2005 OASDI Trustees Report

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II. OVERVIEW

C. ASSUMPTIONS ABOUT THE FUTURE

The actual future income and expenditures of the OASI and DI Trust Funds depend on many factors, including the size and characteristics of the population receiving benefits, the level of monthly benefit amounts, the size of the work force, and the level of workers' earnings. These factors will depend in turn upon future birth rates, death rates, immigration, marriage and divorce rates, retirement-age patterns, disability incidence and termination rates, productivity gains, wage increases, inflation, and many other demographic, economic, and program-specific factors.

The intermediate demographic and economic assumptions shown in table II.C1, designated as alternative II, reflect the Trustees' best estimates of future experience, and therefore most of the figures in this overview depict only the outcomes under the intermediate assumptions. Any projection of the future is, of course, uncertain. For this reason, alternatives I (low cost) and III (high cost) are included to provide a range of possible future experience. The assumptions for these two alternatives are also shown in table II.C1, and their implications are highlighted in a separate section on the uncertainty of the projections.

Assumptions are reexamined each year in light of recent experience and new information. This careful review and updating of the assumptions on an annual basis helps ensure that they provide the Trustees' best estimate of future possibilities.

Table II.C1.—Ultimate1 Values of Key Demographic and Economic Assumptions
for the Long-Range (75-year) Projection Period
Ultimate assumptions
Intermediate
Low Cost
High Cost
 
Total fertility rate (children per woman)
1.95
2.2
1.7
 
Average annual percentage reduction in total
age-sex-adjusted death rates from 2029 to 2079
.71
.33
1.23
 
Annual net immigration (in thousands)
900
1,300
672.5
 
Annual percentage change in:
 
 
 
 
 
Productivity (total U.S. economy)
1.6
1.9
1.3
 
 
Average wage in covered employment
3.9
3.4
4.4
 
 
2.8
1.8
3.8
 
Real-wage differential (percent)
1.1
1.6
.6
 
Unemployment rate (percent)
5.5
4.5
6.5
 
Annual trust fund interest rate (percent)
5.8
5.5
6.0

1Ultimate values are assumed to be reached within 5 to 25 years. See chapter V for details.


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