This appendix presents estimates that illustrate the sensitivity of the long-range actuarial status of the OASDI program to changes in selected individual assumptions. The estimates based on the three alternative sets of assumptions, which were presented earlier in this report, illustrate the effects of varying all of the principal assumptions simultaneously, in order to portray a significantly more optimistic or pessimistic future. For each sensitivity analysis presented in this appendix, the
intermediate alternative II projection is the reference point, and one assumption is varied within that alternative. The variation used for each individual assumption is the same as the level used for that assumption in the
low-cost alternative I and
high-cost alternative III projections.
Each table in this section shows the effects of changing a particular assumption on the OASDI summarized income rates,
summarized cost rates, and actuarial balances for 25-year, 50-year, and 75-year
valuation periods. Each table also shows the effects on the annual balance for 2098 and on the year of combined trust fund reserve depletion. Following each table is a discussion of the estimated changes in cost rates. The change in each of the
actuarial balances is approximately equal to the change in the corresponding cost rate, but in the opposite direction. This appendix does not discuss income rates following each table because income rates vary only slightly with changes in assumptions that affect revenue from taxation of benefits.
Table VI.D1 shows selected measures of OASDI actuarial status on the basis of alternative II with three different assumptions for the future paths of total fertility rates. The Trustees assume that the ultimate total fertility rate will be 1.6, 1.9, and 2.1 children per woman under alternatives III, II, and I, respectively. The ultimate total fertility rate is reached in 2040.
For the 25-year period, the cost rate for the three fertility assumptions varies by only about 0.02 percent of taxable payroll. In contrast, the 75-year cost rate varies over a wide range, decreasing from 18.07 percent to 16.81 percent, as the ultimate total fertility rate increases from 1.6 for alternative III to 2.1 for alternative I. Similarly, while the 25-year actuarial balance varies by only 0.02 percent of taxable payroll, the 75-year actuarial balance varies over a much wider range, from ‑4.20 percent to ‑3.05 percent.
Table VI.D2 shows selected measures of OASDI actuarial status on the basis of alternative II with three different assumptions about future reductions in death rates for the period from 2033 to 2098. These assumptions are described in section
V.A.2. Under the Trustees’ assumptions, the age-sex-adjusted death rates
1 decline at average annual rates of 0.28 percent, 0.73 percent, and 1.23 percent for alternatives I, II, and III, respectively.
Lower death rates raise both the income (through increased taxable payroll) and the cost of the OASDI program. The relative increase in cost, however, exceeds the relative increase in taxable payroll. For any given year, reductions in the death rates for people who are age 62 and over (ages at which death rates are the highest) increase the number of retired-worker beneficiaries (and, therefore, the amount of retirement benefits paid) without adding significantly to the number of covered workers (and, therefore, to the taxable payroll). Reductions in death rates for people at age 50 to
retirement eligibility age result in significant increases to the taxable payroll. However, those increases are not large enough to offset the sum of the additional retirement benefits mentioned above and the
disability benefits paid to additional beneficiaries at these pre-retirement ages, which are ages of high
disability incidence. At ages under 50, death rates are so low that even substantial reductions in death rates do not result in significant increases in the numbers of covered workers or beneficiaries. Consequently, if death rates decline by about the same relative amount for all ages, the cost increases faster than the rate of growth in payroll, which results in higher cost rates and lower actuarial balances. Each additional 0.1‑percentage-point increase in the average annual rate of decline in the death rate decreases (worsens) the long-range actuarial balance by about 0.16 percent of taxable payroll.
Table VI.D3 shows selected measures of OASDI actuarial status under alternative II with three different assumptions about the magnitude of total net immigration (sum of net lawful permanent resident (LPR) immigration and net other-than-LPR immigration). See section V.A.3 for more information on immigration assumptions and methods. Under the Trustees’ assumptions, total net annual immigration averages 829,000 persons, 1,244,000 persons, and 1,683,000 persons for the period 2034 through 2098 under alternatives III, II, and I, respectively.
Table VI.D4 shows selected measures of OASDI actuarial status on the basis of alternative II with three different assumptions about the
real growth rate in the average annual wage in OASDI covered employment. Under the Trustees’ assumptions, the average annual real growth rate in the average wage in covered employment from 2033 to 2098 is 0.53 percent, 1.14 percent, and 1.74 percent under alternatives III, II, and I, respectively.
Table VI.D5 shows selected measures of OASDI actuarial status on the basis of alternative II with three different assumptions about the rate of increase for the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI). Under the Trustees’ assumptions, the annual increase in the CPI is 3.00 percent, 2.40 percent, and 1.80 percent under alternatives I, II, and III, respectively. These ultimate rates of increase are reached by 2026 under all three alternatives.
The time lag between the effects of the CPI changes on taxable payroll and on scheduled benefits explains these patterns. When the rate of increase in the CPI is greater and real wage growth is constant, then: (1) the effect on taxable payroll due to a greater rate of increase in average wages occurs immediately and (2) the effect on benefits due to a larger COLA occurs with a lag of about 1 year. As a result of these effects, the higher taxable payrolls have a stronger effect than the higher benefits, which results in lower cost rates. Each 0.1‑percentage-point decrease in the rate of the change in the CPI decreases (worsens) the long-range actuarial balance by about 0.02 percent of taxable payroll.
Table VI.D6 shows selected measures of OASDI actuarial status under alternative II with three different assumptions about the annual real interest rate (compounded semiannually) for
special public-debt obligations issuable to the trust funds. Under the Trustees’ assumptions, the ultimate annual real interest rate is 1.8 percent, 2.3 percent, and 2.8 percent under alternatives III, II, and I, respectively. These ultimate rates are reached by 2041 under all three alternatives. In each case, the ultimate annual increase in the CPI is 2.40 percent, which is consistent with alternative II. Therefore, the ultimate annual yields are 4.2, 4.8, and 5.3 percent, respectively.
Table VI.D7 shows selected measures of OASDI actuarial status under alternative II with three different assumptions about the ratio of taxable payroll to OASDI covered earnings (the taxable ratio). Note that covered earnings are the sum of wages and net self-employment earnings covered by Social Security, and taxable payroll is essentially the amount of covered earnings subject to the Social Security payroll tax up to the contribution and benefit base ($168,600 for 2024). Under the Trustees’ assumptions, the taxable ratio at the end of the short-range period (2033) is 81.0 percent, 82.5 percent, and 84.0 percent under alternatives III, II, and I, respectively.
Table VI.D8 shows selected measures of OASDI actuarial status on the basis of alternative II with three different assumptions about future disability incidence rates. Under the Trustees’ assumptions, the ultimate age-sex-adjusted
2 incidence rate is 3.6, 4.5, and 5.4 awards per thousand exposed for alternatives I, II, and III, respectively. These ultimate rates are reached by 2033 under all three alternatives. Under the Trustees’ assumptions, incidence rates by age and sex for all three alternatives vary during the early years of the projection period before reaching their long-term average values.
Table VI.D9 shows selected measures of OASDI actuarial status on the basis of alternative II with three different assumptions about future disability termination rates, including deaths and recoveries.
Under the Trustees’ assumptions, death rates for disabled-worker beneficiaries for all three alternatives decline throughout the long-range period. The age-sex-adjusted death rate
3 of 26.8 deaths per thousand disabled-worker beneficiaries in 2023 declines to 21.5, 12.4, and 6.2 deaths per thousand in 2098 for alternatives I, II, and III, respectively. These levels are about 20 percent, 54 percent, and 77 percent lower, respectively, than the level in 2023. For this sensitivity analysis, total population death rates by age and sex are assumed to be the same as those used for the alternative II assumptions.
The ultimate age-sex-adjusted recovery rate
4 used for this analysis is 13.0 recoveries per thousand disabled-worker beneficiaries for the alternative I assumptions, 10.8 recoveries per thousand disabled-worker beneficiaries for the alternative II assumptions, and 8.6 recoveries per thousand disabled-worker beneficiaries for the alternative III assumptions.
