2020 OASDI Trustees Report

C. PROGRAM-SPECIFIC ASSUMPTIONS AND METHODS

The Office of the Chief Actuary at the Social Security Administration uses a set of models to project future income and cost under the OASDI program. These models rely not only on the demographic and economic assumptions described in the previous sections, but also on a number of program-specific assumptions and methods. Values of many program parameters change from year to year as prescribed by formulas set out in the Social Security Act. These program parameters affect the level of payroll taxes collected and the level of benefits paid. The office uses more complex models to project the numbers of future workers covered under OASDI and the levels of their covered earnings, as well as the numbers of future beneficiaries and the expected levels of their benefits. The following subsections provide descriptions of these program-specific assumptions and methods.

1. Automatically Adjusted Program Parameters

The Social Security Act requires that certain parameters affecting the determination of OASDI benefits and taxes be adjusted annually to reflect changes in particular economic measures. Formulas prescribed in the law, applied to reported statistics, change these program parameters annually. The law bases these automatic adjustments on measured changes in the national average wage index (AWI) and the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI).¹ This section shows values for program parameters adjusted using these indices from the time that these adjustments became effective through 2029. Projected values for future years depend on the economic assumptions described in the preceding section of this report.

Tables V.C1 and V.C2 present the historical and projected values of the CPI-based benefit increases, the AWI series, and the values of many of the wage-indexed program parameters. Each table shows projections under the three alternative sets of assumptions. Table V.C1 includes:

•

The annual cost-of-living benefit increase percentages. The automatic cost-of-living adjustment provisions in the Social Security Act specify increases in OASDI benefits based on increases in the CPI. Volatility in oil prices has resulted in substantial volatility in recent cost-of-living adjustments. A large cost-of-living adjustment for December 2008 was followed by no cost-of-living adjustments for December 2009 and December 2010. More recent volatility in oil prices again affected the CPI, resulting in no cost-of-living adjustment for December 2015. Cost-of-living adjustments resumed in December 2016. All three sets of assumptions include annual cost-of-living adjustments for all future years.

•

The annual levels of and percentage increases in the AWI. Under section 215(b)(3) of the Social Security Act, Social Security benefit computations index taxable earnings (for most workers first becoming eligible for benefits in 1979 or later) using the AWI for each year after 1950. This procedure converts a worker’s past earnings to approximately average-wage-indexed equivalent values near the time of his or her benefit eligibility. Other program parameters presented in this section that are subject to the automatic-adjustment provisions also rely on the AWI.

•

The wage-indexed contribution and benefit base. For any year, the contribution and benefit base is the maximum amount of earnings subject to the OASDI payroll tax and creditable toward benefit computation. The Social Security Act defers any increase in the contribution and benefit base if there is no cost-of-living adjustment effective for December of the preceding year. There was no increase in the contribution and benefit base for 2010, 2011, or 2016 because there was no cost-of-living adjustment for the immediate prior December in each case. Under all three sets of assumptions, the contribution and benefit base is projected to increase for all future years.

•

The wage-indexed retirement earnings test exempt amounts. The exempt amounts are the annual amount of earnings below which beneficiaries do not have benefits withheld. A lower exempt amount applies for years prior to the year of attaining normal retirement age. A higher exempt amount applies beginning with the year in which a beneficiary attains normal retirement age. Starting in 2000, the retirement earnings test no longer applies beginning with the month of attaining normal retirement age. The Social Security Act defers any increase in these exempt amounts if there is no cost-of-living adjustment effective for December of the preceding year. There was no increase in these exempt amounts for 2010, 2011, or 2016 because there was no cost-of-living adjustment for the immediate prior December. Under all three sets of assumptions, the exempt amounts increase for all future years.

Table V.C1.—Cost-of-Living Benefit Increases, Average Wage Index, Contribution and Benefit Bases, and Retirement Earnings Test Exempt Amounts, 1975-2029 

Calendar year		Cost-of-living benefit increasea (percent)	Average wage index (AWI)  b		Contribution and benefit base c	Retirement earnings test exempt amount
			Amount	Increase (percent)		Under NRAd	At NRAe
Historical data:
	1975	8.0	$8,630.92	7.5	$14,100	$2,520	$2,520
	1976	6.4	9,226.48	6.9	15,300	2,760	2,760
	1977	5.9	9,779.44	6.0	16,500	3,000	3,000
	1978	6.5	10,556.03	7.9	17,700	3,240	4,000
	1979	9.9	11,479.46	8.7	22,900	3,480	4,500
	1980	14.3	12,513.46	9.0	25,900	3,720	5,000
	1981	11.2	13,773.10	10.1	29,700	4,080	5,500
	1982	7.4	14,531.34	5.5	32,400	4,440	6,000
	1983	3.5	15,239.24	4.9	35,700	4,920	6,600
	1984	3.5	16,135.07	5.9	37,800	5,160	6,960
	1985	3.1	16,822.51	4.3	39,600	5,400	7,320
	1986	1.3	17,321.82	3.0	42,000	5,760	7,800
	1987	4.2	18,426.51	6.4	43,800	6,000	8,160
	1988	4.0	19,334.04	4.9	45,000	6,120	8,400
	1989	4.7	20,099.55	4.0	48,000	6,480	8,880
	1990	5.4	21,027.98	4.6	51,300	6,840	9,360
	1991	3.7	21,811.60	3.7	53,400	7,080	9,720
	1992	3.0	22,935.42	5.2	55,500	7,440	10,200
	1993	2.6	23,132.67	.9	57,600	7,680	10,560
	1994	2.8	23,753.53	2.7	60,600	8,040	11,160
	1995	2.6	24,705.66	4.0	61,200	8,160	11,280
	1996	2.9	25,913.90	4.9	62,700	8,280	12,500
	1997	2.1	27,426.00	5.8	65,400	8,640	13,500
	1998	1.3	28,861.44	5.2	68,400	9,120	14,500
	1999	f 2.5	30,469.84	5.6	72,600	9,600	15,500
	2000	3.5	32,154.82	5.5	76,200	10,080	17,000
	2001	2.6	32,921.92	2.4	80,400	10,680	25,000
	2002	1.4	33,252.09	1.0	84,900	11,280	30,000
	2003	2.1	34,064.95	2.4	87,000	11,520	30,720
	2004	2.7	35,648.55	4.6	87,900	11,640	31,080
	2005	4.1	36,952.94	3.7	90,000	12,000	31,800
	2006	3.3	38,651.41	4.6	94,200	12,480	33,240
	2007	2.3	40,405.48	4.5	97,500	12,960	34,440
	2008	5.8	41,334.97	2.3	102,000	13,560	36,120
	2009	.0	40,711.61	-1.5	106,800	14,160	37,680
	2010	.0	41,673.83	2.4	106,800	14,160	37,680
	2011	3.6	42,979.61	3.1	106,800	14,160	37,680
	2012	1.7	44,321.67	3.1	110,100	14,640	38,880
	2013	1.5	44,888.16	1.3	113,700	15,120	40,080
	2014	1.7	46,481.52	3.5	117,000	15,480	41,400
	2015	.0	48,098.63	3.5	118,500	15,720	41,880
	2016	.3	48,642.15	1.1	118,500	15,720	41,880
	2017	2.0	50,321.89	3.5	127,200	16,920	44,880
	2018	2.8	52,145.80	3.6	128,400	17,040	45,360
Intermediate:
	2019	g1.6	53,756.28	3.1	g132,900	g17,640	g 46,920
	2020	2.3	55,641.66	3.5	g137,700	g18,240	g48,600
	2021	2.5	58,112.16	4.4	141,900	18,840	50,160
	2022	2.4	60,499.07	4.1	147,000	19,560	51,960
	2023	2.4	62,823.60	3.8	153,600	20,400	54,240
	2024	2.4	65,207.33	3.8	159,900	21,240	56,400
	2025	2.4	67,697.32	3.8	165,900	22,080	58,560
	2026	2.4	70,300.71	3.8	172,200	22,800	60,840
	2027	2.4	73,036.06	3.9	178,800	23,760	63,120
	2028	2.4	75,872.79	3.9	185,700	24,600	65,640
	2029	2.4	78,696.64	3.7	192,900	25,560	68,160
Low-cost:
	2019	g 1.6	53,803.50	3.2	g 132,900	g17,640	g 46,920
	2020	3.2	56,306.64	4.7	g137,700	g18,240	g48,600
	2021	2.9	59,561.94	5.8	142,200	18,840	50,160
	2022	3.0	62,888.94	5.6	148,800	19,680	52,560
	2023	3.0	66,034.38	5.0	157,500	20,880	55,560
	2024	3.0	69,330.23	5.0	166,200	22,080	58,680
	2025	3.0	72,801.80	5.0	174,600	23,160	61,560
	2026	3.0	76,455.72	5.0	183,300	24,360	64,680
	2027	3.0	80,341.39	5.1	192,300	25,560	67,920
	2028	3.0	84,435.87	5.1	201,900	26,760	71,280
	2029	3.0	88,628.34	5.0	212,400	28,200	75,000
High-cost:
	2019	g1.6	53,734.72	3.0	g132,900	g17,640	g 46,920
	2020	1.3	54,616.25	1.6	g137,700	g18,240	g48,600
	2021	1.5	54,751.12	0.2	141,900	18,840	50,160
	2022	1.6	56,458.29	3.1	144,300	19,200	51,000
	2023	1.8	58,230.18	3.1	144,600	19,200	51,120
	2024	1.8	60,076.63	3.2	149,100	19,800	52,680
	2025	1.8	61,905.50	3.0	153,900	20,400	54,360
	2026	1.8	63,776.47	3.0	158,700	21,000	56,040
	2027	1.8	65,702.99	3.0	163,500	21,720	57,720
	2028	1.8	67,603.95	2.9	168,600	22,320	59,520
	2029	1.8	69,365.52	2.6	173,700	23,040	61,320

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a

Effective with benefits payable for June in each year 1975-82, and for December in each year after 1982.

b

See table VI.G6 for projected dollar amounts of the AWI for years beyond the last year of this table.

c

Public Law 95-216 specified amounts for 1978-81. Public Law 101-239 changed the indexing procedure and caused slightly higher bases after 1989.

d

Normal retirement age. See table V.C3 for specific values.

e

In 1955-82, the retirement earnings test did not apply at ages 72 and over. In 1983-99, the test did not apply at ages 70 and over. Beginning in 2000, the test does not apply beginning with the month of normal retirement age attainment. In the year of normal retirement age attainment, the higher exempt amount applies to earnings prior to the month of normal retirement age attainment. Public Law 95-216 specified amounts for 1978-82. Public Law 104‑121 specified amounts for 1996-2002.

f

Originally determined as 2.4 percent. Pursuant to Public Law 106-554, effectively 2.5 percent.

g

Actual amount, as determined under automatic-adjustment provisions.

Table V.C2 shows values for other wage-indexed parameters. The table provides historical values from 1978, when indexing of the amount of earnings required for a quarter of coverage first began, through 2020, and also shows projected values through 2029. These other wage-indexed program parameters are:

•

The bend points in the formula for computing the primary insurance amount (PIA) for workers who reach age 62, become disabled, or die in a given year. As figure V.C1 illustrates, these two bend points define three ranges in a worker’s average indexed monthly earnings (AIME). The formula for the worker’s PIA multiplies a 90, 32, or 15 percent factor by the portion of the worker’s AIME that falls within the three respective ranges, and then adds the resulting products together.

Figure V.C1.—Primary-Insurance-Amount Formula for Those Newly Eligible in 2020

[D]

•

The bend points in the formula for computing the maximum total amount of monthly benefits payable based on the earnings record of a retired or deceased worker (maximum family benefit). As figure V.C2 illustrates, these three bend points define four ranges in a worker’s PIA. The formula for the maximum family benefit multiplies a 150, 272, 134, or 175 percent factor by the portion of the worker’s PIA that falls within the four respective ranges, and then adds the resulting products together.

Figure V.C2.—OASI Maximum-Family-Benefit Formula
for Those Newly Eligible in 2020

[D]

•	The amount of earnings required in a year to earn a quarter of coverage (QC). The number and timing of QCs earned determines an individual’s insured status — the basic requirement for benefit eligibility under OASDI.

•

The old-law contribution and benefit base—the contribution and benefit base that would have been in effect without enactment of the 1977 amendments. This old-law base is used in determining special-minimum benefits for certain workers who have many years of low earnings in covered employment. Since 1986, the calculation of OASDI benefits for certain workers who are eligible to receive pensions based on noncovered employment uses the old-law base. In addition, the Railroad Retirement program and the Employee Retirement Income Security Act of 1974 use the old-law base for certain purposes.

Table V.C2.—Values for Selected Wage-Indexed Program Parameters,
Calendar Years 1978-2029 

Calendar year		AIME bend points in PIA formula a			PIA bend points in OASI maximum- family-benefit formula b			Earnings required for a quarter of coverage	Old-law contribution and benefit base c
		First	Second		First	Second	Third
Historical data:
	1978	d	d		d	d	d	e $250	e $17,700
	1979	e $180	e $1,085		e $230	e $332	e $433	260	18,900
	1980	194	1,171		248	358	467	290	20,400
	1981	211	1,274		270	390	508	310	22,200
	1982	230	1,388		294	425	554	340	24,300
	1983	254	1,528		324	468	610	370	26,700
	1984	267	1,612		342	493	643	390	28,200
	1985	280	1,691		358	517	675	410	29,700
	1986	297	1,790		379	548	714	440	31,500
	1987	310	1,866		396	571	745	460	32,700
	1988	319	1,922		407	588	767	470	33,600
	1989	339	2,044		433	626	816	500	35,700
	1990	356	2,145		455	656	856	520	38,100
	1991	370	2,230		473	682	890	540	39,600
	1992	387	2,333		495	714	931	570	41,400
	1993	401	2,420		513	740	966	590	42,900
	1994	422	2,545		539	779	1,016	620	45,000
	1995	426	2,567		544	785	1,024	630	45,300
	1996	437	2,635		559	806	1,052	640	46,500
	1997	455	2,741		581	839	1,094	670	48,600
	1998	477	2,875		609	880	1,147	700	50,700
	1999	505	3,043		645	931	1,214	740	53,700
	2000	531	3,202		679	980	1,278	780	56,700
	2001	561	3,381		717	1,034	1,349	830	59,700
	2002	592	3,567		756	1,092	1,424	870	63,000
	2003	606	3,653		774	1,118	1,458	890	64,500
	2004	612	3,689		782	1,129	1,472	900	65,100
	2005	627	3,779		801	1,156	1,508	920	66,900
	2006	656	3,955		838	1,210	1,578	970	69,900
	2007	680	4,100		869	1,255	1,636	1,000	72,600
	2008	711	4,288		909	1,312	1,711	1,050	75,900
	2009	744	4,483		950	1,372	1,789	1,090	79,200
	2010	761	4,586		972	1,403	1,830	1,120	79,200
	2011	749	4,517		957	1,382	1,803	1,120	79,200
	2012	767	4,624		980	1,415	1,845	1,130	81,900
	2013	791	4,768		1,011	1,459	1,903	1,160	84,300
	2014	816	4,917		1,042	1,505	1,962	1,200	87,000
	2015	826	4,980		1,056	1,524	1,987	1,220	88,200
	2016	856	5,157		1,093	1,578	2,058	1,260	88,200
	2017	885	5,336		1,131	1,633	2,130	1,300	94,500
	2018	895	5,397		1,144	1,651	2,154	1,320	95,400
	2019	926	5,583		1,184	1,708	2,228	1,360	98,700
	2020	960	5,785		1,226	1,770	2,309	1,410	102,300
Intermediate:
	2021	989	5,964		1,264	1,825	2,380	1,460	105,600
	2022	1,024	6,173		1,309	1,889	2,464	1,510	109,200
	2023	1,070	6,447		1,367	1,973	2,573	1,570	114,000
	2024	1,114	6,712		1,423	2,054	2,679	1,640	118,800
	2025	1,156	6,970		1,478	2,133	2,782	1,700	123,300
	2026	1,200	7,235		1,534	2,214	2,887	1,770	127,800
	2027	1,246	7,511		1,592	2,298	2,997	1,830	132,900
	2028	1,294	7,800		1,653	2,387	3,113	1,900	138,000
	2029	1,344	8,103		1,718	2,479	3,234	1,980	143,400
Low-cost:
	2021	990	5,969		1,265	1,827	2,382	1,460	105,600
	2022	1,036	6,247		1,324	1,912	2,493	1,530	110,400
	2023	1,096	6,608		1,401	2,022	2,637	1,610	117,000
	2024	1,158	6,977		1,479	2,135	2,785	1,700	123,300
	2025	1,215	7,326		1,553	2,242	2,924	1,790	129,600
	2026	1,276	7,692		1,631	2,354	3,070	1,880	135,900
	2027	1,340	8,077		1,712	2,472	3,223	1,970	142,800
	2028	1,407	8,483		1,798	2,596	3,385	2,070	150,000
	2029	1,479	8,914		1,890	2,727	3,557	2,180	157,500
High-cost:
	2021	989	5,962		1,264	1,824	2,379	1,460	105,300
	2022	1,005	6,060		1,285	1,854	2,418	1,480	107,100
	2023	1,008	6,074		1,288	1,859	2,424	1,480	107,400
	2024	1,039	6,264		1,328	1,917	2,500	1,530	110,700
	2025	1,072	6,460		1,369	1,977	2,578	1,580	114,300
	2026	1,106	6,665		1,413	2,040	2,660	1,630	117,900
	2027	1,139	6,868		1,456	2,102	2,741	1,680	121,500
	2028	1,174	7,076		1,500	2,165	2,824	1,730	125,100
	2029	1,209	7,290		1,545	2,231	2,909	1,780	129,000

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a

The formula to compute a PIA is: (1) 90% of AIME below the first bend point, plus (2) 32% of AIME in excess of the first bend point but not in excess of the second, plus (3) 15% of AIME in excess of the second bend point. The bend points are determined based on the first year a beneficiary becomes eligible for benefits.

b

The formula to compute an OASI family maximum is: (1) 150% of PIA below the first bend point, plus (2) 272% of PIA in excess of the first bend point but not in excess of the second, plus (3) 134% of PIA in excess of the second bend point but not in excess of the third, plus (4) 175% of PIA in excess of the third bend point. This formula also determines family maximums for disabled workers first eligible after 1978 and entitled before July 1980.

c

Contribution and benefit base that would have been in effect without enactment of the Social Security Amendments of 1977. Public Law 101-239 changed the indexing procedure and caused slightly higher bases after 1989.

d

No provision in law for this amount in this year.

e

Amount specified by Social Security Amendments of 1977.

In addition to the economic factors that affect the determination of OASDI benefits, there are certain legislated changes that affect current and future benefit amounts. Two such changes are the scheduled increases in the normal retirement age and in the delayed retirement credits. Table V.C3 shows the scheduled changes in these parameters and the resulting effects on benefit levels expressed as a percentage of PIA.

Table V.C3.—Legislated Changes in Normal Retirement Age and Delayed Retirement
Credits for Persons Attaining Age 62 in Each Year 1986 and Later

Year of birth	Year of attainment of age 62	Normal retirement age (NRA)	Credit for each year of delayed retirement after NRA (percent)	Benefit, as a percentage of PIA, beginning at age —
				62	65	66	67	70
1924	1986	65	3	80	100	103	106	115
1925	1987	65	3 1/2	80	100	103 1/2	107	117 1/2
1926	1988	65	3 1/2	80	100	103 1/2	107	117 1/2
1927	1989	65	4	80	100	104	108	120
1928	1990	65	4	80	100	104	108	120
1929	1991	65	4 1/2	80	100	104 1/2	109	122 1/2
1930	1992	65	4 1/2	80	100	104 1/2	109	122 1/2
1931	1993	65	5	80	100	105	110	125
1932	1994	65	5	80	100	105	110	125
1933	1995	65	5 1/2	80	100	105 1/2	111	127 1/2
1934	1996	65	5 1/2	80	100	105 1/2	111	127 1/2
1935	1997	65	6	80	100	106	112	130
1936	1998	65	6	80	100	106	112	130
1937	1999	65	6 1/2	80	100	106 1/2	113	132 1/2
1938	2000	65, 2 mo	6 1/2	79 1/6	98 8/9	105 5/12	111 11/12	131 5/12
1939	2001	65, 4 mo	7	78 1/3	97 7/9	104 2/3	111 2/3	132 2/3
1940	2002	65, 6 mo	7	77 1/2	96 2/3	103 1/2	110 1/2	131 1/2
1941	2003	65, 8 mo	7 1/2	76 2/3	95 5/9	102 1/2	110	132 1/2
1942	2004	65, 10 mo	7 1/2	75 5/6	94 4/9	101 1/4	108 3/4	131 1/4
1943-54	2005-16	66	8	75	93 1/3	100	108	132
1955	2017	66, 2 mo	8	74 1/6	92 2/9	98 8/9	106 2/3	130 2/3
1956	2018	66, 4 mo	8	73 1/3	91 1/9	97 7/9	105 1/3	129 1/3
1957	2019	66, 6 mo	8	72 1/2	90	96 2/3	104	128
1958	2020	66, 8 mo	8	71 2/3	88 8/9	95 5/9	102 2/3	126 2/3
1959	2021	66, 10 mo	8	70 5/6	87 7/9	94 4/9	101 1/3	125 1/3
1960 & later	2022 & later	67	8	70	86 2/3	93 1/3	100	124

2. Covered Employment

Projections of the total U.S. civilian labor force and unemployment rate (see table V.B2) are based on Bureau of Labor Statistics definitions from the Current Population Survey (CPS). These projections represent the average weekly number of employed and unemployed persons, age 16 and over, in the U.S. in a calendar year. Covered employment for a calendar year is defined as the total number of persons who have any OASDI covered earnings (that is, earnings subject to the OASDI payroll tax) at any time during that year. For those age 16 and over, projected covered employment is the sum of age-sex groups, each reflecting the growth projected for the group’s total U.S employment and average weeks worked per year.² For the short-range period, the age-sex-adjusted average weeks worked declines slightly as the age-sex-adjusted unemployment rate rises to its ultimate assumed value of 5.0 percent. After 2029, the average weeks worked for each age-sex group is assumed to remain constant. The projection method also accounts for changes in non-OASDI-covered employment and the increase in coverage of Federal civilian employment as a result of the 1983 Social Security Amendments. It also reflects changes in the number and employment status of other-than-LPR immigrants residing within the Social Security coverage area, such as undocumented immigrants and foreign workers and students with temporary visas.

The covered-worker rate is the ratio of OASDI covered workers to the Social Security area population. For men age 16 and over, the projected age-adjusted covered-worker rates³ for 2094 are 69.5, 69.1, and 68.9 percent for the low-cost, intermediate, and high-cost assumptions, respectively. For women age 16 and over, the projected age-adjusted covered-worker rates for 2094 are 66.5, 65.2, and 63.9 percent for the low-cost, intermediate, and high-cost assumptions, respectively. For men, the intermediate projected rate for 2094 is lower than the 2018 age-adjusted rate of 70.5 percent primarily due to the projected increase in the portion of the Social Security area population that consists of other-than-LPR immigrants. For women, the intermediate projected rate for 2094 is higher than the 2018 age-adjusted rate of 64.9 percent because the projected increase in the age-adjusted labor force participation rate more than offsets the projected increase in the portion of the population that will be other-than-LPR immigrants.

3. Insured Population

Eligibility for worker benefits under the OASDI program requires some threshold level of work in covered employment. A worker satisfies this requirement by his or her accumulation of quarters of coverage (QCs). Prior to 1978, a worker earned one QC for each calendar quarter in which he or she earned at least $50. In 1978, when annual earnings reporting replaced quarterly reporting, the amount required to earn a QC (up to a maximum of four per year) was set at $250. As specified in the law, the Social Security Administration has adjusted this amount each year since then according to changes in the AWI. Its value in 2020 is $1,410.

There are three types of insured status that a worker can earn under the OASDI program. The number and recency of QCs earned determine each status. A worker is fully insured when his or her total number of QCs is greater than or equal to the number of years elapsed after the year of attainment of age 21 (but not less than six). After a worker has accumulated 40 QCs, he or she remains permanently fully insured. A worker is disability insured if he or she is: (1) a fully insured worker who has accumulated 20 QCs during the 40-quarter period ending with the current quarter, (2) a fully insured worker aged 24-30 who has accumulated QCs during one-half of the quarters elapsed after the quarter of attainment of age 21 and up to and including the current quarter, or (3) a fully insured worker under age 24 who has accumulated six QCs during the 12-quarter period ending with the current quarter. A worker is currently insured when he or she has accumulated six QCs during the 13-quarter period ending with the current quarter. Periods of disability reduce the number of quarters required for insured status, but not below the minimum of six QCs.

There are many types of benefits payable to workers and their family members under the OASDI program. A worker must be fully insured to be eligible for a primary retirement benefit and for his or her spouse or children to be eligible for auxiliary retirement benefits. A deceased worker must have been either currently insured or fully insured at the time of death for his or her children (and their mother or father) to be eligible for benefits. If there are no eligible surviving children, the deceased worker must have been fully insured at the time of death for his or her surviving spouse to be eligible. A worker must be disability insured to be eligible for a primary disability benefit and for his or her spouse or children to be eligible for auxiliary disability benefits.

The Office of the Chief Actuary estimates the fully insured population, as a percentage of the Social Security area population, by single year of age and sex starting in 1969. The short-range model extrapolates the historical trend in these rates from data in the Continuous Work History Sample (CWHS). The model uses information on quarters of coverage earned due to employment covered by Social Security derived from tabulations of the CWHS. The model also uses historical administrative data on beneficiaries in force and estimated historical mortality rates. The model combines this information to estimate the proportion of individuals who were alive and fully insured as of the end of each historical year. Using projected mortality rates and covered workers, the model extrapolates these rates into the future and applies them to the historical and projected population to arrive at the fully insured population by age and sex through the end of the short-range period.

The long-range fully insured model uses 30,000 simulated work histories for each sex and birth cohort, representing everyone except the other-than-LPR immigrant population. For the other-than-LPR immigrant population, the model generates substantially lower percentages attaining fully insured status. The model constructs simulated work histories using past coverage rates, earnings distributions, and amounts required for crediting QCs, and develops them in a manner that replicates historical individual variations in work patterns. The probability of covered employment in any year is assumed to be higher for those who have worked more consistently in the recent past. Model parameters are selected so that simulated fully insured percentages are consistent with the fully insured percentages estimated by the short-range model for the recent historical period.

The Office of the Chief Actuary estimates the disability insured population, as a percentage of the fully insured population, by age and sex starting in 1969. The office bases historical values on a tabulation of the disability insured population from the CWHS and estimates of the fully insured population. The short-range model projects these percentages by using the relationship between the historical percentages and covered-worker rates. The long-range model projects these percentages by using the same simulated work histories used to project the fully insured percentages. The long-range model makes additional adjustments to the model simulations in order to bring the disability insured percentages in the historical and short-range periods into close agreement with those estimated from the CWHS and the short-range model.

The office does not project the currently insured population because the number of beneficiaries who are entitled to benefits based solely on currently insured status has been very small recently and is likely to remain small in the future.

Using these insured models, the percentage of the Social Security area population aged 62 and over that is fully insured is projected to change from its estimated level of 87.7 for December 31, 2017, to 87.1, 88.1, and 89.3 for December 31, 2095, under the low-cost, intermediate, and high-cost alternatives, respectively. Over the projection period, the percentages for both males and females change significantly. The percentage for males declines, reflecting, in part, increases in the percent of the population that is classified as other-than-LPR immigrants and is thus less likely to have earnings reported and credited to them. The percentage for females increases, reflecting the past substantial growth in the employment of younger cohorts of women. Under the intermediate assumptions, for example, the percentage for males decreases from 94.0 to 87.4, and the percentage for females increases from 82.4 to 88.8.

4. Old-Age and Survivors Insurance Beneficiaries

The Office of the Chief Actuary projects the number of OASI beneficiaries for each type of benefit separately by the sex of the worker on whose earnings the benefits are based and by the age of the beneficiary. For the long-range period, the office also projects the number of beneficiaries by marital status for several types of benefits. The office uses two separate models in making these projections. The short-range model makes projections during the first 10 years of the projection period and the long-range model makes projections thereafter.

The short-range model develops the number of retired-worker beneficiaries by applying award rates to the aged fully insured population, excluding those already receiving retired-worker, disabled-worker, aged-widow(er), or aged-spouse benefits, and by applying termination rates to the number of retired-worker beneficiaries.

The long-range model projects the number of retired-worker beneficiaries who were not previously converted from disabled-worker beneficiary status as a percentage of the exposed population.⁴ For age 62, the model projects this percentage by using a linear regression based on the historical relationship between this percentage, the labor force participation rate at age 62, and the number of months from age 62 to normal retirement age. The percentage for ages 70 and over is nearly 100 because delayed retirement credits cannot be earned after age 70. The long-range model projects the percentage for each age 63 through 69 based on historical experience with an adjustment for changes in the portion of the primary insurance amount that is payable at each age of entitlement. The model adjusts these percentages for ages 62 through 69 to reflect changes in the normal retirement age.

The long-range model calculates the number of retired-worker beneficiaries previously converted from disabled-worker beneficiary status using an extension of disabled-worker death rates by age, sex, and duration.

The Office of the Chief Actuary estimates the number of aged-spouse beneficiaries, excluding those who are also receiving a retired-worker benefit, from the population projected by age and sex. Benefits of aged-spouse beneficiaries depend on the earnings records of their husbands or wives, who are referred to as “earners.” The short-range model projects insured aged-spouse beneficiaries in conjunction with the retired-worker beneficiaries. This model projects uninsured aged-spouse beneficiaries by applying award rates to the aged uninsured male or female population and by applying termination rates to the population already receiving such benefits.

The long-range model estimates aged-spouse beneficiaries separately for those married and divorced. The model projects the number of married aged-spouse beneficiaries, by age and sex, by applying a series of factors to the number of spouses, aged 62 and over, in the population. These factors are the probabilities that the spouse and the earner meet all of the conditions of eligibility — that is, the probabilities that: (1) the earner is 62 or over, (2) the earner is insured, (3) the earner is either receiving benefits or has suspended benefits, (4) the spouse is not receiving a benefit for the care of an entitled child, (5) the spouse is either not insured or is insured but not receiving benefits, and (6) the spouse is not eligible to receive a significant government pension based on earnings from noncovered employment. To calculate the estimated number of aged-spouse beneficiaries, the model applies a projected prevalence rate to the resulting number of spouses. Due to the Bipartisan Budget Act of 2015, aged spouses are no longer eligible to receive an aged-spouse benefit if the earner suspends their benefit after April 29, 2016. Additionally, for those turning age 62 in 2016 and later, deemed filing now applies to all retired workers and spouses even after initial entitlement, regardless of age. Thus, spouses who are insured are no longer eligible to delay their retired-worker benefit while receiving an aged-spouse benefit.

The long-range model estimates the number of divorced aged-spouse beneficiaries, by age and sex, by applying the same factors to the number of divorced persons aged 62 and over in the population, with three differences. First, the model applies a factor to reflect the probability that the earner (former spouse) is still alive. If the former spouse is not alive, the person may be entitled to a divorced widow(er) benefit. Second, the model applies a factor to reflect the probability that the marriage to the former spouse lasted at least 10 years. Third, the model does not apply factor (3) in the previous paragraph because, effective January 1985, a divorced person is generally no longer required to wait for the former spouse to receive benefits.

The Office of the Chief Actuary bases the projected numbers of children under age 18, and students aged 18 and 19, who are eligible for benefits as children of retired-worker beneficiaries, on the projected number of children in the population. The short-range model develops the number of entitled children by applying award rates to the number of children in the population who have two living parents and by applying termination rates to the number of children already receiving benefits.

The long-range model projects separately the number of entitled children by sex of the earner parent. For each age under 18, the model multiplies the projected number of children with a parent aged 62 and over by the ratio of the number of retired workers aged 62 to 71 to the number of members of the population aged 62 to 71. For student beneficiaries, the model multiplies the number of children aged 18 and 19 in the population by the probabilities that: (1) the parent is alive, aged 62 or over, insured, and receiving a retired-worker benefit; and (2) the child is attending high school.

The Office of the Chief Actuary projects the number of disabled children, aged 18 and over, of retired-worker beneficiaries from the adult population. The short-range model applies award rates to the population and applies termination rates to the number of disabled children already receiving benefits. The long-range model projects the number of disabled children in a manner similar to that used for student children except for a factor that reflects the probability of being disabled before age 22.

The short-range model develops the number of spouses of retired workers, who are entitled to spouse benefits because they are caring for a child who is under age 16 or disabled, by applying award rates to the number of awards to children of retired workers and by applying termination rates to the number of young spouses with a child in their care who are already receiving benefits. The long-range model projects the number of young-spouse beneficiaries with a child in their care as a proportion of the number of child beneficiaries of retired workers, including projected changes in average family size.

The Office of the Chief Actuary projects the number of aged-widow(er) beneficiaries, excluding those who are also receiving a retired-worker benefit, from the population by age and sex. The short-range model projects fully insured aged-widow(er) beneficiaries in conjunction with the retired-worker beneficiaries. The model projects the number of uninsured aged-widow(er) beneficiaries by applying award rates to the aged uninsured male or female population and by applying termination rates to the population already receiving such benefits. The long-range model projects uninsured aged-widow(er) beneficiaries by marital status. The model multiplies the number of widow(er)s in the population aged 60 and over by the probabilities that: (1) the deceased earner is fully insured at death, (2) the widow(er) is not receiving a benefit for the care of an entitled child, (3) the widow(er) is not fully insured, and (4) the widow(er) benefits are not withheld because of receipt of a significant government pension based on earnings in noncovered employment. In addition, the model applies the same factors to the number of divorced persons aged 60 and over in the population and includes additional factors representing the probability that the person’s former earner spouse has died and that the marriage lasted at least 10 years. The model projects the number of insured aged-widow(er) beneficiaries who are ages 60 through 70 in a manner similar to that for uninsured aged-widow(er) beneficiaries. In addition, the model assumes that some insured widow(er)s who had not applied for their retired-worker benefits will receive widow(er) benefits. The model projects insured aged-widow(er) beneficiaries over age 70 by applying termination rates to the population that started receiving such benefits prior to age 70.

The short-range model develops the number of disabled-widow(er) beneficiaries by applying award rates to the uninsured male or female population and by applying termination rates to the population already receiving a disabled-widow(er) benefit. The long-range model projects the number for each cohort by age from 50 to normal retirement age as percentages of the widowed and divorced populations, adjusted for the insured status of the deceased spouse, the prevalence of disability, and the probability that the disabled spouse is not receiving another type of benefit.

The Office of the Chief Actuary bases the projected number of children under age 18, and students aged 18 and 19, who are entitled to benefits as survivors of deceased workers, on the number of children in the population whose mothers or fathers are deceased. The short-range model develops the number of entitled children by applying award rates to the number of orphaned children and by applying termination rates to the number of children already receiving benefits.

The long-range model projects the number of surviving-child beneficiaries in a manner similar to that for student beneficiaries of retired workers, except that the model replaces the probability that the parent is aged 62 or over with the probability that the parent is deceased.

The Office of the Chief Actuary projects the number of surviving-disabled-child beneficiaries, aged 18 and over, from the adult population. The short-range model applies award rates to the population and applies termination rates to the number of surviving-disabled-child beneficiaries already receiving benefits. The long-range model projects the number of surviving-disabled-child beneficiaries in a manner similar to that for surviving-student-child beneficiaries, except for including an additional factor to reflect the probability of being disabled before age 22.

The short-range model develops the numbers of entitled surviving-mother and surviving-father beneficiaries by applying award rates to the number of awards to surviving-child beneficiaries, in cases where the children are either under age 16 or disabled, and by applying termination rates to the number of surviving-mother and surviving-father beneficiaries already receiving benefits. The long-range model estimates the numbers of surviving-mother and surviving-father beneficiaries, assuming they are not remarried, from the number of surviving-child beneficiaries.

The Office of the Chief Actuary projects the number of surviving-parent beneficiaries based on the historical pattern of the number of such beneficiaries.

Table V.C4 shows the projected number of beneficiaries under the OASI program by type of benefit. The retired-worker beneficiary counts include those persons who receive a residual auxiliary benefit in addition to their retired-worker benefit. The office makes estimates of the number and amount of residual payments separately for spouses and widow(er)s.

Table V.C4.—OASI Beneficiaries With Benefits in Current-Payment Status
at the End of Calendar Years 1945-2095 

[In thousands]

Calendar year		Retired workers and auxiliaries				Survivors				Total
		Workera	Spouse	Child		Widow- widower	Mother- father	Child	Parent
Historical data:
	1945	518	159	13		94	121	377	6	1,288
	1950	1,771	508	46		314	169	653	15	3,477
	1955	4,474	1,192	122		701	292	1,154	25	7,961
	1960	8,061	2,269	268		1,544	401	1,577	36	14,157
	1965	11,101	2,614	461		2,371	472	2,074	35	19,128
	1970	13,349	2,668	546		3,227	523	2,688	29	23,030
	1975	16,589	2,867	643		3,888	582	2,919	21	27,509
	1980	19,564	3,018	639		4,415	563	2,610	15	30,823
	1985	22,435	3,069	456		4,862	372	1,918	10	33,122
	1990	24,841	3,104	421		5,098	304	1,777	6	35,551
	1995	26,679	3,027	441		5,213	275	1,884	4	37,522
	2000	28,505	2,798	459		4,901	203	1,878	3	38,747
	2005	30,461	2,524	488		4,569	178	1,903	2	40,126
	2010	34,593	2,316	580		4,285	159	1,913	2	43,847
	2011	35,600	2,291	594		4,239	158	1,907	2	44,791
	2012	36,720	2,280	612		4,193	154	1,907	1	45,868
	2013	37,893	2,285	625		4,139	150	1,899	1	46,992
	2014	39,009	2,303	635		4,092	143	1,892	1	48,075
	2015	40,089	2,335	648		4,050	140	1,893	1	49,155
	2016	41,233	2,370	661		4,004	133	1,893	1	50,296
	2017	42,447	2,375	675		3,961	128	1,904	1	51,491
	2018	43,721	2,391	690		3,908	121	1,911	1	52,743
	2019	45,094	2,430	701		3,878	117	1,916	1	54,137
Intermediate:
	2020	46,545	2,329	715		3,837	114	1,934	1	55,475
	2025	53,386	1,845	792		3,720	106	2,003	1	61,853
	2030	60,111	1,792	905		3,562	107	2,073	1	68,551
	2035	64,577	1,707	1,008		3,315	120	2,097	1	72,825
	2040	66,801	1,579	1,092		3,082	130	2,151	1	74,835
	2045	67,736	1,519	1,104		2,934	127	2,150	1	75,571
	2050	69,269	1,508	1,128		2,815	122	2,092	1	76,934
	2055	71,616	1,509	1,156		2,726	117	2,024	1	79,149
	2060	74,772	1,505	1,186		2,653	112	1,954	1	82,183
	2065	77,906	1,509	1,193		2,609	110	1,910	1	85,238
	2070	81,236	1,535	1,217		2,590	108	1,898	1	88,586
	2075	84,494	1,558	1,254		2,564	107	1,896	1	91,873
	2080	86,634	1,567	1,273		2,512	104	1,881	1	93,973
	2085	87,720	1,578	1,273		2,460	101	1,850	1	94,983
	2090	88,882	1,628	1,283		2,443	98	1,817	1	96,152
	2095	91,555	1,682	1,328		2,435	96	1,794	1	98,890
Low-cost:
	2020	46,534	2,329	715		3,836	114	1,935	1	55,464
	2025	53,232	1,848	796		3,713	108	2,024	1	61,722
	2030	59,528	1,778	924		3,584	105	2,176	1	68,096
	2035	63,390	1,699	1,044		3,367	118	2,290	1	71,910
	2040	65,000	1,563	1,153		3,158	129	2,446	1	73,450
	2045	65,387	1,488	1,184		3,028	127	2,525	1	73,741
	2050	66,431	1,454	1,225		2,918	125	2,510	1	74,664
	2055	68,435	1,435	1,276		2,829	122	2,484	1	76,582
	2060	71,281	1,408	1,333		2,747	121	2,462	1	79,354
	2065	74,127	1,385	1,364		2,691	124	2,486	1	82,178
	2070	77,111	1,378	1,414		2,658	128	2,557	1	85,246
	2075	79,918	1,373	1,481		2,618	131	2,636	1	88,159
	2080	81,597	1,359	1,520		2,560	133	2,687	1	89,856
	2085	82,368	1,360	1,535		2,521	133	2,707	1	90,626
	2090	83,916	1,408	1,571		2,542	133	2,728	1	92,300
	2095	87,782	1,470	1,663		2,589	135	2,766	1	96,406
High-cost:
	2020	46,558	2,329	714		3,839	114	1,933	1	55,487
	2025	53,563	1,843	789		3,728	105	1,983	1	62,010
	2030	60,706	1,814	885		3,520	109	1,965	1	68,999
	2035	65,968	1,729	973		3,233	119	1,897	1	73,921
	2040	68,972	1,613	1,031		2,969	125	1,854	1	76,565
	2045	70,577	1,579	1,021		2,800	118	1,784	1	77,880
	2050	72,686	1,589	1,025		2,671	110	1,697	1	79,780
	2055	75,444	1,614	1,028		2,582	101	1,605	1	82,375
	2060	78,936	1,635	1,027		2,513	93	1,510	1	85,715
	2065	82,365	1,671	1,011		2,477	87	1,433	1	89,046
	2070	86,035	1,742	1,013		2,462	82	1,379	1	92,713
	2075	89,724	1,808	1,024		2,442	77	1,337	1	96,412
	2080	92,279	1,855	1,025		2,392	72	1,295	1	98,918
	2085	93,608	1,880	1,014		2,326	67	1,247	1	100,143
	2090	94,275	1,921	1,005		2,281	62	1,200	1	100,745
	2095	95,488	1,964	1,012		2,234	58	1,158	1	101,916

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a

Retired-worker beneficiaries include persons who also receive a residual benefit consisting of the excess of an auxiliary benefit over their retired-worker benefit.

Notes:
1. The number of beneficiaries does not include uninsured individuals who receive benefits under section 228 of the Social Security Act. Transfers from the General Fund of the Treasury reimburse the OASI Trust Fund for the cost of most of these individuals.
2. Totals do not necessarily equal the sums of rounded components.

5. Disability Insurance Beneficiaries

The DI Trust Fund pays for benefits to disabled workers who: (1) satisfy the disability insured requirements, (2) are unable to engage in any substantial gainful activity due to a medically determinable physical or mental impairment severe enough to satisfy the requirements of the program, and (3) have not yet attained normal retirement age. Spouses and children of such disabled workers may also receive DI benefits provided they satisfy certain criteria, primarily age and earnings requirements.

The Office of the Chief Actuary projects the number of disabled-worker beneficiaries in current-payment status (disability prevalence) for each future year. The projections start with the number in current-payment status as of December 2019. Projections of the number of new beneficiaries awarded benefits each year (disability incidence) and the number of beneficiaries leaving the disability rolls each year then determine the number in current-payment status in later years. Beneficiaries leave the rolls due to death and recovery (disability terminations) and due to conversion from disabled-worker to retired-worker beneficiary status at normal retirement age, after which the OASI Trust Fund pays for benefits. The remainder of this section describes the concepts of disability incidence, termination, and prevalence.

a. Disability Incidence

The disability incidence rate is the ratio of the number of new beneficiaries awarded benefits each year to the number of individuals who meet insured requirements but are not yet receiving benefits (the disability-exposed population⁵). The Office of the Chief Actuary projects the number of newly awarded beneficiaries for each future year by multiplying assumed age-sex-specific disability incidence rates and the projected disability-exposed population by age and sex.

Figure V.C3 illustrates the historical and estimated incidence rates under the three alternatives. Incidence rates have varied substantially during the historical period since 1970 due to a variety of demographic and economic factors, along with changes in legislation and program administration. The solid lines in figure V.C3 show the incidence rate adjusted to the age-sex distribution of the disability-exposed population for 2000. This adjustment allows a comparison of incidence rates over time by focusing on the likelihood of becoming disabled, and by excluding the effects of a changing distribution of the population toward ages where disability is more or less likely.

The dashed lines in figure V.C3 represent the gross (unadjusted) incidence rates. The changing age‑sex distribution of the exposed population over time influences these unadjusted rates. The gross incidence rate fell below the age‑sex-adjusted rate between 1975 and 2000 as the baby-boom generation increased the size of the younger working-age population, where disability incidence is lower than in older populations. After 1990, the gross rate generally increased relative to the age‑sex-adjusted rate as the baby-boom generation moved into an age range where disability incidence peaks. The projected gross incidence rate generally declines relative to the age-sex-adjusted rate as the baby-boom generation moves above the normal retirement age and the lower-birth-rate cohorts of the 1970s enter prime disability ages (50 to normal retirement age). As these smaller cohorts age beyond normal retirement age, by about 2050, the gross incidence rate returns to a higher relative level under the intermediate assumptions. Thereafter, the gross rate remains higher than the age-sex-adjusted rate, and reflects the persistently higher average age of the working-age population, which is largely due to lower birth rates since 1965, and to the increase in the normal retirement age.

For the first 10 years of the projection period (through 2029), incidence rates reflect several factors including: (1) aspects of program administration, such as efforts to reduce the disability determination backlogs and recent changes in procedures for adjudicating claims; (2) assumed future unemployment rates; and (3) recent trends in incidence. At the beginning of the recent period of high unemployment, disability incidence rates were well above the general trend level, with rates reaching a peak in 2010. Over the last few years, incidence rates have subsided as the economy has recovered, and have persisted at levels well below those expected over the long-term. Some of the elevation of disability incidence rates experienced during the recession and the lowering of incidence rates experienced during the recovery are likely due to many individuals applying for disability benefits earlier than they would have otherwise. For 2019, the actual incidence rate (4.0 per thousand) was below the level projected in last year’s report (4.4 per thousand). In this year’s report, incidence rates are assumed to rise more gradually early in the short-range period than in last year’s report, and are lower later in the period. Incidence rates are assumed to be somewhat elevated during the period 2020 through 2021, when the Social Security Administration is expected to eliminate a backlog of individuals who have appealed for a hearing on a prior disability claim denial. In 2029, at the end of the short-range period, age-sex-specific incidence rates reach the ultimate rates assumed for the long-range projections. These ultimate age-sex-specific disability incidence rates were selected based on careful analysis of historical levels and patterns and expected future conditions, including the impact of scheduled increases in the normal retirement age.⁶ The ultimate incidence rates represent the expected average rates of incidence for the future.

For the intermediate alternative, the Trustees assume that the ultimate age-sex-adjusted incidence rate (adjusted to the disability-exposed population for the year 2000) will be 5.0 awards per thousand exposed, which is lower than in last year’s report by 0.2 awards per thousand exposed. Figure V.C3 illustrates that the assumed ultimate age-sex-adjusted incidence rate of 5.0 is slightly lower than the average rate for the historical period 1970 through 2019 (5.1 per thousand). However, a similar comparison using gross incidence rates gives a very different result. The estimated ultimate gross incidence rate is substantially greater than the average gross rate over the historical period due to the large changes in the age-sex distribution of the disability-exposed population between 1970 and 2010.

The Trustees assume that the ultimate age-sex-adjusted incidence rates for the low-cost and high-cost alternatives will be 4.0 and 6.0 awards per thousand exposed, or about 1.0 awards per thousand lower and 1.0 awards per thousand higher, respectively, than the ultimate incidence rate for the intermediate alternative. The low-cost and high-cost ultimate age-sex-adjusted incidence rates are both lower than those in last year’s report by 0.2 awards per thousand exposed.

Figure V.C3.—DI Disability Incidence Rates, 1970-2095

[Awards per thousand disability-exposed]

[D]

b. Disability Termination

Beneficiaries stop receiving disability benefits when they die, recover from their medically-determinable disabling condition, or return to substantial work. Disabled-worker beneficiaries who return to substantial work for an extended period are deemed to have recovered, and their benefits are then terminated. The termination rate is the ratio of the number of terminations for these reasons to the average number of disabled-worker beneficiaries during the year.

The Office of the Chief Actuary projects termination rates by age, sex, and reason for termination. In addition, the office projects termination rates by duration of entitlement to disabled-worker benefits in the long-range period (post-2029).

In the short-range period (through 2029), the projected age-sex-adjusted death rate (adjusted to the 2000 disabled-worker population) under the intermediate assumptions gradually declines from 24.8 deaths per thousand beneficiaries for 2019 to about 23.7 per thousand for 2029. The projected age-sex-adjusted recovery rate (medical improvement and return to work) under the intermediate assumptions decreases from the relatively high level of 18.9 per thousand beneficiaries for 2019 to 10.3 per thousand beneficiaries for 2029. The recovery rate has been high in recent years due to an ongoing administrative effort to eliminate a backlog of continuing disability reviews. The rate is expected to decrease as the backlog is reduced. Under the low-cost and high-cost assumptions, total age-sex-adjusted termination rates due to death and recovery are roughly 10-15 percent higher or lower, respectively, than under the intermediate assumptions.

For the long-range period (post-2029), the Office of the Chief Actuary projects death and recovery rates by age, sex, and duration of entitlement relative to the average level of rates experienced over the base period 2011 through 2015. The assumed ultimate age-sex-adjusted recovery rate for disabled workers is about 10.3 per thousand beneficiaries. The assumed ultimate age-sex-adjusted recovery rates for the low-cost and high-cost alternatives are about 12.5 and 8.2 recoveries per thousand beneficiaries, respectively. Death rates by age and sex change throughout the long-range period at the same rate as death rates in the general population. From the age-sex-adjusted death rate of 24.8 per thousand beneficiaries in 2019, this rate decreases to 18.9, 12.0, and 7.1 per thousand disabled-worker beneficiaries for 2095 under the low-cost, intermediate, and high-cost assumptions, respectively.

Figure V.C4 illustrates gross and age-sex-adjusted total termination rates (including both recoveries and deaths) for disabled-worker beneficiaries for the historical period since 1970, and for the projection period through 2095. As with incidence rates, the age-sex-adjusted termination rate illustrates the real change in the tendency to terminate benefits. Changes in the age-sex distribution of the beneficiary population influence the gross termination rate. A shift in the disabled-worker beneficiary population to older ages, as occurred over the past 20 years when the baby-boom generation moved into pre-retirement ages, increases gross death termination rates relative to the age-sex-adjusted rates.

Figure V.C4.—DI Disability Termination Rates, 1970-2095

[Terminations per thousand disabled-worker beneficiaries]

[D]

c. Comparison of Incidence, Termination, and Conversion

Incidence and termination rates are the foundation for projecting the number of disabled-worker beneficiaries in current-payment status. At normal retirement age, all disabled-worker beneficiaries convert to retired-worker status and leave the DI rolls.

Figure V.C5 compares the historical and projected (intermediate) levels of incidence, termination, and conversion on both a gross basis and an age-sex-adjusted basis. Incidence rates have varied widely, and the Trustees expect the age-sex adjusted rates under the intermediate assumptions to remain near the middle of the high and low extremes experienced since 1970. Termination rates have declined and the Trustees expect them to continue to decline, largely because of declining death rates.

Conversions are a transfer of beneficiaries at normal retirement age from the DI program to the OASI program. Therefore, the disability “conversion” rate is 100 percent for disabled-worker beneficiaries reaching normal retirement age in a given year and zero at all other ages. After conversion, recovery from the disabling condition is no longer relevant for benefit eligibility. The conversion ratio is the number of conversions in a given year (that is, beneficiaries who reach normal retirement age) divided by the average number of disabled-worker beneficiaries at all ages in that year. The ratio is constant on an age-sex-adjusted basis, except for the two periods during which normal retirement age increases under current law. On a gross basis, however, the conversion ratio rises and falls with the changing proportion of all disabled-worker beneficiaries who attain normal retirement age in a given year. The gross conversion ratio generally increases from 2005 to 2030 due to aging of the beneficiary population.

Figure V.C5.—Comparison of DI Disability Incidence Rates, Termination Rates and Conversion Ratios Under Intermediate Assumptions, 1970-2095

[Awards per thousand disability-exposed;
terminations and conversions per thousand disabled-worker beneficiaries]

[D]

d. DI Beneficiaries and Disability Prevalence Rates

The Office of the Chief Actuary makes detailed projections of disabled-worker awards, terminations, and conversions and combines these to project the number of disabled workers receiving benefits over the next 75 years. Table V.C5 presents the projected numbers of disabled workers in current-payment status. The number of disabled workers in current-payment status grows from 8.4 million at the end of 2019, to 11.2 million, 12.9 million, and 13.9 million at the end of 2095, under the low-cost, intermediate, and high-cost assumptions, respectively. Of course, much of this growth results from the growth and aging of the population described earlier in this chapter. Table V.C5 also presents projected numbers of auxiliary beneficiaries and disability prevalence rates on both a gross basis and an age-sex-adjusted basis.

Table V.C5.—DI Beneficiaries With Benefits in Current-Payment Status
at the End of Calendar Years 1960-2095 

[Beneficiaries in thousands; prevalence rates per thousand persons insured for disability benefits]

Calendar year		Disabled‑ worker beneficiaries	Auxiliary beneficiaries		Total beneficiaries	Disability prevalence rates
			Spouse	Child		Gross	Age-sex- adjusteda
Historical data:
	1960	455	77	155	687
	1965	988	193	558	1,739
	1970	1,493	283	889	2,665	20	18
	1975	2,488	453	1,411	4,351	29	29
	1980	2,856	462	1,359	4,677	28	31
	1985	2,653	306	945	3,904	24	26
	1990	3,007	266	989	4,261	25	28
	1995	4,179	264	1,409	5,852	33	35
	2000	5,036	165	1,466	6,667	36	36
	2005	6,519	157	1,633	8,309	45	40
	2010	8,204	161	1,820	10,185	55	44
	2011	8,576	164	1,874	10,614	58	45
	2012	8,827	163	1,900	10,890	59	46
	2013	8,941	157	1,889	10,987	60	46
	2014	8,955	150	1,828	10,932	59	46
	2015	8,909	143	1,756	10,808	59	45
	2016	8,809	136	1,667	10,612	58	44
	2017	8,695	127	1,590	10,412	57	43
	2018	8,537	119	1,507	10,164	55	41
	2019	8,378	114	1,434	9,927	54	40
Intermediate:
	2020	8,292	111	1,397	9,800	53	39
	2025	8,412	120	1,343	9,874	53	38
	2030	8,429	117	1,412	9,958	53	39
	2035	8,678	120	1,577	10,375	53	40
	2040	9,108	124	1,806	11,038	54	41
	2045	9,805	137	1,954	11,896	57	42
	2050	10,291	140	2,021	12,452	59	43
	2055	10,698	141	2,056	12,894	60	44
	2060	10,862	137	2,069	13,068	60	44
	2065	11,113	141	2,096	13,350	61	44
	2070	11,327	147	2,158	13,632	61	44
	2075	11,341	146	2,240	13,728	60	45
	2080	11,519	147	2,311	13,976	60	45
	2085	11,912	150	2,358	14,420	61	45
	2090	12,565	162	2,397	15,125	62	45
	2095	12,912	164	2,439	15,515	63	45
Low-cost:
	2020	8,259	111	1,391	9,762	53	39
	2025	7,875	118	1,242	9,235	49	35
	2030	7,334	100	1,245	8,680	45	33
	2035	7,170	96	1,354	8,619	43	33
	2040	7,320	93	1,553	8,966	43	32
	2045	7,760	100	1,685	9,545	44	33
	2050	8,082	99	1,738	9,919	45	33
	2055	8,382	99	1,772	10,252	45	34
	2060	8,523	94	1,799	10,416	44	34
	2065	8,756	95	1,853	10,705	44	34
	2070	8,988	100	1,953	11,040	44	34
	2075	9,115	100	2,072	11,287	43	34
	2080	9,430	101	2,175	11,705	43	34
	2085	9,997	106	2,250	12,354	44	35
	2090	10,772	117	2,320	13,209	45	35
	2095	11,235	119	2,399	13,753	45	35
High-cost:
	2020	8,324	112	1,402	9,837	53	39
	2025	9,024	122	1,453	10,599	58	41
	2030	9,569	136	1,579	11,284	61	45
	2035	10,233	147	1,777	12,157	63	48
	2040	10,971	161	1,998	13,131	66	50
	2045	11,948	183	2,136	14,267	71	52
	2050	12,607	189	2,209	15,005	75	53
	2055	13,119	194	2,238	15,550	78	54
	2060	13,282	189	2,228	15,699	79	55
	2065	13,515	195	2,214	15,923	80	55
	2070	13,648	205	2,220	16,073	81	55
	2075	13,462	201	2,242	15,905	80	56
	2080	13,371	200	2,264	15,836	80	56
	2085	13,399	197	2,272	15,869	80	56
	2090	13,741	208	2,272	16,221	82	56
	2095	13,863	210	2,269	16,342	83	56

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a

Adjusted to the age-sex distribution of the disability insured population for the year 2000.

Note: Totals do not necessarily equal the sums of rounded components.

The disability prevalence rate is the ratio of the number of disabled-worker beneficiaries in current-payment status to the number of persons insured for disability benefits. Figure V.C6 illustrates the historical and projected disability prevalence rates on both a gross basis and on an age-sex-adjusted basis (adjusted to the age-sex distribution of the disability insured population for the year 2000).

Changes in prevalence rates are a direct result of changes in incidence rates and termination rates. Figure V.C5 depicts patterns for incidence and termination rates, which are helpful for understanding the trend in prevalence rates. Annual incidence and termination rates are not directly comparable or combinable because their denominators differ.

Figure V.C6.—DI Disability Prevalence Rates, 1970-2095

[Rate per thousand persons insured for disability benefits]

[D]

Age-sex-adjusted prevalence rates have increased primarily because: (1) termination rates, in particular death termination rates, have declined; (2) incidence rates at younger ages have increased relative to rates at older ages (new beneficiaries at younger ages have more potential years on the disability rolls); (3) incidence rates have increased substantially for women to parity with men; and (4) the maturation of the DI program (disabled worker benefits became available to those over age 50 at the start of the program in 1957 and to younger workers in 1960, and disability insured status requirements were eased for those under age 31 in 1968). Gross prevalence rates have increased more than age-sex-adjusted prevalence rates since the baby-boom generation began to reach ages 45 through normal retirement age, a time of life when disability incidence rates are relatively high. The Office of the Chief Actuary projects both gross and age-sex adjusted prevalence rates to grow at a slower pace based on assumed stabilization in these four factors: (1) the age distribution of the general population, (2) the age distribution of the disability insured population, (3) incidence rates by age and gender, and (4) DI program age and insured requirements. As these factors gradually stabilize, the declining death termination rate continues to have a small influence toward higher disability prevalence rates.

As mentioned above in the discussion of incidence and termination rates, the age-sex-adjusted prevalence rate isolates the changing trend in the underlying likelihood of receiving benefits for the insured population, without reflecting changes in the age distribution of the population. As with incidence rates, gross disability prevalence rates declined relative to the age-sex-adjusted rate when the baby-boom generation reached working age between 1970 and 1990; this trend reflects the lower disability prevalence rates associated with younger ages. Conversely, the gross rate of disability prevalence has increased relative to the age-sex-adjusted rate after 1990 due to the aging of the baby-boom generation into ages with higher disability prevalence rates.

Under the intermediate assumptions, the projected age-sex-adjusted disability prevalence rate grows from 39.7 per thousand disability insured at the end of 2019 to 45.3 per thousand at the end of 2095. As mentioned above, the Office of the Chief Actuary projects that the growth in prevalence will slow relative to the historical period.

Under the low-cost and high-cost assumptions, the age-sex-adjusted disability prevalence rate decreases to 34.8 per thousand and increases to 56.4 per thousand insured workers at the end of 2095, respectively.

Table V.C5 presents projections of the numbers of auxiliary beneficiaries paid from the DI Trust Fund. As indicated at the beginning of this subsection, auxiliary beneficiaries are qualifying spouses and children of disabled workers. A spouse must either be at least age 62 or have an eligible child beneficiary in his or her care who is either under age 16 or disabled prior to age 22. A child must be: (1) under age 18, (2) age 18 or 19 and still a student in high school, or (3) age 18 or older and disabled prior to age 22.

The projection of the number of auxiliary beneficiaries relies on the projected number of disabled-worker beneficiaries. In the short-range period (2020 through 2029), the Office of the Chief Actuary projects incidence and termination rates for each category of auxiliary beneficiary. After 2029, the office projects child beneficiaries at ages 18 and under in relation to the projected number of children in the population using the probability that either of their parents is a disabled-worker beneficiary. The office projects the remaining categories of children and spouses in a similar manner.

6. Covered and Taxable Earnings, Taxable Payroll, and Payroll Tax Contributions

Covered earnings include both covered wages and covered self-employment net earnings. The Office of the Chief Actuary projects covered wages for component sectors of the economy (i.e., private, State and local, Federal civilian, and military) based on the projected overall growth of sectoral and total wages in the U.S. economy. The projections of covered wages also reflect changes in covered employment due to a relative increase in non-covered undocumented immigrants and to the mandatory coverage of new hires in the Federal civilian sector. The office projects covered self-employment net earnings based on the growth in net proprietors’ income in the U.S. economy.

Taxable earnings are the portion of covered earnings subject to the Social Security payroll tax. Taxable wages for an employee are total covered wages from all wage employment up to the contribution and benefit base. Taxable wages for an employer are the sum of all covered wages paid to each employee up to the base. Employees with multiple jobs whose total wages exceed the base are eligible for a refund of excess employee taxes withheld; employers are not eligible for a refund on this basis. For self-employed workers with no taxable wages, taxable earnings are the amount of covered self-employment net earnings up to the base. For self-employed workers with taxable wages less than the base, covered self-employment net earnings are taxable up to the difference between the base and their taxable wages. For projection purposes, the Office of the Chief Actuary computes taxable earnings based on a proportion of covered earnings that is at or below the base.

The OASDI taxable payroll (see table VI.G6) for a year is computed as the amount of earnings which, when multiplied by the combined OASDI employee-employer payroll tax rate for that year, yields the total amount of payroll taxes due from wages paid and self-employment net earnings for the year. The Trustees use taxable payroll to determine income rates, cost rates, and actuarial balances. Taxable payroll is derived by adjusting total taxable earnings to account for categories of earnings that are taxed at rates other than the combined employee-employer rate and to take into account amounts credited as wages that were not included in normally reported wages. For 1951 and later, taxable earnings are reduced by one-half of the amount of wages paid to employees with multiple jobs that exceed the contribution and benefit base. For 1983 through 2001, deemed wage credits for military service after 1956 are added to taxable earnings. The self-employment tax rates for 1951 through 1983 were less than the combined employee-employer rates; therefore, the self-employment component of taxable payroll for those years is reduced by multiplying the ratio of the self-employment rate to the combined employee-employer rate times the taxable self-employment net earnings. Finally, for 1966 through 1979, employers were exempt from paying their share of payroll tax on their employees’ tips and, for 1980 through 1987, employers paid tax on only part of their employees’ tips. For those years, the taxable payroll is reduced by half of the amount of tips for which the employer owed no payroll tax.

The ratio of taxable payroll to covered earnings (the taxable ratio) fell from 88.6 percent for 1984 to 82.6 percent for 2000, mostly due to much higher increases in wage levels for very high earners than for all other earners. From 2000 to 2010, the taxable ratio varied with the business cycle, rising during economic downturns and falling during recoveries. Specifically, the taxable ratio rose to 85.7 percent for 2002, declined to 82.4 percent for 2007, rose to 85.2 percent for 2009, and was 83.0 percent for 2018.

For this report, the Trustees assume a level for the taxable ratio at the end of the short-range period (2029) of 82.5 percent for the intermediate assumptions, 84.0 percent for the low-cost assumptions, and 81.0 percent for the high-cost assumptions.⁷ These are the same assumptions that the Trustees made for the end of the short-range period (2028) for the 2019 report.

The Office of the Chief Actuary projects payroll tax contributions using the patterns of tax collection required by Federal laws and regulations. The office determines payroll tax liabilities by multiplying the scheduled tax rates for each year by the amount of taxable wages and self-employment net earnings for that year. The office then splits these liabilities into amounts by collection period. For wages, Federal law requires that employers withhold OASDI and HI payroll taxes and Federal individual income taxes from employees’ pay. As an employer’s accumulation of such taxes (including the employer share of payroll taxes) meets certain thresholds, which the Department of the Treasury determines, the employer must deposit these taxes with the U.S. Treasury by a specific day, depending on the amount of money involved.⁸ For projection purposes, the office splits the payroll tax contributions related to wages into amounts paid in the same quarter as incurred and in the following quarter. Self-employed workers must make estimated tax payments on their earnings four times during the year and make up any underestimate on their individual income tax returns. The projection splits the self-employed tax liabilities by collection quarter to reflect this pattern.

The projected tax contributions also reflect the method used to ensure that money transferred to the trust funds is adjusted, over time, to equal the actual liability owed. Because payers generally make tax payments without identifying the separate OASDI contribution amounts, Treasury makes daily transfers of money from the General Fund to the trust funds on an initial estimated basis. The Social Security Administration periodically certifies the amounts of wages and self-employment net earnings on which tax contributions are owed for each year, at which time Treasury determines adjustments to appropriations to reconcile tax liabilities with deposits in the trust funds. This process also includes periodic transfers from the trust funds to the General Fund for contributions on wages in excess of the contribution and benefit base.

Table V.C6 shows the payroll tax contribution rates applicable under current law in each calendar year and the allocation of these rates between the OASI and DI Trust Funds.⁹ It also shows the contribution and benefit base for each year through 2020.

Table V.C6.—Contribution and Benefit Base and Payroll Tax Contribution Rates 

Calendar years	Contribution and benefit base	Payroll tax contribution rates (percent)
		Employees and employers, combineda				Self-employedb
		OASDI	OASI	DI		OASDI	OASI	DI
1937-49	$3,000	2.00	2.00	—		—	—	—
1950	3,000	3.00	3.00	—		—	—	—
1951-53	3,600	3.00	3.00	—		2.2500	2.2500	—
1954	3,600	4.00	4.00	—		3.0000	3.0000	—
1955-56	4,200	4.00	4.00	—		3.0000	3.0000	—
1957-58	4,200	4.50	4.00	0.50		3.3750	3.0000	0.3750
1959	4,800	5.00	4.50	.50		3.7500	3.3750	.3750
1960-61	4,800	6.00	5.50	.50		4.5000	4.1250	.3750
1962	4,800	6.25	5.75	.50		4.7000	4.3250	.3750
1963-65	4,800	7.25	6.75	.50		5.4000	5.0250	.3750
1966	6,600	7.70	7.00	.70		5.8000	5.2750	.5250
1967	6,600	7.80	7.10	.70		5.9000	5.3750	.5250
1968	7,800	7.60	6.65	.95		5.8000	5.0875	.7125
1969	7,800	8.40	7.45	.95		6.3000	5.5875	.7125
1970	7,800	8.40	7.30	1.10		6.3000	5.4750	.8250
1971	7,800	9.20	8.10	1.10		6.9000	6.0750	.8250
1972	9,000	9.20	8.10	1.10		6.9000	6.0750	.8250
1973	10,800	9.70	8.60	1.10		7.0000	6.2050	.7950
1974	13,200	9.90	8.75	1.15		7.0000	6.1850	.8150
1975	14,100	9.90	8.75	1.15		7.0000	6.1850	.8150
1976	15,300	9.90	8.75	1.15		7.0000	6.1850	.8150
1977	16,500	9.90	8.75	1.15		7.0000	6.1850	.8150
1978	17,700	10.10	8.55	1.55		7.1000	6.0100	1.0900
1979	22,900	10.16	8.66	1.50		7.0500	6.0100	1.0400
1980	25,900	10.16	9.04	1.12		7.0500	6.2725	.7775
1981	29,700	10.70	9.40	1.30		8.0000	7.0250	.9750
1982	32,400	10.80	9.15	1.65		8.0500	6.8125	1.2375
1983	35,700	10.80	9.55	1.25		8.0500	7.1125	.9375
1984 c	37,800	11.40	10.40	1.00		11.4000	10.4000	1.0000
1985 c	39,600	11.40	10.40	1.00		11.4000	10.4000	1.0000
1986 c	42,000	11.40	10.40	1.00		11.4000	10.4000	1.0000
1987 c	43,800	11.40	10.40	1.00		11.4000	10.4000	1.0000
1988 c	45,000	12.12	11.06	1.06		12.1200	11.0600	1.0600
1989 c	48,000	12.12	11.06	1.06		12.1200	11.0600	1.0600
1990	51,300	12.40	11.20	1.20		12.4000	11.2000	1.2000
1991	53,400	12.40	11.20	1.20		12.4000	11.2000	1.2000
1992	55,500	12.40	11.20	1.20		12.4000	11.2000	1.2000
1993	57,600	12.40	11.20	1.20		12.4000	11.2000	1.2000
1994	60,600	12.40	10.52	1.88		12.4000	10.5200	1.8800
1995	61,200	12.40	10.52	1.88		12.4000	10.5200	1.8800
1996	62,700	12.40	10.52	1.88		12.4000	10.5200	1.8800
1997	65,400	12.40	10.70	1.70		12.4000	10.7000	1.7000
1998	68,400	12.40	10.70	1.70		12.4000	10.7000	1.7000
1999	72,600	12.40	10.70	1.70		12.4000	10.7000	1.7000
2000	76,200	12.40	10.60	1.80		12.4000	10.6000	1.8000
2001	80,400	12.40	10.60	1.80		12.4000	10.6000	1.8000
2002	84,900	12.40	10.60	1.80		12.4000	10.6000	1.8000
2003	87,000	12.40	10.60	1.80		12.4000	10.6000	1.8000
2004	87,900	12.40	10.60	1.80		12.4000	10.6000	1.8000
2005	90,000	12.40	10.60	1.80		12.4000	10.6000	1.8000
2006	94,200	12.40	10.60	1.80		12.4000	10.6000	1.8000
2007	97,500	12.40	10.60	1.80		12.4000	10.6000	1.8000
2008	102,000	12.40	10.60	1.80		12.4000	10.6000	1.8000
2009	106,800	12.40	10.60	1.80		12.4000	10.6000	1.8000
2010d	106,800	12.40	10.60	1.80		12.4000	10.6000	1.8000
2011d	106,800	10.40	8.89	1.51		10.4000	8.8900	1.5100
2012d	110,100	10.40	8.89	1.51		10.4000	8.8900	1.5100
2013	113,700	12.40	10.60	1.80		12.4000	10.6000	1.8000
2014	117,000	12.40	10.60	1.80		12.4000	10.6000	1.8000
2015	118,500	12.40	10.60	1.80		12.4000	10.6000	1.8000
2016	118,500	12.40	10.03	2.37		12.4000	10.0300	2.3700
2017	127,200	12.40	10.03	2.37		12.4000	10.0300	2.3700
2018	128,400	12.40	10.03	2.37		12.4000	10.0300	2.3700
2019	132,900	12.40	10.60	1.80		12.4000	10.6000	1.8000
2020	137,700	12.40	10.60	1.80		12.4000	10.6000	1.8000
2021 and later	e	12.40	10.60	1.80		12.4000	10.6000	1.8000

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a

Except as noted below, the combined employee/employer rate is divided equally between employees and employers.

b

Beginning in 1990, self-employed persons receive a deduction, for purposes of computing their net earnings, equal to half of the combined OASDI and HI contributions that would be payable without regard to the contribution and benefit base. The OASDI contribution rate then applies to net earnings after this deduction, but subject to the OASDI base.

c

In 1984 only, employees received an immediate credit of 0.3 percent of taxable wages against their OASDI payroll tax contributions. The self-employed received similar credits of 2.7 percent, 2.3 percent, and 2.0 percent against their combined OASDI and Hospital Insurance (HI) contributions on net earnings from self-employment in 1984, 1985, and 1986-89, respectively. The General Fund of the Treasury reimbursed the trust funds for these credits.

d

Public Law 111-147 exempted most employers from paying the employer share of OASDI payroll tax on wages paid during the period March 19, 2010 through December 31, 2010 to certain qualified individuals hired after February 3, 2010. Public Law 111-312 reduced the OASDI payroll tax rate for 2011 by 2 percentage points for employees and for self-employed workers. Public Law 112-96 extended the 2011 rate reduction through 2012. These laws require that the General Fund of the Treasury reimburse the OASI and DI Trust Funds for these temporary reductions in 2010 through 2012 payroll tax revenue, in order to “replicate to the extent possible” revenue that would have been received if the combined employee/employer payroll tax rates had remained at 12.4 percent for OASDI (10.6 percent for OASI and 1.8 percent for DI).

e

Subject to automatic adjustment based on increases in average wages.

7. Income From Taxation of Benefits

Under current law, the OASI and DI Trust Funds are credited with income tax revenue from the taxation of up to the first 50 percent of taxpayers’ OASI and DI benefit payments. (The HI Trust Fund receives the remainder of the income tax revenue from the taxation of up to 85 percent of taxpayers’ OASI and DI benefit payments.) Benefits are taxed for beneficiaries with “combined income” (adjusted gross income, plus half of benefits and all non-taxable interest) exceeding specified threshold amounts. The threshold amounts are $25,000 for single filers, $32,000 for joint filers, and $0 for those married but filing separately.

For the short-range period, the Office of the Chief Actuary estimates the income to the trust funds from taxation of benefits by applying the following two factors (projected by the Office of Tax Analysis, Department of the Treasury) to total OASI and DI scheduled benefits: (1) the percentage of taxpayers’ scheduled benefits (limited to 50 percent) that is taxable and (2) the average marginal tax rate applicable to those benefits.

For the long-range period, the office estimates the income to the trust funds from taxation of benefits by applying projected ratios of taxation of OASI and DI benefits to total OASI and DI scheduled benefits. These tax ratios rely on estimates from the Office of Tax Analysis in the Department of the Treasury. The Office of the Chief Actuary’s estimates reflect the following assumptions: (1) The income thresholds used for benefit taxation are specified in the Internal Revenue Code to be constant in the future, and have never been changed, while income and benefit levels continue to rise. Accordingly, projected ratios of income from taxation of benefits to the amount of benefits increase gradually. (2) A permanent level shift upward in the ratios is projected for 2026 and beyond due to the expiration of the personal income tax provisions in Public Law 115-97, the Tax Cuts and Jobs Act of 2017. (3) Because indexation of income tax brackets is not specified in the Social Security Act, and because periodic changes have been made in the past to avoid indefinite compression of the income tax brackets relative to income levels (bracket creep), the Trustees assume that such periodic changes will occur in the future. As a result, after the tenth year of the projection period, income tax brackets are assumed to rise with average wages, rather than with the C-CPI-U as specified under current law. Thus, the income tax brackets are projected to roughly maintain their levels relative to the income distribution.

8. Average Benefits

Projections of average benefits for each benefit type reflect recent historical averages, projected average primary insurance amounts (PIAs), and projected ratios of average benefits to average PIAs. Calculations of average PIAs are based on projected distributions of beneficiaries by duration from year of initial entitlement, average PIAs at initial entitlement, and increases in PIAs after initial entitlement. Projected increases in average PIAs after initial entitlement depend on automatic benefit increases, recomputations to reflect additional covered earnings, and differences in mortality by level of lifetime earnings. Calculations of future average PIAs at initial entitlement are based on projected earnings histories, which in turn reflect a combination of the actual earnings histories associated with a sample of 2016 initial entitlements and more recent actual earnings levels by age and sex for covered workers.

For retired-worker, aged-spouse, and aged-widow(er) benefits, the percentage of the PIA that is payable depends on the age at initial entitlement to benefits. Projected ratios of average benefits to average PIAs for these types of benefits are based on projections of age distributions at initial entitlement.

9. Scheduled Benefits

For each type of benefit, scheduled benefits are the product of the number of beneficiaries and the corresponding average monthly benefit. The short-range model calculates scheduled benefits on a quarterly basis. The long-range model calculates all scheduled benefits on an annual basis, using the number of beneficiaries at the beginning and end of the year. Adjustments to these annual scheduled benefits include retroactive payments to newly awarded beneficiaries and other amounts not reflected in the regular monthly scheduled benefits.

Scheduled lump-sum death benefits are estimated as the product of: (1) the number of lump-sum death payments projected on the basis of the assumed death rates, the projected fully insured population, and the estimated percentage of the fully insured population that will qualify for lump-sum death payments; and (2) the amount of the lump-sum death payment, which is $255 (unindexed since 1973).

10. Illustrative Scheduled Benefit Amounts

Table V.C7 shows, under the intermediate assumptions, future benefit amounts payable upon retirement at the normal retirement age and at age 65, for various hypothetical workers attaining age 65 in 2020 and subsequent years. The illustrative benefit amounts in table V.C7 are presented in CPI-indexed 2020 dollars—that is, adjusted to 2020 levels by the CPI indexing series shown in table VI.G6. As a point of comparison, table V.C7 also shows the national average wage index (AWI) for 2020 and subsequent years in CPI-indexed 2020 dollars.

The normal retirement age was 65 for individuals who reached age 62 before 2000. It increased to age 66 during the period 2000 through 2005, at a rate of 2 months per year as workers attained age 62. Under current law, the normal retirement age increases to age 67 during the period 2017 through 2022, also by 2 months per year as workers attain age 62. The illustrative benefit amounts shown in table V.C7 for retirees at age 65 are lower than the amounts shown for retirees at normal retirement age because the statute requires an actuarial reduction for monthly benefits taken before normal retirement age to reflect the expected additional years benefits will be collected. For example, those who collect benefits starting in 2027 at age 65 will receive benefits for two more years than if they instead claim benefits at the normal retirement age (age 67) unless they die between the ages of 65 and 67.

Table V.C7 shows five different pre-retirement earnings patterns. Four of these patterns assume the earnings history of workers with scaled-earnings patterns¹⁰ and reflect very low, low, medium, and high career-average levels of pre-retirement earnings starting at age 21. The fifth pattern assumes the earnings history of a steady maximum earner starting at age 22. The four scaled-earnings patterns derive from earnings experienced by insured workers during 1997‑2016. These earnings levels differ by age. The career-average level of earnings for each scaled case targets a percent of the AWI.

For the scaled medium earner, the career-average earnings level is about equal to the AWI (or $55,642 for 2020). For the scaled very low, low, and high earners, the career-average earnings level is about 25 percent, 45 percent, and 160 percent of the AWI, respectively (or $13,910, $25,039, and $89,027, respectively, for 2020). The steady maximum earner has earnings at or above the contribution and benefit base for each year starting at age 22 through the year prior to retirement (or $137,700 for 2020).

Table V.C7.—Annual Scheduled Benefit Amounts for Retired Workers
With Various Pre-Retirement Earnings Patterns
Based on Intermediate Assumptions, Calendar Years 2020-2095 

Year attain age 65a		Age at retirement	Scaled very low earningsb	Scaled low earningsc	Scaled medium earningsd	Scaled high earningse	Steady maximum earningsf	National Average Wage Index in 2020 dollarsg
			Benefits in 2020 dollarsh with retirement at normal retirement age
	2020	66:2	$10,683	$13,974	$23,049	$30,529	$37,327	$55,642
	2025	67:0	11,089	14,529	23,978	31,716	39,057	60,110
	2030	67:0	11,982	15,690	25,891	34,256	42,223	64,330
	2035	67:0	12,820	16,787	27,694	36,650	45,188	68,331
	2040	67:0	13,625	17,835	29,413	38,929	47,968	72,374
	2045	67:0	14,428	18,882	31,142	41,223	50,822	76,268
	2050	67:0	15,206	19,905	32,825	43,445	53,518	80,400
	2055	67:0	16,030	20,983	34,603	45,800	56,336	84,962
	2060	67:0	16,941	22,175	36,572	48,403	59,492	89,859
	2065	67:0	17,917	23,453	38,680	51,192	62,891	95,001
	2070	67:0	18,943	24,795	40,890	54,121	66,497	100,340
	2075	67:0	20,007	26,190	43,189	57,164	70,240	105,963
	2080	67:0	21,129	27,657	45,608	60,366	74,180	111,857
	2085	67:0	22,304	29,197	48,147	63,726	78,308	118,055
	2090	67:0	23,541	30,816	50,816	67,257	82,643	124,696
	2095	67:0	24,865	32,550	53,677	71,042	87,288	131,796
			Benefits in 2020 dollarsh with retirement at age 65
	2020	65:0	9,859	12,901	21,269	28,182	34,349	55,642
	2025	65:0	9,608	12,577	20,755	27,470	33,587	60,110
	2030	65:0	10,383	13,589	22,417	29,671	36,337	64,330
	2035	65:0	11,109	14,545	23,986	31,751	38,902	68,331
	2040	65:0	11,804	15,447	25,478	33,729	41,306	72,374
	2045	65:0	12,497	16,364	26,981	35,718	43,771	76,268
	2050	65:0	13,171	17,243	28,436	37,642	46,093	80,400
	2055	65:0	13,889	18,176	29,974	39,681	48,522	84,962
	2060	65:0	14,677	19,211	31,682	41,937	51,238	89,859
	2065	65:0	15,525	20,321	33,506	44,355	54,170	95,001
	2070	65:0	16,411	21,482	35,422	46,894	57,279	100,340
	2075	65:0	17,335	22,691	37,413	49,527	60,505	105,963
	2080	65:0	18,305	23,960	39,510	52,303	63,898	111,857
	2085	65:0	19,325	25,294	41,707	55,215	67,457	118,055
	2090	65:0	20,398	26,698	44,020	58,275	71,189	124,696
	2095	65:0	21,545	28,198	46,496	61,552	75,189	131,796

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a

Attains age 65 on January 1 of the year.

b

Career-average earnings at about 25 percent of the AWI.

c

Career-average earnings at about 45 percent of the AWI.

d

Career-average earnings at about 100 percent of the AWI. Such a worker would have career-average earnings at approximately the 57th percentile of all new retired-worker beneficiaries.

e

Career-average earnings at about 160 percent of the AWI.

f

Earnings for each year at or above the contribution and benefit base.

g

Average Wage Index from table VI.G6, adjusted to be in 2020 dollars by using the CPI indexing series from table VI.G6.

h

Annual amounts are the total for the 12-month period starting with the month of retirement, adjusted to be in 2020 dollars by using the CPI indexing series from table VI.G6.

Note: Benefits shown at age 65 reflect adjustments for early retirement. For early retirement as early as age 62, the benefit amount is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month. For example, if the number of reduction months is 60 (the maximum number for retirement at 62 when normal retirement age is 67), then the benefit is reduced by 30 percent. Delayed retirement credit is generally given for retirement after the normal retirement age. The delayed retirement credit is 2/3 of one percent per month for persons born in 1943 and later. No credit is given for delaying benefits after attaining age 70. See table V.C3 for additional details, including adjustments applying to other birth years.

11. Administrative Expenses

The projection of administrative expenses through the short-range period is based on historical experience and the projected growth in average wages. The Office of Budget of the Social Security Administration provides estimates for the first several years of the projection. For years after the short-range period, projected administrative expenses reflect increases in the number of beneficiaries in current-payment status, and increases in the average wage. However, the increases in average wage are partially offset by assumed administrative productivity gains.

12. Railroad Retirement Financial Interchange

Railroad workers are covered under a separate multi-tiered benefit plan, with a first tier of coverage similar to OASDI coverage. An annual financial interchange between the Railroad Retirement fund and the OASI and DI Trust Funds is made to resolve the difference between: (1) the amount of OASDI benefits that would be paid to railroad workers and their families if railroad employment had been covered under the OASDI program, plus administrative expenses associated with these benefits; and (2) the amount of OASDI payroll tax and income tax that would be received with allowances for interest from railroad workers.

Calculation of the financial interchange with the Railroad Retirement reflects trends similar to those used in estimating the cost of OASDI benefits. The annual short-range net cost for the OASI and DI Trust Funds is about $5‑$6 billion and the long-range summarized net cost for the OASI and DI Trust Funds is 0.05 percent of taxable payroll.

 

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1

The Federal Register publishes details of these indexation procedures annually. Also see
www.ssa.gov/OACT/COLA/.

2

For those under age 16, projected covered employment is the sum of age-sex components, each of which is projected as a ratio to the Social Security area population.

3

Age-adjusted covered-worker rates are adjusted to the 2011 age distribution of the Social Security area population.

4

The exposed population is the fully insured population age 62 and over, excluding persons entitled to or converted from disabled-worker benefits and fully insured persons entitled only to widow(er) benefits.

5

The disability-exposed population excludes those receiving benefits, while the disability insured population includes them. Section V.C.3 of this report describes the projection of the disability insured population.

6

Projected incidence rates are adjusted upward to account for additional workers who are expected to file for disability benefits (rather than retirement benefits) in response to reductions in retirement benefits as the normal retirement age rises.

7

The taxable ratio drifts down slightly after 2029, to 82.3, 83.9, and 80.6 percent in 2094 for the intermediate, low-cost, and high-cost assumptions, respectively, as self-employment income becomes an increasing share of total earnings.

8

Generally, the higher the amount of liability, the sooner the taxes must be paid. For smaller employers, payment is due by the middle of the month following when the liability was incurred. Medium-size employers have three banking days in which to make their deposits. Larger employers must make payment on the next business day after paying their employees.

9

Table VI.G1 shows the payroll tax contribution rates for the Hospital Insurance (HI) program.

10

Actuarial Note 2020.3 has more details on scaled-earnings patterns.
See www.ssa.gov/OACT/NOTES/ran3/.