While it is reasonable to assume that actual trust fund experience will fall within the range defined by the three alternative sets of assumptions used in this report, no definite assurance can be given that this will occur because of the uncertainty inherent in projections of this type and length. In general, a greater degree of confidence can be placed in the assumptions and estimates for the earlier years than for the later years. Nonetheless, even for the earlier years, the estimates are only an indication of the expected trend and general range of future program experience.
The assumptions vary, in most cases, from year to year during the first 5 to 25 years before reaching their ultimate values for the remainder of the 75-year projection period. Table I.F1 summarizes the ultimate values assumed for the key economic and demographic factors underlying the actuarial estimates shown in this report. These ultimate values apply for years after 2020, with the exception of life expectancy, which is assumed to continue improving throughout the projection period.
These key assumptions for this report are quite similar to the assumptions used in the 1995 report. The only significant change in any of the ultimate economic or demographic assumptions is an increase in the assumed ultimate rates of mortality improvement for ages under 65. The rate of improvement for the non-elderly was increased to be greater than the rate assumed for the elderly, which is consistent with experience throughout this century. An additional change was made in the distribution of annual net immigration. The net number of other-than-legal immigrants assumed to enter the Social Security area population each year was increased by 50,000, while the net number of legal immigrants was decreased by 50,000. These changes are consistent with estimates based on recent data from the Immigration and Naturalization Service (INS). Under the intermediate assumptions, the ultimate assumed level of net annual immigration of 900,000 is the combination of 600,000 net legal immigrants per year and 300,000 net other-than-legal immigrants per year.
Revisions of other economic and demographic assumptions for the early years of the projection period, based on data collected since the 1995 report, had little effect in the long range, with the exception of changes in the level of wages and self-employment income reported in the National Income and Product Accounts (NIPA) for 1994 and later. Lower levels of wages and self-employment income result in lower estimated amounts of OASDI taxable payroll throughout the 75-year projection period.
These assumptions reflect a careful assessment of past data and future prospects. No major changes in ultimate economic or demographic assumptions, other than those made for immigration, were deemed necessary to ensure that the financial projections continue to be based on a plausible range of economic and demographic conditions. Other changes in assumptions and methods reflected in the estimates in this report are discussed in section II.F.
Recent and expected future changes in the calculation of the CPI by the Bureau of Labor Statistics and recent changes in the methodology used in measuring real GDP growth by the Bureau of Economic Analysis were not reflected in the development of assumptions for this report. The analysis that must be undertaken to fully incorporate the implications of these changes, including particularly the magnitude of the effect of each change and the extent to which their separate effects may be offsetting, will be completed in time to make any necessary adjustments in next year's report.
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