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Summary of Provisions That Would Change the Social Security Program

Estimates based on the intermediate assumptions of the 2010 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 (2010 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-1.92 -4.12
A1 Beginning in December 2011, reduce the annual COLA by 1 percentage point.
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1.58 2.19 -0.34 -1.93
A2 Beginning in December 2011, reduce the annual COLA by 0.5 percentage point.
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0.82 1.15 -1.10 -2.97
A3 (2011) Starting with the December 2011 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.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) | memo (Fiscal Commision)
0.50 0.70 -1.42 -3.42
A3 (2012) 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.
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0.49 0.70 -1.43 -3.42
A4 Starting with the December 2013 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 -1.56 -3.62
A5 Beginning December 2011, 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 -0.11 -2.00 -4.23
A6 Starting with the December 2012 cost-of-living adjustment (COLA), compute the COLA based on changes in the Consumer Price Index for the Elderly (CPI-E). Use of this CPI series is estimated to result in an annual COLA that is 0.2 percentage point higher, on average, than using the consumer price index for urban wage and clerical workers (CPI-W).
graph | table | pdf-graph | pdf-table | memo
-0.34 -0.49 -2.26 -4.61
Category: Provisions Affecting Level of Monthly Benefits (PIA) (2010 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-1.92 -4.12
B1.1 Beginning with those newly eligible for OASDI benefits in 2017 and later, reduce PIA formula factors so that benefits grow by inflation rather than by increases in real wages.
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2.51 7.50 0.59 3.38
B1.2 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI 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.
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1.43 4.11 -0.49 -0.01
B1.3 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2017. 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 | memo
1.19 3.40 -0.73 -0.72
B1.4 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2017. 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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0.93 2.49 -0.99 -1.63
B1.5 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2017. 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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0.64 1.53 -1.28 -2.59
B1.6 (2014) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2014. 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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1.48 3.85 -0.44 -0.27
B1.6 (2019) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2019. 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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1.13 3.47 -0.79 -0.65
B1.7 Progressive price indexing of PIA formula factors for individuals newly eligible for OASI benefits in 2018 through 2055. Create new bend point at the 40th percentile of career-average earnings for new retirees. Maintain current-law benefit credit for career-average earnings up to the 40th percentile. Reduce PIA formula factors (32% and 15%) that apply above the new bend point such that the maximum worker benefit grows with price inflation from one generation to the next rather than with growth in the average wage. Disability (DI) 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. Hold harmless from this provision young survivors (children of deceased workers and surviving spouses with a child in care).
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0.91 2.35 -1.01 -1.77
B2.1 (2020) For OASI beneficiaries becoming eligible for benefits in 2020 and later, multiply the PIA factors by the ratio of life expectancy at 67 for 2015 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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0.55 1.87 -1.37 -2.24
B2.1 (2023) For OASI beneficiaries becoming eligible for benefits in 2023 and later, multiply the PIA factors by the ratio of life expectancy at 67 for 2018 to the life expectancy at age 67 for the 4th year prior to the year of initial benefit eligibility. Unisex life expectancies, based on period life tables as computed by SSA's Office of the Chief Actuary, would be used in determining the ratio. 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 proportion of years at ages 22 through 61 not disabled.
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0.48 1.75 -1.44 -2.37
B3.1 For each year from 2011-2041, 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 2041 and later.
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1.49 2.88 -0.43 -1.24
B3.2 Beginning with those newly eligible in 2018, multiply the 90 and 32 PIA factors each year by 0.9925 and 0.982, respectively. Stop reductions in 2055. Beginning with those newly eligible in 2013, multiply the 15 factor by 0.982. Stop reduction of the 15 factor in 2050. Disabled workers 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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2.02 5.22 0.10 1.10
B3.3 For all individuals becoming eligible for OASDI benefits in 2011 and later, use a modified primary insurance amount (PIA) formula. The modified formula would increase the first bend point to the equivalent of $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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0.22 0.30 -1.70 -3.82
B3.4 Multiply all PIA formula factors successively by 0.991 for new benefit eligibility in each year 2014 through 2042. 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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1.44 3.06 -0.48 -1.06
B3.5 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2013, continuing through 2050, and resuming in 2071. 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 1.2 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
1.27 2.97 -0.65 -1.15
B3.6 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2013 through 2062. 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 1.2 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
1.32 3.21 -0.60 -0.91
B3.7 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2013, continuing through 2022, and then resuming in 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 1.2 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
0.59 1.51 -1.33 -2.61
B3.8 Create a new bend point at the 50th percentile of new retired and disabled worker entitlements. Beginning for those newly eligible in 2017, do the following: a) reduce the 32 percent PIA formula factor below the new bend point to 30 percent by 2050; b) reduce the 32 percent PIA factor above the new bend point to 10 percent by 2050; and c) reduce the 15 percent factor to 5 percent by 2050.
graph | table | pdf-graph | pdf-table | memo
0.86 2.12 -1.06 -2.00
B3.9 Reduce the upper 15-percent PIA formula factor to 10 percent over a 30-year period from 2023 through 2052. Affects OASI and DI benefit computations.
graph | table | pdf-graph | pdf-table | memo
0.07 0.20 -1.85 -3.91
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 2011-2015.
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0.29 0.42 -1.63 -3.70
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 2011-2019.
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0.46 0.71 -1.46 -3.41
B4.3 Eliminate dropout years for OASI and DI computation of primary insurance amount (PIA) for individuals newly eligible for benefits from 2012 to 2020. Specifically, for OASDI benefit computation, reduce the maximum number of drop-out years from 5 for benefit eligibility in 2011, with a decrease of 1 computation year in 2012, 2014, 2016, 2018, and 2020.
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0.62 1.00 -1.30 -3.12
B5.1 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 2028, and would be phased in for new eligible in 2019 through 2027. 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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-0.02 0.00 -1.94 -4.12
B5.2 Beginning in 2011, 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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-0.22 -0.31 -2.14 -4.43
B5.3 Beginning in 2011, 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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-0.31 -0.44 -2.23 -4.55
B5.4 Beginning for those newly eligible for benefits in 2017, 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) 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) Increase the PIA per year of coverage from 2009 to the year of implementation, 2017, using the chain-CPI index; then 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. Scale work requirements for disabled workers based on the years of potential work (not disabled).
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-0.15 -0.26 -2.07 -4.38
B5.5 Reconfigure the special minimum benefit to ensure that an individual with at least 30 creditable years of earnings (equal to at least 20% of the "old law taxable maximum") would receive a PIA of 133 percent of the Aged Federal poverty level, with the formula phased linearly from zero for workers with 19 creditable years to 133 percent of poverty for those with 30 creditable years. Up to 8 years with own child under the age of 6 could be used as creditable years, if not otherwise counted as a creditable year. Scale the creditable year requirements and number of child-care years for disabled workers and workers dying under age 62 based on the proportion of years from 22 through 61 alive and not disabled. This provision is effective for individuals newly eligible for benefits in 2012 and later. Wage-index the poverty level from 2009 up to 2 years prior to benefit eligibility.
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-0.09 -0.14 -2.01 -4.26
B6.1 Reduce benefits by 3 percent for those newly eligible for benefits in 2011 and later.
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0.36 0.49 -1.56 -3.62
B6.2 Reduce benefits by 5 percent for those newly eligible for benefits in 2011 and later.
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0.60 0.82 -1.32 -3.30
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 $21,542 in 2010. The credits would be available for all past years to newly eligible retired-worker and disabled-worker beneficiaries in 2011 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.
graph | table | pdf-graph | pdf-table | memo
-0.28 -0.41 -2.20 -4.52
B6.4 Provide a 5 percent increase to the benefit level of any beneficiary who is 85 or older at the beginning of 2011 or who reaches their 85th birthday after the beginning of 2011.
graph | table | pdf-graph | pdf-table | memo
-0.09 -0.14 -2.01 -4.26
B6.5 Provide the same dollar amount increase to the benefit level of any beneficiary who is 85 or older at the beginning of 2011 or who reaches their 85th birthday after the beginning of 2011. The dollar amount of increase equals 5 percent of the average retired worker benefit in the prior year.
graph | table | pdf-graph | pdf-table | memo
-0.10 -0.14 -2.02 -4.26
B6.6 Increase benefits by 20 percent for all beneficiaries as of the beginning of 2011 and for those newly eligible for benefits after the beginning of 2011.
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-2.96 -3.29 -4.88 -7.41
B6.7 Increase benefits by 5 percent for all beneficiaries as of the beginning of 2011 and for those newly eligible for benefits after the beginning of 2011.
graph | table | pdf-graph | pdf-table | memo
-0.74 -0.82 -2.66 -4.94
B6.8 Increase benefits by 2 percent for all beneficiaries as of the beginning of 2011 and for those newly eligible for benefits after the beginning of 2011.
graph | table | pdf-graph | pdf-table | memo
-0.30 -0.33 -2.22 -4.45
B6.9 Starting in 2011, provide a 5% uniform benefit increase, beginning 20 years after eligibility. The benefit increase would be phased in at 1% per year from the 20th through 24th years after initial benefit eligibility. For disabled workers the eligibility age would be the initial entitlement year to the benefit. The benefit increase is equal to 5% 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
-0.15 -0.23 -2.07 -4.35
B6.10 Provide an increase in the benefit level of any beneficiary who is 85 or older at the beginning of 2012 or who reaches their 85th birthday after the beginning of 2012. The beneficiary’s PIA would be increased based on an amount equal to the average retired worker PIA at the end of 2011, or at the end of the year age 80 if later. The beneficiary’s PIA would be increased by 5 percent of this amount for those older than 85 at the beginning of 2012 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
-0.13 -0.18 -2.05 -4.30
Category: Provisions Affecting Retirement Age (2010 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-1.92 -4.12
C1.1 Shorten the hiatus in the normal retirement age (start increasing to age 67 for those age 62 in 2011, rather than those age 62 in 2017).
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0.08 0.00 -1.84 -4.12
C1.2 Shorten the hiatus in the normal retirement age (start increasing to age 67 for those age 62 in 2011, 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
0.44 0.74 -1.48 -3.38
C1.3 Shorten the hiatus in the normal retirement age (start increasing to age 67 for those age 62 in 2011, 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.
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0.62 1.72 -1.30 -2.40
C1.4 Shorten the hiatus in the normal retirement age (start increasing to age 67 for those age 62 in 2011, 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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0.55 0.74 -1.37 -3.38
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 -1.86 -4.12
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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0.44 1.54 -1.48 -2.58
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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0.41 1.52 -1.51 -2.60
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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0.44 1.54 -1.48 -2.58
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 2012. The EEA of 65 would apply for those reaching age 62 in 2029 and later (those reaching age 65 in 2032 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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-0.07 -0.40 -1.99 -4.52
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)
0.54 1.40 -1.38 -2.72
C2.3 Starting in 2013, 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 2012 (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 2012, disability applications would not be accepted for benefit entitlement that would start at ages over EEA.
graph | table | pdf-graph | pdf-table | memo
0.38 0.75 -1.54 -3.37
C2.4 After the normal retirement age (NRA) reaches age 67, index NRA to maintain a constant ratio of life expectancy at NRA to potential work years (NRA-20) and maintain the earliest eligibility age (EEA) at 5 years less than the normal retirement age in the future. Also, include a "hardship exemption" with no EEA/NRA change if a worker has 25 years of earnings of at least the level needed for 4 quarters of coverage, and average indexed monthly earnings (AIME) less than 250% of the individual aged Federal poverty level (wage-indexed from 2009). The hardship exemption is phased out for those with AIME above 400% of the poverty level.
graph | table | pdf-graph | pdf-table | memo
0.34 1.22 -1.58 -2.90
C2.5 Increase both the earliest eligibility age (EEA) and the normal retirement age (NRA) at a rate of 36/47 of a month per year starting for those reaching age 62 in 2023, until reaching an EEA of 65 and an NRA of 70 for those reaching age 62 in 2069. For each year, the computed EEA and NRA would be rounded down to the next lower full month.
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0.62 1.99 -1.30 -2.13
C2.6 Increase the normal retirement age (NRA) 3 months per year starting in 2017 until reaching 70 for those attaining age 62 in 2032. Then increase the NRA 1 month every 2 years thereafter. Note that the NRA would increase from 66 to 67 faster than under current law. Increase the earliest eligibility age (EEA) from 62 to 64 at the same time the NRA would increase from 67 to 69; that is, for those attaining age 62 in 2021 through 2028. Keep EEA at 64 thereafter. Keep years in which delayed retirement credits can be earned at 4 years after attaining NRA.
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1.36 2.90 -0.56 -1.22
C2.7 For those attaining age 62 in 2020 and 2021, increase the earliest eligibility age (EEA) to 63 and increase the normal retirement age (NRA) to 68. Then, increase the EEA and NRA by 3 months per year starting with those reaching age 62 in 2022 and stopping with those reaching age 62 in 2025. The EEA would then remain at 64 and the NRA at 69 for workers and spouses attaining 62 in 2025 and later.
graph | table | pdf-graph | pdf-table | memo
0.82 1.25 -1.10 -2.87
Category: Provisions Affecting Family Member Benefits (2010 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-1.92 -4.12
D1 Beginning in 2011, 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 -1.99 -4.18
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 2011, until the percent reaches 33. Thus, the spouse benefit would be based on 33 percent of PIA for newly eligible spouses in 2027 and later.
graph | table | pdf-graph | pdf-table | memo
0.12 0.18 -1.80 -3.94
Category: Provisions Affecting Payroll Tax Rates or Taxable Maximum (2010 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-1.92 -4.12
E1.1 Raise payroll tax rates (for employees and employers combined) by 2.1 percentage points in 2011 and later.
graph | table | pdf-graph | pdf-table | memo
2.00 2.09 0.08 -2.03
E1.2 Raise payroll tax rates (for employees and employers combined) by 1.9 percentage points in 2023-52 (to 14.3% combined) and by an additional 1.9 percentage points in 2053 (to 16.2% combined).
graph | table | pdf-graph | pdf-table | memo
1.99 3.72 0.07 -0.40
E1.3 Beginning in 2011, reduce the combined OASDI payroll tax rate from 12.4 percent to 11.4 percent.
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-0.96 -1.01 -2.88 -5.12
E1.4 Raise the payroll tax rates gradually (for employees and employers combined) by 0.1 percentage points in 2016; continue this increase each year for 20 years. By 2035, the combined employee and employer payroll tax rate would be 14.4 percent.
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1.40 1.98 -0.52 -2.13
E1.5 Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2013, 12.9 percent in 2021, 13.1 in percent in 2031, 13.9 percent in 2041, 13.5 percent in 2051, and 13.3 percent in 2061.
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0.73 0.90 -1.19 -3.21
E1.6 Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2013, 12.9 percent in 2021, 13.3 in percent in 2031, 13.8 percent in 2041, 14.4 percent in 2061, and 14.5 percent in 2076.
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1.03 2.07 -0.89 -2.05
E1.7 Increase the payroll tax rate (currently 12.4 percent) to 12.7 percent in 2013, 13.0 percent in 2026, 13.3 percent in 2041, 14.0 percent in 2061, 14.5 percent in 2071, and 14.7 percent in 2081.
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0.84 2.25 -1.08 -1.87
E2.1 Beginning in 2011, make all earnings subject to the payroll tax (but retain the current-law taxable maximum for benefit calculations).
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2.33 2.48 0.41 -1.64
E2.2 Beginning in 2011, make all earnings subject to the payroll tax and credit them for benefit purposes.
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1.90 1.65 -0.02 -2.47
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 2011-2020). All earnings subject to the payroll tax would be used in determining benefits.
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0.76 0.64 -1.16 -3.48
E2.4 Make 90% of the earnings subject to the payroll tax (phased in 2011-2020), 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.
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0.96 1.10 -0.96 -3.02
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 2012 and 2017. Benefit computations would reflect all earnings up to the new taxable maximum.
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0.77 0.64 -1.15 -3.48
E2.6 Impose a 3 percent payroll tax on OASDI covered earnings above the current taxable maximum starting in 2011. Benefit computations would not reflect any earnings above the taxable maximum amount.
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0.57 0.60 -1.35 -3.51
E2.7 In 2011 through 2013, raise the OASDI contribution and benefit base from $106,800 to $115,200 (in 2009 AWI indexed dollars). For years after 2013, 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.
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0.12 0.09 -1.80 -4.03
E2.8 Impose a 6 percent payroll tax on OASDI covered earnings above the current taxable maximum starting in 2011. Benefit computations would not reflect any earnings above the taxable maximum amount.
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1.13 1.21 -0.79 -2.91
E2.9 Beginning in 2011, 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 $4,483 and $8,900 ($106,800 divided by 12), plus 3 percent of AIME over $8,900.
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2.18 2.18 0.26 -1.94
E2.10 (2011) Beginning in 2011, 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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0.61 0.67 -1.31 -3.45
E2.10 (2012) Increase contribution and benefit base ("taxable maximum") by an additional 2 percent per year beginning in 2012 until taxable earnings are equal to 90 percent of covered earnings. Additional taxable earnings would be credited for the purpose of computing benefits.
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0.60 0.68 -1.32 -3.44
E2.11 Make all earnings subject to the employer OASDI payroll tax beginning in 2011. For the employee OASDI payroll tax and for benefit calculation purposes, the taxable maximum would equal the present-law taxable maximum for years 2010 and earlier. Beginning in 2011, 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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1.42 1.39 -0.50 -2.72
E2.12 Apply the following payroll tax rate above the current-law taxable maximum, with no credit toward benefits: 2.0 percent in 2013 and 3.0 percent in 2061.
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0.41 0.60 -1.51 -3.52
E2.13 Increase the taxable maximum (contribution and benefit base) by an additional 2 percent over normal indexing starting in 2013, until 90 percent of OASDI covered earnings is taxable (achieved in 2050). 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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0.71 1.09 -1.21 -3.03
E2.14 Apply the following payroll tax rates above the current-law taxable maximum, with no credit toward benefits: 2.0 percent in 2013, 3.0 percent in 2026, 3.5 percent in 2041, 4.5 percent in 2051, and 5.5 percent in 2061.
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0.66 1.10 -1.26 -3.02
E2.15 Apply 2 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.19 0.16 -1.73 -3.95
E2.16 Apply 2 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.25 0.30 -1.67 -3.82
E2.17 Apply 3 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.29 0.25 -1.63 -3.87
E2.18 Apply 3 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.37 0.45 -1.55 -3.67
E2.19 Apply 4 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.39 0.34 -1.53 -3.78
E2.20 Apply 4 percent payroll tax rate on earnings over $200,000 in 2018, with the $200,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.49 0.60 -1.43 -3.52
E2.21 Apply 2 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.14 0.12 -1.78 -4.00
E2.22 Apply 2 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.18 0.22 -1.74 -3.89
E2.23 Apply 3 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.22 0.19 -1.70 -3.93
E2.24 Apply 3 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.27 0.34 -1.65 -3.78
E2.25 Apply 4 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.29 0.25 -1.63 -3.87
E2.26 Apply 4 percent payroll tax rate on earnings over $300,000 in 2018, with the $300,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.37 0.45 -1.55 -3.67
E2.27 Apply 2 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.12 0.10 -1.80 -4.02
E2.28 Apply 2 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.15 0.18 -1.77 -3.94
E2.29 Apply 3 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.18 0.15 -1.74 -3.97
E2.30 Apply 3 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.22 0.27 -1.70 -3.84
E2.31 Apply 4 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give proportional benefit credit for additional earnings in AIME for benefit computation.
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0.24 0.20 -1.68 -3.92
E2.32 Apply 4 percent payroll tax rate on earnings over $400,000 in 2018, with the $400,000 threshold wage-indexed after 2018. Give no benefit credit for additional earnings in AIME for benefit computation.
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0.30 0.37 -1.62 -3.75
E2.33 Make 90% of the earnings subject to the payroll tax (phased in 2011-2020). In addition, apply a tax rate of 6.2 percent for earnings above the revised taxable maximum, phased in from 2011-2020. 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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1.38 1.36 -0.54 -2.76
E2.34 Increase contribution and benefit base ("taxable maximum") by an additional 2 percent per year beginning in 2012 until taxable earnings are equal to 90 percent of covered earnings (estimated to occur in 2049). Additional taxable earnings would be credited for the purpose of computing benefits. Create a new bend point equal to the current-law taxable maximum and provide a 5 percent PIA formula factor for AIME above the new bend point.
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0.67 0.90 -1.25 -3.21
E2.35 Eliminate the contribution and benefit base entirely beginning for 2017 and later; phase in the inclusion of earnings above the current contribution and benefit base for years 2011 through 2016. Assess the full Social Security payroll tax rate of 12.4 percent on the additional earnings. The primary insurance amount (PIA) would be determined in two components. The first component would be based on the average indexed monthly earnings (AIME), restricted to earnings at the level of the current-law contribution and benefit base ($106,800 for 2010) for each year. The second component of the PIA would be computed using the "AIME+", which would be equal to the sum of the indexed earnings in excess of the current-law contribution and benefit base for the 35 years included in the AIME, divided by 420. The second component of PIA would be equal to 3 percent of AIME+ up to $11,933 ((equals $250,000-$106,800)/12) and 0.25 percent for AIME+ above this level for beneficiaries newly eligible in 2011. For beneficiaries newly eligible for benefits after 2011, the "bend point" of $11,933 would be indexed by the national average wage index (AWI) in the same manner as for the bend points in the first component of the PIA.
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2.16 2.37 0.24 -1.75
E2.36 Apply 12.4 payroll tax rate on earnings above $250,000 starting in 2012. The $250,000 threshold does not increase in future years; when the current-law contribution and benefit base exceeds $250,000, apply 12.4 percent tax rate to earnings above the base. Earnings subject to tax above the threshold would not be credited for the purpose of computing benefits.
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2.07 2.47 0.15 -1.64
Category: Provisions Affecting Coverage of Employment (2010 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-1.92 -4.12
F1 (2011) Cover newly hired State and local government employees beginning in 2011.
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0.17 -0.16 -1.75 -4.28
F1 (2020) Cover newly hired State and local government employees beginning in 2020.
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0.16 -0.12 -1.76 -4.24
F1 (2021) Cover newly hired State and local government employees beginning in 2021.
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0.16 -0.11 -1.76 -4.23
F2 Provide for OASDI payroll tax coverage of employer provided group health insurance cost, starting in 2012. 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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0.96 0.77 -0.96 -3.35
F3 Phase out the income and payroll tax exclusion for employer-sponsored group health insurance (ESI) beginning in 2018. Set the exclusion at the 75th percentile of premium distribution in 2018, with amounts above that subject to tax. Reduce the exclusion level by 10 percent annually, with exclusion fully eliminated in 2028. Eliminate the excise tax on ESI.
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0.93 1.06 -0.99 -3.06
F4 Beginning in 2011, exempt individuals with more than 180 quarters of coverage from the OASDI payroll tax.
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-0.22 -0.31 -2.14 -4.43
F5 Tax all voluntary salary reduction plan contributions (such as Cafeteria 125 plans and FSAs) like 401(k)s for OASDI payroll tax purposes, effective 2012.
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0.22 0.13 -1.70 -3.99
F6 Tax Reform for Business: Establish a value added tax (VAT) of 3.0 percent for 2012 and 6.5 percent for 2013 and later. Lower the corporate income tax rate from 35 to 27 percent starting 2012.
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-0.03 0.16 -1.95 -3.95
Category: Provisions Affecting Trust Fund Investment in Equities (2010 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-1.92 -4.12
G1 Invest 40 percent of the Trust Funds in equities (phased in 2011-2025), assuming an ultimate 6.4 percent real rate of return on equities.
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0.62 0.00 -1.30 -4.12
G2 Invest 40 percent of the Trust Funds in equities (phased in 2011-2025), assuming an ultimate 5.4 percent real rate of return on equities.
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0.45 0.00 -1.47 -4.12
G3 Invest 40 percent of the Trust Funds in equities (phased in 2011-2025), 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 -1.92 -4.12
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 2011 through 2020. Maintain the percentage at 15 percent thereafter.
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0.25 0.00 -1.67 -4.12
G5 Invest 15 percent of the Trust Funds in equities (phased in 2011-2020), 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 -1.92 -4.12
Category: Provisions Affecting Taxation of Benefits (2010 Trustees Report intermediate assumptions)
Present Law, Alternative II.
-1.92 -4.12
H1 Tax Social Security benefits in a manner similar to private pension income beginning in 2011. Phase out the lower-income thresholds during 2011-2020.
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0.28 0.18 -1.64 -3.94
H2 Tax Social Security benefits in a manner similar to private pension income beginning in 2011. Phase out the lower-income thresholds during 2011-2030.
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0.26 0.18 -1.66 -3.94
H3 Tax Reform for Individuals: For personal income tax, establish in 2012 a 2-bracket approach with marginal rates of 15 and 27 percent separated at $51,000 (CPI indexed) for 2012 and later, with a non-refundable credit for low-income tax filers age 65 and older. Capital gains would be treated as regular income. All Social Security benefits would be taxed starting 2012 at the applicable marginal rate (15 or 27) less a non-refundable credit of 7.5 percent. Revenue to OASDHI would be based on the net marginal rates of 7.5 and 19.5 percent, with 40 percent of revenue dedicated to HI.
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-0.01 -0.06 -1.93 -4.17
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Last reviewed or modified April 27, 2011