A Stochastic Model
of the Long-Range Financial Status
of the OASDI Program—September 2004

Contents
ACTUARIAL STUDY NO. 117
Primary Authors: Anthony W. Cheng, Michael L. Miller, Michael Morris, Jason P. Schultz, J. Patrick Skirvin, and Danielle P. Walder
Additional Authors: Robert E. Baldwin, Sharon K. Chu, Josiah M. Lynch, William M. Piet, and Lesley B. Reece

FOREWORD


The 2004 Annual Report of the OASDI Board of Trustees includes a brief description of the OCACT Stochastic Model (OSM, Version 2004.1) and projections produced using it. Actuarial Study No. 117 is intended to provide more extensive details of this model and its results.

The purpose of the OSM is to provide probability distributions for the range of possible future experience of the OASDI program under present law. This probabilistic representation of uncertainty augments the presentations of low and high cost alternatives and sensitivity analyses that have traditionally been included in the Trustees Report. It should be noted that this model is in its first stage of development. Future improvements and refinements to the model are expected. In particular, future revisions are expected to more fully reflect the range of uncertainty about future experience.

Anthony W. Cheng and Michael L. Miller developed the equations for the OSM, Version 2004.1. Programmers of the individual modules are identified below:


Assumptions
Michael Morris
Population
Michael L. Miller
Economics
William M. Piet
Insured
Sharon K. Chu
DIB
Robert E. Baldwin
OASIB
Danielle P. Walder
Awards
Michael D. Clingman and Lesley B. Reece
Cost
Jason P. Schultz
Summary Results
Josiah M. Lynch

Seung An and Sue Kunkel of OCACT provided direction and support throughout the development process. Sheldon Baker and Lise Holler assisted in the publication of the study. In addition, an acknowledgement must be made of the Long Term Modeling Group of the Congressional Budget Office and the Office of Policy of the Social Security Administration, both of which provided consultation during the early development of the OSM.

Alice H. Wade
Deputy Chief Actuary
September 30, 2004

Stephen C. Goss
Chief Actuary
September 30, 2004

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