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Summary of Provisions That Would Change the Social Security Program

Description of Proposed Provisions:
Provisions Affecting Level of Monthly Benefits

Estimates based on the intermediate assumptions of the 2013 Trustees Report


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  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
  Present Law, Alternative II.
    -2.72 -4.77
B1.1 Price indexing of PIA formula factors beginning with those newly eligible for OASDI benefits in 2020: Reduce PIA formula factors so that initial benefits grow by inflation rather than by the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
2.57 7.59 -0.15 2.82
B1.2 Progressive price indexing (30th percentile) of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2020: Create a new bend point at the 30th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 30th percentile and below. Reduce the 32 and 15 percent formula factors above the 30th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum grows by inflation rather than the growth in the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
1.44 4.26 -1.28 -0.50
B1.3 Progressive price indexing (40th percentile) of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2020: Create a new bend point at the 40th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 40th percentile and below. Reduce the 32 and 15 percent formula factors above the 40th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum grows by inflation rather than the growth in the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
1.22 3.62 -1.50 -1.15
B1.4 Progressive price indexing (50th percentile) of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2020: Create a new bend point at the 50th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 50th percentile and below. Reduce the 32 and 15 percent formula factors above the 50th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum grows by inflation rather than the growth in the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
0.99 2.79 -1.73 -1.98
B1.5 Progressive price indexing (60th percentile) of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2020: Create a new bend point at the 60th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 60th percentile and below. Reduce the 32 and 15 percent formula factors above the 60th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum grows by inflation rather than the growth in the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
0.71 1.77 -2.01 -2.99
B1.6 (2017) Progressive price indexing (30th percentile) of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2017: Create a new bend point at the 30th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 30th percentile and below. Reduce the 32 and 15 percent formula factors above the 30th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum grows by inflation rather than the growth in the SSA average wage index. Young survivors (children and spouses under normal retirement age with a child in care) are not affected by this proposal. Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (Bennett)
1.57 4.07 -1.15 -0.69
B1.6 (2022) Progressive price indexing (30th percentile) of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2022: Create a new bend point at the 30th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 30th percentile and below. Reduce the 32 and 15 percent formula factors above the 30th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum grows by inflation rather than growth in the SSA average wage index. Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (Ryan 2010)
1.11 3.59 -1.61 -1.17
B1.7 Progressive price indexing (40th percentile) of PIA formula factors for individuals newly eligible for OASI benefits in 2021 through 2058: Create a new bend point at the 40th percentile of the AIME distribution of newly retired workers. Maintain current-law benefit credit for earners at the 40th percentile and below. Reduce the 32 and 15 formula factors above the 40th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum grows by inflation rather than the growth in the SSA average wage index. Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status. Young survivors (children of deceased workers and surviving spouses with a child in care) are not affected.
graph | table | pdf-graph | pdf-table | memo (Graham, Paul, Lee)
0.93 2.50 -1.79 -2.27
B1.8 Progressive price indexing (50th percentile) of PIA formula factors for individuals newly eligible for OASI benefits in 2018 through 2057: Create a new bend point at the 50th percentile of the AIME distribution of newly retired workers. Maintain current-law benefit credit for earners at the 50th percentile and below. Reduce the 32 and 15 formula factors above the 50th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum grows by inflation rather than the growth in the SSA average wage index. Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (Chaffetz)
1.01 2.37 -1.71 -2.40
B2.1 Beginning with those newly eligible for OASI benefits in 2023, 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 benefit eligibility. Unisex life expectancies, based on period life tables as computed by SSA's Office of the Chief Actuary, are used to determine the ratio. Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center) | memo (Bennett)
0.53 1.76 -2.19 -3.01
B3.1 Beginning with those newly eligible for OASDI benefits in 2014, multiply the 32 and 15 percent formula factors each year by 0.987. Stop reductions in 2044, when the formula factors reach 21 percent and 10 percent, respectively.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
1.57 3.11 -1.15 -1.66
B3.2 Beginning with those newly eligible for OASI benefits in 2021, multiply the 90 and 32 percent PIA factors each year by 0.9925 and 0.982, respectively. Stop reductions in 2058. Beginning with those newly eligible for OASI benefits in 2016, multiply the 15 factor by 0.982. Stop reduction of the 15 factor in 2053. Child beneficiaries and spouses with a child in care under the OASI program are not affected by this proposal. Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (Liebman, MacGuineas, Samwick)
2.00 5.37 -0.72 0.60
B3.3 Beginning with those newly eligible for OASDI benefits in 2014, use a modified primary insurance amount (PIA) formula. The modified formula: (1) increases the first bend point to the equivalent of $800 in 2009; (2) places a new bend point 75 percent of the way between the reset first bend point and the current-law second bend point; (3) lowers the PIA factor between the new bend point and the upper bend point from 32 percent to 20 percent; and (4) lowers the factor above the upper bend point from 15 percent to 10 percent.
graph | table | pdf-graph | pdf-table | memo (AARP)
0.23 0.31 -2.49 -4.46
B3.4 Beginning with those newly eligible for OASDI benefits in 2017, multiply all PIA formula factors each year by 0.991. Stop reductions after 2045. Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status. Young survivors (children of deceased workers and surviving spouses with a child in care) are not affected.
graph | table | pdf-graph | pdf-table | memo (Warshawsky)
1.48 3.20 -1.23 -1.57
B3.5 Progressive indexing (30th percentile) of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2016, continuing through 2053, and resuming in 2074: Create a new bend point at the 30th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 30th percentile and below. Reduce the 32 and 15 percent formula factors above the 30th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum is reduced by 1.12 percent per year as compared to current law (for the years that progressive indexing applies). Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA)
1.25 3.03 -1.47 -1.73
B3.6 Progressive indexing (30th percentile) of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2016, continuing through 2065: Create a new bend point at the 30th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 30th percentile and below. Reduce the 32 and 15 percent formula factors above the 30th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum is reduced by 1.12 percent per year as compared to current law (for the years that progressive indexing applies). Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA)
1.33 3.50 -1.39 -1.27
B3.7 Progressive indexing (30th percentile) of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2016, continuing through 2025, and resuming in 2064: Create a new bend point at the 30th percentile of the AIME distribution of newly retired workers. Maintain current-law benefits for earners at the 30th percentile and below. Reduce the 32 and 15 percent formula factors above the 30th percentile such that the initial benefit for a worker with AIME equal to the taxable maximum is reduced by 1.12 percent per year as compared to current law (for the years that progressive indexing applies). Disabled workers are: (a) not affected prior to normal retirement age; and (b) subject to a proportional reduction in benefits, based on the worker's years of disability, upon conversion to retired-worker beneficiary status.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA)
0.58 1.56 -2.13 -3.20
B3.8 Beginning with those newly eligible for OASDI benefits in 2020, create a new bend point at the 50th percentile of the AIME distribution of newly retired workers and gradually reduce all PIA formula factors except for the 90 percent factor. By 2053: a) the 32 percent PIA formula factor below the new bend point reduces to 30 percent; b) the 32 percent PIA factor above the new bend point reduces to 10 percent; and c) the 15 percent factor reduces to 5 percent.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission)
0.92 2.37 -1.80 -2.40
B3.9 Beginning with those newly eligible for OASDI benefits in 2026, gradually reduce the 15 percent PIA formula factor in each year so that it reaches 10 percent for those newly eligible in 2055 and later.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center)
0.08 0.23 -2.64 -4.53
B3.10 Beginning with those newly eligible for OASDI benefits in 2020, gradually increase the first PIA bend point in each year so that it is 15 percent higher for those newly eligible in 2034 and later.
graph | table | pdf-graph | pdf-table | memo (Harkin 2013) | memo (Harkin 2012)
-0.36 -0.72 -3.08 -5.48
B4.1 Increase the number of years used to calculate benefits for retirees and survivors (but not for disabled workers) from 35 to 38, phased in over the years 2014-2018.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
0.28 0.41 -2.44 -4.36
B4.2 Increase the number of years used to calculate benefits for retirees and survivors (but not for disabled workers) from 35 to 40, phased in over the years 2014-2022.
graph | table | pdf-graph | pdf-table | memo (Chaffetz) | memo (Social Security Advisory Board)
0.46 0.69 -2.26 -4.08
B4.3 For the OASI and DI computation of the PIA, gradually reduce the maximum number of drop-out years from 5 to 0, phased in over the years 2015-2023.
graph | table | pdf-graph | pdf-table | memo (Warshawsky)
0.61 0.97 -2.10 -3.80
B5.1 Increase the PIA to a level such that a worker with 30 years of earnings at the minimum wage level receives an adjusted PIA equal to 120 percent of the Federal poverty level for an aged individual. This provision takes full effect for all newly eligible OASDI workers in 2031, and is phased in for new eligibles in 2022 through 2030. The percentage increase in PIA is lowered proportionately for those with fewer than 30 years of earnings, down to no enhancement for workers with 20 or fewer years of earnings. (Year-of-work requirements are "scaled" for disabled workers based on their years of potential work from age 22 to benefit eligibility). The benefit enhancement percentage is reduced proportionately for workers with higher average indexed monthly earnings (AIME), down to no enhancement for those with AIME at least twice that of a 35-year steady minimum wage earner.
graph | table | pdf-graph | pdf-table | memo (Ryan 2010)
-0.02 0.00 -2.74 -4.77
B5.2 Beginning in 2014, reconfigure the special minimum benefit: (a) A year of coverage is defined as a year in which 4 quarters of coverage are earned. (b) At implementation, set the PIA for 30 years of coverage equal to 125 percent of the monthly poverty level (about $1,164 in 2012). For those with under 30 years of coverage, the PIA per year of coverage over 10 years is $1,164/20 = $58.20. (c) Index the initial PIA per year of coverage by wage growth for successive cohorts.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
-0.20 -0.31 -2.92 -5.07
B5.3 Beginning in 2014, reconfigure the special minimum benefit: (a) A year of coverage is defined to be either a year in which 4 quarters of coverage are earned or a child is in care. Childcare years are granted to parents who have a child under 5, with a limit of 8 such years. (b) At implementation, set the PIA for 30 years of coverage equal to 125 percent of the monthly poverty level (about $1,164 in 2012). For those with under 30 years of coverage, the PIA per year of coverage over 10 years is $1,164/20 = $58.20. (c) Index the initial PIA per year of coverage by wage growth for successive cohorts.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
-0.27 -0.40 -2.99 -5.17
B5.4 Beginning in 2020, reconfigure the special minimum benefit: (a) A year of coverage is defined as a year in which 4 quarters of coverage are earned. (b) At implementation, set the PIA for 30 years of coverage equal to 125 percent of the monthly poverty level (about $1,164 in 2012). For those with under 30 years of coverage, the PIA per year of coverage over 10 years is $1,164/20 = $58.20. (c) From 2012 to the year of implementation, 2020, index the PIA per year of coverage using the chain-CPI index. Then, for later years, index the PIA per year of coverage by wage growth for successive cohorts. (d) Scale work requirements for disabled workers, based on the number of years of non-disabled potential work.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission)
-0.14 -0.24 -2.86 -5.01
B5.5 Beginning in 2015, reconfigure the special minimum benefit: (a) A year of coverage is defined as a year in which either 20 percent of the "old law maximum" is earned or a child is in care. Childcare years are granted to parents who have a child under 6, with a limit of 8 such years. (b) At implementation, set the PIA for 30 years of coverage equal to 133 percent of the poverty level. For those with under 30 years of coverage, the PIA per year of coverage over 19 is 12.09 percent of poverty. (c) Use the 2012 Aged Federal poverty level, increased by the SSA average wage index to 2 years prior to benefit eligibility. (d) Scale work requirements for disabled workers, based on the number of years of non-disabled potential work.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center)
-0.09 -0.15 -2.81 -4.92
B5.6 Beginning in 2014, reconfigure the special minimum benefit: (a) A year of coverage is defined to be either a year in which 4 quarters of coverage are earned or a child is in care. Childcare years are granted to parents who have a child under 6, with a limit of 5 such years. (b) At implementation, set the PIA for 30 years of coverage equal to 100 percent of the monthly poverty level (about $957.50 in 2013). For those with under 30 years of coverage, the PIA per year of coverage over 10 years is $957.50/20 = $47.90. (c) From 2013 to the year of implementation, 2014, index the PIA per year of coverage using the CPI index. Then, for later years, index the PIA per year of coverage by wage growth for successive cohorts. (d) Scale work requirements for disabled workers, based on the number of years of non-disabled potential work.
graph | table | pdf-graph | pdf-table | memo (Chaffetz)
-0.15 -0.22 -2.86 -4.99
B5.7 Beginning for those newly eligible in 2016, increase the special minimum benefit to 100 of poverty by: (a) The number of years of work (YOWs) is determined as total quarters of coverage divided by 4, ignoring any fraction. Up to 5 additional years with a child under 6. (b) Set the PIA for 30+ YOWs equal to 100 percent of the monthly HHS poverty level for the year prior to eligibility. For workers between 11 and 29 YOWs, reduce the special minimum by 3 1/3 percentage points per YOW so that at 29 YOWs the minimum would be 96 2/3% of poverty, ..., down to 11 YOWs at 36 2/3% of poverty. No minimum for 10 or fewer YOWs.
graph | table | pdf-graph | pdf-table | memo (Moore)
-0.02 -0.01 -2.74 -4.77
B6.1 Provide a 5 percent increase to the monthly benefit amount (MBA) of any beneficiary who is 85 or older at the beginning of 2014 or who reaches their 85th birthday after the beginning of 2014.
graph | table | pdf-graph | pdf-table | memo (Chaffetz) | memo (National Academy of Social Insurance)
-0.11 -0.16 -2.82 -4.92
B6.2 Provide the same dollar amount increase to the monthly benefit amount (MBA) of any beneficiary who is 85 or older at the beginning of 2014 or who reaches their 85th birthday after the beginning of 2014. The dollar amount of increase equals 5 percent of the average retired-worker MBA in the prior year.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
-0.10 -0.15 -2.82 -4.92
B6.3 Provide an increase in the benefit level of any beneficiary who is 85 or older at the beginning of 2015 or who reaches their 85th birthday after the beginning of 2015. Increase the beneficiary’s PIA based on an amount equal to the average retired-worker PIA at the end of 2014, or at the end of the year age 80 if later. Increase the beneficiary’s PIA by 5 percent of this amount for those older than 85 at the beginning of 2014 and by 5 percent of this amount at age 85 for others, phased in at 1 percent per year for ages 81-85.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center)
-0.13 -0.19 -2.85 -4.96
B6.4 Starting in 2014, provide a 5 percent uniform benefit increase 24 years after initial benefit eligibility. Phase in the benefit increase at 1 percent per year from the 20th through 24th years after eligibility. For disabled workers, the eligibility age is the initial entitlement year to the benefit. The benefit increase is equal to 5 percent of the PIA of a worker assumed to have career-average earnings equal to SSA’s average wage index.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission)
-0.15 -0.21 -2.87 -4.98
B6.5 Starting in 2016, provide a 5 percent uniform PIA increase 20 years after benefit eligibility. Phase in the PIA increase at 1 percent per year from the 16th through 20th years after eligibility. The full PIA increase is equal to 5 percent of the PIA of a worker assumed to have career-average earnings equal to the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Moore)
-0.23 -0.31 -2.95 -5.08
B6.6 Starting in 2020, provide a uniform PIA increase 23 years after benefit eligibility. Phase in the PIA increase at 0.5 percent per year from the 14th through the 23rd years after eligibility. The full PIA increase is equal to 5 percent of the average retired worker PIA in December of the 12th year after benefit eligibility. A similar additional PIA increase applies 42 years after benefit eligibility (phased in from the 33rd through the 42nd years after eligibility). Auxiliary beneficiaries receive benefit enhancement based on PIA of governing worker.
graph | table | pdf-graph | pdf-table | memo(FY 2014 Budget)
-0.21 -0.31 -2.93 -5.08
B7.1 Reduce benefits by 3 percent for those newly eligible for benefits in 2014 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
0.37 0.51 -2.35 -4.25
B7.2 Reduce benefits by 5 percent for those newly eligible for benefits in 2014 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
0.62 0.86 -2.10 -3.91
B7.3 Give credit to parents with a child under 6 for earnings for up to five years. The earnings credited for a childcare year equal one half of the SSA average wage index (about $21,858 in 2012). The credits are available for all past years to newly eligible retired-worker and disabled-worker beneficiaries starting in 2014. The 5 years are chosen to yield the largest increase in AIME.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
-0.22 -0.31 -2.94 -5.08
B7.4 Increase benefits by 2 percent for all beneficiaries as of the beginning of 2014 and for those newly eligible for benefits after the beginning of 2014.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
-0.31 -0.34 -3.03 -5.11
B7.5 Increase benefits by 5 percent for all beneficiaries as of the beginning of 2014 and for those newly eligible for benefits after the beginning of 2014.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
-0.78 -0.85 -3.49 -5.62
B7.6 Increase benefits by 20 percent for all beneficiaries as of the beginning of 2014 and for those newly eligible for benefits after the beginning of 2014.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
-3.10 -3.42 -5.82 -8.19
B7.7 Reduce individual Social Security benefits if modified adjusted gross income, or MAGI (AGI less taxable Social Security benefits plus nontaxable interest income) is above $60,000 for single taxpayers or $120,000 for taxpayers filing jointly. This provision is effective for individuals newly eligible for benefits in 2020 or later. The percentage reduction increases linearly up to 50 percent for single/joint filers with MAGI of $180,000/$360,000 or above. Index the MAGI thresholds for years after 2020, based on changes in the SSA average wage index.
graph | table | pdf-graph | pdf-table | memo (Chaffetz)
0.27 0.42 -2.44 -4.35
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Last reviewed or modified October 30, 2013