Short-Range Actuarial EstimatesOn a combined basis, OASDI fails the test of short-range financial adequacy because the OASDI trust fund ratio declines to 84 percent by the beginning of 2030 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 has declined steadily since 2010 and is expected to decline throughout the short-range period.

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 (2024 through 2098): (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 (2024 through 2098). The figure shows all values as percentages of taxable payroll. Under the intermediate assumptions, demographic factors cause the projected cost rate to rise rapidly until about 2040, then rise more gradually through 2080, and then generally decline through 2098. The projected income rate is relatively stable at somewhat above 13 percent throughout the 75‑year period ending in 2098.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 2024, as it has each year beginning in 2021, and combined OASI and DI Trust Fund reserves decline until they become depleted in 2035. After trust fund reserve depletion, continuing income is sufficient to support expenditures at a level of 83 percent of program cost for the rest of 2035, declining to 73 percent for 2098. 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 2.7 workers for every OASDI beneficiary in 2023. 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 2040 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 2024 to a peak of about 6.4 percent for 2078, and then generally decline to 6.1 percent by 2098. Social Security’s non-interest income is 4.6 percent of GDP through 2026, and then rises gradually to a peak of about 4.8 percent by 2033. Thereafter, non-interest income as a percent of GDP declines gradually, to about 4.5 percent for 2098.

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 (2024 through 2098) 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 throughout the 75-year projection period from 92 percent of annual cost in 2024 to 858 percent of annual cost at the beginning of 2098.

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 2023 to 2098. 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 $2.79 trillion at the end of 2023. The combined trust fund reserves decline on a present value basis after 2023, but remain positive through 2034. However, this cumulative amount becomes negative beginning in 2035, which means that the combined OASI and DI Trust Funds have a net unfunded obligation through the end of each year after 2034. Through the end of 2098, the combined funds have a present-value unfunded obligation of $22.6 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 $23.2 trillion due to the change in the valuation date and the extension of the valuation period through an additional year, 2098.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 4.5 percent of future taxable payroll or 1.2 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 2035 under the intermediate alternative and in 2032 under the high-cost alternative. Under the low-cost alternative, trust fund reserves are projected to become depleted in 2080, but the trust funds would have sufficient income by the end of 2086 to permit full payment of scheduled benefits thereafter and also to pay in arrears the temporary shortfalls between 2080 and 2086.

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 2040 under the low-cost alternative, and in 2031 under the high-cost alternative. The DI reserves are projected to become depleted in 2043 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 indicates that for 95 percent of these stochastic simulations, the reserve depletion year falls within the range from 2032 to 2043. In last year’s report, this range was from 2031 to 2040.

The projected long-range OASDI actuarial deficit decreased from 3.61 percent of taxable payroll for last year’s report to 3.50 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, 2098, would have by itself increased the actuarial deficit to 3.67 percent. Changes in law, methods, starting values, and assumptions combined to decrease the actuarial deficit by 0.17 percent of taxable payroll. This decrease is mainly attributable to changes in economic factors and the lower assumed ultimate disability incidence rate, which are partially offset by the lower assumed ultimate total fertility rate. For a detailed description of the specific changes identified in table II.D2, see section IV.B.6.

^{a}^{a} -.05 -.01 -.06 -.16 -.01 -.16 -.02

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 generally higher (less negative) in years through 2077 and lower thereafter. For the full 75-year projection period, the annual balances average 0.13 percentage point higher in this year’s report.

Figure II.D9.—OASDI Annual Balances: 2023 and 2024 Trustees Reports

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