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1997 OASDI Trustees Report


CONTENTS

I. OVERVIEW 1
A. INTRODUCTION 1
B. ADVISORY COUNCIL 2
C. HIGHLIGHTS 4
D. TRUST FUND FINANCIAL OPERATIONS 8
1. Income 8
2. Expenditures 9
3. Trust Fund Assets 9
E. INTRODUCTION TO ACTUARIAL ESTIMATES 11
F. ECONOMIC AND DEMOGRAPHIC ASSUMPTIONS 13
G. SHORT-RANGE ACTUARIAL ESTIMATES 15
1. OASI Trust Fund 15
2. DI Trust Fund 16
3. OASI and DI Trust Funds, Combined 17
H. LONG-RANGE ACTUARIAL ESTIMATES 19
1. Annual Income Rates, Cost Rates, and Balances 19
2. Summarized Income Rates, Cost Rates, and Balances 22
3. Trust Fund Ratios 25
4. Test of Long-Range Close Actuarial Balance 27
I. CONCLUSION 28
1. Short-Term Status 28
2. Long-Term Status 28
3. Recommendations 29
II. ACTUARIAL ANALYSIS 31
A. SOCIAL SECURITY AMENDMENTS SINCE THE 1996 REPORT 31
B. DESCRIPTION OF THE TRUST FUNDS 33
C. SUMMARY OF THE OPERATIONS OF THE OLD-AGE AND SURVIVORS INSURANCE AND DISABILITY INSURANCE TRUST FUNDS, FISCAL YEAR 1996 39
1. Old-Age and Survivors Insurance Trust Fund 39
2. Disability Insurance Trust Fund 45
3. Old-Age and Survivors Insurance and Disability Insurance Trust Funds, Combined 49
D. PRINCIPAL ECONOMIC AND DEMOGRAPHIC ASSUMPTIONS 54
1. Economic Assumptions 54
2. Demographic Assumptions 62
E. AUTOMATIC ADJUSTMENTS 66
F. ACTUARIAL ESTIMATES 72
1. Operations and Status of the Trust Funds During the Period October 1, 1996, to December 31, 2006 77
a. OASI Trust Fund Operations 78
b. DI Trust Fund Operations 81
c. Combined OASI and DI Trust Fund Operations 86
2. Long-Range Actuarial Status of the Trust Funds 108
a. Annual Income Rates, Cost Rates, and Balances 109
b. Summarized Income Rates, Cost Rates, and Balances 113
c. Test of Long-Range Close Actuarial Balance 116
d. Income and Cost Rates by Component 120
e. Comparison of Workers to Beneficiaries 123
f. Trust Fund Ratios 126
g. Reasons for Change in Actuarial Balance From Last Report 131
G. LONG-RANGE SENSITIVITY ANALYSIS 134
1. Total Fertility Rate 134
2. Death Rates 135
3. Net Immigration 137
4. Real-Wage Differential 138
5. Consumer Price Index 139
6. Real Interest Rate 141
7. Disability Incidence Rates 142
8. Disability Termination Rates 143
H. ASSUMPTIONS AND METHODS UNDERLYING THE ACTUARIAL ESTIMATES 145
1.Total Population 145
2. Covered Population 149
3. Average Earnings, Inflation, and Real Interest Rate 150
4. Taxable Payroll and Taxes 153
5. Insured Population 154
6. Old-Age and Survivors Insurance Beneficiaries 155
7. Disability Insurance Beneficiaries 161
8. Average Benefits 166
9. Benefit Payments 166
10. Administrative Expenses 167
11. Railroad Retirement Financial Interchange 167
12. Benefits to Uninsured Persons 168
13. Military-Service Transfers 168
14. Income From Taxation of Benefits 168
III. APPENDICES 170
A. ACTUARIAL ESTIMATES FOR THE OASDI AND HI PROGRAMS, COMBINED 170
B. LONG-RANGE ESTIMATES OF SOCIAL SECURITY TRUST FUND OPERATIONS IN DOLLARS 176
C. LONG-RANGE ESTIMATES OF SOCIAL SECURITY TRUST FUND OPERATIONS AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT 188
D. TEN YEAR HISTORY OF ACTUARIAL BALANCE ESTIMATES 194
E. ACTUARIAL ANALYSIS OF BENEFIT DISBURSEMENTS FROM THE FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND WITH RESPECT TO DISABLED BENEFICIARIES 197
F. FEDERAL REGISTER NOTICE 200
G. GLOSSARY 207
H. STATEMENT OF ACTUARIAL OPINION 222


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