Estimates based on the intermediate assumptions of
the 2018 Trustees Report
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Description of proposed provisions |
Change from current law [percent of payroll] |
Shortfall eliminated | ||||
---|---|---|---|---|---|---|
Long-range actuarial balance |
Annual balance in 75th year |
Long-range actuarial balance |
Annual balance in 75th year |
|||
Category: Provisions Affecting Cost of Living Adjustment (2018 Trustees Report intermediate assumptions) | ||||||
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll. | ||||||
A1 |
Starting December 2019, reduce the annual COLA by 1 percentage point.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
1.81 | 2.39 | 64% | 55% | |
A2 |
Starting December 2019, reduce the annual COLA by 0.5 percentage point.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.94 | 1.25 | 33% | 29% | |
A3 |
Starting December 2019, compute the COLA using a chained version of
the consumer price index for wage and salary workers (CPI-W). We estimate
this new computation will reduce the annual COLA by about 0.3 percentage
point, on average.
graph | table | pdf-graph | pdf-table | memo (Ribble) | memo (FY 2014 Budget) | memo (Chaffetz) | memo (Becerra) | memo (Fiscal Commission) | memo (Bipartisan Policy Center 2010) | memo (Social Security Advisory Board) |
0.58 | 0.77 | 20% | 18% | |
A4 |
Starting December 2021, compute the COLA using a chained version of the
consumer price index for wage and salary workers (CPI-W). We estimate this
new computation will reduce the annual COLA by about 0.3 percentage point,
on average. The new COLA will not apply to DI benefits. It will apply to
OASI benefits, except for those of formerly disabled-workers who converted
to retired-worker status.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.43 | 0.58 | 15% | 13% | |
A5 |
Starting December 2019, add 1 percentage point to the annual COLA for beneficiaries
who have lived past a "specified age". The "specified age" is the sum of: (1) 65 and
(2) the unisex cohort life expectancy at age 65.
graph | table | pdf-graph | pdf-table | memo (Senate Special Committee on Aging) |
-0.10 | -0.11 | -3% | -3% | |
A6 |
Starting December 2020, compute the COLA using the Consumer Price Index for the
Elderly (CPI-E). We estimate this new computation will increase the annual COLA
by about 0.2 percentage point, on average.
graph | table | pdf-graph | pdf-table | memo (Deutch, Hirono) | memo (Lawson) | memo (Larson 2017) | memo (Sanders, DeFazio) | memo (Sanchez) | memo (Sanders 2016) | memo (Schatz) | memo (Deutch 2015) | memo (DeFazio 2015) | memo (Sanders 2015) | memo (Larson 2015) | memo (Larson 2014) | memo (Harkin 2013) | memo (Harkin 2012) | memo (Becerra) | memo (Deutch 2010) |
-0.39 | -0.54 | -14% | -12% | |
A7 |
Starting December 2019, reduce the annual COLA by 1 percentage point, but not
to less than zero. In cases where the unreduced COLA is less than 1 percentage
point, do not carry over the unused reduction into future years.
graph | table | pdf-graph | pdf-table | memo (Hutchison) |
1.71 | 2.25 | 60% | 52% | |
A8 |
Starting December 2019, for OASI beneficiaries only (DI beneficiaries would
only be affected when their benefit converts to OASI at NRA), the annual COLA
would be based on the chain-weighted version of the CPI-U.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.49 | 0.64 | 17% | 15% | |
A9 |
For single/head-of-household/married-filing-separate taxpayers with modified
adjusted gross income (MAGI) below $89,000 and for joint filers with MAGI below
$178,000 for December 2020 ($85,000 and $170,000 multiplied by estimated CPI-U
for 2019-2020), use the chain-weighted version of the Consumer Price Index for All
Urban Consumers (C-CPI-U) to calculate the cost-of-living adjustment (COLA),
beginning with the December 2020 COLA. For those beneficiaries whose MAGI is
above these thresholds, provide no COLA. Use prior tax year income data for
this determination. Index the eligibility income threshold amounts to the CPI-U
after December 2020.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
1.35 | 2.47 | 47% | 57% |
Category: Provisions Affecting Level of Monthly Benefits (PIA) (2018 Trustees Report intermediate assumptions) | ||||||
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll. | ||||||
B1.1 |
Price indexing of PIA factors beginning with those newly eligible for
OASDI benefits in 2025: Reduce factors so that initial benefits grow
by inflation rather than by the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
2.78 | 7.75 | 98% | 180% | |
B1.2 |
Progressive price indexing (30th percentile) of PIA factors beginning with
individuals newly eligible for OASDI benefits in 2025: Create a new bend
point at the 30th percentile of the AIME distribution of newly retired workers.
Maintain current-law benefits for earners at the 30th percentile and below. Reduce
the 32 and 15 percent factors above the 30th percentile such that the initial
benefit for a worker with AIME equal to the taxable maximum grows by inflation
rather than the growth in the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
1.53 | 4.31 | 54% | 100% | |
B1.3 |
Progressive price indexing (40th percentile) of PIA factors beginning
with individuals newly eligible for OASDI benefits in 2025: Create a new
bend point at the 40th percentile of the AIME distribution of newly retired
workers. Maintain current-law benefits for earners at the 40th percentile
and below. Reduce the 32 and 15 percent factors above the 40th percentile
such that the initial benefit for a worker with AIME equal to the taxable
maximum grows by inflation rather than the growth in the SSA average wage
index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
1.30 | 3.63 | 46% | 84% | |
B1.4 |
Progressive price indexing (50th percentile) of PIA factors beginning
with individuals newly eligible for OASDI benefits in 2025: Create a
new bend point at the 50th percentile of the AIME distribution of newly
retired workers. Maintain current-law benefits for earners at the 50th
percentile and below. Reduce the 32 and 15 percent factors above the 50th
percentile such that the initial benefit for a worker with AIME equal to
the taxable maximum grows by inflation rather than the growth in the SSA
average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
1.06 | 2.77 | 37% | 64% | |
B1.5 |
Progressive price indexing (60th percentile) of PIA factors beginning with
individuals newly eligible for OASDI benefits in 2025: Create a new bend
point at the 60th percentile of the AIME distribution of newly retired workers.
Maintain current-law benefits for earners at the 60th percentile and below. Reduce
the 32 and 15 percent factors above the 60th percentile such that the initial
benefit for a worker with AIME equal to the taxable maximum grows by inflation
rather than the growth in the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.78 | 1.84 | 28% | 43% | |
B1.6 (2022) |
Progressive price indexing (30th percentile) of PIA factors beginning with
individuals newly eligible for OASI benefits in 2022: Create a new bend point
at the 30th percentile of the AIME distribution of newly retired workers. Maintain
current-law benefits for earners at the 30th percentile and below. Reduce the
32 and 15 percent factors above the 30th percentile such that the initial benefit
for a worker with AIME equal to the taxable maximum grows by inflation rather
than the growth in the SSA average wage index. Disabled workers are: (a) not
affected prior to normal retirement age; and (b) subject to a proportional
reduction in benefits, based on the worker's years of disability, upon conversion
to retired-worker beneficiary status. Young survivors (children of deceased
workers and surviving spouses with a child in care) are not affected.
graph | table | pdf-graph | pdf-table | memo (Bennett) |
1.53 | 4.00 | 54% | 93% | |
B1.6 (2027) |
Progressive price indexing (30th percentile) of PIA factors beginning with
individuals newly eligible for OASI benefits in 2027: Create a new bend point
at the 30th percentile of the AIME distribution of newly retired workers. Maintain
current-law benefits for earners at the 30th percentile and below. Reduce the
32 and 15 percent factors above the 30th percentile such that the initial benefit
for a worker with AIME equal to the taxable maximum grows by inflation rather
than the growth in the SSA average wage index. Disabled workers are: (a) not
affected prior to normal retirement age; and (b) subject to a proportional
reduction in benefits, based on the worker's years of disability, upon conversion
to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (Ryan 2010) |
1.21 | 3.66 | 43% | 85% | |
B1.7 |
Progressive price indexing (40th percentile) of PIA factors for individuals
newly eligible for OASI benefits in 2026 through 2063: Create a new bend
point at the 40th percentile of the AIME distribution of newly retired workers.
Maintain current-law benefits for earners at the 40th percentile and below. Reduce
the 32 and 15 percent factors above the 40th percentile such that the initial
benefit for a worker with AIME equal to the taxable maximum grows by inflation
rather than the growth in the SSA average wage index. Disabled workers are: (a)
not affected prior to normal retirement age; and (b) subject to a proportional
reduction in benefits, based on the worker's years of disability, upon conversion
to retired-worker beneficiary status. Young survivors (children of deceased workers
and surviving spouses with a child in care) are not affected.
graph | table | pdf-graph | pdf-table | memo (Graham, Paul, Lee) |
1.02 | 2.62 | 36% | 61% | |
B1.8 |
Progressive price indexing (50th percentile) of PIA factors for individuals
newly eligible for OASI benefits in 2023 through 2062: Create a new bend point
at the 50th percentile of the AIME distribution of newly retired workers. Maintain
current-law benefits for earners at the 50th percentile and below. Reduce the
32 and 15 percent factors above the 50th percentile such that the initial benefit
for a worker with AIME equal to the taxable maximum grows by inflation rather
than the growth in the SSA average wage index. Disabled workers are: (a) not
affected prior to normal retirement age; and (b) subject to a proportional reduction
in benefits, based on the worker's years of disability, upon conversion to
retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (Chaffetz) |
1.02 | 2.39 | 36% | 55% | |
B2.1 |
Beginning with those newly eligible for OASI benefits in 2028, multiply
the PIA factors by the ratio of life expectancy at 67 for 2023 to the
life expectancy at age 67 for the 4th year prior to the year of benefit
eligibility. Unisex life expectancies, based on period life tables as
computed by SSA's Office of the Chief Actuary, are used to determine the
ratio. Disabled workers are: (a) not affected prior to normal retirement
age; and (b) subject to a proportional reduction in benefits, based on
the worker's years of disability, upon conversion to retired-worker
beneficiary status.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) | memo (Bennett) |
0.52 | 1.66 | 18% | 39% | |
B3.8 |
Beginning with those newly eligible for OASDI benefits in 2025, create
a new bend point at the 50th percentile of the AIME distribution of
newly retired workers and gradually reduce all PIA factors except for
the 90 percent factor. By 2058: a) the 32 percent PIA factor below the
new bend point reduces to 30 percent; b) the 32 percent PIA factor above
the new bend point reduces to 10 percent; and c) the 15 percent PIA factor
reduces to 5 percent.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission) |
0.94 | 2.32 | 33% | 54% | |
B3.9 |
Beginning with those newly eligible for OASDI benefits in 2031, gradually
reduce the 15 percent PIA factor in each year so that it reaches 10 percent
for those newly eligible in 2060 and later.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
0.09 | 0.25 | 3% | 6% | |
B3.10 |
Beginning with those newly eligible for OASDI benefits in 2025, gradually
increase the first PIA bend point in each year so that it is 15 percent
higher for those newly eligible in 2039 and later.
graph | table | pdf-graph | pdf-table | memo (Sanders, DeFazio) | memo (Sanchez) | memo (Sanders 2016) | memo (Schatz) | memo (Sanders 2015) | memo (Harkin 2013) | memo (Harkin 2012) |
-0.37 | -0.70 | -13% | -16% | |
B3.11 |
Increase the first PIA factor from 90 percent to 93 percent for all
beneficiaries eligible as of January 2020 and for those newly eligible
for benefits after 2019.
graph | table | pdf-graph | pdf-table | memo (Larson 2017) | memo (Larson 2015) | memo (Larson 2014) |
-0.24 | -0.26 | -8% | -6% | |
B3.12 |
Use an annualized "mini-PIA" formula beginning with retired workers
newly eligible in 2025. For each indexed earnings year, compute an
individual AIME and an individual PIA. Sum these individual PIAs for
the 40 highest years of indexed earnings and divide that total amount
by 37 to get the PIA for this provision. Phase-in over five years,
meaning that in 2025, 80 percent of the benefit would be based on the
old 35-year average PIA formula and 20 percent on the new mini-PIA
formula, shifting by 20 percentage points each year until 100 percent
is based on the new mini-PIA formula for those attaining age 62 in 2029.
Disabled worker benefits are unchanged under this provision.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.25 | 0.40 | 9% | 9% | |
B3.13 |
For retired worker beneficiaries newly eligible in 2025 (excluding
disabled workers), add a new bend point at the wage-indexed equivalent
of the 50th percentile of the AIME distribution minus $100 (for 2015
eligibility) and change the PIA factors to 95/32/15/5. Also move the
current-law first bend point from the wage-indexed equivalent of $895
in 2018 to $1,138 in 2018. Phase this provision in over 10 years (2025-2034).
The phase-in would work on a weighted-average basis: 90% of CL formula
+ 10% of proposal formula for 2025, 80% of CL formula + 20% of proposal
formula for 2026, and so on.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.09 | 0.18 | 3% | 4% | |
B3.14 |
Beginning with those newly eligible for OASDI benefits in 2020, reduce
the 15 percent PIA factor by 2 percentage points per year so that it
reaches 5 percent for those newly eligible in 2024 and later.
graph | table | pdf-graph | pdf-table | memo (Ribble) |
0.33 | 0.49 | 12% | 11% | |
B3.15 |
Increase the 90 percent PIA formula factor to 91 percent for beneficiaries
newly eligible in 2023, 92 percent for those newly eligible in 2024, ...,
reaching 95 percent for those newly eligible in 2027 and later.
graph | table | pdf-graph | pdf-table | memo (Sanchez) |
-0.27 | -0.44 | -10% | -10% | |
B3.16 |
For retired worker and disabled worker beneficiaries becoming initially
eligible in January 2025 or later, phase in a new benefit formula (from
2025 to 2034). Replace the existing two primary insurance amount (PIA)
bend points with three new bend points as follows: (1) 25% AWI/12 from
2 years prior to initial eligibility; (2) 100% AWI/12 from 2 years prior
to initial eligibility; and (3) 125% AWI/12 from 2 years prior to initial
eligibility. The new PIA factors are 95%, 27.5%, 5% and 2%. During the
phase in, those becoming newly eligible for benefits will receive an increasing
portion of their benefits based on the new formula, reaching 100% of the
new formula in 2034.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
0.89 | 1.62 | 31% | 37% | |
B4.1 |
Increase the number of years used to calculate benefits for retirees and
survivors (but not for disabled workers) from 35 to 38, phased in over the
years 2019-2023.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.27 | 0.38 | 9% | 9% | |
B4.2 |
Increase the number of years used to calculate benefits for retirees
and survivors (but not for disabled workers) from 35 to 40, phased in
over the years 2019-2027.
graph | table | pdf-graph | pdf-table | memo (Chaffetz) | memo (Social Security Advisory Board) |
0.43 | 0.64 | 15% | 15% | |
B4.3 |
For the OASI and DI computation of the PIA, gradually reduce the maximum
number of drop-out years from 5 to 0, phased in over the years 2020-2028.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
0.59 | 0.91 | 21% | 21% | |
B4.4 |
Reduce the number of computation years (increase dropout years) for parents
having a child in care under the age of 6. The parent must have no earnings
(covered or non-covered) for the year to be eligible for the credit. Only one
parent can claim the childcare added dropout year for a given earnings year.
Each parent can earn at most 2 dropout years per child, and a maximum of 5
dropout years in total. The years designated as childcare years do not have
to be the years that could otherwise be included in the computation of the
average indexed monthly earnings (AIME). The provision would be effective for
all benefits payable for entitlement in January 2020 and later (without regard
for when the beneficiary became initially eligible).
graph | table | pdf-graph | pdf-table | memo (Murphy) |
-0.05 | -0.05 | -2% | -1% | |
B4.5 |
For retired and disabled workers, reduce the maximum number of dropout
years to 4 for workers newly eligible in 2020, to 3 for workers newly
eligible in 2021, and to 2 for workers newly eligible in 2022 and later.
graph | table | pdf-graph | pdf-table | memo (Ribble) |
0.36 | 0.51 | 13% | 12% | |
B5.1 |
Increase the PIA to a level such that a worker with 30 years of earnings
at the minimum wage level receives an adjusted PIA equal to 120 percent
of the Federal poverty level for an aged individual. This provision takes
full effect for all newly eligible OASDI workers in 2036, and is phased
in for new eligibles in 2027 through 2035. The percentage increase in PIA
is lowered proportionately for those with fewer than 30 years of earnings,
down to no enhancement for workers with 20 or fewer years of earnings.
(Year-of-work requirements are "scaled" for disabled workers based on their
years of potential work from age 22 to benefit eligibility). The benefit
enhancement percentage is reduced proportionately for workers with higher
average indexed monthly earnings (AIME), down to no enhancement for those
with AIME at least twice that of a 35-year steady minimum wage earner.
graph | table | pdf-graph | pdf-table | memo (Ryan 2010) |
-0.01 | -0.00 | -0% | -0% | |
B5.2 |
Beginning for those newly eligible in 2019, reconfigure the special
minimum benefit: (a) A year of coverage is defined as a year in which
4 quarters of coverage are earned. (b) At implementation, set the PIA
for 30 years of coverage equal to 125 percent of the monthly poverty
level (about $1,256 in 2017). For those with under 30 years of coverage,
the PIA per year of coverage over 10 years is $1,256/20 = $62.80. (c)
Index the initial PIA per year of coverage by wage growth for successive
cohorts.
graph | table | pdf-graph | pdf-table | memo (Lawson) | memo (Larson 2017) | memo (Sanders, DeFazio) | memo (Sanders 2016) | memo (Sanders 2015) | memo (Larson 2015) | memo (Larson 2014) | memo (National Academy of Social Insurance) |
-0.17 | -0.25 | -6% | -6% | |
B5.3 |
Beginning for those newly eligible in 2019, reconfigure the special
minimum benefit: (a) A year of coverage is defined to be either a year
in which 4 quarters of coverage are earned or a child is in care.
Childcare years are granted to parents who have a child under 5, with
a limit of 8 such years. (b) At implementation, set the PIA for 30
years of coverage equal to 125 percent of the monthly poverty level
(about $1,256 in 2017). For those with under 30 years of coverage,
the PIA per year of coverage over 10 years is $1,256/20 = $62.80.
(c) Index the initial PIA per year of coverage by wage growth for
successive cohorts.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
-0.25 | -0.36 | -9% | -8% | |
B5.4 |
Beginning for those newly eligible in 2025, reconfigure the special
minimum benefit: (a) A year of coverage is defined as a year in which
4 quarters of coverage are earned. (b) At implementation, set the PIA
for 30 years of coverage equal to 125 percent of the monthly poverty
level (about $1,256 in 2017). For those with under 30 years of coverage,
the PIA per year of coverage over 10 years is $1,256/20 = $62.80. (c)
From 2017 to the year of implementation, 2025, index the PIA per year
of coverage using the chain-CPI index. Then, for later years, index
the PIA per year of coverage by wage growth for successive cohorts.
(d) Scale work requirements for disabled workers, based on the number
of years of non-disabled potential work.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission) |
-0.13 | -0.22 | -5% | -5% | |
B5.5 |
Beginning for those newly eligible in 2020, reconfigure the special
minimum benefit: (a) A year of coverage is defined as a year in which
either 20 percent of the "old law maximum" is earned or a child is in
care. Childcare years are granted to parents who have a child under 6,
with a limit of 8 such years. (b) At implementation, set the PIA for 30
years of coverage equal to 133 percent of the Census monthly poverty level
(about $1,303 in 2017). For those with under 30 years of coverage, the
PIA per year of coverage over 19 years is $1,303/11 = $118.50. (c) Index
the initial PIA per year of coverage by wage growth for successive cohorts.
(d) Scale work requirements for disabled workers, based on the number of
years of non-disabled potential work.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
-0.06 | -0.08 | -2% | -2% | |
B5.6 |
Beginning for those newly eligible in 2019, reconfigure the special
minimum benefit: (a) A year of coverage is defined to be either a year
in which 4 quarters of coverage are earned or a child is in care. Childcare
years are granted to parents who have a child under 6, with a limit
of 5 such years. (b) At implementation, set the PIA for 30 years of
coverage equal to 100 percent of the monthly poverty level (about $1,012
in 2018). For those with under 30 years of coverage, the PIA per year
of coverage over 10 years is $1,012/20 = $50.60. (c) From 2018 to the
year of implementation, 2019, index the PIA per year of coverage using
the CPI index. Then, for later years, index the PIA per year of coverage
by wage growth for successive cohorts. (d) Scale work requirements for
disabled workers, based on the number of years of non-disabled potential
work.
graph | table | pdf-graph | pdf-table | memo (Chaffetz) |
-0.10 | -0.15 | -4% | -4% | |
B5.7 |
Beginning for those newly eligible in 2021, reconfigure the special
minimum benefit: (a) The number of years of work (YOWs) is determined
as total quarters of coverage divided by 4, ignoring any fraction.
Childcare years are granted to parents who have a child under 6, with
a limit of 5 such years. (b) At implementation, set the PIA for 30+
YOWs equal to 100 percent of the monthly HHS poverty level for the
year prior to eligibility. For workers between 11 and 29 YOWs, reduce
the special minimum by 3 1/3 percentage points per YOW so that at 29
YOWs the minimum would be 96 2/3% of poverty, ..., down to 11 YOWs at
36 2/3% of poverty. No minimum for 10 or fewer YOWs.
graph | table | pdf-graph | pdf-table | memo (Moore) |
-0.02 | -0.00 | -1% | -0% | |
B5.8 |
Beginning in 2023, create a Basic Minimum Benefit (BMB) within Social
Security (i.e., the cost of the BMB would be charged as a cost to the
OASI Trust Fund), with the following specifications: (1) Eligibility
for the BMB would be limited to OASI beneficiaries who have attained
normal retirement age (NRA) or above. OASI beneficiaries under NRA would
not be eligible for the BMB. (2) The BMB would be calculated on a household
basis and split equally between members of the household. In the case
of a married couple, both spouses would need to claim any Social Security
benefits for which they are eligible before they could receive the BMB.
If both spouses have claimed and one is NRA or above and the other has
not yet attained NRA, only the half of the BMB for the spouse over NRA
would be payable. (3) The BMB amount for single beneficiaries would be
equal to either: 1) the BMB base ($604 in 2015) - 0.70 * current monthly
OASI benefit (not including any BMB), if positive; or 2) zero. (4) The
BMB amount for married beneficiaries would be equal to either: 1) the
BMB base ($906 in 2015) - 0.70 * total household monthly OASI benefits
(not including any BMB), if positive; or 2) zero. (5) The BMB bases for
singles and couples would be updated annually for changes in the average
wage index (AWI). (6) Single filers with Adjusted Gross Income (AGI) over
$30,000 and joint filers with AGI (including taxable SS benefits) over
$45,000 would be subject to clawback of the BMB through the income tax
system. Any BMB would be reduced by one dollar for every dollar of income
above the thresholds. (Thresholds, in 2015 dollars, would be indexed to
chained CPI-U.) Clawbacks would be credited back to the OASI Trust Fund.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
-0.20 | -0.24 | -7% | -5% | |
B5.9 |
Beginning for those newly eligible in 2020, reconfigure the special
minimum benefit: (a) A year of coverage is defined as a year in which
4 quarters of coverage are earned. (b) At implementation, set the PIA
for 40 years of coverage equal to 125 percent of the monthly Aged Federal
poverty level (about $1,225 in 2017). For those with 20 or fewer years
of coverage, phase up linearly from 0 percent of the poverty level for
10 years of coverage to 100 percent of the poverty level. For those having
between 20 and 40 years of coverage, phase up linearly from 100 percent
of the poverty level at 20 years of coverage to 125% of the poverty level
for 40 or more years of coverage. (c) For newly eligible workers in 2020
and 2021, index the applicable poverty level using the CPI index, to the
year prior to eligibility. Then, for newly eligible workers in 2022 and
later, index the PIA per year of coverage by wage growth for successive
cohorts. (d) Disabled workers have a somewhat similar minimum benefit,
with work requirements scaled based on the number of years of non-disabled
potential work.
graph | table | pdf-graph | pdf-table | memo (Ribble) |
-0.17 | -0.28 | -6% | -7% | |
B5.10 |
Reconfigure the special minimum benefit, phased in for retired and
disabled workers newly eligible from 2025 through 2034: (a) A year
of work (YOW) coverage is equal to earnings at or above $10,875 in
2018 (reflecting a full-time worker earning the federal minimum wage),
adjusted thereafter for wage growth. (b) At implementation, set the
minimum PIA at zero percent of AWI for those with 10 or fewer YOWs
to 15 percent of AWI for those with 15 YOWs, increasing linearly so
that it reaches 19 percent for 19 YOWs. Then the minimum PIA would
jump up to 25 percent of AWI for those with 20 YOWs, increasing linearly
so that it equals 35 percent of AWI for those with 35 or more YOWs.
(c) Use the AWI for two years prior to the year of initial eligibility
in the minimum PIA calculation with COLA increase after the year of
initial eligibility. (d) Scale the YOW requirements for disabled workers,
based on the number of years of non-disabled potential work.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
-0.23 | -0.41 | -8% | -10% | |
B6.1 |
Provide a 5 percent increase to the monthly benefit amount (MBA) of any
beneficiary who is 85 or older at the beginning of 2019 or who reaches
their 85th birthday after the beginning of 2019.
graph | table | pdf-graph | pdf-table | memo (Chaffetz) | memo (National Academy of Social Insurance) |
-0.11 | -0.16 | -4% | -4% | |
B6.2 |
Provide the same dollar amount increase to the monthly benefit amount
(MBA) of any beneficiary who is 85 or older at the beginning of 2019 or
who reaches their 85th birthday after the beginning of 2019. The dollar
amount of increase equals 5 percent of the average retired-worker MBA in
the prior year.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
-0.11 | -0.16 | -4% | -4% | |
B6.3 |
Provide an increase in the benefit level of any beneficiary who is 85
or older at the beginning of 2020 or who reaches their 85th birthday
after the beginning of 2020. Increase the beneficiary's PIA based on
an amount equal to the average retired-worker PIA at the end of 2019,
or at the end of the year age 80 if later. Increase the beneficiary's
PIA by 5 percent of this amount for those older than 85 at the beginning
of 2020 and by 5 percent of this amount at age 85 for others, phased in
at 1 percent per year for ages 81-85.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
-0.14 | -0.19 | -5% | -4% | |
B6.4 |
Starting in 2019, provide a 5 percent uniform benefit increase 24
years after initial benefit eligibility. Phase in the benefit increase
at 1 percent per year from the 20th through 24th years after eligibility.
For disabled workers, the eligibility age is the initial entitlement
year to the benefit. The benefit increase is equal to 5 percent of
the PIA of a worker assumed to have career-average earnings equal
to SSA's average wage index.
graph | table | pdf-graph | pdf-table | memo (Ribble) | memo (Fiscal Commission) |
-0.16 | -0.22 | -6% | -5% | |
B6.5 |
Starting in 2021, provide a 5 percent uniform PIA increase 20 years
after benefit eligibility. Phase in the PIA increase at 1 percent per
year from the 16th through 20th years after eligibility. The full PIA
increase is equal to 5 percent of the PIA of a worker assumed to have
career-average earnings equal to the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Moore) |
-0.24 | -0.32 | -9% | -7% | |
B6.6 |
Starting in 2025, provide a uniform PIA increase 23 years after benefit
eligibility. Phase in the PIA increase at 0.5 percent per year from the
14th through the 23rd years after eligibility. The full PIA increase is
equal to 5 percent of the average retired worker PIA in December of the
12th year after benefit eligibility. A similar additional PIA increase
applies 42 years after benefit eligibility (age 104), phased in from the
33rd through the 42nd years after eligibility. For those past the 14th year
of eligibility in 2025 (over age 76 for retirees), phase in the PIA enhancement
over 10 years starting in 2025. Auxiliary beneficiaries receive benefit
enhancement based on the PIA of the governing worker.
graph | table | pdf-graph | pdf-table | memo (FY 2014 Budget) |
-0.21 | -0.30 | -7% | -7% | |
B6.7 |
Starting in January 2025, provide an addition to monthly benefits for
all beneficiaries who have been eligible for at least 20 years, with
the following specifications: (1) Augment benefits (not the PIA) for
those of qualifying age and eligibility duration with a MAGI below about
$26,150 if single and $52,300 if married. MAGI is set to equal the IRMAA
definition (AGI plus tax-exempt interest income). Index these thresholds
after 2025 by the increase in the C-CPI-U; (2) The full additional amount
is applicable for those born 1959 and later, once 24 years elapse from
initial eligibility. The basic additional amount is calculated as 5 percent
of the PIA for a hypothetical worker with earnings equal to the AWI each
year; (3) For those born prior to 1959, the full additional amount is
multiplied by the number of years they have been affected by the C-CPI-U,
divided by 24; (4) Beneficiaries will receive 20 percent of their additional
amount in their 20th year after initial eligibility, 40 percent in their 21st
year after initial eligibility,..., and 100 percent of their additional amount
in their 24th and later years after benefit eligibility; (5) Retired and
disabled worker beneficiaries, dually entitled spouse beneficiaries, and
all survivor beneficiaries received their addition as described above.
Spousal beneficiaries (aged or with child in care) and child beneficiaries
of a living retired or disabled worker receive 50 percent of the additional
amount described above. Other beneficiary types (such as parents of deceased
workers) will receive the percentage of the flat benefit that equals the
percentage of the insured worker's PIA that they receive; (6) The AWI used
is for the second year prior to the beneficiary's initial eligibility year,
with applicable COLAs applied up to the age when the addition is received;
and (7) The additional amount is added to the monthly benefit after reductions
for early claiming or increases for delayed claiming have been applied.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
-0.06 | -0.08 | -2% | -2% | |
B7.2 |
Reduce benefits by 5 percent for those newly eligible for
benefits in 2019 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.61 | 0.83 | 21% | 19% | |
B7.3 |
Give credit to parents with a child under 6 for earnings for up to five
years. The earnings credited for a childcare year equal one half of the
SSA average wage index (about $25,947 in 2018). The credits are available
for all past years to newly eligible retired-worker and disabled-worker
beneficiaries starting in 2019. The 5 years are chosen to yield the largest
increase in AIME.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
-0.23 | -0.32 | -8% | -7% | |
B7.5 |
Increase benefits by 5 percent for all beneficiaries as of the beginning
of 2019 and for those newly eligible for benefits after the beginning of 2019.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
-0.78 | -0.83 | -27% | -19% | |
B7.7 |
Reduce individual Social Security benefits if modified adjusted gross
income, or MAGI (AGI less taxable Social Security benefits plus nontaxable
interest income) is above $60,000 for single taxpayers or $120,000 for
taxpayers filing jointly. This provision is effective for individuals
newly eligible for benefits in 2023 or later. The percentage reduction
increases linearly up to 50 percent for single/joint filers with MAGI
of $180,000/$360,000 or above. Index the MAGI thresholds for years after
2023, based on changes in the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Chaffetz) |
0.36 | 0.50 | 13% | 12% | |
B7.8 |
Replace the Windfall Elimination Provision (WEP) and Government
Pension Offset (GPO) with a revised reduction for most OASI benefits
based on all earnings, beginning with beneficiaries newly eligible
in 2025.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.09 | 0.13 | 3% | 3% | |
B7.9 |
Beginning for newly eligible retired workers and spouses in 2025,
all claimants who are married would receive a specified joint-and-survivor
annuity benefit (i.e., surviving spouses would receive 75 percent
of the decedents' benefits, in addition to their own) that would
be payable if both were still alive. Initial benefits would be
actuarially adjusted to keep the expected value of benefits equivalent
to what would otherwise be current law.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) memo (Bipartisan Policy Center June 2016) |
0.00 | -0.24 | 0% | -6% | |
B7.10 |
Replace the current-law WEP with a new calculation for most OASI and DI
benefits based on covered and non-covered earnings, phased in for beneficiaries
becoming newly eligible in 2025 through 2034. For this new approach, compute
a PIA based on all past earnings (covered and non-covered), and multiply
by the "non-covered earnings ratio." This ratio is equal to the current-law
concept of the average indexed monthly earnings computed without non-covered
earnings divided by a modified average indexed monthly earnings that includes
both covered and non-covered earnings in our records.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
0.05 | 0.09 | 2% | 2% | |
B7.11 |
Beginning in January 2021, eliminate the retirement earnings test for
all beneficiaries under normal retirement age, including retired workers,
aged spouses, aged widow(er)s, young spouses with a child in care, young
surviving spouses with a child in care, and children.
graph | table | pdf-graph | pdf-table | memo (Johnson, Walorski) | memo (Johnson 2016) |
0.02 | 0.13 | 1% | 3% | |
B7.12 |
Provide an option to split the 8-percent delayed retirement credit (DRC)
to offer a lump sum benefit at initial entitlement equal to 2 percent of
the 8 percent DRC earned, and a 6 percent DRC on subsequent monthly benefits,
effective for workers newly entitled to retired worker benefits in 2021
and later. Widows are held harmless from the lump-sum decision.
graph | table | pdf-graph | pdf-table | memo (Johnson, Smith) | memo (Johnson 2016) |
-0.00 | 0.00 | -0% | 0% |
Category: Provisions Affecting Retirement Age (2018 Trustees Report intermediate assumptions) | ||||||
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll. | ||||||
C1.1 |
After the normal retirement age (NRA) reaches 67 for those age 62 in 2022,
increase the NRA 1 month every 2 years until the NRA reaches 68.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.37 | 0.69 | 13% | 16% | |
C1.2 |
After the normal retirement age (NRA) reaches 67 for those age 62 in 2022,
increase the NRA 2 months per year until the NRA reaches 68.
graph | table | pdf-graph | pdf-table | memo (Liebman, MacGuineas, Samwick) |
0.46 | 0.69 | 16% | 16% | |
C1.3 |
After the normal retirement age (NRA) reaches 67 for those age 62 in 2022,
index the NRA to maintain a constant ratio of expected retirement years
(life expectancy at NRA) to potential work years (NRA minus 20). We assume
the NRA will increase 1 month every 2 years.
graph | table | pdf-graph | pdf-table | memo (Ryan 2010) | memo (AARP) | memo (Ryan 2008) | memo (Social Security Advisory Board) |
0.55 | 1.55 | 19% | 36% | |
C1.4 |
After the normal retirement age (NRA) reaches 67 for those age 62 in 2022,
increase the NRA 2 months per year until it reaches 69 for individuals attaining
age 62 in 2034. Thereafter, increase the NRA 1 month every 2 years.
graph | table | pdf-graph | pdf-table | memo (Ribble) | memo (Chaffetz) |
1.11 | 2.17 | 39% | 50% | |
C1.5 |
Starting in 2019, allow workers to choose whether to have their payroll tax
rate reduced by 2 percentage points. For each calendar year that a worker chooses
to have their payroll tax reduced, their normal retirement age (NRA) increases
1 month. We assume 2/3 of workers each year will choose this payroll reduction.
The General Fund of the Treasury reimburses the OASI and DI Trust Funds for
the reduction in payroll tax revenue.
graph | table | pdf-graph | pdf-table | memo (Landry) |
0.66 | 1.23 | 23% | 28% | |
C1.6 |
After the normal retirement age (NRA) reaches 67 for those age 62 in 2022,
increase the NRA by 1 month every 2 years until the NRA reaches 69. Also
increase the age up to which the delayed retirement credit may be earned
at the same rate (from 70 to 72). No change to earliest eligibility age.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.53 | 1.32 | 19% | 31% | |
C1.7 |
After the normal retirement age (NRA) reaches 67 for those attaining age 62
in 2022, increase the NRA by 3 months per year starting for attaining age 62
in 2023 until it reaches 69 for those attaining age 62 in 2030. Increase the
age up to which delayed retirement credits may be earned from 70 to 72 on the
same schedule. Increase the widow(er) NRA in the same manner. The earliest
eligibility age (EEA) for worker's and widow(er)'s benefit is unchanged.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
0.88 | 1.32 | 31% | 31% | |
C2.1 |
Increase the earliest eligibility age (EEA) by two months per year for
those age 62 starting in 2020 and ending in 2037 (EEA reaches 65 for
those age 62 in 2037).
graph | table | pdf-graph | pdf-table | memo (AARP) |
-0.07 | -0.42 | -2% | -10% | |
C2.2 |
After the normal retirement age (NRA) reaches 67 for those age 62 in 2022,
index the NRA to maintain a constant ratio of expected retirement years
(life expectancy at NRA) to potential work years (NRA minus 20). We assume
the NRA will increase 1 month every 2 years. Also, raise the earliest eligibility
age (EEA) for retired-workers, aged widow(er)s, and disabled widow(er)s by
the same amount as the NRA starting for those attaining EEA in 2019.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) | memo (Warshawsky) |
0.51 | 1.25 | 18% | 29% | |
C2.3 |
After the normal retirement age (NRA) reaches 67 for those age 62 in 2022,
index the NRA to maintain a constant ratio of expected retirement years (life
expectancy at NRA) to potential work years (NRA minus 20). We assume the
NRA will increase 1 month every 2 years. Also, increase the earliest eligibility
age (EEA) by the same amount as the NRA starting for those age 62 in 2022
so as to maintain a 5 year difference between the two ages. Include a "hardship
exemption" with no EEA/NRA change for a worker with 25 years of earnings
(with 4 quarters of coverage each), and average indexed monthly earnings
(AIME) less than 250 percent of the poverty level (wage-indexed from 2013).
The hardship exemption is phased out for those with AIME above 400 percent
of the poverty level.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission) |
0.42 | 1.06 | 15% | 25% | |
C2.4 |
After the normal retirement age (NRA) reaches 67 for those age 62 in 2022,
increase both the NRA and the earliest eligibility age (EEA) by 36/47 of a
month per year until the NRA and EEA reach 70 and 65 respectively. For each
year, the computed NRA and EEA round down to the next lower full month.
graph | table | pdf-graph | pdf-table | memo (Lummis) |
0.75 | 1.78 | 27% | 41% | |
C2.5 |
Increase the normal retirement age (NRA) 3 months per year starting for
those age 62 in 2019 until the NRA reaches 70 in 2033. Thereafter, index
the NRA to maintain a constant ratio of expected retirement years (life
expectancy at NRA) to potential work years (NRA minus 20). We assume the
NRA will increase 1 month every 2 years. Also, increase the earliest eligibility
age (EEA) from 62 to 64 at the same time the NRA increases from 67 to 69;
that is, for those attaining age 62 in 2021 through 2028. Keep EEA at 64
thereafter.
graph | table | pdf-graph | pdf-table | memo (Graham, Paul, Lee) |
1.37 | 2.65 | 48% | 61% | |
C2.6 |
Increase the normal retirement age (NRA) and the earliest eligibility age
(EEA) for those age 62 in 2020-2021 to 68 and 63, respectively, and then
by 3 months per year in 2022-2025 to 69 and 64, respectively.
graph | table | pdf-graph | pdf-table | memo (Hutchison) |
0.89 | 1.11 | 31% | 26% | |
C2.7 |
Increase the normal retirement age (NRA) and the earliest eligibility age (EEA)
for those age 62 starting in 2019 by 3 months per year until EEA reaches 64 in
2026 and NRA reaches 69 in 2029.
graph | table | pdf-graph | pdf-table | memo (Hutchison) |
0.81 | 1.11 | 28% | 26% | |
C2.8 |
Starting in 2021, convert all disabled-worker beneficiaries to retired-worker
status upon attainment of their earliest eligibility age (EEA) rather than their
normal retirement age (NRA). After conversion, apply the early retirement reduction
for retirement at EEA (currently about 29.2 percent for those age 62 in 2021)
phased in over 40 years.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
0.43 | 0.80 | 15% | 18% |
Category: Provisions Affecting Family Member Benefits (2018 Trustees Report intermediate assumptions) | ||||||
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll. | ||||||
D1 |
Beginning in 2019, continue benefits for children of disabled or deceased
workers until age 22 if the child is in high school, college or vocational
school.
graph | table | pdf-graph | pdf-table | memo (Lawson) | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) | memo (Begich, Murray) | memo (Moore) | memo (National Academy of Social Insurance) |
-0.06 | -0.06 | -2% | -1% | |
D2 |
The current spouse benefit is based on 50 percent of the PIA of the other
spouse. Reduce this percent each year by 1 percentage point beginning with
newly eligible spouses in 2019, until the percent reaches 33 in 2035.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
0.10 | 0.15 | 4% | 4% | |
D3 |
Allow divorced aged spouses and divorced surviving spouses married 5 to 9
years to get benefits based on the former spouse's account. Divorced aged
and surviving spouses would receive 50% of the applicable current-law PIA
percentage if married 5 years, 60% of the applicable PIA percentage if
married 6 years, ..., 90% of the applicable PIA percentage if married 9
years. This benefit would be available to divorced spouses on the rolls at
the beginning of 2020 and those becoming eligible after 2020.
graph | table | pdf-graph | pdf-table | memo (Begich, Murray) |
-0.02 | -0.01 | -1% | -0% | |
D4 |
Establish an alternative benefit for a surviving spouse. For the surviving
spouse, the alternative benefit would equal 75 percent of the sum of the
survivor's own worker benefit and the deceased worker's PIA (including any
actuarial reductions or delayed retirement credits). If the deceased worker
died before becoming entitled, use the age 62 actuarial reduction if deceased
before age 62, or the applicable actuarial reduction/DRC for entitlement at
the age of death if deceased after 62. The alternative benefit would not
exceed the PIA of a hypothetical earner who earns the SSA average wage index
(AWI) every year, and who becomes eligible for retired-worker benefits in the
same year in which the deceased worker became entitled to worker benefits or
died (if before entitlement). The alternative benefit would be paid only if
more than the current-law benefit. This benefit would be available to surviving
spouses on the rolls at the beginning of 2020 and those becoming eligible after
2020.
graph | table | pdf-graph | pdf-table | memo (Lawson) | memo (Begich, Murray) |
-0.12 | -0.12 | -4% | -3% | |
D5 |
Limit the spousal benefit to that received by the spouse of the 75th
percentile career-average worker, beginning with retired workers newly
eligible in 2025. For future cohorts, this limit would be indexed for
inflation annually using chain weighted CPI-U. The provision affects
divorced spouses and young spouses (retired workers) but not spouses
of disabled workers.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.09 | 0.19 | 3% | 4% | |
D6 |
For spouses and children of retired and disabled workers becoming newly
eligible beginning in 2025 and phased in for 2025 through 2034, limit
their auxiliary benefit to one-half of the PIA for a hypothetical worker
with earnings equal to the national average wage index (AWI) each year.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
0.07 | 0.10 | 2% | 2% | |
D7 |
Beginning in January 2021, require full time school enrollment as a
condition of eligibility for child benefits at age 15 up to 18.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
0.00 | 0.00 | 0% | 0% |
Category: Provisions Affecting Payroll Taxes (2018 Trustees Report intermediate assumptions) | ||||||
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll. | ||||||
E1.1 |
Increase the payroll tax rate (currently 12.4 percent) to 15.4 percent
in 2019 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
2.85 | 2.97 | 100% | 69% | |
E1.2 |
Increase the payroll tax rate (currently 12.4 percent) to 15.5 percent in
2031-2060, and to 18.6 percent in years 2061 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
3.33 | 5.99 | 117% | 139% | |
E1.4 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2024-2043, until the rate reaches 14.4 percent in 2043
and later.
graph | table | pdf-graph | pdf-table | memo (Larson 2014) | memo (National Academy of Social Insurance) |
1.45 | 1.98 | 51% | 46% | |
E1.8 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2021-2026, until the rate reaches 13.0 percent for
2026 and later.
graph | table | pdf-graph | pdf-table | memo (Moore) |
0.54 | 0.60 | 19% | 14% | |
E1.9 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2022-2045, until the rate reaches 14.8 percent in 2045.
Then increase the payroll tax rate an additional 0.1 percentage point in
each year from 2084-2088, until the rate reaches 15.3 percent for 2088 and
later.
graph | table | pdf-graph | pdf-table | memo (Larson 2017) | memo (Larson 2015) |
1.77 | 2.85 | 62% | 66% | |
E1.10 |
Increase the payroll tax rate by 0.1 percentage point per year for 2020
through 2029 so that it equals 13.4 percent for 2029 and later. The increase
would be split evenly between the employer and employee share, and would
be split between OASI and DI in proportion to currently scheduled payroll
tax rates.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.88 | 1.00 | 31% | 23% | |
E2.1 |
Eliminate the taxable maximum in years 2019 and later, and apply full
12.4 percent payroll tax rate to all earnings. Do not provide benefit
credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (DeFazio 2015) | memo (Social Security Advisory Board) |
2.35 | 2.46 | 83% | 57% | |
E2.2 |
Eliminate the taxable maximum in years 2019 and later, and apply full
12.4 percent payroll tax rate to all earnings. Provide benefit credit
for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
1.93 | 1.68 | 68% | 39% | |
E2.3 |
Eliminate the taxable maximum in years 2019 and later, and apply full 12.4
percent payroll tax rate to all earnings. Provide benefit credit for earnings
above the current-law taxable maximum. Create a new bend point at the
current-law taxable maximum with a 3 percent formula factor applying above
the new bend point.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
2.16 | 2.17 | 76% | 50% | |
E2.4 |
Eliminate the taxable maximum for years 2025 and later (phased in 2019-2025),
and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit
credit for earnings above the current-law taxable maximum that are subject to
the payroll tax, using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2018 that were
in excess of that year's current-law taxable maximum; (2) a new bend point equal
to 134 percent of the monthly current-law taxable maximum; and (3) formula factors
of 3 percent and 0.25 percent below and above the new bend point, respectively.
graph | table | pdf-graph | pdf-table | memo (Deutch, Hirono) | memo (Deutch 2015) | memo (Deutch 2010) |
2.18 | 2.35 | 77% | 54% | |
E2.5 |
Apply 12.4 percent payroll tax rate on earnings above $250,000
starting in 2019, and tax all earnings once the current-law taxable
maximum exceeds $250,000. Do not provide benefit credit for additional
earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Sanders, DeFazio) | memo (Sanders 2016) | memo (Sanders 2015) | memo (Sanders 2013) | memo (DeFazio 2011) |
2.20 | 2.46 | 77% | 57% | |
E2.6 |
Apply a 3 percent payroll tax on earnings above the current-law taxable
maximum starting in 2019. Do not provide benefit credit for earnings above
the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (AARP) |
0.61 | 0.63 | 21% | 15% | |
E2.8 |
Apply a 2 percent payroll tax on earnings above the current-law taxable
maximum for years 2021-2068, and a 3 percent rate for years 2069 and later.
Do not provide benefit credit for earnings above the current-law taxable
maximum.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.44 | 0.63 | 16% | 15% | |
E2.11 |
Eliminate the taxable maximum in years 2024 and later. Phase in elimination
by taxing all earnings above the current-law taxable maximum at: 2.48 percent
in 2020, 4.96 percent in 2021, and so on, up to 12.40 percent in 2024. Provide
benefit credit for earnings above the current-law taxable maximum that are
subject to the payroll tax, using a secondary PIA formula. This secondary PIA
formula involves: (1) an "AIME+" derived from annual earnings from each year
after 2019 that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 5 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Sanchez) | memo (Schatz) | memo (Harkin 2013) |
2.11 | 2.20 | 74% | 51% | |
E2.12 |
Eliminate the taxable maximum in years 2030 and later. Phase in
elimination by taxing all earnings above the current-law taxable
maximum at: 1.24 percent in 2021, 2.48 percent in 2022, and so on,
up to 12.40 percent in 2030. Provide benefit credit for earnings
above the current-law taxable maximum. Create a new bend point at
the current-law taxable maximum with a 3 percent formula factor
applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Moore) |
1.93 | 2.17 | 68% | 50% | |
E2.13 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $400,000
starting in 2020, and tax all earnings once the current-law taxable
maximum exceeds $400,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2019
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Larson 2015) | memo (Larson 2014) |
1.90 | 2.35 | 67% | 54% | |
E2.14 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $250,000
starting in 2020, and tax all earnings once the current-law taxable
maximum exceeds $250,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2019
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Lawson) |
2.13 | 2.35 | 75% | 54% | |
E2.15 |
Apply OASDI 12.4 percent payroll tax rate on earnings above $300,000
starting in 2020, and tax all earnings once the current-law taxable
maximum exceeds $300,000. Provide benefit credit for earnings above
the current-law taxable maximum that are subject to the payroll tax,
using a secondary PIA formula. This secondary PIA formula involves:
(1) an "AIME+" derived from annual earnings from each year after 2019
that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 3 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Crist) |
2.03 | 2.30 | 71% | 53% | |
E3.1 |
Increase the taxable maximum such that 90 percent of earnings
would be subject to the payroll tax (phased in 2019-2028). Provide
benefit credit for earnings up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.79 | 0.68 | 28% | 16% | |
E3.2 |
Increase the taxable maximum such that 90 percent of earnings would
be subject to the payroll tax (phased in 2019-2028). Do not provide
benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Liebman, MacGuineas, Samwick) |
0.98 | 1.11 | 35% | 26% | |
E3.5 |
Increase the taxable maximum each year by an additional 2 percent
beginning in 2019 until taxable earnings equal 90 percent of covered
earnings. Provide benefit credit for earnings up to the revised taxable
maximum.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) | memo (National Academy of Social Insurance) |
0.65 | 0.70 | 23% | 16% | |
E3.6 |
Increase the taxable maximum each year by an additional 2 percent
beginning in 2021 until taxable earnings equal 90 percent of covered
earnings. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.75 | 1.10 | 26% | 26% | |
E3.7 |
Increase the taxable maximum by an additional 2 percent per year
beginning in 2020 until taxable earnings equal 90 percent of covered
earnings. Provide benefit credit for earnings up to the revised
taxable maximum. Create a new bend point equal to the current-law
taxable maximum with a 5 percent formula factor applying above the
new bend point.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission) |
0.66 | 0.80 | 23% | 19% | |
E3.8 |
Beginning in 2026, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $200,000 in 2017 (about $279,300
in 2026), with the threshold wage-indexed after 2026. Provide
proportional benefit credit for additional earnings taxed, based
on the payroll tax rate applied to the additional earnings divided
by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.20 | 0.17 | 7% | 4% | |
E3.9 |
Beginning in 2026, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $200,000 in 2017 (about $279,300
in 2026), with the threshold wage-indexed after 2026. Do not provide
benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.25 | 0.29 | 9% | 7% | |
E3.10 |
Beginning in 2026, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $300,000 in 2017 (about $419,100
in 2026), with the threshold wage-indexed after 2026. Provide
proportional benefit credit for additional earnings taxed, based
on the payroll tax rate applied to the additional earnings divided
by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.14 | 0.12 | 5% | 3% | |
E3.11 |
Beginning in 2026, apply 2 percent payroll tax rate on earnings over
the wage-indexed equivalent of $300,000 in 2017 (about $419,100 in 2026),
with the threshold wage-indexed after 2026. Do not provide benefit credit
for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.18 | 0.22 | 6% | 5% | |
E3.12 |
Beginning in 2026, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $400,000 in 2017 (about $558,900
in 2026), with the threshold wage-indexed after 2026. Provide
proportional benefit credit for additional earnings taxed, based
on the payroll tax rate applied to the additional earnings divided
by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.12 | 0.10 | 4% | 2% | |
E3.13 |
Beginning in 2026, apply 2 percent payroll tax rate on earnings
over the wage-indexed equivalent of $400,000 in 2017 (about $558,900
in 2026), with the threshold wage-indexed after 2026. Do not provide
benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.15 | 0.18 | 5% | 4% | |
E3.14 |
Eliminate the taxable maximum for the employer payroll tax (6.2 percent)
beginning in 2019. For the employee payroll tax (6.2 percent) and for
benefit credit purposes, beginning in 2019, increase the taxable maximum
by an additional 2 percent per year until taxable earnings equal 90 percent
of covered earnings.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
1.45 | 1.41 | 51% | 33% | |
E3.15 |
Increase the taxable maximum such that 90 percent of earnings are
subject to the payroll tax (phased in 2019-2028). In addition, apply
a tax rate of 6.2 percent for earnings above the revised taxable
maximum (phased in from 2019-2028). Provide benefit credit for earnings
taxed up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Senate Special Committee on Aging) |
1.41 | 1.39 | 50% | 32% | |
E3.16 |
Beginning in 2020, apply 4 percent payroll tax rate on earnings above the
wage-indexed equivalent of $400,000 in 2015 (about $462,300 in 2020), with
the threshold wage-indexed after 2020. Provide benefit credit for additional
earnings taxed, using a secondary PIA formula. This secondary PIA formula
involves: (1) an "AIME+" derived from annual earnings taxed only between 2015
wage-indexed equivalents of $400,000 and $500,000, or about $462,300 and
$578,100 in 2020 (with thresholds wage-indexed after 2020); and (2) a formula
factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Larson 2017) | memo (Begich, Murray) |
0.31 | 0.33 | 11% | 8% | |
E3.17 |
Beginning in 2020, increase the taxable maximum by twice the rate of
increase in the national Average Wage Index, but never by less than
3 percent. Provide benefit credit for earnings up to the revised
taxable maximum levels.
graph | table | pdf-graph | pdf-table | memo (Murphy) |
1.08 | 1.51 | 38% | 35% | |
E3.18 |
Increase the taxable maximum linearly over 4 years to $222,600 for 2023.
After 2023, index the taxable maximum to AWI plus 0.5 percentage point.
Apply benefit credit on additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.63 | 0.70 | 22% | 16% | |
E3.19 |
Increase the taxable maximum such that 90 percent of earnings would
be subject to the payroll tax (phased in linearly from 2020-2025).
Provide benefit credit for additional earnings taxed, using a secondary
PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived
from additional annual earnings taxed over the current-law taxable
maximum; and (2) a formula factor of 2.5 percent on this newly computed
"AIME+".
graph | table | pdf-graph | pdf-table | memo (Ribble) |
0.96 | 1.04 | 34% | 24% |
Category: Provisions Affecting Coverage of Employment (2018 Trustees Report intermediate assumptions) | ||||||
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll. | ||||||
F1 |
Starting in 2019, cover newly hired State and local government employees.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission) | memo (Bipartisan Policy Center 2010) | memo (Warshawsky) | memo (Social Security Advisory Board) |
0.16 | -0.16 | 6% | -4% | |
F2 |
Starting in 2019, exempt individuals with more than 180 quarters of
coverage from the OASDI payroll tax. Earnings exempted from OASDI
payroll tax would not be used in computing benefits.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
-0.52 | -0.71 | -18% | -16% | |
F3 |
Expand covered earnings to include employer and employee premiums
for employer-sponsored group health insurance (ESI). Starting in
2022, phase out the OASDI payroll tax exclusion for ESI premiums.
Set an exclusion level at the 75th percentile of premium distribution
in 2022, with amounts above that subject to the payroll tax. Reduce
the exclusion level each year by 10 percent of the 2022 exclusion
level until fully eliminated in 2031. Eliminate the excise tax on
ESI premiums starting in 2022.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
0.92 | 0.66 | 32% | 15% | |
F4 |
Expand covered earnings to include contributions to voluntary salary
reduction plans (such as Cafeteria 125 plans and Flexible Spending
Accounts). Starting in 2019, subject these contributions to the OASDI
payroll tax, making the payroll tax treatment of these contributions
like 401(k) contributions.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
0.28 | 0.18 | 10% | 4% | |
F5 |
Tax Reform for Business: Establish a value added tax (VAT) of
3.0 percent for 2020 and 6.5 percent for 2021 and later. Assume about
75% of personal consumption expenditures is subject to the VAT.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
-0.03 | 0.16 | -1% | 4% | |
F6 |
Apply a 6.2 percent tax on investment income as defined in the Affordable
Care Act (ACA), with unindexed thresholds as in the ACA ($200,000 for single
filer, $250,000 for married filing jointly), starting in 2020. Proceeds go
to the OASDI Trust Fund.
graph | table | pdf-graph | pdf-table | memo (Sanders, DeFazio) | memo (Sanders 2016) | memo (Sanders 2015) |
0.94 | 1.16 | 33% | 27% |
Category: Provisions Affecting Trust Fund Investment in Equities (2018 Trustees Report intermediate assumptions) | ||||||
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll. | ||||||
G1 |
Invest 40 percent of the OASDI Trust Fund reserves in equities (phased in
2019-2033), assuming an ultimate 6.2 percent annual real rate of return on
equities.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.51* | 0.00 | * | 0% | |
G2 |
Invest 40 percent of the OASDI Trust Fund reserves in equities (phased in
2019-2033), assuming an ultimate 5.2 percent annual real rate of return on
equities.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.38 | 0.00 | * | 0% | |
G3 |
Invest 40 percent of the OASDI Trust Fund reserves in equities (phased in
2019-2033), assuming an ultimate 2.7 percent annual real rate of return on
equities. Thus, the ultimate rate of return on equities is the same as that
assumed for Trust Fund bonds.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.00* | 0.00 | * | 0% | |
G4 |
Invest 15 percent of the OASDI Trust Fund reserves in equities (phased in
2019-2028), assuming an ultimate 6.2 percent annual real rate of return on
equities.
graph | table | pdf-graph | pdf-table | memo (AARP) |
0.21* | 0.00 | * | 0% | |
G5 |
Invest 15 percent of the OASDI Trust Fund reserves in equities (phased in
2019-2028), assuming an ultimate 2.7 percent annual real rate of return on
equities. Thus, the ultimate rate of return on equities is the same as that
assumed for Trust Fund bonds.
graph | table | pdf-graph | pdf-table | memo (AARP) |
0.00* | 0.00 | * | 0% | |
G6 |
Invest 25 percent of the OASDI Trust Fund reserves in equities (phased in
2021-2030), assuming an ultimate 6.2 percent annual real rate of return on
equities.
graph | table | pdf-graph | pdf-table | memo (Larson 2014) |
0.33* | 0.00 | * | 0% | |
G7 |
Invest 25 percent of the OASDI Trust Fund reserves in equities (phased in
2021-2030), assuming an ultimate 2.7 percent annual real rate of return on
equities. Thus, the ultimate rate of return on equities is the same as that
assumed for Trust Fund bonds.
graph | table | pdf-graph | pdf-table | memo (Larson 2014) |
0.00* | 0.00 | * | 0% | |
* A change in the investment of trust fund reserves to include some equities affects the size of all summarized measures because increased "present-value" discounting reduces the weight on values for more distant future years. As a result, the magnitude of the current-law actuarial balance and the summarized effects of most proposals is reduced. Therefore, the size of the change in the long-range actuarial balance indicated here cannot be interpreted directly as a reduction in the shortfall. The actual reduction in the shortfall from equity investment depends on the amount of reserves that are available for investment throughout the period. For example, if provisions to change revenue or scheduled benefits resulted in a purely pay-as-you-go system (reserves just above zero throughout the period), then investment in equities would have no effect on the actuarial balance. |
Category: Provisions Affecting Taxation of Benefits (2018 Trustees Report intermediate assumptions) | ||||||
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll. | ||||||
H2 |
Starting in 2019, tax Social Security benefits in a manner similar to
private pension income. Phase out the lower-income thresholds during
2019-2038.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
0.19 | 0.15 | 7% | 4% | |
H3 |
Starting in 2020, modify personal income tax by: (a) establishing two-brackets
with marginal rates of 15 and 27 percent separated at $51,000 (CPI indexed);
(b) creating a non-refundable credit for low-income tax filers age 65 and older;
and (c) treating capital gains as regular income. Tax all Social Security benefits
at the applicable marginal rate (15 or 27 percent) less 7.5 percent, with 60 percent
of this revenue going to OASDI and 40 percent going to HI.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
-0.05 | -0.10 | -2% | -2% | |
H4 |
Increase the threshold for taxation of OASDI benefits to $50,000 for single
filers and $100,000 for joint filers starting in 2020. Taxation of benefits
revenues transferred to the Hospital Insurance (HI) Trust Fund would be the
same as if the current-law computation applied.
graph | table | pdf-graph | pdf-table | memo (Larson 2015) | memo (Larson 2014) |
-0.10 | -0.01 | -4% | -0% | |
H5 |
Beginning in 2025, for single/head-of-household/married-filing-separate
taxpayers with MAGI of $250,000 or more and joint filers with MAGI of $500,000
or more, include up to the remaining 15 percent of Social Security benefits
in taxable income (increased from up to 85 percent of benefits taxable under
current law). In subsequent years, update these thresholds for growth in
wages (AWI). Revenue from this provision would be credited to the Social
Security trust funds. Current law taxation of up to 85 percent of Social
Security benefits would remain unchanged.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.01 | 0.01 | 0% | 0% | |
H6 |
Eliminate federal income taxation of OASDI benefits that is credited to the
OASI and DI Trust Funds for 2054 and later. Phase out OASDI taxation of benefits
by increasing relevant "income" thresholds from 2045 through 2053 as follows,
for single/joint tax filers: (a) 2045 = $32,500/$65,000; (b) 2046 = $40,000/$80,000;
(c) 2047 = $47,500/$95,000; (d) 2048 = $55,000/$110,000; (e) 2049 = $62,500/$125,000;
(f) 2050 = $70,000/$140,000; (g) 2051 = $77,500/$155,000; (h) 2052 = $85,000/$170,000;
and (i) 2053 = $92,500/$185,000. Taxation of benefits revenues for the Hospital
Insurance (HI) Trust Fund would be maintained at the same level as if the
current-law computation applied.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
-0.45 | -0.99 | -16% | -23% | |
H7 |
Replace the current-law thresholds for federal income taxation of OASDI benefits
with a single set of thresholds at $50,000 for single filers and $100,000 for
joint filers for taxation of up to 85 percent of OASDI benefits, effective for
tax year 2020. These thresholds would be fixed and not indexed to price inflation
or average wage increase. Reallocate a portion of revenue from taxation of OASDI
benefits to the HI Trust Fund such that the HI Trust Fund would be in the same
position as if the current-law computation (in the absence of this provision)
applied. The net amount of revenue from taxing OASDI benefits, after the allocation
to HI, would be allocated to the combined Social Security Trust Fund.
graph | table | pdf-graph | pdf-table | memo (Larson 2017) |
-0.16 | -0.01 | -6% | -0% |