Short-Range Actuarial EstimatesOn a combined basis, OASDI fails the test of short-range financial adequacy because the OASDI trust fund ratio declines to 96 percent by the beginning of 2029 and remains below 100 percent for the remainder of the short-range period. Figure II.D1 shows that the trust fund ratio for the combined OASI and DI Trust Funds declines steadily after 2010.

Figure II.D1.—Short-Range OASI and DI Combined Trust Fund Ratio Long-Range Actuarial EstimatesThe Trustees use three types of measures to assess the actuarial status of the program over the long-range period (2023 through 2097): (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. These measures are expressed as percentages of taxable payroll, as percentages of gross domestic product (GDP), or in dollars. Appendix F also presents summary measures over the infinite horizon. The infinite horizon values provide an additional indication of Social Security’s very-long-run financial condition.Figure II.D2 illustrates the year-by-year relationship among OASDI income (excluding interest), cost (including scheduled benefits), and expenditures (including payable benefits) starting in 2000 and for the full 75-year projection period (2023 through 2097). The figure shows all values as percentages of taxable payroll. Under the intermediate assumptions, demographic factors by themselves cause the projected cost rate to rise rapidly for the next two decades, level off somewhat in about 2040 through 2055, rise temporarily between 2055 and 2078, and then decline somewhat through 2097. The projected income rate is relatively stable at about 13 percent throughout the 75‑year period ending in 2097.Annual OASDI cost has exceeded non-interest income every year beginning with 2010. Cost is projected to continue to exceed non-interest income throughout the 75-year valuation period. Cost is projected to exceed total income in 2023, as it has each year beginning in 2021, and combined OASI and DI Trust Fund reserves decline until they become depleted in 2034. After trust fund reserve depletion, continuing income is sufficient to support expenditures at a level of 80 percent of program cost for the rest of 2034, declining to 74 percent for 2097. Figure II.D2 depicts OASDI operations as a combined whole. However, under current law, the differences between scheduled and payable benefits for OASI would begin in 2033, when the OASI Trust Fund is projected to become depleted. Scheduled benefits equal payable benefits for DI throughout the entire 75-year projection period, because the DI Trust Fund is not projected to become depleted during the period.

Figure II.D3 shows the estimated number of covered workers per OASDI beneficiary. Figures II.D2 and II.D3 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 2022. This ratio had been stable, remaining between 3.2 and 3.4 from 1974 through 2008, and has generally declined since then, initially due to the economic recession of 2007-09 and the beginning of a notable demographic shift. This shift causes the ratio of workers to beneficiaries to decline, as workers of lower-birth-rate generations replace workers of the baby-boom generation. The decline in the ratio slowed substantially between 2013 and 2019 as the recovery of the economy largely offset the demographic shift during that period. The ratio declined slightly in 2020 and then increased slightly by 2022, due to effects of the pandemic-induced recession and recovery on the number of workers. The underlying demographic shift will continue to drive this ratio down over the next 10 to 15 years. The ratio of workers to beneficiaries reaches 2.3 by 2035 when the baby-boom generation will have largely retired, and will generally decline very gradually thereafter due to increasing longevity.

Another important way to look at Social Security’s future actuarial status is to view its annual cost and non-interest income as a share of U.S. economic output (GDP). As shown in figure II.D4, Social Security’s cost as a percent of GDP is generally projected to grow from 5.2 percent in 2023 to a peak of about 6.3 percent for 2076, and then decline to 6.0 percent by 2097. Social Security’s non-interest income is projected to decrease from 4.8 percent of GDP in 2023 to 4.7 percent in 2024, and then rise gradually to a peak of about 4.8 percent by 2032. Thereafter, non-interest income as a percent of GDP declines gradually, to about 4.5 percent for 2097.

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 accumulated 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 (2023 through 2097) and the year of trust fund asset reserve depletion. Trust fund ratios for OASI and combined OASI and DI are projected to decline from their current levels until reserve depletion. For DI, the trust fund ratio is projected to rise to 267 percent of cost in 2043, and then generally decline to 159 percent of cost by 2097.

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

and Trust Fund Reserve Depletion Dates Projected year of trust fund reserve depletion

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.D5 shows the present value of cumulative OASDI income less cost from the inception of the program through each of the years from 2022 to 2097. 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 about $2.83 trillion at the end of 2022. The combined trust fund reserves decline on a present value basis after 2022, but remain positive through 2033. However, after 2033 this cumulative amount becomes negative in 2034, which means that the combined OASI and DI Trust Funds have a net unfunded obligation through the end of each year after 2033. Through the end of 2097, the combined funds have a present-value unfunded obligation of $22.4 trillion. If the assumptions, methods, starting values, and the law had all remained unchanged from last year, the unfunded obligation in this year’s report would have risen to about $21.2 trillion due to the change in the valuation date and the extension of the valuation period through an additional year, 2097.Figures II.D2, II.D4, and II.D5 show that the program’s actuarial status will deteriorate throughout the projection period if current law is not altered. Negative annual balances and increasing cumulative shortfalls toward the end of the 75-year period provide an indication of the additional change that will be needed by that time in order 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 actuarial status extending indefinitely into the future, but results are subject to 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 4.6 percent of future taxable payroll or 1.4 percent of future GDP.Figure II.D6. shows the projected trust fund ratios for the combined OASI and DI Trust Funds under the intermediate, low-cost, and high-cost assumptions. The figure indicates that the combined trust funds are projected to become depleted in 2034 under the intermediate alternative and in 2031 under the high-cost alternative. Under the low-cost alternative, trust fund reserves are projected to become depleted in 2067, but the trust funds would have sufficient income by the end of 2092 to permit full payment of scheduled benefits thereafter and also to pay in arrears the temporary shortfalls between 2067 and 2092.

Figure II.D7 shows the projected trust fund ratios separately for OASI and DI Trust Funds under the intermediate, low-cost, and high-cost assumptions. The figure indicates that the OASI reserves are projected to become depleted in 2033 under the intermediate alternative, in 2039 under the low-cost alternative, and in 2031 under the high-cost alternative. The DI reserves are projected to become depleted in 2036 under the high-cost alternative, and are not projected to become depleted under the low-cost and intermediate alternatives. This figure illustrates that OASI reserves are expected to become depleted much sooner than DI reserves, and potentially within the next 10 years.

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

[Asset reserves as a percentage of annual cost] Appendix D of this report presents a second approach using 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 and central tendencies for most of the key parameters. These simulations produce a distribution of projected outcomes and corresponding probabilities that future experience 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 (the point at which reserves are insufficient to pay scheduled benefits in full and on time) is very likely before mid-century. In particular, figure II.D8 suggests that based on these stochastic simulations, trust fund reserves will become depleted with 95‑percent confidence between 2031 and 2040. In last year’s report, this range was between 2031 and 2043. After depletion relatively early in the 75-year projection period, the trust funds are projected not to have sufficient income through 2097 to permit full and timely payment of scheduled benefits.

The projected long-range OASDI actuarial deficit increased from 3.42 percent of taxable payroll for last year’s report to 3.61 percent of taxable payroll for this year’s report. The change in the valuation date and the extension of the 75-year projection period for an additional year, 2097, would have by itself increased the actuarial deficit to 3.48 percent. Changes in law, methods, starting values, and assumptions combined to increase the actuarial deficit by an additional 0.13 percent of taxable payroll. This increase is mainly attributable to a change in the assumptions for the levels of productivity and GDP in the first several years of the projection. For this year’s report, the Trustees assume that the level of potential GDP was about 0.9 percent lower than the level estimated in last year’s report for 2020, widening to about 3.0 percent lower by 2026 and for all years thereafter. This shift was made as the Trustees lowered the levels of GDP and total economy labor productivity in response to recent economic developments, including higher-than-expected inflation rates and lower-than-expected output growth. For a detailed description of the specific changes identified in table II.D2, see section IV.B.6.

-.05 -.01 -.05 -.03 -.03 -.04 -.04 -.08 -.06 -.21 -.19

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 balance for 2023 is higher (less negative) in this year’s report than it was in last year’s report. The annual balances are lower (more negative) in this year’s report for all years from 2024 through 2097. For the full 75-year projection period, the annual balances are lower, on average, by 0.13 percentage point.

Figure II.D9.—OASDI Annual Balances: 2022 and 2023 Trustees Reports

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