2012 OASDI Trustees Report

C. ASSUMPTIONS ABOUT THE FUTURE

The future income and expenditures of the OASI and DI Trust Funds will depend on many factors, including the size and characteristics of the population receiving benefits, the level of monthly benefit amounts, the size of the workforce, and the level of covered workers’ earnings. These factors will depend in turn on future birth rates, death rates, immigration, marriage and divorce rates, retirement-age patterns, disability incidence and termination rates, employment rates, productivity gains, wage increases, inflation, interest rates, and many other demographic, economic, and program-specific factors.

Table II.C1 presents key demographic and economic assumptions for three alternative scenarios. The intermediate assumptions reflect the Trustees’ best estimates of future experience. Therefore, most of the figures in this overview depict only the outcomes under the intermediate assumptions. Any projection of the future is, of course, uncertain. For this reason, the Trustees also present results under low-cost and high-cost alternatives to provide a range of possible future experience. The actual future costs are unlikely to be as extreme as those portrayed by the low-cost and high-cost projections. A separate section on the uncertainty of the projections, beginning on page 16, highlights the implications of these alternative scenarios.

The Trustees reexamine the assumptions each year in light of recent experience and new information. This annual review helps to ensure that the Trustees’ assumptions provide the best estimate of future possibilities.

 

Table II.C1.—Long-Range Values  of Key Demographic and Economic Assumptions
for the 75-year Projection Period

Long-range assumptions	Intermediate	Low-cost	High-cost
Total fertility rate (children per woman), starting in 2036	2.0	2.3	1.7
Average annual percentage reduction in total age‑sex‑adjusted death rates from 2011 to 2086	.77	.39	1.18
Average annual net immigration (in thousands) for years 2012‑86	1,080	1,375	790
Productivity (total U.S. economy), starting in 2024	1.68	1.98	1.38
Average annual percentage change in average wage in covered employment from 2021 to 2086	3.92	3.51	4.31
Consumer Price Index (CPI), starting in 2021	2.80	1.80	3.80
Average annual real-wage differential (percent) for years 2022‑86	1.12	1.71	.51
Unemployment rate (percent), starting in 2021	5.5	4.5	6.5
Annual trust fund real interest rate (percent), starting in 2022	2.9	3.4	2.4

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1

See chapter V for details, including historical values and projected values.