2024 OASDI Trustees Report

II. OVERVIEW

A. HIGHLIGHTS

This section summarizes the report’s major findings.

Since the assumptions for last year’s report were set, the Trustees have reassessed their expectations based on recent experience and have made changes to the intermediate assumptions in three primary areas. First, given the continued low level of the total fertility rate (TFR) in recent years, the Trustees have revised the ultimate TFR from 2.0 to 1.9 children per woman. Second, with the continued low levels of applications for and awards of disability benefits, the Trustees have reduced the assumed ultimate disabled worker incidence rate from 4.8 to 4.5 per thousand exposed. Third, given that actual growth in gross domestic product (GDP) substantially exceeded the growth assumed in last year’s report, the Trustees have increased the assumed level of labor productivity over the projection period. Additional factors, including the lower assumed disability incidence rate, have raised the projected employment rate for the working-age population. Together, these changes increase the level of GDP by a total of about 3 percent over the projection period, excluding the eventual offsetting effects of the lower assumed fertility rate. The assumed ultimate rate of growth in productivity remains unchanged from the 2023 report.

The intermediate (best estimate) assumptions for this report were set in December 2023. The Trustees will continue to monitor developments and modify the projections in later reports.

In 2023

At the end of 2023, the OASDI program was providing benefit payments¹ to about 67 million people: 53 million retired workers and dependents of retired workers, 6 million survivors of deceased workers, and 9 million disabled workers and dependents of disabled workers. During the year, an estimated 183 million people had earnings covered by Social Security and paid payroll taxes on those earnings. The total cost of the program in 2023 was $1,392 billion. Total income was $1,351 billion, which consisted of $1,284 billion in non-interest income and $67 billion in interest earnings. Asset reserves held in special issue U.S. Treasury securities declined from $2,830 billion at the beginning of the year to $2,788 billion at the end of the year.

Short-Range Results (2024-33)

Under the Trustees’ intermediate assumptions, Social Security’s total cost is projected to be higher than its total income in 2024 and all later years. Total cost began to be higher than total income in 2021. Social Security’s cost has exceeded its non-interest income since 2010.

To illustrate the actuarial status of the Social Security program as a whole, the operations of the OASI and DI Trust Funds are often shown on a combined basis as OASDI. However, by law, the two funds are separate entities and therefore the combined fund operations and reserves are hypothetical. The combined reserves are projected to decrease from $2,788 billion at the beginning of 2024 to $551 billion at the end of 2033, the last year of the short-range period.

The reserves of the combined OASI and DI Trust Funds along with projected program income are sufficient to cover projected program cost over the next 10 years under the intermediate assumptions. However, the ratio of reserves to annual cost is projected to decline from 188 percent at the beginning of 2024 to 84 percent at the beginning of 2030 and remain below 100 percent for the remainder of the 10-year short-range period. Because this ratio falls below 100 percent by the end of the 10th projection year, the combined OASI and DI Trust Funds fail the Trustees’ test of short-range financial adequacy. For last year’s report, the combined reserves were projected to be 187 percent of annual cost at the beginning of 2024 and 25 percent at the beginning of 2033.

Considered separately, the reserves of the OASI Trust Fund are projected to become depleted during 2033 under the intermediate assumptions. The reserves of the DI Trust Fund along with projected program income are sufficient to cover projected program cost over the next 10 years. The OASI Trust Fund fails the test of short-range financial adequacy, but the DI Trust Fund satisfies the test.

Long-Range Results (2024-98)

Under the Trustees’ intermediate assumptions, OASDI cost exceeds total income in 2024 and in every year thereafter through 2098, and the level of the hypothetical combined trust fund reserves declines until reserves become depleted in 2035, one year later than projected in last year’s report. Figure II.D2 shows the implications of reserve depletion for the combined OASI and DI Trust Funds. Considered separately, the OASI Trust Fund reserves become depleted in 2033, which is the same year projected in last year’s report. As in last year’s report, the DI Trust Fund reserves do not become depleted within the 75-year long-range projection period.²

The DI program continued to have low levels of disability applications and benefit awards through 2023. Disability applications have declined substantially since 2010, and the total number of disabled-worker beneficiaries in current payment status has been falling since 2014. For this report, disability applications are assumed to rise gradually from current low levels, resulting in a rise in the age-sex-adjusted disability incidence rate to an ultimate rate of 4.5 per thousand exposed by the end of the short-range projection period. In last year’s report, a higher ultimate disability incidence rate of 4.8 per thousand was assumed.

Over the 75-year long-range period 2024-98, the projected OASDI annual cost rate (the ratio of program cost to taxable payroll) increases from 14.71 percent of taxable payroll for 2024 to 18.60 percent for 2080, and then decreases generally to 18.12 percent for 2098. The projected cost rate for 2098 is 4.64 percent of taxable payroll more than the projected income rate (the ratio of non-interest income to taxable payroll) for 2098. For last year’s report, projected OASDI cost for 2098 was 17.77 percent, or 4.36 percent of payroll more than the annual income rate for that year. When expressed as a share of gross domestic product (GDP), OASDI cost generally rises from 5.2 percent of GDP for 2024 to a peak of about 6.4 percent for 2078, and then declines to 6.1 percent by 2098.

OASDI cost has generally increased much more rapidly than taxable payroll since 2008 and is projected to continue to do so through about 2040. In this period, the retirement of the baby-boom generation is increasing the number of beneficiaries much faster than the increase in the number of covered workers, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. Between about 2040 and 2080, the OASDI cost rate continues to grow, but at a slower pace than prior to 2040. After 2080, the OASDI cost rate declines and then stabilizes. These patterns in the cost rate are largely driven by the effect of birth rates on the age distribution of the adult population. Birth rates are assumed to increase from recent very low levels to an ultimate level of 1.9 children per woman for 2040 and thereafter. In last year’s report, a higher ultimate total fertility rate of 2.0 children per woman was assumed for 2056 and later.

The OASDI actuarial deficit is 3.50 percent of taxable payroll for the 75-year projection period through 2098, which is smaller than the value of 3.61 percent of taxable payroll for the 75-year projection period through 2097 in last year’s report. The open-group unfunded obligation for OASDI is 3.32 percent of taxable payroll over the 75-year projection period through 2098, which is smaller than the value of 3.42 percent of payroll over the 75-year projection period through 2097 in last year’s report. Expressed in present-value dollars discounted to January 1, 2024, the open-group unfunded obligation for OASDI is $22.6 trillion over the 75-year projection period through 2098. This value is $0.2 trillion more than the measured level in last year’s report of $22.4 trillion over the 75-year projection period through 2097, discounted to January 1, 2023. The actuarial deficit and unfunded obligation measures are reported separately for the OASI and DI funds in section IV.B of this report. The OASDI actuarial deficit and the OASDI unfunded obligation both round to 1.2 percent of GDP over the 75-year projection period through 2098, compared to 1.3 percent for the actuarial deficit and 1.2 percent for the unfunded obligation over the 75-year projection period through 2097 in last year’s report.

If the assumptions, methods, starting values, and the law had all remained unchanged, the actuarial deficit would have increased to 3.67 percent of taxable payroll, and the unfunded obligation would have risen to 3.48 percent of taxable payroll and $23.2 trillion in present value due to the change in the valuation date and the extension of the valuation period through an additional year, 2098. The actuarial deficit decreased significantly in this year’s report primarily due to changes in economic factors and the lower assumed ultimate disability incidence rate, which are partially offset by the lower assumed ultimate total fertility rate. These changes are described in detail in section IV.B.6 of this report.

To illustrate the magnitude of the 75-year actuarial deficit, consider that for the combined OASI and DI Trust Funds to remain fully solvent throughout the 75-year projection period ending in 2098: (1) revenue would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 3.33 percentage points³ to 15.73 percent beginning in January 2024; (2) scheduled benefits would have to be reduced by an amount equivalent to an immediate and permanent reduction of 20.8 percent applied to all current and future beneficiaries effective in January 2024, or 24.8 percent if the reductions were applied only to those who become initially eligible for benefits in 2024 or later; or (3) some combination of these approaches would have to be adopted.

If substantial actions are deferred for several years, the changes necessary to maintain solvency for the combined OASI and DI Trust Funds would be concentrated on fewer years and fewer generations. Significantly larger changes would be necessary if action is deferred until the combined trust fund reserves become depleted in 2035. For example, maintaining 75-year solvency through 2098 with changes that begin in 2035 would require: (1) an increase in revenue by an amount equivalent to a permanent 4.02 percentage point payroll tax rate increase to 16.42 percent starting in 2035, (2) a reduction in scheduled benefits by an amount equivalent to a permanent 24.6 percent reduction in all benefits starting in 2035, or (3) some combination of these approaches.

Conclusion

Under the intermediate assumptions, the projected hypothetical combined OASI and DI Trust Fund asset reserves become depleted and unable to pay scheduled benefits in full on a timely basis in 2035. At the time of depletion of these combined reserves, continuing income to the combined trust funds would be sufficient to pay 83 percent of scheduled benefits. The OASI Trust Fund reserves are projected to become depleted in 2033, at which time OASI income would be sufficient to pay 79 percent of OASI scheduled benefits. DI Trust Fund asset reserves are not projected to become depleted during the 75-year period ending in 2098.

Lawmakers have a broad continuum of policy options that would close or reduce Social Security's long-term financing shortfall. Estimates for many such policy options are available at ssa.gov/OACT/solvency/provisions/.

The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them. Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits. Social Security will play a critical role in the lives of 68 million beneficiaries and 184 million covered workers and their families during 2024. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.

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1

The definitions of “benefit payments” and other terms appear in the Glossary.

2

If the OASI Trust Fund reserves were to become depleted in 2033 as is currently projected, the operations of the hypothetical combined OASI and DI Trust Funds would not reflect the aggregated operation of the OASI Trust Fund and the DI Trust Fund because part of the OASI benefits could not be paid without a change in the law. The values shown for the hypothetical combined trust funds assume the law will have been changed to permit the transfer of resources between funds as needed.

3

The 3.33 percentage point increase in the payroll tax rate required to achieve 75-year solvency through 2098 differs somewhat from the 3.50 percent actuarial deficit. This is primarily because the rate increase required to achieve 75-year solvency reflects a zero trust fund reserve at the end of the period in 2098, whereas the 3.50 percent actuarial deficit incorporates an ending trust fund reserve equal to one year’s cost. While such an increase in the payroll tax rate would cause some behavioral changes in earnings and ensuing changes in benefit levels, such changes are not included in these calculations because they are assumed to have roughly offsetting effects on OASDI actuarial status over the 75-year long-range period as a whole.