2023 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 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 past and future benefits scheduled under current law; and (2) expenditures, 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 (2023 through 2032) first, followed by estimates and measures of actuarial status for the long-range period (2023 through 2097). 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 factor s 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 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 scheduled 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 projections, based on the assumptions described in chapter V, of the operations and financial status of the OASI Trust Fund for the period 2023 through 2032. 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 are projected to decrease in years 2023 through 2032 under all three sets of assumptions. Under the intermediate and low-cost assumptions, asset reserves remain positive through the end of the short-range period, but under the high-cost assumptions, asset reserves become depleted in the third quarter of 2031. Trust fund ratios are similarly projected to decline throughout the 10-year projection period under all three sets of assumptions. Based on the intermediate assumptions, the reserves of the OASI Trust Fund drop below 100 percent of annual cost during 2028, to a trust fund ratio of 91 percent at the beginning of 2029, and remain below 100 percent for the remainder of the short-range period. Consequently, the OASI Trust Fund fails the test of short-range financial adequacy. See figure IV.A1 for an illustration of these results.
Table IV.A1.—Operations of the OASI Trust Fund, Calendar Years 2018-2032a 
Costb
Trust
fund
ratio at
start of year c
Net pay-
roll tax contri-
butionsd
GF
reimburse-mentse

a
The OASI Trust Fund reserves become depleted in the third quarter of 2031 under the high-cost assumptions. 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 2020 and 2021 are adjusted to include in 2021 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2021, which were actually paid on December 31, 2020 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 occur periodically 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
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. The trust fund ratio at the beginning of 2033 is projected to be 7 percent for the intermediate, and 69 percent for the low-cost assumptions.

d
Includes adjustments for prior calendar years. For example, in June 2021, an unusually large negative adjustment to payroll tax contributions in the amount of $30.4 billion was made because payroll tax revenue credited to the trust fund in 2020 was based on estimates that did not anticipate effects of the pandemic and recession.

e
Includes reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; and (2) payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96. Also includes transfers of a portion of proceeds from repayments of loans authorized under Public Law 116-136.

f
Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the law.

g
Between -$50 million and $50 million.

h
When the fund reserves are depleted, values under current law would reflect permissible expenditures only, which would be less than the full cost of paying scheduled benefits shown in this table.
Note: Components may not sum to totals because of rounding.

The estimated income shown in table IV.A1 increases annually under each set of assumptions throughout the short-range projection period, with the exception of a small decrease in 2024 for the high-cost alternative. The estimated increases in income result primarily from the projected increases in OASDI taxable payroll. Employment increases in years 2023 through 2032 for all three alternatives, with the exception of small decreases in covered employment in 2023 and 2024 for the high-cost alternative: the number of covered workers increases under alternatives I, II, and III from 181 million during calendar year 2022 to about 192 million, 188 million, and 184 million, respectively, in 2032.3 The total annual amount of taxable payroll increases in years 2023 through 2032 for each alternative. Total taxable payroll increases from $9,069 billion in 2022 to $16,650 billion, $14,023 billion, and $12,189 billion in 2032, on the basis of alternatives I, II, and III, respectively.4 These increases in taxable payroll 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.
Interest earnings contribute to the overall projected level of trust fund income during this period. Interest income declines generally at a slow rate under the intermediate assumptions and much faster under the high-cost assumptions, and increases generally under the low-cost assumptions, due to the net effects of changes in reserve levels and the patterns of projected interest rates. Under the intermediate assumptions, interest also declines as a share of total OASI Trust Fund income reaching 1 percent of total trust fund income for 2032, as compared to 6 percent for 2022.
Rising OASI cost from 2022 through 2032 reflects automatic benefit increases each year after initial benefit eligibility and increases each year for those becoming newly eligible based on rising average earnings levels, as well as the upward trend in the number of beneficiaries. The steady growth in the number of OASI beneficiaries in the past 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 insured 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 the proceeds from 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.
2. Operations of the DI Trust Fund
Table IV.A2 shows the projected operations and financial status of the DI Trust Fund during calendar years 2023 through 2032 under the three sets of assumptions, together with values for actual experience during 2018 through 2022. Non-interest income for DI dropped in 2019 from its level in 2018, due to the temporary payroll tax rate reallocation from OASI to DI in 2016 through 2018. For 2022, non-interest income was higher than DI cost. Non-interest income increases generally throughout the short-range projection period under each alternative, due to most of the same factors described previously for the OASI Trust Fund beginning on page 45.  DI cost grows steadily throughout the period under each alternative. Under the intermediate and low-cost assumptions, DI reserves increase through 2032. Under the high-cost assumptions, DI reserves increase through 2026 and then decline through 2032.
Net pay-
roll tax contri-
butionsd 

a
Appendix A presents a detailed description of the components of income and cost, along with complete historical values.

b
Amounts for 2020 and 2021 are adjusted to include in 2021 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2021, which were actually paid on December 31, 2020 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 occur periodically 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
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. The trust fund ratio at the beginning of 2033 is projected to be 194 percent for the intermediate, 425 percent for the low-cost, and 45 percent for the high-cost assumptions.

d
Includes adjustments for prior calendar years. For example, in June 2021, an unusually large negative adjustment to payroll tax contributions in the amount of $5.2 billion was made because payroll tax revenue credited to the trust fund in 2020 was based on estimates that did not anticipate effects of the pandemic and recession.

e
Includes reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; and (2) payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112‑78, and 112-96.

f
Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the law.

g
Between -$50 million and $50 million.
Note: Components may not sum to totals because of rounding.

For the future, DI cost is projected to increase 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. Future changes in DI cost also reflect changes in the number of DI beneficiaries in current-payment status. In 2022, the number of DI beneficiaries in current-payment status continued the declining trend of the prior eight years. Under the intermediate assumptions, that number of DI beneficiaries is projected to drop further through the end of 2024, then increase through the end of 2032 to a level of about 9 million. The rate of increase after 2024 is much slower than was experienced on average from 1990 to 2010, when the population with the highest disability prevalence rates was growing rapidly due to the aging of the baby-boom generation. See section V.C.5 for further details.
At the beginning of calendar year 2023, the reserves of the DI Trust Fund represented 77 percent of estimated annual cost. Under the intermediate assumptions, DI trust fund reserves and the trust fund ratio increase throughout the short-range projection period. The trust fund ratio rises to 107 percent at the beginning of the fourth projected year, 2026, and continues to increase for the remainder of the short-range period.
Because the reserves of the DI Trust Fund at the beginning of 2023 were less than the estimated annual cost for 2023, but are projected to increase to above annual cost within five years, and then remain above annual cost throughout the rest of the short-range period under the intermediate assumptions, the DI Trust Fund satisfies the Trustees’ test of short-range financial adequacy.
3. Operations of the Combined OASI and DI Trust Funds
Table IV.A3 shows the projected operations and status of the combined OASI and DI Trust Funds for calendar years 2023 through 2032 under the three alternatives, together with actual experience in 2018 through 2022. Income and cost for the OASI Trust Fund represent over 80 percent of the corresponding amounts for the combined OASI and DI Trust Funds. Under the intermediate and low-cost assumptions, 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. Under the high-cost assumptions, combined OASI and DI trust fund reserves deplete in the fourth quarter of 2031. The combined OASI and DI Trust Funds do not satisfy the test of short-range financial adequacy because under the intermediate assumptions, trust fund reserves drop below 100 percent of annual cost during 2028, to a trust fund ratio of 96 percent at the beginning of 2029, and remain below 100 percent for the remainder of the short-range period.
Table IV.A3.—Operations of the Combined OASI and DI Trust Funds,
Calendar Years 2018-2032a 
Trust
fund
ratio  at start of yearc
Net pay-
roll tax contri-
butionsd
GF
reim-
burse-
mentse

a
The OASDI Trust Fund reserves become depleted in the fourth quarter of 2031 under the high-cost assumptions. 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 2020 and 2021 are adjusted to include in 2021 operations those benefit payments regularly scheduled in the law to be paid on January 3, 2021, which were actually paid on December 31, 2020 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 occur periodically 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
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. The trust fund ratio at the beginning of 2033 is projected to be 25 percent for the intermediate, and 100 percent for the low-cost assumptions.

d
Includes adjustments for prior calendar years. For example, in June 2021, an unusually large negative adjustment to payroll tax contributions in the amount of $35.5 billion was made because payroll tax revenue credited to the trust funds in 2020 was based on estimates that did not anticipate effects of the pandemic and recession.

e
Includes reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; and (2) payroll tax revenue forgone under the provisions of Public Laws 111-147, 111-312, 112-78, and 112-96. Also includes transfers of a portion of proceeds from repayments of loans authorized under Public Law 116-136.

f
Revenue from taxation of benefits is the amount that would be assessed on benefit amounts scheduled in the law.

g
Between -$50 million and $50 million.

h
When the fund reserves are depleted, values under current law would reflect permissible expenditures only, which would be less than the full cost of paying scheduled benefits shown in this table.
Note: Components may not sum to totals because of rounding.

4. Factors Underlying Changes in 10-Year Trust Fund Ratio Estimates From Last Year’s 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 2022 report under the intermediate assumptions, the trust fund ratio for OASI reached 66 percent at the beginning of 2031— the tenth projection year for that report. The change in the short-range valuation period alone, from 2022 through 2031 to 2023 through 2032, lowered the estimated trust fund ratio for the tenth year by 20 percentage points, to 46 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 18 percentage points. Therefore, the total change in the tenth year projected trust fund ratio from last year’s report to this year’s report is a reduction of 38 percentage points to 28 percent.
Legislative and regulatory changes since the 2022 report was published did not have a significant effect on the projected tenth year OASI trust fund ratio. Changes in demographic assumptions over the short-range period increased the projected tenth year trust fund ratio for OASI by 4 percentage points. Several changes in economic data and assumptions combined to cause a net reduction in the OASI trust fund ratio of 21 percentage points by the beginning of 2032. The large decrease due to economic factors is primarily due to the Trustees revising down the levels of GDP and labor productivity over the projection period. The reduced level of productivity reduces the projected growth in average earnings relative to the CPI. As a result, higher assumed growth in CPI and average benefits in the short-range period is not matched with comparable increases in average earnings underlying payroll tax collections. Incorporating recent programmatic data and assumptions, including actual average benefits and beneficiary counts for 2022, resulted in a decrease of 1 percentage point in the tenth year OASI trust fund ratio. Finally, the tenth year trust fund ratio was not affected significantly by changes in the short-range methodology for this report.
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 35-percentage-point increase in the DI trust fund ratio from the beginning of 2031 in last year’s report to the beginning of 2032 in this year’s report is the net effect of increases and decreases from the factors described above for the OASI Trust Fund, combined with other changes that are significant for DI but not OASI. The large increase of 33 points due to programmatic data and assumptions reflects lower recent disabled-worker application and incidence rates, and a more gradual return of initial disability application rates to their ultimate levels from recent lows.

a
Between -0.5 and 0.5 percent.

Note: Components may not sum to totals because of rounding.

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 short-range 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.

3
See table IV.B3.

4
See table VI.G6.


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