2
10.3
 
90.2
87.7
2.2
.2
 
5.7
189.8
204
 
2006
101.0
89.1
1.4
10.5
 
98.8
96.3
2.3
.3
 
2.2
192.0
192
 
2007
104.9
92.8
1.6
10.4
 
107.4
104.7
2.4
.3
 
-2.5
189.5
179
 
2008
109.9
97.7
2.0
10.2
 
118.4
115.5
2.5
.3
 
-8.5
181.0
160
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
117.2
105.3
2.2
9.7
 
133.3
130.2
2.7
.3
 
-16.2
164.8
136
 
2010
123.2
112.0
2.5
8.7
 
144.0
140.7
2.9
.4
 
-20.8
144.1
114
 
2011
128.7
118.1
3.1
7.5
 
154.3
150.8
3.1
.4
 
-25.7
118.4
93
 
2012
133.7
124.2
3.6
5.9
 
166.3
162.6
3.3
.4
 
-32.6
85.8
71
 
2013
138.7
130.4
4.1
4.2
 
177.4
173.4
3.5
.5
 
-38.7
47.1
48

1A detailed description of the components of income and cost, along with complete historical values, is presented in appendix A.

2"Total Income" column includes transfers made between the DI Trust Fund and the General Fund of the Treasury that are not included in the separate components of income shown. These transfers consist of payments for the cost of noncontributory wage credits for military service before 1957. In particular, a transfer was made in December 2000 in the amount of $836 million from the DI Trust Fund to the General Fund of the Treasury. Such transfers are estimated to be less than $500,000 in each year of the projection period.

3The "Trust fund ratio" column represents assets at the beginning of a year (which are identical to assets at the end of the prior year shown in the "Amount at end of year" column) as a percentage of cost for the year.

4Less than $50 million.

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

The proportion of DI beneficiaries whose benefits terminate in a given year has also fluctuated significantly in the past. Over the last 20 years, the rates of benefit termination due to death or conversion to retirement benefits (at attainment of normal retirement age) have declined very gradually. This trend is attributable, in part, to the lower average age of new beneficiaries. However, some recent program changes and health trends have also led to improved mortality experience among the DI disabled worker beneficiaries. The termination rate due to recovery has been much more volatile. Currently, the proportion of disabled beneficiaries whose benefits cease because of their recovery from disability is very low in comparison to levels experienced throughout the 1970s and early 1980s. Projected levels of recovery terminations for this year's report remain consistent with last year's report. The overall termination rate (reflecting all causes) is projected to remain near the 2003 level before increasing back to higher levels in 2009 when the gradual increase in the normal retirement age temporarily ceases.

At the beginning of calendar year 2003, the assets of the DI Trust Fund represented 219 percent of annual expenditures. During 2003, DI income exceeded DI expenditures by $15.0 billion, contributing to an increase in the trust fund ratio for the beginning of 2004 to about 223 percent. Under the intermediate set of assumptions, total income is estimated to exceed expenditures in each year of the short-range projection period. However, the projected decline in the trust fund ratio from a peak of 226 percent in 2006-07 to 194 percent by the beginning of 2013 is an early warning of the eventual shortfall in available DI Trust Fund assets needed to cover program cost--projected under the intermediate assumptions to occur after the end of the short-range period.

Under the low cost assumptions, the trust fund ratio would increase rapidly to 306 percent at the beginning of 2013. Under the high cost assumptions, the assets of the DI Trust Fund would increase through 2006 and then decline steadily thereafter, dipping below the level of 1 year's expenditures near the middle of 2010.

Because DI assets were greater than 1 year's expenditures at the beginning of 2004 and would remain above that level in 2005 and later the DI Trust Fund satisfies the Trustees' short-range test of financial adequacy under both the intermediate and low cost assumptions. However, under the high cost assumptions the DI Trust Fund fails to meet the short-range test of financial adequacy, because assets fall below 1 year's expenditures by the end of the short-range period, as described above (see also figure IV.A1).

3. Operations of the Combined OASI and DI Trust Funds

The estimated operations and status of the OASI and DI Trust Funds, combined, during calendar years 2004-13 on the basis of the three alternatives, are shown in table IV.A3, together with figures on actual experience in 1999-2003. The dollar amounts are the sums of the corresponding figures shown in tables IV.A1 and IV.A2. Since the income and cost for the OASI Trust Fund represent over 80 percent of the corresponding amounts for the combined OASI and DI Trust Funds, the operations of the OASI Trust Fund dominate the operations of the combined two funds. Consequently, the combined OASI and DI Trust Funds meet the requirements of the short-range test of financial adequacy under all three alternative sets of assumptions.

Table IV.A3.--Operations of the Combined OASI and DI Trust Funds,
Calendar Years 1999-2013 1 

[Amounts in billions]

Calendar
year
Income
 
Cost
 
Assets
Total 2
Net
contri-
butions
Taxa-
tion of
benefits
Net
inter-
est 
Total
Benefit
pay-
ments 
Admin-
istra-
tive
costs
RRB
inter-
change
Net
increase
during
year
Amount
at end
of year
Trust
fund
ratio 3
Historical data:
 
1999
$526.6
$459.6
$11.6
$55.5
 
$392.9
$385.8
$3.3
$3.8
 
$133.7
$896.1
194
 
2000
568.4
492.5
12.3
64.5
 
415.1
407.6
3.8
3.7
 
153.3
1,049.4
216
 
2001
602.0
516.4
12.7
72.9
 
438.9
431.9
3.7
3.3
 
163.1
1,212.5
239
 
2002
627.1
532.5
13.8
80.4
 
461.7
453.8
4.2
3.6
 
165.4
1,378.0
263
 
2003
631.9
533.5
13.4
84.9
 
479.1
470.8
4.6
3.7
 
152.8
1,530.8
288
Intermediate:
 
2004
653.7
550.9
13.8
88.9
 
500.3
491.8
4.7
3.8
 
153.4
1,684.1
306
 
2005
700.7
589.8
15.5
95.5
 
517.6
508.8
4.9
3.9
 
183.2
1,867.3
325
 
2006
738.5
617.8
16.7
104.0
 
538.3
529.6
4.9
3.7
 
200.2
2,067.5
347
 
2007
782.5
649.1
18.4
115.0
 
563.4
554.6
5.0
3.9
 
219.0
2,286.6
367
 
2008
830.5
680.6
21.4
128.6
 
594.0
585.0
5.1
3.9
 
236.5
2,523.1
385
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
878.3
713.5
21.8
142.9
 
631.6
622.5
5.2
3.9
 
246.6
2,769.7
399
 
2010
929.8
747.8
24.1
157.9
 
670.0
660.6
5.4
4.1
 
259.8
3,029.6
413
 
2011
985.7
783.3
28.6
173.9
 
711.9
702.3
5.6
4.0
 
273.8
3,303.3
426
 
2012
1,040.6
818.8
31.8
190.0
 
760.3
750.2
5.8
4.3
 
280.2
3,583.5
434
 
2013
1,095.2
853.8
35.2
206.2
 
811.6
801.1
6.0
4.4
 
283.6
3,867.1
442
Low Cost:
 
2004
654.9
552.1
13.8
89.0
 
498.8
490.3
4.7
3.8
 
156.1
1,686.8
307
 
2005
705.2
594.2
15.4
95.6
 
513.7
504.9
4.9
3.9
 
191.4
1,878.3
328
 
2006
741.9
621.6
16.5
103.8
 
530.2
521.6
4.9
3.7
 
211.7
2,090.0
354
 
2007
785.8
653.2
18.0
114.6
 
550.2
541.4
4.9
3.8
 
235.6
2,325.6
380
 
2008
832.7
684.5
20.7
127.4
 
574.1
565.2
5.0
3.8
 
258.6
2,584.2
405
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
879.4
716.7
20.9
141.7
 
603.1
594.1
5.2
3.8
 
276.2
2,860.4
428
 
2010
929.9
749.8
22.9
157.2
 
632.5
623.3
5.3
3.9
 
297.4
3,157.8
452
 
2011
985.1
784.2
26.8
174.0
 
664.4
655.2
5.5
3.8
 
320.7
3,478.5
475
 
2012
1,038.1
816.6
29.5
191.9
 
701.7
692.1
5.6
4.0
 
336.4
3,814.8
496
 
2013
1,089.8
846.8
32.4
210.6
 
740.8
731.0
5.8
4.0
 
348.9
4,163.8
515
High Cost:
 
2004
648.1
546.0
13.9
88.3
 
503.1
494.6
4.7
3.8
 
145.0
1,675.8
304
 
2005
694.2
581.6
15.8
96.8
 
531.0
522.2
4.9
3.9
 
163.2
1,839.0
316
 
2006
737.1
613.6
17.3
106.2
 
560.1
551.4
4.9
3.8
 
177.0
2,015.9
328
 
2007
773.9
639.4
19.0
115.5
 
589.6
580.7
5.0
4.0
 
184.3
2,200.2
342
 
2008
825.5
672.8
22.5
130.1
 
632.3
623.1
5.2
4.1
 
193.1
2,393.4
348
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
902.9
725.3
23.6
154.0
 
691.5
681.8
5.5
4.2
 
211.4
2,604.8
346
 
2010
970.7
771.5
26.8
172.5
 
751.0
740.8
5.8
4.5
 
219.7
2,824.4
347
 
2011
1,031.8
813.7
32.2
185.9
 
810.5
799.9
6.0
4.6
 
221.3
3,045.7
348
 
2012
1,090.1
855.8
36.1
198.1
 
873.1
861.9
6.2
5.0
 
217.0
3,262.6
349
 
2013
1,149.3
898.1
40.3
210.9
 
938.7
926.9
6.5
5.3
 
210.7
3,473.3
348

1A detailed description of the components of income and cost, along with complete historical values, is presented in appendix A.

2"Total Income" column includes transfers made between the OASI and DI Trust Funds and the General Fund of the Treasury that are not included in the separate components of income shown. These transfers consist of payments for (1) the cost of noncontributory wage credits for military service before 1957, and (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968. Such transfers are estimated to be less than $500,000 in each year of the projection period.

3The "Trust fund ratio" column represents assets at the beginning of a year (which are identical to assets at the end of the prior year shown in the "Amount at end of year" column) as a percentage of cost for the year.

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

4. Factors Underlying Changes in 10-Year Trust Fund Ratio Estimates From the 2003 Report

The factors underlying the changes in the intermediate estimates for the OASI, DI and the combined funds from last year's annual report to this report are analyzed in table IV.A4. In the 2003 Annual Report, the trust fund ratio for OASI was estimated to reach 503 percent at the beginning of 2012--the tenth projection year from that report. If there had been no changes to the projections, the estimated ratio at the beginning of 2013 would be 13 percentage points higher than at the beginning of 2012, or 516 percent. There were changes, however, to reflect the latest actual data, as well as adjustments to the assumptions for future years. The resulting ratio shown in this report for the tenth projection year (2013) is 492 percent. The net effect of changes in demographic assumptions over the short-range period resulted in an estimated small net reduction in the tenth-year trust fund ratio. The cumulative net effects of changes in economic data and assumptions (including re-estimates of future tax revenue consistent with recent revisions to historical data) resulted in a reduction in the trust fund ratio of 5 percentage points by the beginning of 2013. A further reduction was due to the net effect of various factors labeled collectively as "programmatic data and assumptions." For OASI, the most significant factor contributing to this change was a revised assessment of the future pattern of average benefit levels payable to aged widow beneficiaries to correct a problem introduced in last year's estimates. Finally, an update to the data sample and model used to project average amounts paid to newly-awarded beneficiaries resulted in a further reduction in the 2013 trust fund ratio of 5 percentage points.

Corresponding estimates of the factors underlying the changes in the financial projections for the DI Trust Fund, and for the OASI and DI Trust Funds combined, are also shown in table IV.A4. The largest effect on the DI trust fund ratio at the beginning of 2013 was the change in the valuation period, although revised economic assumptions, updates for the starting values of a variety of programmatic assumptions, and the revised methodology for projecting average benefit amounts for new awards also contributed to the total 15 percentage point reduction.

Table IV.A4.--Reasons for Change in Trust Fund Ratios at the Beginning
of the Tenth Year of Projection

[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 2012
503
209
452
Change in trust fund ratio due to changes in:
 
 
Legislation
--
--
--
 
 
Valuation period
13
-6
10
 
 
Demographic data and assumptions
-1
-1
-1
 
 
Economic data and assumptions
-5
-4
-5
 
 
Programmatic data and assumptions
-13
-2
-11
 
 
Projection methods and data
-5
-3
-4
 
Total change in trust fund ratio
-11
-15
-11
Trust fund ratio shown in this report for calendar year 2013
492
194
442

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


1The estimates shown in this subsection reflect 12 months of benefit payments in each year of the short-range projection period. In practice, 13 benefit payments have been made in certain years, with the next year having only 11 payments. This situation resulted from the statutory requirement that benefit checks be delivered early when the normal check delivery date is a Saturday, Sunday, or legal public holiday. For example, the benefit checks for December 1998 would normally have been delivered on January 3, 1999; however, because that day was a Sunday, and the two preceding days a Saturday and a holiday, the checks were actually delivered on December 31, 1998. The annual benefit figures are shown as if those benefit checks were delivered on the usual date. Whenever this situation occurs, only the portion of benefits payable on January 3 would be delivered in December. The benefits payable later in January due to payment cycling, which began in June 1997, would still be paid in January.

2Note that the pattern, by alternative, of these nominal amounts of total wages is not what might be expected, but the reverse, because of the varying inflation assumptions embedded in the respective estimates.

3Historical and projected patterns of disability incidence rates are described in greater detail in section V.C.6.


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