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Summary of Provisions That Would Change the Social Security Program

Estimates based on the intermediate assumptions of the 2008 and 2009 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 (2009 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-2.00 -4.34
A1 Beginning December 2010, reduce cost-of-living adjustment for OASDI benefits by 1 percentage point.
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1.55 2.19 -0.45 -2.15
A2 Beginning December 2010, reduce cost-of-living adjustment for OASDI benefits by 0.5 percentage point.
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0.81 1.15 -1.20 -3.19
A3 Starting with the December 2010 cost-of-living adjustment (COLA), compute the COLA using a chained version of the consumer price index for wage and salary workers (CPI-W). This new computation is estimated to result in an annual COLA that is 0.3 percentage point less, on average.
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0.49 0.70 -1.51 -3.64
A4 Starting with the December 2012 cost-of-living adjustment (COLA), compute the COLA using a chained version of the consumer price index for wage and salary workers (CPI-W). This new computation is estimated to result in an annual COLA that is 0.3 percentage point less, on average. The new COLA would not apply to DI benefits and would apply for all OASI benefits, except for those who are converted from disabled worker to retired worker status.
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0.36 0.50 -1.64 -3.84
A5 Beginning December 2010, add 1 percentage point to the annual cost-of-living adjustment for OASDI monthly benefits for beneficiaries who have lived past a "specified age", which reflects their age 65 life expectancy. The "specified age" is based on the beneficiary's year of birth and is determined as the sum of: (1) 65 and (2) the unisex cohort life expectancy at age 65 for the Social Security area population with the same year of birth as the beneficiary.
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-0.08 -0.10 -2.08 -4.44
Category: Provisions Affecting Level of Monthly Benefits (PIA) (2009 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-2.00 -4.34
B1.1 Beginning with those newly eligible for OASDI benefits in 2016 and later, reduce PIA formula factors so that benefits grow by inflation rather than by increases in real wages.
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2.28 7.16 0.27 2.82
B1.2 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI 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.
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1.31 3.97 -0.69 -0.37
B1.3 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2016. 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.
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1.10 3.32 -0.90 -1.02
B1.4 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2016. 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.
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0.87 2.51 -1.13 -1.83
B1.5 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2016. 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.
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0.61 1.57 -1.39 -2.77
B1.6 (2013) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2013. 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.
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1.31 3.64 -0.69 -0.70
B1.6 (2016) 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.
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1.14 3.46 -0.86 -0.88
B1.6 (2017) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2017. 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.
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1.10 3.42 -0.90 -0.92
B1.6 (2018) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2018. 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.
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1.04 3.36 -0.96 -0.98
B2.1 (2019) For OASI beneficiaries becoming eligible for benefits in 2019 and later, multiply the PIA factors by the ratio of life expectancy at 67 for 2014 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.
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0.56 1.93 -1.44 -2.41
B2.1 (2022) For OASI beneficiaries becoming eligible for benefits in 2022 and later, multiply the PIA factors by the ratio of life expectancy at 67 for 2017 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.
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0.49 1.81 -1.51 -2.53
B3.1 For each year from 2010-2040, 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 2040 and later.
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1.51 2.94 -0.49 -1.40
B3.2 Beginning with those newly eligible in 2017, multiply the 90 and 32 PIA factors each year by 0.9925 and 0.982, respectively. Stop reductions in 2054. Beginning with those newly eligible in 2012, multiply the 15 factor by 0.982. Stop reduction of the 15 factor in 2049. 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.
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2.03 5.31 0.03 0.96
B3.3 For all individuals becoming eligible for OASDI benefits in 2010 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%.
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0.23 0.29 -1.77 -4.05
B3.4 Multiply all PIA formula factors successively by 0.991 for new benefit eligibility in each year 2013 through 2041. 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.
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1.45 3.11 -0.56 -1.23
B3.5 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2012, continuing through 2049, and resuming in 2070. 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 is reduced by 1.1 percent per year as compared to current law, for the years that progressive indexing applies. 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.
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1.25 2.90 -0.76 -1.44
B3.6 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2012 through 2061. 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 is reduced by 1.1 percent per year as compared to current law, for the years that progressive indexing applies. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject
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1.34 3.33 -0.66 -1.01
B3.7 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2012, continuing through 2021, and then resuming in 2060. 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 is reduced by 1.1 percent per year as compared to current law, for the years that progressive indexing applies. 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
0.63 1.59 -1.38 -2.76
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 2010-2014.
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0.29 0.43 -1.71 -3.91
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 2010-2018.
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0.46 0.72 -1.54 -3.62
B4.3 Eliminate dropout years for OASI and DI computation of primary insurance amount (PIA) for individuals newly eligible for benefits from 2011 to 2019. Specifically, for OASDI benefit computation, reduce the maximum number of drop-out years from 5 for benefit eligibility in 2010, with a decrease of 1 computation year in 2011, 2013, 2015, 2017, and 2019.
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0.63 1.02 -1.37 -3.32
B5.1 (2017) 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 2026, and would be phased in for new eligible in 2017 through 2025. 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.
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-0.04 0.00 -2.04 -4.34
B5.1 (2018) 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 2027, and would be phased in for new eligible in 2018 through 2026. 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.
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-0.04 0.00 -2.04 -4.34
B5.2 Beginning in 2010, increase the special minimum benefit by making the following changes: (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 $1,128 in 2009). The PIA per year of coverage (after the first 10 years) would be $1,128/20 = $56.40. (c) Index the initial PIA per year of coverage by wage growth for successive cohorts, so that the special minimum keeps up with the wage-indexed benefit formula.
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-0.13 -0.19 -2.13 -4.53
B5.3 Beginning in 2010, increase the special minimum benefit by making the following changes: (a) A year of coverage is defined to be either a childcare year or a year in which 4 quarters of coverage are earned. 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 $1,128 in 2009). The PIA per year of coverage (after the first 10 years) would be $1,128/20 = $56.40. (c) Index the initial PIA per year of coverage by wage growth for successive cohorts, so that the special minimum keeps up with the wage-indexed benefit formula.
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-0.26 -0.36 -2.26 -4.70
B6.1 Reduce benefits by 3 percent for those newly eligible for benefits in 2010 and later.
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0.36 0.50 -1.64 -3.84
B6.2 Reduce benefits by 5 percent for those newly eligible for benefits in 2010 and later.
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0.61 0.84 -1.39 -3.50
B6.3 Give parents earnings credits for up to five years if they have a child under 6. The earnings credited for a childcare year would be such that the resulting earnings assigned to the parents would equal one half of the Social Security average-wage index -- about $21,021 in 2009. The credits would be available for all past years to newly eligible retired-worker and disabled-worker beneficiaries in 2010 and later. The 5 most advantageous years would be used if more than 5 childcare credit years are possible; that is, the 5 years that make the biggest difference in indexed earnings.
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-0.24 -0.35 -2.24 -4.69
B6.4 Provide a 5 percent increase to the benefit level of any beneficiary who is 85 or older at the beginning of 2010 or who reaches their 85th birthday after the beginning of 2010.
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-0.09 -0.13 -2.09 -4.48
B6.5 Provide the same dollar amount increase to the benefit level of any beneficiary who is 85 or older at the beginning of 2010 or who reaches their 85th birthday after the beginning of 2010. The dollar amount of increase equals 5 percent of the average retired worker benefit in the prior year.
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-0.09 -0.14 -2.09 -4.48
B6.6 Increase benefits by 20 percent for all beneficiaries as of the beginning of 2010 and for those newly eligible for benefits after the beginning of 2010.
graph | table | pdf-graph | pdf-table | memo
-2.98 -3.34 -4.98 -7.68
B6.7 Increase benefits by 5 percent for all beneficiaries as of the beginning of 2010 and for those newly eligible for benefits after the beginning of 2010.
graph | table | pdf-graph | pdf-table | memo
-0.75 -0.83 -2.75 -5.17
B6.8 Increase benefits by 2 percent for all beneficiaries as of the beginning of 2010 and for those newly eligible for benefits after the beginning of 2010.
graph | table | pdf-graph | pdf-table | memo
-0.30 -0.33 -2.30 -4.67
Category: Provisions Affecting Retirement Age (2009 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-2.00 -4.34
C1.1 Shorten the hiatus in the normal retirement age (start increasing to age 67 for those age 62 in 2010, rather than those age 62 in 2017).
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0.09 0.00 -1.91 -4.34
C1.2 Shorten the hiatus in the normal retirement age (start increasing to age 67 for those age 62 in 2010, 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 | memo
0.46 0.73 -1.55 -3.62
C1.3 Shorten the hiatus in the normal retirement age (start increasing to age 67 for those age 62 in 2010, 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 | memo
0.62 1.43 -1.39 -2.91
C1.4 Shorten the hiatus in the normal retirement age (start increasing to age 67 for those age 62 in 2010, rather than those age 62 in 2017) and then increase the NRA 2 months per year until the NRA reaches age 68.
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0.57 0.73 -1.43 -3.61
C1.5 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.
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0.06 0.00 -1.94 -4.34
C1.6 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).
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0.41 1.23 -1.59 -3.11
C1.7 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.
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0.40 1.20 -1.60 -3.14
C1.8 Increase the normal retirement age (NRA) for those reaching age 62 in 2018 and later. For those reaching age 62 in 2018, the NRA would be 66 years, 6 months. The NRA would increase 2 months per year for those reaching age 62 in 2019, 2020, and 2021, reaching an NRA of 67 for those turning 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).
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0.41 1.23 -1.59 -3.11
C2.1 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 2011. The EEA of 65 would apply for those reaching age 62 in 2028 and later (those reaching age 65 in 2031 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.
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-0.03 -0.37 -2.03 -4.71
C2.2 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 (Warshawsky) | memo (NRC/NAPA)
0.56 1.23 -1.45 -3.11
C2.3 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
0.36 0.73 -1.64 -3.61
Category: Provisions Affecting Family Member Benefits (2009 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-2.00 -4.34
D1 Beginning in 2010, 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
-0.07 -0.07 -2.07 -4.41
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 2010, until the percent reaches 33. Thus, the spouse benefit would be based on 33 percent of PIA for newly eligible spouses in 2026 and later.
graph | table | pdf-graph | pdf-table | memo
0.12 0.17 -1.89 -4.17
Category: Provisions Affecting Payroll Tax Rates or Taxable Maximum (2009 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-2.00 -4.34
E1.1 Raise payroll tax rates (for employees and employers combined) by 2.2 percentage points in 2010 and later.
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2.09 2.19 0.09 -2.15
E1.2 Raise payroll tax rates (for employees and employers combined) by 2.0 percentage points in 2022 (to 14.4% combined) and by an additional 2.0 percentage points in 2052 (to 16.4% combined).
graph | table | pdf-graph | pdf-table | memo
2.06 3.92 0.06 -0.42
E1.3 Beginning in 2010, reduce the combined OASDI payroll tax rate from 12.4 percent to 11.4 percent.
graph | table | pdf-graph | pdf-table | memo
-0.96 -1.01 -2.96 -5.35
E1.4 Raise the payroll tax rates gradually (for employees and employers combined) by 0.1 percentage points in 2015; continue this increase each year for 20 years. By 2034, the combined employee and employer payroll tax rate would be 14.4 percent.
graph | table | pdf-graph | pdf-table | memo
1.39 1.98 -0.62 -2.36
E1.5 Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2012, 12.9 percent in 2020, 13.1 in percent in 2030, 13.9 percent in 2040, 13.5 percent in 2050, and 13.3 percent in 2060.
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0.73 0.91 -1.28 -3.43
E1.6 Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2012, 12.9 percent in 2020, 13.3 in percent in 2030, 13.8 percent in 2040, 14.4 percent in 2060, and 14.5 percent in 2075.
graph | table | pdf-graph | pdf-table | memo
1.02 2.07 -0.98 -2.27
E1.7 Increase the payroll tax rate (currently 12.4 percent) to 12.7 percent in 2012, 13.0 percent in 2025, 13.3 in percent in 2040, 14.0 percent in 2060, 14.5 percent in 2070, and 14.7 percent in 2080.
graph | table | pdf-graph | pdf-table | memo
0.83 2.25 -1.17 -2.09
E2.1 Beginning in 2010, make all earnings subject to the payroll tax (but retain the current-law taxable maximum for benefit calculations).
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2.32 2.49 0.31 -1.86
E2.2 Beginning in 2010, make all earnings subject to the payroll tax and credit them for benefit purposes.
graph | table | pdf-graph | pdf-table | memo
1.89 1.65 -0.11 -2.69
E2.3 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 2010-2019). All earnings subject to the payroll tax would be used in determining benefits.
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0.75 0.62 -1.25 -3.72
E2.4 Make 90 percent of the earnings subject to the payroll tax (phased in 2010-2019), 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
0.94 1.07 -1.06 -3.27
E2.5 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 2011 and 2016. Benefit computations would reflect all earnings up to the new taxable maximum.
graph | table | pdf-graph | pdf-table | memo
0.74 0.61 -1.26 -3.73
E2.6 Impose a 3 percent payroll tax on OASDI covered earnings above the current taxable maximum starting in 2010. Benefit computations would not reflect any earnings above the taxable maximum amount.
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0.57 0.61 -1.44 -3.73
E2.7 In 2010 through 2012, raise the OASDI contribution and benefit base from $106,800 to $115,200 (in 2009 AWI indexed dollars). For years after 2012, 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
0.11 0.08 -1.89 -4.26
E2.8 Impose a 6 percent payroll tax on OASDI covered earnings above the current taxable maximum starting in 2010. Benefit computations would not reflect any earnings above the taxable maximum amount.
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1.12 1.20 -0.88 -3.14
E2.9 Beginning in 2010, make all earnings subject to the OASDI payroll tax and give benefit credit using an PIA formula that is extended to provide less credit for those with AIMEs higher than the current-law maximum AIME level. The high end of the benefit formula, applied to 2009, would be: 15 percent of AIME between $4,482 and $8,900 ($106,800 divided by 12), plus 3 percent of AIME over $8,900.
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2.17 2.19 0.16 -2.15
E2.10 Beginning in 2010, raise the taxable maximum each year by an additional 2 percent over the current-law, wage-indexed amount until total earnings subject to payroll taxes equals 90 percent of all covered earnings. Credit the earnings for benefit purposes.
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0.60 0.65 -1.41 -3.69
E2.11 Make all earnings subject to the employer OASDI payroll tax beginning in 2010. For the employee OASDI payroll tax and for benefit calculation purposes, the taxable maximum would equal the present-law taxable maximum for years 2009 and earlier. Beginning in 2010, the taxable maximum would be raised each year by an additional 2 percent over the current-law, wage-indexed amount until earnings subject to payroll taxes equals 90 percent of all covered earnings.
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1.41 1.39 -0.60 -2.95
E2.12 Apply the following payroll tax rate above the current-law taxable maximum, with no credit toward benefits: 2.0 percent in 2012 and 3.0 percent in 2060.
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0.41 0.60 -1.59 -3.74
E2.13 Increase the taxable maximum (contribution and benefit base) increases by an additional 2 percent over normal indexing starting in 2012, until 90 percent of OASDI covered earnings is taxable (achieved in 2048). The present-law taxable maximum is retained for benefit purposes; no benefit credit is given for earnings above the present-law taxable maximum.
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0.69 1.06 -1.31 -3.28
E2.14 Apply the following payroll tax rates above the current-law taxable maximum, with no credit toward benefits: 2.0 percent in 2012, 3.0 percent in 2025, 3.5 percent in 2040, 4.5 percent in 2050, and 5.5 percent in 2060.
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0.65 1.10 -1.35 -3.24
E2.15 Apply 2 percent payroll tax rate on earnings over $200,000 in 2017, with the $200,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.19 0.16 -1.81 -4.18
E2.16 Apply 2 percent payroll tax rate on earnings over $200,000 in 2017, with the $200,000 threshold wage-indexed after 2017. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.24 0.30 -1.76 -4.04
E2.17 Apply 3 percent payroll tax rate on earnings over $200,000 in 2017, with the $200,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.29 0.25 -1.71 -4.09
E2.18 Apply 3 percent payroll tax rate on earnings over $200,000 in 2017, with the $200,000 threshold wage-indexed after 2017. Give no benefit credit for additional earnings in AIME for benefit computation.
graph | table | pdf-graph | pdf-table | memo
0.37 0.45 -1.63 -3.89
E2.19 Apply 4 percent payroll tax rate on earnings over $200,000 in 2017, with the $200,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.39 0.34 -1.61 -4.00
E2.20 Apply 4 percent payroll tax rate on earnings over $200,000 in 2017, with the $200,000 threshold wage-indexed after 2017. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.49 0.61 -1.51 -3.73
E2.21 Apply 2 percent payroll tax rate on earnings over $300,000 in 2017, with the $300,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.14 0.12 -1.86 -4.22
E2.22 Apply 2 percent payroll tax rate on earnings over $300,000 in 2017, with the $300,000 threshold wage-indexed after 2017. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.18 0.23 -1.82 -4.11
E2.23 Apply 3 percent payroll tax rate on earnings over $300,000 in 2017, with the $300,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.21 0.19 -1.79 -4.16
E2.24 Apply 3 percent payroll tax rate on earnings over $300,000 in 2017, with the $300,000 threshold wage-indexed after 2017. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.27 0.34 -1.73 -4.00
E2.25 Apply 4 percent payroll tax rate on earnings over $300,000 in 2017, with the $300,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
graph | table | pdf-graph | pdf-table | memo
0.29 0.25 -1.72 -4.09
E2.26 Apply 4 percent payroll tax rate on earnings over $300,000 in 2017, with the $300,000 threshold wage-indexed after 2017. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.36 0.45 -1.64 -3.89
E2.27 Apply 2 percent payroll tax rate on earnings over $400,000 in 2017, with the $400,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.12 0.10 -1.89 -4.24
E2.28 Apply 2 percent payroll tax rate on earnings over $400,000 in 2017, with the $400,000 threshold wage-indexed after 2017. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.15 0.18 -1.85 -4.16
E2.29 Apply 3 percent payroll tax rate on earnings over $400,000 in 2017, with the $400,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.17 0.15 -1.83 -4.19
E2.30 Apply 3 percent payroll tax rate on earnings over $400,000 in 2017, with the $400,000 threshold wage-indexed after 2017. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.22 0.28 -1.78 -4.06
E2.31 Apply 4 percent payroll tax rate on earnings over $400,000 in 2017, with the $400,000 threshold wage-indexed after 2017. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.23 0.20 -1.77 -4.14
E2.32 Apply 4 percent payroll tax rate on earnings over $400,000 in 2017, with the $400,000 threshold wage-indexed after 2017. Give no benefit credit for earnings in AIME for benefit computation.
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0.30 0.37 -1.71 -3.97
E2.33 Make 90% of the earnings subject to the payroll tax (phased in 2010-2019). In addition, apply a tax rate of 6.2 percent for earnings above the revised taxable maximum, phased in from 2010-2019. This additional tax rate would be paid by employers on wages of their employees, and by self-employed workers on their earnings. Benefit computations for workers would only reflect earnings below the revised taxable maximum.
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1.37 1.36 -0.63 -2.98
Category: Provisions Affecting Coverage of Employment (2009 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-2.00 -4.34
F1 Cover newly hired State and local government employees beginning in 2010.
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0.17 -0.17 -1.83 -4.51
F2 Provide for OASDI payroll tax coverage of employer provided group health insurance cost, starting in 2011. 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.
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1.13 0.97 -0.87 -3.37
F3 Beginning in 2010, exempt individuals with more than 180 quarters of coverage from the OASDI payroll tax.
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-0.26 -0.38 -2.26 -4.72
Category: Provisions Affecting Trust Fund Investment in Equities (2009 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-2.00 -4.34
G1 Invest 40 percent of the Trust Funds in equities (phased in 2010-2024), assuming an ultimate 6.4 percent real rate of return on equities.
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0.67 0.00 -1.34 -4.34
G2 Invest 40 percent of the Trust Funds in equities (phased in 2010-2024), assuming an ultimate 5.4 percent real rate of return on equities.
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0.48 0.00 -1.52 -4.34
G3 Invest 40 percent of the Trust Funds in equities (phased in 2010-2024), 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.
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0.00 0.00 -2.00 -4.34
G4 Gradually invest 15 percent of OASDI trust fund assets in a broad index of equity market securities (such as the Wilshire 5000), assuming an ultimate 6.4 percent annual real rate of return on equities. Increase the portion in equities by 1.5 percent each year 2010 through 2019. Maintain the percentage at 15 percent thereafter.
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0.27 0.00 -1.73 -4.34
G5 Invest 15 percent of the Trust Funds in equities (phased in 2010-2019), 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.
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0.00 0.00 -2.00 -4.34
Category: Provisions Affecting Taxation of Benefits (2009 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-2.00 -4.34
H1 Tax Social Security benefits in a manner similar to private pension income beginning in 2010. Phase out the lower-income thresholds during 2010-2019.
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0.28 0.16 -1.72 -4.18
H2 Tax Social Security benefits in a manner similar to private pension income beginning in 2010. Phase out the lower-income thresholds during 2010-2029.
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0.25 0.16 -1.75 -4.18
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Last reviewed or modified September 28, 2010