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| Actuarial Publications |
Summary of Provisions That Would Change the Social Security Program |
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The information shown below is available in PDF. |
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Estimates based on the intermediate assumptions of the 2008 Trustees Report
| Description of proposed provisions | Change from present law | Results with this provision | ||||
|---|---|---|---|---|---|---|
| Long-range actuarial balance |
Annual balance in 75th year |
Long-range actuarial balance |
Annual balance in 75th year |
|||
| Category: Cost-of-Living Adjustment | ||||||
| Present Law, Alternative II. |
-1.70 | -4.20 | ||||
| A1 | Beginning December 2009,
reduce cost-of-living adjustment for OASDI benefits by 1
percentage point. graph | table | pdf-graph | pdf-table |
1.43 | 2.04 | -0.27 | -2.16 | |
| A2 | Beginning December 2009,
reduce cost-of-living adjustment for OASDI benefits by 0.5
percentage point. graph | table | pdf-graph | pdf-table |
0.75 | 1.07 | -0.95 | -3.13 | |
| A3 | Beginning December 2009, use the
"superlative" (or "chained") CPI for COLAs, estimated to reduce
the COLA by 0.3 percentage point. graph | table | pdf-graph | pdf-table |
0.45 | 0.65 | -1.24 | -3.55 | |
| Category: Provisions Affecting Level of Monthly Benefits (PIA) | ||||||
| Present Law, Alternative II. |
-1.70 | -4.20 | ||||
| B1 | Increase the number of years used to
calculate benefits for retirees and survivors (but not for
disabled workers) from 35 to 38, phased in 2009-2013. graph | table | pdf-graph | pdf-table |
0.31 | 0.44 | -1.39 | -3.76 | |
| B2 | Increase the number of years used to
calculate benefits for retirees and survivors (but not for
disabled workers) from 35 to 40, phased in 2009-2017. graph | table | pdf-graph | pdf-table |
0.49 | 0.75 | -1.20 | -3.45 | |
| B3 |
For each year from 2009-2039, multiply the 32 and 15 percent
formula factors by 0.987, reducing the factors to 21 percent
and 10 percent respectively, for new eligibles in 2039 and later. graph | table | pdf-graph | pdf-table |
1.55 | 2.98 | -0.15 | -1.22 | |
| B4 | Reduce benefits by
3 percent for those newly eligible for benefits in 2009 and later. graph | table | pdf-graph | pdf-table |
0.36 | 0.50 | -1.34 | -3.70 | |
| B5 | Reduce benefits by
5 percent for those newly eligible for benefits in 2009 and later. graph | table | pdf-graph | pdf-table |
0.60 | 0.83 | -1.09 | -3.37 | |
| B6 |
Beginning with those newly eligible for OASDI benefits in 2015 and
later, reduce PIA formula factors so that benefits grow by
inflation rather than by increases in real wages. graph | table | pdf-graph | pdf-table |
2.30 | 7.18 | 0.60 | 2.97 | |
| B7 | Progressive price indexing of PIA formula
factors beginning with individuals newly eligible for OASDI
benefits in 2015. Create new bend point at the 30th
percentile of earners. Maintain current-law benefits for earners
at the 30th percentile and below and reduce upper 2 formula
factors (32% and 15%) such that maximum worker benefit
grows by inflation rather than the growth in average wages. graph | table | pdf-graph | pdf-table |
1.36 | 4.13 | -0.34 | -0.08 | |
| B8 | Progressive price indexing of PIA
formula factors beginning with individuals newly eligible for
OASDI benefits in 2015. Create new bend point at the 40th
percentile of earners. Maintain current-law benefits for earners
at the 40th percentile and below and reduce upper 2 formula
factors (32% and 15%) such that maximum worker benefit
grows by inflation rather than the growth in average wages. graph | table | pdf-graph | pdf-table |
1.15 | 3.47 | -0.55 | -0.73 | |
| B9 | Progressive price indexing of PIA
formula factors beginning with individuals newly eligible for
OASDI benefits in 2015. Create new bend point at the 50th
percentile of earners. Maintain current-law benefits for earners
at the 50th percentile and below and reduce upper 2 formula
factors (32% and 15%) such that maximum worker benefit
grows by inflation rather than the growth in average wages. graph | table | pdf-graph | pdf-table |
0.93 | 2.65 | -0.77 | -1.55 | |
| B10 | Progressive price indexing of PIA
formula factors beginning with individuals newly eligible for
OASDI benefits in 2015. Create new bend point at the 60th
percentile of earners. Maintain current-law benefits for
earners at the 60th percentile and below and reduce upper
2 formula factors (32% and 15%) such that maximum worker benefit
grows by inflation rather than the growth in average wages. graph | table | pdf-graph | pdf-table |
0.68 | 1.69 | -1.02 | -2.51 | |
| B11 |
Beginning with those newly eligible in 2016, multiply the 90 and 32
PIA factors each year by 0.9925 and 0.982, respectively. Stop
reductions in
2053. Beginning with those newly eligible in 2011, multiply the 15
factor by 0.982. Stop reduction of the 15 factor in 2048. DI will
have present law scheduled benefit and proportional reduction at
conversion to retired worker benefits at normal retirement age,
based on years of disability. graph | table | pdf-graph | pdf-table | memo |
2.06 | 5.33 | 0.36 | 1.13 | |
| B12 |
Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASI benefits in 2015. Create new
bend point at the 30th percentile of earners. Maintain current-law
benefits for earners at the 30th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average wages.
Disability benefits are not affected by the proposal. Disabled
worker beneficiaries, upon attaining normal retirement age, would
be subject to a proportional reduction in benefits based on the
worker's years of disability. graph | table | pdf-graph | pdf-table | memo |
1.18 | 3.61 | -0.52 | -0.59 | |
| B12.1 |
Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASI benefits in 2012. Create new
bend point at the 30th percentile of earners. Maintain current-law
benefits for earners at the 30th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average wages.
Disability benefits are not affected by the proposal. Disabled
worker beneficiaries, upon attaining normal retirement age, would
be subject to a proportional reduction in benefits based on the
worker's years of disability. In addition, the reduction to the
upper 2 formula factors is suspended for any year in which
sustainable solvency over the next 75 years is expected. With this
provision taken alone, suspension is not expected within the next
75 years. graph | table | pdf-graph | pdf-table | memo |
1.31 | 3.71 | -0.39 | -0.49 | |
| B13 |
For OASI beneficiaries becoming eligible for benefits in 2021 and
later, multiply the PIA factors by the ratio of life expectancy at
67 for 2016 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, would be used as projected by SSA's Office
of the Chief Actuary. Disability benefits are not affected by the
proposal. Disabled worker beneficiaries, upon attaining normal
retirement age, would be subject to a proportional reduction in
benefits based on the worker's years of disability.
graph | table | pdf-graph | pdf-table | memo |
0.47 | 1.71 | -1.23 | -2.49 | |
| B13.1 |
For OASI beneficiaries becoming eligible for benefits in 2018 and
later, multiply the PIA factors by the ratio of life expectancy at
67 for 2013 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, would be used as projected by SSA's Office
of the Chief Actuary. Disability benefits are not affected by the
proposal. Disabled worker beneficiaries, upon attaining normal
retirement age, would be subject to a proportional reduction in
benefits based on the worker's years of disability.
graph | table | pdf-graph | pdf-table | memo |
0.52 | 1.80 | -1.17 | -2.40 | |
| B14 |
Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASI benefits in 2016. Create new
bend point at the 30th percentile of earners. Maintain current-law
benefits for earners at the 30th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average
wages. Disability benefits are not affected by the proposal.
Disabled worker beneficiaries, upon attaining normal retirement
age, would be subject to a proportional reduction in benefits
based on the worker's years of disability.
graph | table | pdf-graph | pdf-table | memo |
1.13 | 3.55 | -0.57 | -0.65 | |
| B15 |
Increase the PIA to a level such that a worker with 30 years
of earnings at the minimum wage level would receive an adjusted
PIA equal to 120 percent of the Federal poverty level for an
aged individual. This provision would take full effect for
all newly eligible OASDI workers in 2025, and would be phased
in for new eligible in 2016 through 2024. The percentage
increase in PIA would be 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 would be 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 |
-0.04 | 0.00 | -1.74 | -4.21 | |
| B16 |
For all individuals becoming eligible for OASDI benefits in 2009 and
later, use a modified primary insurance amount (PIA) formula.
The modified formula would increase the first bend point to $800 in
2009. Also, a new bend point would be placed between the reset
first bend point and the current-law second bend point. The
new bend point would be equal to the reset first bend point
plus 75 percent of the difference between the bend points.
The PIA formula factor between the new bend point and the upper
bend point would be lowered from 32% to 20%. The PIA formula
factor above the upper bend point would be lowered from 15% to
10%.
graph | table | pdf-graph | pdf-table |
0.28 | 0.34 | -1.41 | -3.86 | |
| B17 |
Eliminate dropout years for OASI and DI computation of primary
insurance amount (PIA) for individuals newly eligible for benefits
from 2010 to 2018. Specifically, for OASDI benefit computation,
reduce the maximum number of drop-out years from 5 for benefit
eligibility in 2009, with a decrease of 1 computation year in
2010, 2012, 2014, 2016, and 2018.
graph | table | pdf-graph | pdf-table | memo |
0.65 | 1.03 | -1.05 | -3.17 | |
| B18 |
Multiply all PIA formula factors successively by 0.991 for new
benefit eligibility in each year 2012 through 2040. Disabled
workers and young survivors (surviving spouses with a
child-in-care and survivor children) would not be affected by
this provision. Upon conversion from disabled worker to retired
worker benefits, benefit levels would be proportionally reduced
based on the fraction of years the individual was not disabled
between ages 22 and 62.
graph | table | pdf-graph | pdf-table | memo |
1.46 | 3.11 | -0.24 | -1.09 | |
| Category: Provisions Affecting Retirement Age | ||||||
| Present Law, Alternative II. |
-1.70 | -4.20 | ||||
| C1 |
Shorten the hiatus in the normal retirement age (start increasing
to age 67 for those age 62 in 2009, rather than those age 62 in 2017).
graph | table | pdf-graph | pdf-table |
0.10 | 0.00 | -1.60 | -4.20 | |
| C2 |
Shorten the hiatus in the normal retirement age (start increasing
to age 67 for those age 62 in 2009, rather than those age 62 in 2017)
and then index the normal retirement age
(by 1 month every 2 years) until the NRA reaches age 68.
graph | table | pdf-graph | pdf-table |
0.46 | 0.73 | -1.24 | -3.47 | |
| C3 |
Shorten the hiatus in the normal retirement age (start increasing
to age 67 for those age 62 in 2009, rather than those age 62 in 2017)
and then index the normal retirement age (by 1 month
every 2 years) until the NRA reaches age 70. graph | table | pdf-graph | pdf-table |
0.62 | 1.43 | -1.08 | -2.78 | |
| C4 |
Shorten the hiatus in the normal retirement age (start increasing
to age 67 for those age 62 in 2009, rather than those age 62 in 2017)
and then increase the NRA 2 months per year until
the NRA reaches age 68. graph | table | pdf-graph | pdf-table | memo |
0.58 | 0.73 | -1.12 | -3.47 | |
| C5 |
Shorten the hiatus in the normal retirement age (speed up the
increase to age 67). That is, increase the NRA by 2 months per year
for those attaining age 62 in 2012 through 2017, five years earlier
than in current law, which would increase the NRA 2 months per year
for those reaching age 62 in 2017 through 2022. graph | table | pdf-graph | pdf-table | memo |
0.05 | 0.00 | -1.65 | -4.20 | |
| C6 |
Increase the normal retirement age (NRA) from 66 to 67 one year
earlier than current law, starting for those reaching age 62 in
2016 and ending for those reaching age 62 in 2021. Then, after
2021, index the NRA to maintain a constant ratio of expected
retirement years (life expectancy at NRA) to potential work
years (NRA minus 20).
graph | table | pdf-graph | pdf-table | memo |
0.38 | 1.11 | -1.32 | -3.09 | |
| C7 |
Index benefits to longevity after the normal retirement age (NRA)
reaches age 67 under current law. Under current law, the NRA
reaches 67 for individuals who attain age 62 in 2022 and later.
Under this provision, the NRA would be further increased by
one month for those attaining age 62 in every other year after 2022.
graph | table | pdf-graph | pdf-table |
0.37 | 1.09 | -1.32 | -3.12 | |
| C8 |
Gradually raise the earliest eligibility age (EEA)
for Social Security retirement benefits
from 62 to 65. The EEA would be increased by 2 months for
individuals reaching age 62 in every year, starting in 2010.
The EEA of 65 would apply for those reaching age 62 in 2027
and later (those reaching age 65 in 2030 and later). As under
current law, the PIA formula applicable for any individual
would depend on the year in which eligibility age is attained.
It should be noted that the elimination of retirement
eligibility between ages 62 and 65 would increase the number
of individuals who would apply for disabled worker benefits
at those ages.
graph | table | pdf-graph | pdf-table |
-0.01 | -0.28 | -1.70 | -4.48 | |
| C9 |
Shorten the hiatus in the NRA by 5 years, that is, start increasing
the NRA from 66 to 67 for individuals age 62 in 2012, rather
than in 2017. Beginning for those age 62 in 2012, increase
the EEA and NRA for retired worker benefits by 2 months per
year until the EEA reaches age 63 and the NRA reaches age 67
for those attaining age 62 in 2017. Thereafter, increase both
EEA and NRA by 1 month every 2 years. Finally, increase the
earliest eligibility age for disabled widow(er)s and aged
widow(er)s at the same rate as the increase in the EEA for
retired worker benefits.
graph | table | pdf-graph | pdf-table | memo |
0.56 | 1.18 | -1.14 | -3.02 | |
| C10 |
Starting in 2012, convert all disabled worker beneficiaries to
retired worker status upon attainment of their EEA (rather than
their NRA). After conversion, apply the early retirement
reduction for retirement at EEA (currently 25%) times the ratio
of years after 2011 (or years after attaining age 21, if later)
and before attaining age 62, to 40. Medicare eligibility would
be extended to age 65 on the basis of disability. After 2011,
disability applications would not be accepted for benefit
entitlement that would start at ages over EEA.
graph | table | pdf-graph | pdf-table | memo |
0.37 | 0.77 | -1.33 | -3.43 | |
| Category: Provisions Affecting Payroll Tax Rates | ||||||
| Present Law, Alternative II. |
-1.70 | -4.20 | ||||
| D1 | Raise payroll tax rates (for employees
and employers combined) by 1.8 percentage points in 2009 and later. graph | table | pdf-graph | pdf-table |
1.77 | 1.81 | 0.07 | -2.40 | |
| D2 | Raise payroll tax rates (for employees
and employers combined) by 1.6 percentage points in 2021 (to 14.0%
combined) and by an additional 1.6 percentage points in 2051 (to
15.6% combined). graph | table | pdf-graph | pdf-table |
1.70 | 3.21 | 0.01 | -0.99 | |
| D3 |
Beginning in 2009, reduce the combined OASDI payroll tax rate
from 12.4 percent to 11.4 percent. graph | table | pdf-graph | pdf-table | memo |
-0.98 | -1.00 | -2.68 | -5.20 | |
| Category: Provisions Affecting OASDI Contribution and Benefit Base | ||||||
| Present Law, Alternative II. |
-1.70 | -4.20 | ||||
| E1 | Beginning in 2009, make all earnings
subject to the payroll tax (but retain the current-law taxable
maximum for benefit calculations). graph | table | pdf-graph | pdf-table |
2.19 | 2.67 | 0.50 | -1.53 | |
| E2 | Beginning in 2009, make all earnings
subject to the payroll tax and credit them for benefit purposes. graph | table | pdf-graph | pdf-table |
1.84 | 1.96 | 0.14 | -2.24 | |
| E3 |
Determine the level of the contribution and benefit base such that
90 percent of the earnings would be subject to the payroll tax
(phased in 2009-2018). All earnings subject to the payroll tax
would be used in determining benefits. graph | table | pdf-graph | pdf-table |
0.83 | 0.93 | -0.87 | -3.27 | |
| E4 |
Make 90 percent of the earnings subject to the payroll tax (phased in
2009-2018), but retain the current-law taxable maximum for
benefit purposes. This estimate considers all self-employed
earnings in computing the percentage of earnings subject to
the payroll tax. graph | table | pdf-graph | pdf-table | memo |
1.01 | 1.36 | -0.69 | -2.84 | |
| E5 |
Raise the taxable maximum amount (the contribution and benefit base)
to include 90 percent of total OASDI covered earnings. Phase in
this increase gradually between 2010 and 2015. Benefit
computations would reflect all earnings up to the new taxable
maximum.
graph | table | pdf-graph | pdf-table |
0.84 | 0.93 | -0.86 | -3.27 | |
| E6 |
Impose a 3 percent payroll tax on OASDI covered earnings above
the current taxable maximum starting in 2009. Benefit
computations would not reflect any earnings above the taxable
maximum amount.
graph | table | pdf-graph | pdf-table |
0.64 | 0.78 | -1.06 | -3.42 | |
| E7 |
In 2009 through 2011, raise the OASDI contribution and benefit
base from $102,000 to $110,000 (in 2008 AWI indexed dollars).
For years after 2011, the contribution and benefit base would
be increased based on changes in SSA's average wage index.
Additional earnings subject to the OASDI payroll tax would be
credited for benefit calculation purposes.
graph | table | pdf-graph | pdf-table | memo |
0.15 | 0.13 | -1.55 | -4.07 | |
| Category: Provisions Affecting Coverage of Employment | ||||||
| Present Law, Alternative II. |
-1.70 | -4.20 | ||||
| F1 | Cover newly hired State and local
government employees beginning in 2009. graph | table | pdf-graph | pdf-table | memo |
0.22 | 0.00 | -1.48 | -4.20 | |
| F2 |
Provide for OASDI payroll tax coverage of employer provided group
health insurance cost, starting in 2010. Specifically, any cost
toward such group health insurance borne by employees would cease
to be deductible, and the cost borne by employers would now be
allocated to employees as if it had been wages, for the purpose
of payroll tax (and later, benefit) calculations. Both employee
and employer OASDI payroll taxes would be affected by this proposal.
graph | table | pdf-graph | pdf-table | memo |
1.20 | 1.62 | -0.49 | -2.58 | |
| F3 |
Beginning in 2009, exempt individuals with more than 180 quarters
of coverage from the OASDI payroll tax.
graph | table | pdf-graph | pdf-table | memo |
-0.28 | -0.49 | -1.98 | -4.69 | |
| Category: Provisions Affecting Trust Fund Investment in Equities | ||||||
| Present Law, Alternative II. |
-1.70 | -4.20 | ||||
| G1 | Invest 40 percent of the Trust Funds in
equities (phased in 2009-2023), assuming
an ultimate 6.4 percent real rate of return on equities. graph | table | pdf-graph | pdf-table |
0.71 | 0.00 | -0.99 | -4.20 | |
| G2 | Invest 40 percent of the Trust Funds in
equities (phased in 2009-2023), assuming
an ultimate 5.4 percent real rate of return on equities. graph | table | pdf-graph | pdf-table |
0.51 | 0.00 | -1.19 | -4.20 | |
| G3 |
Invest 40 percent of the Trust Funds in equities (phased in
2009-2023), assuming an ultimate 2.9 percent real rate of return on
equities, the same as the assumed ultimate yield on the
special-issue Social Security trust fund bonds. graph | table | pdf-graph | pdf-table |
0.00 | 0.00 | -1.70 | -4.20 | |
| G4 |
Gradually invest 15 percent of OASDI trust fund assets in a broad
index of equity market securities (such as the Wilshire 5000).
Increase the portion in equities by 1.5 percent each year 2009
through 2018. Maintain the percentage at 15 percent thereafter.
graph | table | pdf-graph | pdf-table |
0.29 | 0.00 | -1.41 | -4.20 | |
| G5 |
Invest 15 percent of the Trust Funds in equities
(phased in 2009-2023), assuming an ultimate 2.9 percent annual
real rate of return on equities, the same as the assumed
ultimate yield on the special-issue Social Security trust
fund bonds.
graph | table | pdf-graph | pdf-table |
0.00 | 0.00 | -1.70 | -4.20 | |
| Category: Provisions Affecting Taxation of Benefits | ||||||
| Present Law, Alternative II. |
-1.70 | -4.20 | ||||
| H1 | Tax Social Security benefits in a
manner similar to private pension income beginning in 2009.
Phase out the lower-income thresholds during 2009-2018. graph | table | pdf-graph | pdf-table |
0.27 | 0.16 | -1.43 | -4.04 | |
| H2 |
Tax Social Security benefits in a manner similar to private pension
income beginning in 2009. Phase out the lower-income thresholds
during 2009-2028.
graph | table | pdf-graph | pdf-table | memo |
0.24 | 0.16 | -1.46 | -4.04 | |
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