2023 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 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 2032. 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 monthly benefits based on increases in the CPI. Volatility in oil prices has resulted in substantial volatility in cost-of-living adjustments over the last two decades. 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, 1975-2032 

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
	2019	1.6	54,099.99	3.7	132,900	17,640	46,920
	2020	1.3	55,628.60	2.8	137,700	18,240	48,600
	2021	5.9	60,575.07	8.9	142,800	18,960	50,520
Intermediate:
	2022	g8.7	63,467.98	4.8	g147,000	g19,560	g51,960
	2023	3.3	66,147.17	4.2	g160,200	g21,240	g56,520
	2024	2.4	68,627.58	3.7	167,700	22,200	59,160
	2025	2.4	71,411.99	4.1	174,900	23,160	61,680
	2026	2.4	74,348.48	4.1	181,200	24,000	64,080
	2027	2.4	77,393.67	4.1	188,700	25,080	66,600
	2028	2.4	80,510.73	4.0	196,500	26,040	69,360
	2029	2.4	83,757.03	4.0	204,600	27,120	72,240
	2030	2.4	87,106.49	4.0	212,700	28,200	75,120
	2031	2.4	90,574.48	4.0	221,400	29,400	78,120
	2032	2.4	93,995.33	3.8	230,100	30,480	81,240
Low-cost:
	2022	g 8.7	63,432.25	4.7	g147,000	g19,560	g51,960
	2023	3.1	66,442.68	4.7	g160,200	g21,240	g56,520
	2024	3.0	70,258.88	5.7	167,700	22,200	59,160
	2025	3.0	74,575.71	6.1	175,500	23,280	62,040
	2026	3.0	78,782.82	5.6	185,700	24,600	65,520
	2027	3.0	83,005.63	5.4	197,100	26,160	69,600
	2028	3.0	87,405.28	5.3	208,200	27,600	73,560
	2029	3.0	92,010.68	5.3	219,300	29,040	77,400
	2030	3.0	96,841.91	5.3	231,000	30,600	81,600
	2031	3.0	101,915.61	5.2	243,000	32,280	85,800
	2032	3.0	107,046.81	5.0	255,900	33,960	90,360
High-cost:
	2022	g8.7	63,460.05	4.8	g147,000	g19,560	g51,960
	2023	4.0	64,726.55	2.0	g160,200	g21,240	g56,520
	2024	2.6	67,055.34	3.6	167,700	22,200	59,160
	2025	1.8	69,534.32	3.7	171,000	22,680	60,360
	2026	1.8	71,952.76	3.5	177,300	23,520	62,520
	2027	1.8	74,431.84	3.4	183,600	24,360	64,920
	2028	1.8	76,626.52	2.9	190,200	25,200	67,080
	2029	1.8	78,738.96	2.8	196,800	26,040	69,480
	2030	1.8	80,892.11	2.7	202,500	26,880	71,520
	2031	1.8	83,098.17	2.7	207,900	27,600	73,440
	2032	1.8	85,191.64	2.5	213,600	28,320	75,480

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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 2023, and also shows projected values through 2032. 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 2023

[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 2023

[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 1978-2032 

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
	2021	996	6,002		1,272	1,837	2,395	1,470	106,200
	2022	1,024	6,172		1,308	1,889	2,463	1,510	109,200
	2023	1,115	6,721		1,425	2,056	2,682	1,640	118,800
Intermediate:
	2024	1,168	7,042		1,493	2,155	2,810	1,720	124,500
	2025	1,218	7,339		1,556	2,246	2,929	1,790	129,900
	2026	1,263	7,614		1,614	2,330	3,039	1,860	134,700
	2027	1,314	7,923		1,680	2,424	3,162	1,930	140,100
	2028	1,368	8,249		1,749	2,524	3,292	2,010	145,800
	2029	1,425	8,587		1,820	2,627	3,427	2,100	151,800
	2030	1,482	8,932		1,894	2,733	3,565	2,180	158,100
	2031	1,542	9,293		1,970	2,843	3,708	2,270	164,400
	2032	1,603	9,664		2,049	2,957	3,857	2,360	171,000
Low-cost:
	2024	1,168	7,038		1,492	2,153	2,809	1,720	124,500
	2025	1,223	7,372		1,563	2,256	2,942	1,800	130,500
	2026	1,293	7,795		1,652	2,385	3,111	1,900	138,000
	2027	1,373	8,274		1,754	2,532	3,302	2,020	146,400
	2028	1,450	8,741		1,853	2,675	3,488	2,130	154,500
	2029	1,528	9,209		1,952	2,818	3,675	2,250	162,900
	2030	1,609	9,697		2,056	2,967	3,870	2,370	171,600
	2031	1,694	10,208		2,164	3,124	4,074	2,490	180,600
	2032	1,782	10,744		2,278	3,288	4,288	2,620	189,900
High-cost:
	2024	1,168	7,041		1,492	2,154	2,810	1,720	124,500
	2025	1,191	7,181		1,522	2,197	2,866	1,750	126,900
	2026	1,234	7,440		1,577	2,276	2,969	1,820	131,700
	2027	1,280	7,715		1,635	2,361	3,079	1,880	136,500
	2028	1,324	7,983		1,692	2,443	3,186	1,950	141,300
	2029	1,370	8,258		1,751	2,527	3,296	2,020	146,100
	2030	1,410	8,501		1,802	2,601	3,393	2,080	150,300
	2031	1,449	8,736		1,852	2,673	3,486	2,130	154,500
	2032	1,489	8,975		1,902	2,746	3,582	2,190	158,700

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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-worker beneficiaries 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 4.5 percent. After 2032, 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 and boys age 16 and over, the projected age-adjusted covered-worker rates³ for 2097 are 69.7, 69.8, and 69.6 percent for the low-cost, intermediate, and high-cost assumptions, respectively. For women and girls age 16 and over, the projected age-adjusted covered-worker rates for 2097 are 66.8, 66.1, and 65.7 percent for the low-cost, intermediate, and high-cost assumptions, respectively. An important factor in the variation among the projected rates for the three alternatives is the portion of the men and women in the population that is projected to be other-than-LPR immigrants. For men and boys, the intermediate projected rate for 2097 is lower than the 2021 age-adjusted rate of 71.0 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 and girls, the intermediate projected rate for 2097 is higher than the 2021 age-adjusted rate of 64.8 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 2023 is $1,640.

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.⁴ 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 88.5 for December 31, 2020, to 86.8, 88.6, and 90.9 for December 31, 2100, under the low-cost, intermediate, and high-cost alternatives, respectively. Over the projection period, the percentages for both men and women change significantly. The percentage for men 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 women increases, reflecting the past substantial growth in the employment of younger cohorts of women. Under the intermediate assumptions, for example, the percentage for men decreases from 94.1 to 87.7, and the percentage for women increases from 83.9 to 89.4.

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.⁵ For age 62, the model projects this percentage by using a linear regression based on the historical relationship between this percentage, the employment rate⁶ 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 receiving 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, 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 71 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 71 by applying termination rates to the population that started receiving such benefits prior to age 71.

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 1945-2100 

[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
	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
	2020	46,330	2,323	704		3,823	115	1,936	1	55,231
	2021	47,293	2,165	687		3,773	114	1,976	1	56,009
	2022	48,588	2,022	682		3,728	112	2,020	1	57,152
Intermediate:
	2023	50,059	1,858	712		3,695	109	2,041	1	58,476
	2025	52,853	1,750	755		3,643	105	2,056	1	61,163
	2030	59,486	1,626	865		3,520	95	2,111	1	67,705
	2035	63,776	1,561	972		3,289	106	2,151	1	71,855
	2040	66,187	1,415	1,092		3,002	127	2,194	1	74,018
	2045	67,417	1,317	1,217		2,800	133	2,225	1	75,109
	2050	69,190	1,287	1,308		2,664	131	2,214	1	76,796
	2055	71,765	1,280	1,381		2,560	128	2,178	1	79,292
	2060	75,341	1,262	1,464		2,473	123	2,115	1	82,778
	2065	78,638	1,251	1,494		2,424	120	2,062	1	85,989
	2070	81,810	1,252	1,521		2,405	118	2,041	1	89,149
	2075	84,845	1,262	1,558		2,383	117	2,043	1	92,209
	2080	86,757	1,264	1,570		2,335	116	2,041	1	94,084
	2085	87,626	1,268	1,574		2,277	114	2,022	1	94,881
	2090	88,032	1,288	1,573		2,236	111	1,992	1	95,233
	2095	89,429	1,327	1,615		2,219	108	1,964	1	96,664
	2100	92,017	1,378	1,669		2,221	106	1,942	1	99,333
Low-cost:
	2023	50,029	1,858	714		3,692	110	2,046	1	58,449
	2025	52,739	1,750	760		3,637	106	2,074	1	61,066
	2030	59,016	1,633	884		3,503	100	2,186	1	67,322
	2035	62,533	1,545	1,005		3,336	105	2,349	1	70,874
	2040	64,067	1,397	1,152		3,074	128	2,528	1	72,346
	2045	64,500	1,284	1,302		2,891	137	2,662	1	72,778
	2050	65,508	1,227	1,411		2,765	139	2,727	1	73,778
	2055	67,423	1,187	1,502		2,659	140	2,753	1	75,664
	2060	70,367	1,146	1,619		2,564	140	2,756	1	78,593
	2065	73,048	1,115	1,676		2,502	143	2,789	1	81,273
	2070	75,501	1,098	1,721		2,477	148	2,881	1	83,828
	2075	77,747	1,090	1,785		2,452	155	3,005	1	86,234
	2080	78,899	1,070	1,814		2,411	160	3,111	1	87,467
	2085	79,123	1,050	1,832		2,375	163	3,180	1	87,724
	2090	79,424	1,056	1,848		2,384	166	3,234	1	88,112
	2095	81,729	1,096	1,952		2,436	169	3,296	1	90,680
	2100	85,763	1,140	2,063		2,506	174	3,377	1	95,023
High-cost:
	2023	50,098	1,858	711		3,699	109	2,036	1	58,511
	2025	52,999	1,750	751		3,652	104	2,038	1	61,294
	2030	60,109	1,621	847		3,544	90	2,029	1	68,243
	2035	65,450	1,594	930		3,224	101	1,923	1	73,223
	2040	69,088	1,450	1,010		2,889	114	1,815	1	76,366
	2045	71,537	1,373	1,098		2,645	116	1,744	1	78,514
	2050	74,439	1,370	1,169		2,477	109	1,671	1	81,236
	2055	77,950	1,394	1,224		2,352	101	1,592	1	84,613
	2060	82,358	1,405	1,265		2,252	92	1,493	1	88,865
	2065	86,407	1,416	1,258		2,201	83	1,398	1	92,764
	2070	90,340	1,446	1,253		2,178	76	1,322	1	96,616
	2075	94,108	1,485	1,250		2,158	71	1,265	1	100,338
	2080	96,708	1,516	1,234		2,111	66	1,217	1	102,851
	2085	98,097	1,528	1,216		2,036	61	1,167	1	104,105
	2090	98,223	1,537	1,189		1,953	56	1,115	1	104,073
	2095	97,792	1,545	1,170		1,875	51	1,065	1	103,498
	2100	97,694	1,567	1,165		1,833	47	1,017	1	103,323

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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. Components may not sum to totals because of rounding.

5. Disability Insurance Beneficiaries

The DI Trust Fund pays for benefits to workers who: (1) satisfy the disability insured requirements, (2) have applied for disabled-worker benefits, (3) are determined to be 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 (4) have not yet attained normal retirement age. Spouses and children of such disabled-worker beneficiaries 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 2022. Projections of the number of applicants and 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 applicants newly awarded disabled-worker benefits during each year to the number of individuals who meet insured requirements but are not yet receiving benefits (the disability-exposed population⁷). 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 projected incidence rates under the three alternatives along with historical rates. 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 age-sex-adjusted incidence rate consistent with the age-sex distribution of the disability-exposed population for 2000. This adjustment allows a meaningful comparison of incidence rates over time by focusing on the likelihood of being awarded disabled-worker benefits, 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 declined relative to the age‑sex-adjusted rate between 1970 and 1990 as the baby-boom generation increased the size of the younger working-age population, where disability incidence is lower than in older populations. Between 1990 and 2010, the gross rate increased relative to the age‑sex-adjusted rate as the baby-boom generation moved into an age range where disability incidence is higher. 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 compared to the population in 2000, 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 2032), incidence rates reflect several factors following on the experience since the recession of 2007-09. At the beginning of the period of high unemployment that began in 2007, disability incidence rates started to rise to a level well above the general trend level, with rates reaching a peak in 2010. Between 2010 and 2012, incidence rates subsided as the economy recovered, but the decline continued after 2012, reaching levels well below those expected over the long-term. A portion of the elevation of disability incidence rates experienced during the recession of 2007-09 likely contributed to the lowering of incidence rates experienced during and subsequent to the economic recovery that followed, as many individuals applied for disability benefits earlier than they would have otherwise.

For 2022, the actual age-sex-adjusted incidence rate (2.9 per thousand) was below the level projected in last year’s report (3.2 per thousand). In this year’s report, incidence rates under the intermediate alternative are projected to rise more slowly early in the projection period than in last year’s report, consistent with the low incidence levels experienced recently. Incidence rates are projected to rise to a temporary peak level for 2027 as some of the reduced levels of new benefit awards in the pandemic period are realized in the next few years. After 2027, incidence rates gradually decline through the rest of the short-range period to the ultimate assumed level of incidence.

In 2032, at the end of the short-range period, age-sex-specific incidence rates are assumed to 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.⁸ 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 4.8 awards per thousand exposed, which is the same as in last year’s report. Figure V.C3 illustrates that the age-sex-adjusted incidence rate averaged 5.0 per thousand over the historical period 1970 through 2022, but has dropped substantially below that level since 2013. The rates seen in recent years are not consistent with an assumption of a full rise back to longer-term past historical averages. The Trustees continue to monitor experience and review the disability incidence rate assumption.

The Trustees assume that the ultimate age-sex-adjusted incidence rates for the low-cost and high-cost alternatives will be 3.8 and 5.8 awards per thousand exposed, or about 20 percent lower and higher, respectively, than the ultimate incidence rate for the intermediate alternative. These ultimate low-cost and high-cost incidence rates are similar to those in last year’s report.

Figure V.C3.—DI Disability Incidence Rates, 1970-2100

[Awards per thousand disability-exposed]

[D]

b. Disability Termination

Beneficiaries stop receiving disability benefits when they die, experience an improvement in their medically-determinable impairment such that they are deemed able to engage in substantial gainful activity, 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-2032).

In the short-range period (through 2032), the projected age-sex-adjusted death rate (adjusted to the 2000 disabled-worker beneficiary population) under the intermediate assumptions declines from the temporarily elevated rate of 28.6 deaths per thousand beneficiaries for 2022 to about 23.8 per thousand for 2032. These rates are assumed to remain elevated through 2024 due to the COVID-19 pandemic, and then return to follow the underlying declining trend in general population mortality. The projected age-sex-adjusted recovery rate (medical improvement and return to substantial work) under the intermediate assumptions decreases from the relatively high level of 19.6 per thousand beneficiaries for 2022 to 10.4 per thousand beneficiaries for 2032. The recovery rate has been high in recent years due to an ongoing administrative effort to eliminate a backlog of medical continuing disability reviews. The recovery rate is expected to decrease as the backlog of disabled-worker reviews is assumed to be eliminated by the end of 2025. Thereafter, the rate decreases toward the expected long-term projected rate. Under the low-cost and high-cost assumptions, total age-sex-adjusted termination rates due to death and recovery are roughly 10 to 20 percent higher or lower, respectively, than under the intermediate assumptions.

For the long-range period (post-2032), 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-worker beneficiaries is 10.4 per thousand beneficiaries under the intermediate alternative.⁹ The assumed ultimate age-sex-adjusted recovery rates for the low-cost and high-cost alternatives are 12.5 and 8.3 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. The age-sex-adjusted death rate decreases from 28.6 per thousand beneficiaries in 2022 to 21.5, 12.4, and 6.1 per thousand disabled-worker beneficiaries for 2097 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 2100. 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, 1970-2100

[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 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. 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.

Figure V.C5.—Comparison of DI Disability Incidence Rates, Termination Rates and Conversion Ratios Under Intermediate Assumptions, 1970-2100

[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-worker beneficiaries in current-payment status. The number of disabled-worker beneficiaries in current-payment status grows from 7.6 million at the end of 2022, to 10.9 million, 12.6 million, and 12.6 million at the end of 2100, under the low-cost, intermediate, and high-cost assumptions, respectively. Of course, much of this growth results from the growth and changing age distribution 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 1960-2100 

[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	28
	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
	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
	2020	8,151	105	1,364	9,620	52	39
	2021	7,877	97	1,245	9,219	50	37
	2022	7,604	92	1,146	8,842	48	34
Intermediate:
	2023	7,416	90	1,100	8,606	46	33
	2025	7,518	90	1,092	8,700	47	33
	2030	7,845	89	1,211	9,145	48	35
	2035	8,233	90	1,357	9,681	49	37
	2040	8,775	91	1,589	10,455	52	39
	2045	9,518	103	1,784	11,405	55	40
	2050	10,040	106	1,900	12,046	58	41
	2055	10,433	108	1,966	12,507	59	42
	2060	10,509	104	1,982	12,595	59	42
	2065	10,658	106	1,987	12,751	59	42
	2070	10,795	110	2,020	12,926	59	42
	2075	10,756	110	2,086	12,952	58	43
	2080	10,851	111	2,168	13,131	57	43
	2085	11,106	114	2,242	13,461	57	43
	2090	11,667	121	2,302	14,090	58	43
	2095	12,185	125	2,350	14,660	59	43
	2100	12,550	129	2,399	15,078	60	43
Low-cost:
	2023	7,379	90	1,093	8,562	46	33
	2025	7,301	90	1,056	8,447	45	32
	2030	6,948	88	1,077	8,112	42	31
	2035	6,826	74	1,164	8,064	40	30
	2040	6,998	70	1,359	8,427	41	30
	2045	7,447	75	1,528	9,050	42	31
	2050	7,779	75	1,622	9,476	43	31
	2055	8,054	75	1,677	9,805	43	32
	2060	8,119	71	1,699	9,889	43	32
	2065	8,259	73	1,727	10,058	42	32
	2070	8,415	75	1,795	10,285	41	32
	2075	8,481	75	1,899	10,455	40	32
	2080	8,705	76	2,014	10,795	40	32
	2085	9,134	78	2,114	11,326	40	32
	2090	9,860	86	2,200	12,146	41	32
	2095	10,450	90	2,279	12,819	42	32
	2100	10,870	91	2,368	13,329	42	32
High-cost:
	2023	7,452	90	1,105	8,647	47	33
	2025	7,750	91	1,129	8,969	48	34
	2030	8,706	90	1,312	10,107	54	40
	2035	9,627	107	1,491	11,225	59	44
	2040	10,556	114	1,689	12,358	63	47
	2045	11,614	135	1,861	13,609	69	49
	2050	12,332	142	1,972	14,446	74	51
	2055	12,839	146	2,033	15,018	78	52
	2060	12,894	141	2,027	15,062	79	53
	2065	13,001	143	1,986	15,130	80	53
	2070	13,028	148	1,947	15,123	81	53
	2075	12,740	146	1,927	14,813	81	53
	2080	12,492	145	1,934	14,571	80	54
	2085	12,249	143	1,948	14,340	79	54
	2090	12,230	144	1,954	14,327	80	54
	2095	12,421	147	1,945	14,513	81	54
	2100	12,556	150	1,927	14,632	82	54

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a

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

Note: Components may not sum to totals because of rounding.

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, 1970-2100

[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 sex, 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 and sex 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 34.4 per thousand disability insured workers at the end of 2022 to 43.4 per thousand at the end of 2100. The projected age-sex-adjusted disability prevalence rate at the end of 2100 is 32.4 per thousand under the low-cost assumptions and 54.4 per thousand under the high-cost assumptions.

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-worker beneficiaries. 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 (2023 through 2032), the Office of the Chief Actuary projects incidence and termination rates for each category of auxiliary beneficiary. After 2032, 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 government, 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. Taxable payroll is used as the denominator for 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) declined from 88.6 percent for 1984 to 82.6 percent for 2000, mostly due to much larger 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 declining 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 averaged 83.0 percent for the period 2010 to 2019.

The ratio declined to 82.2 percent for 2020 from the previous year’s 83.1 percent. Unlike previous economic downturns, the pandemic-induced recession led to a much greater decrease in wages for earners at the low end of the earnings distribution than for those at the high end. This resulted in a relatively higher proportion of total wages being above the contribution and benefit base than has typically been the case in other economic downturns. The ratio declined further to 81.0 percent for 2021, mainly due to increases in bonuses paid to high earners and the exercising of stock options.

The taxable ratio for 2022 is estimated to increase to 82.3 percent for all three alternatives. The ratio for the intermediate assumptions increases to 83.1 for 2023 and 83.2 for 2024. For the low-cost and high-cost alternatives, the ratio for 2023 increases to 83.1 and 83.5, respectively. Subsequently, for all three alternatives, the ratio gradually decreases to the levels assumed for the end of the short-range period.

For this report, the Trustees assume a level for the taxable ratio at the end of the short-range period (2032) of 84.0 percent for the low-cost assumptions, 82.5 percent for the intermediate assumptions, and 81.0 percent for the high-cost assumptions.¹⁰ These are the same assumptions that the Trustees used for the end of the short-range period (2031) for the 2022 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.¹¹ 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.¹² It also shows the contribution and benefit base for each year through 2023.

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	142,800	12.40	10.60	1.80		12.4000	10.6000	1.8000
2022	147,000	12.40	10.60	1.80		12.4000	10.6000	1.8000
2023	160,200	12.40	10.60	1.80		12.4000	10.6000	1.8000
2024 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 partially subject to federal income tax for beneficiaries with income (defined for this purpose as adjusted gross income excluding Social Security benefits, plus half of their Social Security benefits and all of their non-taxable interest income) in excess of specified threshold amounts. The threshold amounts are $25,000 for single filers, $32,000 for joint filers, and $0 for those married individuals filing separately.

For the short-range period, the Office of the Chief Actuary estimates the income to the OASI and DI 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. Up to 85 percent of benefits may be subject to federal income tax, with any tax on more than 50 percent of a taxpayer’s benefits credited to the Medicare Hospital Insurance Trust Fund.

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 2019 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 scheduled benefit amounts payable upon retirement at the normal retirement age and at age 65, for various hypothetical workers attaining age 65 in 2023 and subsequent years. The illustrative benefit amounts in table V.C7 are presented in CPI-indexed 2023 dollars—that is, adjusted to 2023 levels by the CPI indexing series shown in table VI.G6. Table V.C7 also shows each benefit amount as a percentage of the average of each hypothetical worker’s highest 35 years of Social Security covered earnings, indexed by national average wage growth to the year prior to initial entitlement to retired worker benefits.¹³

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 monthly benefits taken before normal retirement age are reduced to reflect the expected additional years benefits will be collected. For example, those who start collecting benefits at age 65 in 2027 and survive to age 67 will receive benefits for two more years than if they had instead waited to start collecting benefits at normal retirement age in 2029.

Table V.C7 shows five different pre-retirement earnings patterns. Four of these patterns assume the earnings history of workers with scaled-earnings patterns¹⁴ 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 calendar years 2000 through 2019. 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 (estimated to be $66,147 for 2023). For the scaled very low, low, and high earners, the career-average earnings level, wage-indexed to the year before starting benefits, is about 25 percent, 45 percent, and 160 percent of the AWI, respectively (estimated to be $16,537, $29,766, and $105,835, respectively, for 2023). The steady maximum earner has earnings at or above the contribution and benefit base ($160,200 for 2023) for each year starting at age 22 through the year prior to retirement.

Table V.C7.—Annual Scheduled Benefit Amounts^a for Retired Workers
With Various Pre-Retirement Earnings Patterns
Based on Intermediate Assumptions, Calendar Years 2023-2100 

		Retirement at normal retirement age				Retirement at age 65
	Year attain age 65b	Age at retirement	CPI-indexed 2023 dollarsc	Percent of 35-year average earnings		Age at retirement	CPI-indexed 2023 dollarsc	Percent of 35-year average earnings
	Scaled very low earnings:d
	2023	66:8	$13,041	78.9		65:0	$11,311	71.3
	2025	67:0	12,790	75.8		65:0	11,063	67.7
	2030	67:0	13,581	74.3		65:0	11,758	66.4
	2035	67:0	14,707	75.6		65:0	12,730	67.1
	2040	67:0	15,703	76.0		65:0	13,601	67.4
	2045	67:0	16,686	76.3		65:0	14,454	67.6
	2050	67:0	17,676	76.5		65:0	15,306	67.7
	2055	67:0	18,675	76.5		65:0	16,169	67.7
	2060	67:0	19,730	76.5		65:0	17,088	67.7
	2065	67:0	20,852	76.4		65:0	18,060	67.7
	2070	67:0	22,067	76.4		65:0	19,109	67.7
	2075	67:0	23,356	76.4		65:0	20,226	67.7
	2080	67:0	24,713	76.4		65:0	21,401	67.7
	2085	67:0	26,150	76.4		65:0	22,646	67.7
	2090	67:0	27,668	76.4		65:0	23,959	67.7
	2095	67:0	29,262	76.5		65:0	25,341	67.7
	2100	67:0	30,942	76.4		65:0	26,795	67.7
	Scaled low earnings:e
	2023	66:8	17,082	57.4		65:0	14,824	51.9
	2025	67:0	16,787	55.2		65:0	14,499	49.3
	2030	67:0	17,791	54.1		65:0	15,390	48.3
	2035	67:0	19,265	55.0		65:0	16,677	48.8
	2040	67:0	20,570	55.3		65:0	17,806	49.0
	2045	67:0	21,858	55.5		65:0	18,922	49.2
	2050	67:0	23,139	55.7		65:0	20,035	49.3
	2055	67:0	24,455	55.7		65:0	21,173	49.3
	2060	67:0	25,835	55.6		65:0	22,366	49.3
	2065	67:0	27,307	55.6		65:0	23,639	49.2
	2070	67:0	28,896	55.6		65:0	25,014	49.2
	2075	67:0	30,583	55.6		65:0	26,475	49.2
	2080	67:0	32,362	55.6		65:0	28,017	49.2
	2085	67:0	34,244	55.6		65:0	29,645	49.2
	2090	67:0	36,229	55.6		65:0	31,363	49.2
	2095	67:0	38,318	55.6		65:0	33,173	49.2
	2100	67:0	40,515	55.6		65:0	35,075	49.2
	Scaled medium earnings:f
	2023	66:8	28,204	42.6		65:0	24,463	38.5
	2025	67:0	27,753	41.1		65:0	23,947	36.6
	2030	67:0	29,374	40.2		65:0	25,399	35.8
	2035	67:0	31,793	40.9		65:0	27,501	36.2
	2040	67:0	33,939	41.1		65:0	29,361	36.4
	2045	67:0	36,064	41.2		65:0	31,209	36.5
	2050	67:0	38,183	41.3		65:0	33,043	36.6
	2055	67:0	40,342	41.3		65:0	34,914	36.6
	2060	67:0	42,626	41.3		65:0	36,887	36.6
	2065	67:0	45,054	41.3		65:0	38,989	36.5
	2070	67:0	47,676	41.2		65:0	41,259	36.5
	2075	67:0	50,459	41.3		65:0	43,664	36.5
	2080	67:0	53,390	41.3		65:0	46,205	36.5
	2085	67:0	56,496	41.3		65:0	48,890	36.5
	2090	67:0	59,770	41.3		65:0	51,726	36.5
	2095	67:0	63,215	41.3		65:0	54,708	36.5
	2100	67:0	66,843	41.3		65:0	57,845	36.5
	Scaled high earnings:g
	2023	66:8	37,269	35.2		65:0	32,345	31.9
	2025	67:0	36,579	33.9		65:0	31,621	30.2
	2030	67:0	38,822	33.2		65:0	33,598	29.6
	2035	67:0	42,037	33.8		65:0	36,391	30.0
	2040	67:0	44,882	33.9		65:0	38,861	30.1
	2045	67:0	47,693	34.1		65:0	41,301	30.2
	2050	67:0	50,503	34.2		65:0	43,734	30.2
	2055	67:0	53,360	34.2		65:0	46,209	30.2
	2060	67:0	56,375	34.1		65:0	48,821	30.2
	2065	67:0	59,587	34.1		65:0	51,598	30.2
	2070	67:0	63,052	34.1		65:0	54,601	30.2
	2075	67:0	66,732	34.1		65:0	57,785	30.2
	2080	67:0	70,612	34.1		65:0	61,146	30.2
	2085	67:0	74,718	34.1		65:0	64,702	30.2
	2090	67:0	79,048	34.1		65:0	68,452	30.2
	2095	67:0	83,607	34.1		65:0	72,400	30.2
	2100	67:0	88,402	34.1		65:0	76,553	30.2
	Steady maximum earnings:h
	2023	66:8	45,587	28.0		65:0	39,456	25.3
	2025	67:0	45,010	27.0		65:0	38,640	24.0
	2030	67:0	47,766	26.4		65:0	41,085	23.5
	2035	67:0	51,747	26.8		65:0	44,540	23.7
	2040	67:0	55,205	27.0		65:0	47,536	23.8
	2045	67:0	58,704	27.1		65:0	50,551	23.9
	2050	67:0	62,112	27.2		65:0	53,489	23.9
	2055	67:0	65,531	27.2		65:0	56,430	24.0
	2060	67:0	69,185	27.2		65:0	59,578	24.0
	2065	67:0	73,106	27.2		65:0	62,957	24.0
	2070	67:0	77,373	27.2		65:0	66,643	23.9
	2075	67:0	81,897	27.2		65:0	70,541	23.9
	2080	67:0	86,659	27.2		65:0	74,644	23.9
	2085	67:0	91,701	27.2		65:0	78,988	23.9
	2090	67:0	97,014	27.2		65:0	83,564	24.0
	2095	67:0	102,606	27.2		65:0	88,383	24.0
	2100	67:0	108,487	27.2		65:0	93,448	24.0

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a

Annual amounts are the total for the 12-month period starting with the month of retirement.

b

Attains age 65 on January 1 of the year.

c

CPI-indexed dollar adjustment uses the adjusted CPI indexing series shown in table VI.G6.

d

Career average earnings at about 25 percent of the national Average Wage Index (AWI).

e

Career average earnings at about 45 percent of the AWI.

f

Career average earnings at about 100 percent of the AWI.

g

Career average earnings at about 160 percent of the AWI.

h

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

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.

The Office of the Chief Actuary’s projection of future amounts for the financial interchange with the Railroad Retirement fund 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 $6 to $7 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

Those granted legal work authorization through the 2012 Deferred Action for Childhood Arrivals program are included in the simulations.

5

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.

6

The employment rate is the ratio of U.S. civilian employment to the civilian noninstitutional population.

7

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.

8

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.

9

The disability recovery rates for each alternative vary slightly over the last 65 years of the 75-year projection period, so the ultimate rates are presented as averages for years 2033 through 2097.

10

The taxable ratio drifts down slightly after 2032, to 84.0, 82.3, and 80.7 percent for 2097 for the low-cost, intermediate, and high-cost assumptions, respectively, as self-employment income (which has a lower percent taxable than wages) becomes an increasing share of total earnings.

11

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.

12

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

13

Actuarial Note 2023.9 has additional detail on illustrative benefits for hypothetical workers. See www.ssa.gov/OACT/NOTES/ran9/.

14

Actuarial Note 2023.3 has more details on scaled-earnings patterns. See www.ssa.gov/OACT/NOTES/ran3/.