2015 OASDI Trustees Report

C. PROGRAM-SPECIFIC ASSUMPTIONS AND METHODS

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

1. Automatically Adjusted Program Parameters

The Social Security Act requires that certain parameters affecting the determination of OASDI benefits and taxes be adjusted annually to reflect changes in particular economic measures. Formulas prescribed in the law, applied to reported statistics, change these program parameters annually. The law bases these automatic adjustments on measured changes in the national average wage index (AWI) and the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI).¹ This section shows values for program parameters adjusted using these indices from the time that these adjustments became effective through 2024. 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 economic assumptions. Table V.C1 includes:

•

The annual cost-of-living benefit increase percentages. The automatic cost-of-living adjustment provisions in the Social Security Act specify increases in OASDI benefits based on increases in the CPI. Volatility in oil prices has resulted in substantial volatility in recent cost-of-living adjustments. A large cost-of-living adjustment in December 2008 was followed by no cost-of-living adjustments in December 2009 and December 2010. More recent volatility in oil prices has again affected the CPI. As a result, projections under the intermediate and high-cost assumptions do not have a cost-of-living adjustment for December 2015. Under all three sets of economic assumptions, the projections include annual cost-of-living adjustments in all future years after 2015.

•

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 and 2011. Increases resumed in 2012. Under the intermediate and high-cost assumptions, there is no cost-of-living adjustment for December 2015, and therefore no increase in the contribution and benefit base for 2016. Under all three sets of assumptions, the contribution and benefit base increases in all other 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 in years before normal retirement age. A higher amount applies for 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 normal retirement age attainment. 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 in 2010 and 2011. Increases resumed in 2012. Under the intermediate and high-cost assumptions, there is no cost-of-living adjustment for December 2015, and therefore no increase in the exempt amounts for 2016. Under all three sets of assumptions, the exempt amounts increase in all other future years.

Table V.C1.—Cost-of-Living Benefit Increases, Average Wage Index, Contribution and Benefit Bases, and Retirement Earnings Test Exempt Amounts, 1975-2024 

Calendar year		Cost-of-living benefit increase1 (percent)	Average wage index (AWI)  2		Contribution and benefit base 3	Retirement earnings test exempt amount
			Amount	Increase (percent)		Under NRA4	At NRA5
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	6 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
Intermediate:
	2014	g1.7	46,289.41	3.1	7 117,000	g  15,480	g 41,400
	2015	.0	47,820.21	3.3	g118,500	g 15,720	g41,880
	2016	3.1	50,388.16	5.4	118,500	15,720	41,880
	2017	2.7	52,937.78	5.1	126,300	16,800	44,640
	2018	2.7	55,517.91	4.9	133,200	17,640	47,040
	2019	2.7	58,106.90	4.7	139,800	18,600	49,440
	2020	2.7	60,681.31	4.4	146,700	19,440	51,840
	2021	2.7	63,345.67	4.4	153,600	20,400	54,240
	2022	2.7	66,028.98	4.2	160,200	21,240	56,640
	2023	2.7	68,727.50	4.1	167,400	22,200	59,160
	2024	2.7	71,429.77	3.9	174,600	23,160	61,560
Low-cost:
	2014	g1.7	$46,316.67	3.2	g$117,000	g  $15,480	g $41,400
	2015	.2	48,185.19	4.0	g118,500	g 15,720	g41,880
	2016	3.5	51,364.52	6.6	122,400	16,200	43,200
	2017	3.4	54,732.51	6.6	127,200	16,920	45,000
	2018	3.4	58,135.27	6.2	135,600	18,000	47,880
	2019	3.4	61,502.48	5.8	144,600	19,200	51,120
	2020	3.4	64,848.32	5.4	153,600	20,400	54,240
	2021	3.4	68,381.37	5.4	162,600	21,600	57,360
	2022	3.4	72,076.04	5.4	171,300	22,680	60,480
	2023	3.4	75,981.57	5.4	180,600	24,000	63,840
	2024	3.4	79,993.85	5.3	190,500	25,320	67,200
High-cost:
	2014	g1.7	46,245.03	3.0	g117,000	g  15,480	g 41,400
	2015	.0	47,150.51	2.0	g118,500	g 15,720	g41,880
	2016	2.5	48,817.95	3.5	118,500	15,720	41,880
	2017	2.0	50,611.49	3.7	124,500	16,560	44,040
	2018	2.0	52,526.83	3.8	129,000	17,160	45,600
	2019	2.0	54,437.43	3.6	133,800	17,760	47,160
	2020	2.0	56,308.62	3.4	138,900	18,360	48,960
	2021	2.0	58,349.32	3.6	143,700	19,080	50,760
	2022	2.0	60,320.20	3.4	148,800	19,680	52,560
	2023	2.0	62,093.08	2.9	154,200	20,400	54,480
	2024	2.0	63,647.09	2.5	159,300	21,120	56,280

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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 2015, and also shows projected values through 2024. 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 2015

[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 2015

[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 1978-2024 

Calendar year		AIME bend points in PIA formula 1			PIA bend points in OASI maximum- family-benefit formula 2			Earnings required for a quarter of coverage	Old-law contribution and benefit base 3
		First	Second		First	Second	Third
Historical data:
	1978	4	d		d	d	d	5 $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
Intermediate:
	2016	852	5,136		1,089	1,571	2,050	1,250	88,200
	2017	880	5,306		1,125	1,623	2,117	1,300	93,900
	2018	927	5,590		1,185	1,711	2,231	1,370	99,000
	2019	974	5,873		1,245	1,797	2,344	1,430	103,800
	2020	1,022	6,160		1,306	1,885	2,458	1,500	108,900
	2021	1,070	6,447		1,367	1,973	2,573	1,570	114,000
	2022	1,117	6,732		1,427	2,060	2,687	1,640	119,100
	2023	1,166	7,028		1,490	2,151	2,805	1,720	124,200
	2024	1,215	7,326		1,553	2,242	2,924	1,790	129,600
Low-cost:
	2016	$853	$5,139		$1,089	$1,572	$2,051	$1,250	$90,900
	2017	887	5,346		1,133	1,636	2,133	1,310	94,500
	2018	945	5,699		1,208	1,744	2,274	1,390	100,800
	2019	1,007	6,072		1,287	1,858	2,423	1,480	107,400
	2020	1,070	6,450		1,367	1,974	2,574	1,580	114,000
	2021	1,132	6,824		1,446	2,088	2,723	1,670	120,600
	2022	1,194	7,195		1,525	2,202	2,871	1,760	127,200
	2023	1,259	7,587		1,608	2,321	3,028	1,850	134,100
	2024	1,327	7,997		1,695	2,447	3,191	1,950	141,300
High-cost:
	2016	851	5,131		1,088	1,570	2,048	1,250	88,200
	2017	868	5,231		1,109	1,601	2,088	1,280	92,400
	2018	899	5,416		1,148	1,657	2,161	1,320	95,700
	2019	932	5,615		1,190	1,718	2,241	1,370	99,300
	2020	967	5,828		1,235	1,783	2,326	1,420	103,200
	2021	1,002	6,040		1,280	1,848	2,410	1,480	106,800
	2022	1,036	6,247		1,324	1,912	2,493	1,530	110,400
	2023	1,074	6,474		1,372	1,981	2,584	1,580	114,600
	2024	1,110	6,692		1,419	2,048	2,671	1,630	118,500

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1

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.

2

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

3

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.

4

No provision in law for this amount in this year.

5

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 Reaching 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. 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. The Office of the Chief Actuary defines covered employment for a calendar year 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 components, each reflecting the growth projected for the component’s total U.S employment and average weeks worked per year.²For the short-range period, the average weeks worked for each component is assumed to increase during the economic recovery. After 2024, the average weeks worked for each component is assumed to remain constant. The projection method also accounts for changes in non-OASDI-covered employment, the increase in coverage of Federal civilian employment as a result of the 1983 Social Security Amendments, and changes in the number and employment status of other immigrants residing within the Social Security coverage area.

The covered-worker rate is the ratio of OASDI covered workers to the Social Security area population. For men age 16 and over, the projected age-adjusted covered-worker rates³ for 2089 are 70.2, 69.6, and 69.2 percent for the low-cost, intermediate, and high-cost assumptions, respectively. For women age 16 and over, the projected covered-worker rates for 2089 are 66.7, 65.3, and 63.6 percent for the low-cost, intermediate, and high-cost assumptions, respectively. These rates are higher than the 2013 levels of 67.1 percent for males and 61.2 percent for women, due to the assumed decreases in unemployment rates and assumed increase in labor force participation rates.

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 2015 is $1,220.

There are three types of insured status that a worker can acquire under the OASDI program. The number and recency of QCs earned determine each status. A worker acquires fully insured status 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). Once a worker has accumulated 40 QCs, he or she remains permanently fully insured. A worker acquires disability insured status 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 acquires currently insured status 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 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 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. The model uses information on quarters of coverage earned due to employment covered by Social Security derived from tabulations of the Continuous Work History Sample. 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 immigrant population. For the other 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 1970. The office bases historical values on a tabulation of the disability insured population from the Continuous Work History Sample 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 Continuous Work History Sample 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 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 will increase from its estimated level of 84.8 for December 31, 2012, to 89.1, 89.4, and 90.1 for December 31, 2090, under the low-cost, intermediate, and high-cost alternatives, respectively. Over the projection period, the percentage for females increases significantly, reflecting the past substantial growth in the employment of younger cohorts of women. The percentage for males declines to a small degree, reflecting, in part, increases in the percent of the population that is classified as other immigrants and is thus less likely to have earnings reported and credited to them. Under the intermediate assumptions, for example, the percentage for males decreases slightly from 92.9 to 89.5, and the percentage for females increases from 78.1 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)’s, or aged-spouse’s benefits, and by applying termination rates to the number of retired-worker beneficiaries.

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

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

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

The long-range model estimates aged-spouse beneficiaries separately for those married and divorced. The model projects the number of married aged-spouse beneficiaries, by age and sex, by applying a series of factors to the number of spouses, aged 62 and over, in the population. These factors are the probabilities that the spouse and the earner meet all of the conditions of eligibility — that is, the probabilities that: (1) the earner is 62 or over, (2) the earner is insured, (3) the earner is either receiving benefits or has suspended benefits, (4) the spouse is not receiving a benefit for the care of an entitled child, (5) the spouse is either not insured or is insured but not receiving benefits, and (6) the spouse is not eligible to receive a significant government pension based on earnings in noncovered employment. To calculate the estimated number of aged-spouse beneficiaries, the model applies a projected prevalence rate to the resulting number of spouses.

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 four 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)’s 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. Fourth, the spouse cannot be insured for factor (5).

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)’s benefits are not withheld because of receipt of a significant government pension based on earnings in noncovered employment. In addition, the model applies the same factors to the number of divorced persons aged 60 and over in the population and includes additional factors representing the probability that the person’s former earner spouse has died and that the marriage lasted at least 10 years. The model projects the number of insured aged-widow(er) beneficiaries who are ages 60 through 70 in a manner similar to that for uninsured aged-widow(er) beneficiaries. In addition, the model assumes that some insured widow(er)s who had not applied for their retired-worker benefits will receive widow(er)’s benefits. The model projects insured aged-widow(er) beneficiaries over age 70 by applying termination rates to the population that started receiving such benefits prior to age 70.

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

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

The long-range model projects the number of child-survivor 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 disabled-child-survivor 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 disabled-child-survivor beneficiaries already receiving benefits. The long-range model projects the number of disabled-child-survivor beneficiaries in a manner similar to that for student-child-survivor 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 mother-survivor and father-survivor beneficiaries by applying award rates to the number of awards to child-survivor beneficiaries, in cases where the children are either under age 16 or disabled, and by applying termination rates to the number of mother-survivors and father-survivors already receiving benefits. The long-range model estimates the numbers of mother-survivor and father-survivor beneficiaries, assuming they are not remarried, from the number of child-survivor beneficiaries.

The Office of the Chief Actuary projects the number of parent-survivor 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 1945-2090 

[In thousands]

Calendar year		Retired workers and auxiliaries				Survivors				Total
		Worker1	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
	1996	26,905	2,971	442		5,199	242	1,898	4	37,661
	1997	27,282	2,926	441		5,043	230	1,893	3	37,817
	1998	27,518	2,866	439		4,981	221	1,884	3	37,911
	1999	27,784	2,811	442		4,936	212	1,885	3	38,073
	2000	28,505	2,798	459		4,901	203	1,878	3	38,747
	2001	28,843	2,742	467		4,828	197	1,890	3	38,969
	2002	29,195	2,681	477		4,771	194	1,908	2	39,227
	2003	29,537	2,622	480		4,707	190	1,910	2	39,448
	2004	29,952	2,569	482		4,643	184	1,901	2	39,733
	2005	30,461	2,524	488		4,569	178	1,903	2	40,126
	2006	30,976	2,476	490		4,494	171	1,899	2	40,508
	2007	31,528	2,431	494		4,436	165	1,892	2	40,947
	2008	32,274	2,370	525		4,380	160	1,915	2	41,625
	2009	33,514	2,343	561		4,327	160	1,921	2	42,828
	2010	34,593	2,316	580		4,285	159	1,913	2	43,847
	2011	35,600	2,291	594		4,239	158	1,907	2	44,791
	2012	36,720	2,280	612		4,193	154	1,907	1	45,868
	2013	37,893	2,285	625		4,139	150	1,899	1	46,992
	2014	39,009	2,303	635		4,092	143	1,892	1	48,075
Intermediate:
	2015	40,558	2,312	648		4,106	139	1,891	1	49,656
	2020	49,132	2,334	759		4,069	130	1,898	1	58,323
	2025	56,786	2,301	859		4,005	129	1,914	1	65,995
	2030	63,706	2,454	965		3,889	138	1,930	1	73,083
	2035	68,251	2,561	1,051		3,758	145	1,986	1	77,753
	2040	70,802	2,541	1,076		3,591	143	1,967	1	80,121
	2045	72,433	2,506	1,076		3,454	139	1,922	1	81,532
	2050	74,423	2,515	1,095		3,340	135	1,884	1	83,394
	2055	77,146	2,565	1,121		3,254	131	1,847	1	86,066
	2060	80,370	2,668	1,142		3,194	128	1,816	1	89,320
	2065	83,521	2,780	1,157		3,170	126	1,798	1	92,554
	2070	86,953	2,903	1,196		3,174	123	1,787	1	96,139
	2075	89,980	3,023	1,220		3,181	120	1,772	1	99,299
	2080	91,951	3,118	1,224		3,198	117	1,752	1	101,361
	2085	94,652	3,230	1,255		3,227	114	1,732	1	104,211
	2090	98,228	3,333	1,296		3,247	112	1,716	1	107,933
Low-cost:
	2015	40,549	2,312	648		4,105	139	1,891	1	49,645
	2020	48,957	2,335	762		4,055	131	1,912	1	58,153
	2025	56,227	2,271	873		4,009	128	2,000	1	65,510
	2030	62,547	2,415	991		3,929	136	2,085	1	72,105
	2035	66,406	2,493	1,094		3,828	144	2,233	1	76,198
	2040	68,273	2,436	1,135		3,677	143	2,290	1	77,954
	2045	69,371	2,371	1,149		3,547	142	2,298	1	78,879
	2050	70,981	2,350	1,187		3,434	141	2,302	1	80,396
	2055	73,472	2,371	1,236		3,346	142	2,313	1	82,882
	2060	76,490	2,439	1,283		3,283	145	2,342	1	85,983
	2065	79,431	2,514	1,321		3,257	148	2,394	1	89,067
	2070	82,554	2,596	1,387		3,265	151	2,455	1	92,410
	2075	85,181	2,670	1,436		3,273	153	2,504	1	95,218
	2080	86,859	2,731	1,457		3,302	155	2,539	1	97,043
	2085	89,807	2,816	1,515		3,367	156	2,573	1	100,236
	2090	94,436	2,901	1,597		3,439	159	2,618	1	105,150
High-cost:
	2015	40,564	2,312	647		4,107	139	1,891	1	49,662
	2020	49,279	2,331	753		4,080	128	1,877	1	58,449
	2025	57,377	2,337	842		3,976	133	1,820	1	66,485
	2030	64,942	2,514	938		3,814	140	1,768	1	74,116
	2035	70,218	2,668	1,008		3,646	143	1,744	1	79,427
	2040	73,530	2,684	1,022		3,464	136	1,669	1	82,506
	2045	75,800	2,684	1,009		3,326	126	1,585	1	84,531
	2050	78,281	2,724	1,001		3,221	118	1,513	1	86,859
	2055	81,281	2,809	1,000		3,145	110	1,450	1	89,796
	2060	84,710	2,944	994		3,092	103	1,389	1	93,234
	2065	88,027	3,100	985		3,071	96	1,337	1	96,617
	2070	91,750	3,252	1,000		3,069	90	1,293	1	100,456
	2075	95,164	3,400	1,003		3,067	84	1,253	1	103,971
	2080	97,430	3,509	994		3,065	78	1,211	1	106,288
	2085	99,802	3,629	999		3,059	73	1,171	1	108,735
	2090	102,301	3,732	1,010		3,038	69	1,135	1	111,285

---

1

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

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

5. Disability Insurance Beneficiaries

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

The Office of the Chief Actuary projects the number of disabled-worker beneficiaries in current-payment status (disability prevalence) for each future year. The projections start with the number in current-payment status as of December 2014. Projections of the number of new beneficiaries awarded benefits each year (disability incidence) and the number of beneficiaries leaving the disability rolls each year then determine the number in current-payment status in later years. Beneficiaries leave the rolls due to death and recovery (disability terminations) and due to conversion from disabled-worker to retired-worker beneficiary status at normal retirement age, after which the OASI Trust Fund pays for benefits. The remainder of this section describes the concepts of disability incidence, termination, and prevalence.

a. Disability Incidence

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

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

The dashed lines in figure V.C3 represent the gross (unadjusted) incidence rates. The changing age‑sex distribution of the exposed population over time influences these unadjusted rates. The gross incidence rate fell substantially below the age‑sex-adjusted rate between 1975 and 1995 as the baby-boom generation swelled the size of the younger working-age population, where disability incidence is lower than in older populations. After 1995, the gross rate rose faster than the age‑sex-adjusted rate as the baby-boom generation moved into an age range where disability incidence peaks. After 2023, the projected gross incidence rate 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 and reflects the persistently higher average age of the working-age population, which is largely due to lower birth rates since 1965.

For the first 10 years of the projection period (through 2024), incidence rates reflect several factors including: (1) aspects of program administration, such as efforts to reduce the disability backlog and recent changes to how claims are adjudicated; (2) assumed future unemployment rates; and (3) underlying trends in incidence. As described in section V.B.5, all three sets of economic assumptions reflect a continuation of the gradual economic recovery from the recession that began in December 2007. The corresponding projected unemployment rates follow near-term paths specific to the three alternative sets of economic assumptions, then gradually move toward their respective ultimate levels. At the beginning of the recent period of high unemployment, disability incidence rates were well above the general trend level, with rates reaching a peak in 2010. Over the last few years, incidence rates have subsided as the economy has recovered. At the beginning of the projection period, disability incidence rates remain briefly below the general trend level for each alternative because some of the earlier additional awards would have occurred in a later year. Due to expected efforts to reduce backlogs in processing disability determinations which have developed over the last few years, incidence rates are projected to rise above the general trend level through about 2020. Over the rest of the short-range period, disability incidence rates under each alternative evolve toward their ultimate levels along trajectories consistent with the assumed unemployment rates. After 2024, age-sex-specific incidence rates trend toward the ultimate rates assumed for the long-range projections and reach these ultimate rates in 2034. These ultimate age-sex-specific disability incidence rates were selected based on careful analysis of historical levels and patterns and expected future conditions, including the impact of scheduled increases in the normal retirement age.⁶ The ultimate incidence rates represent the expected average rates of incidence for the future.

For the intermediate alternative, the Trustees assume that the ultimate age-sex-adjusted incidence rate (adjusted to the disability-exposed population for the year 2000) will be 5.4 awards per thousand exposed, which is the same as in last year’s report. Figure V.C3 illustrates that the estimated ultimate age-sex-adjusted incidence rate of 5.4 is slightly higher than the average rate for the historical period 1970 through 2014, reflecting the increase in female incidence rates over this period. However, a similar comparison using gross incidence rates gives a different result. The estimated ultimate gross incidence rate is substantially greater than the average gross rate over the historical period due to the large changes in the age-sex distribution of the disability-exposed population between 1970 and 2010.

The Trustees assume that the ultimate age-sex-adjusted incidence rates for the low-cost and high-cost alternatives will be 4.3 and 6.5 awards per thousand exposed, or about 17 percent lower and 25 percent higher than the average for the historical period, respectively. These ultimate age-sex-adjusted incidence rates are similar to those in last year’s report.

Figure V.C3.—DI Disability Incidence Rates, 1970-2090

[Awards per thousand disability-exposed]

[D]

b. Disability Termination

Beneficiaries stop receiving disability benefits when they die, recover from their medically-determinable disabling condition, or return to 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-2024).

In the short-range period (through 2024), the projected age-sex-adjusted death rate (adjusted to the 2000 disabled-worker population) under the intermediate assumptions gradually declines from 25.6 deaths per thousand beneficiaries for 2014 to about 22.8 per thousand for 2024. The projected age-sex-adjusted recovery rate (medical improvement and return to work) under the intermediate assumptions evolves from a level of 11.3 per thousand beneficiaries for 2014 to 10.9 per thousand beneficiaries for 2024. Under the low-cost and high-cost assumptions, total age-sex-adjusted termination rates due to death and recovery are roughly 10-15 percent higher or lower, respectively, than under the intermediate assumptions.

For the long-range period (post-2024), 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 2006-2010. The assumed ultimate age-sex-adjusted recovery rate for disabled workers is about 10.4 per thousand beneficiaries. The assumed ultimate age-sex-adjusted recovery rates for the low-cost and high-cost alternatives are about 12.6 and 8.3 recoveries per thousand beneficiaries, respectively. Recovery rates by age, sex, and duration of entitlement reach ultimate levels in the twentieth year of the projection period (2034) for all three sets of assumptions. In contrast, death rates by age and sex change throughout the long-range period at the same rate as death rates in the general population. From the age-sex-adjusted death rate of 25.6 per thousand beneficiaries in 2014, this rate decreases to 18.2, 11.4, and 6.7 per thousand disabled-worker beneficiaries for 2090 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 2090. In the near term, through 2017, recovery terminations are projected to increase, consistent with the assumption that the Social Security Administration will receive sufficient budget appropriations to reduce the pending backlog of continuing disability reviews. 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 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, 1970-2090

[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, disabled-worker beneficiaries convert to retired-worker status and leave the DI rolls.

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

Conversions are simply a transfer of beneficiaries at normal retirement age from the DI Trust Fund account to the OASI Trust Fund account. Therefore, the disability “conversion” rate is 100 percent for disabled-worker beneficiaries reaching normal retirement age in a given year and zero at all other ages. After conversion, recovery from the disabling condition is no longer relevant for benefit eligibility. The conversion ratio is the number of conversions in a given year (that is, beneficiaries who reach normal retirement age) divided by the average number of disabled-worker beneficiaries at all ages in that year. The ratio is constant on an age-sex-adjusted basis, except for the two periods during which normal retirement age increases under current law. On a gross basis, however, the conversion ratio rises and falls with the changing proportion of all disabled-worker beneficiaries who attain normal retirement age in a given year. The gross conversion ratio generally increases from 2002 to 2030 due to aging of the beneficiary population.

Figure V.C5.—Comparison of DI Disability Incidence Rates, Termination Rates and Conversion Ratios Under Intermediate Assumptions, 1970-2090

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

[D]

d. DI Beneficiaries and Disability Prevalence Rates

The Office of the Chief Actuary makes detailed projections of disabled-worker awards, terminations, and conversions and combines these to project the number of disabled workers receiving benefits over the next 75 years. Table V.C5 presents the projected numbers of disabled workers in current-payment status. The number of disabled workers in current-payment status grows from 9.0 million at the end of 2014, to 12.6 million, 14.5 million, and 15.7 million at the end of 2090, under the low-cost, intermediate, and high-cost assumptions, respectively. Of course, much of this growth results from the growth and aging of the population described earlier in this chapter. Table V.C5 also presents projected numbers of auxiliary beneficiaries and disability prevalence rates on both a gross basis and an age-sex-adjusted basis.

Table V.C5.—DI Beneficiaries With Benefits in Current-Payment Status
at the End of Calendar Years 1960-2090 

[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- adjusted1
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
	1996	4,378	224	1,463	6,065	34	36
	1997	4,501	207	1,438	6,146	34	36
	1998	4,691	190	1,446	6,327	35	36
	1999	4,870	176	1,468	6,514	36	36
	2000	5,036	165	1,466	6,667	36	36
	2001	5,268	157	1,482	6,907	38	37
	2002	5,539	152	1,526	7,217	39	38
	2003	5,869	151	1,571	7,590	41	38
	2004	6,198	153	1,599	7,950	43	39
	2005	6,519	157	1,633	8,309	45	40
	2006	6,807	156	1,652	8,615	46	40
	2007	7,099	154	1,665	8,918	48	41
	2008	7,427	155	1,692	9,273	50	41
	2009	7,788	159	1,749	9,695	52	43
	2010	8,204	161	1,820	10,185	55	44
	2011	8,576	164	1,874	10,614	58	45
	2012	8,827	163	1,900	10,890	59	46
	2013	8,941	157	1,889	10,987	60	46
	2014	8,955	150	1,828	10,932	59	46
Intermediate:
	2015	9,017	149	1,845	11,012	60	45
	2020	9,470	155	1,905	11,530	61	46
	2025	10,001	169	1,935	12,106	63	46
	2030	9,974	188	2,084	12,246	61	46
	2035	10,178	207	2,292	12,677	61	46
	2040	10,550	210	2,393	13,152	62	47
	2045	11,203	222	2,454	13,878	63	47
	2050	11,660	227	2,510	14,398	64	48
	2055	12,056	239	2,568	14,863	65	48
	2060	12,241	244	2,635	15,121	65	49
	2065	12,584	256	2,721	15,561	66	49
	2070	12,893	267	2,807	15,967	66	49
	2075	13,108	270	2,875	16,253	66	49
	2080	13,677	281	2,935	16,892	67	50
	2085	14,227	294	2,999	17,520	68	50
	2090	14,484	298	3,069	17,851	68	50
Low-cost:
	2015	8,934	149	1,815	10,897	59	45
	2020	8,828	152	1,757	10,736	57	43
	2025	8,897	147	1,746	10,790	55	40
	2030	8,512	153	1,837	10,502	51	39
	2035	8,382	158	1,997	10,537	49	38
	2040	8,475	153	2,076	10,704	48	37
	2045	8,876	157	2,122	11,155	48	37
	2050	9,182	158	2,170	11,510	48	37
	2055	9,481	164	2,236	11,881	48	37
	2060	9,657	167	2,331	12,155	48	37
	2065	9,987	175	2,458	12,619	48	38
	2070	10,334	182	2,589	13,106	47	38
	2075	10,679	186	2,700	13,565	47	38
	2080	11,378	195	2,800	14,373	48	38
	2085	12,113	206	2,904	15,223	49	38
	2090	12,572	213	3,021	15,805	49	38
High-cost:
	2015	9,100	150	1,875	11,126	60	46
	2020	10,137	158	2,048	12,343	67	50
	2025	11,115	197	2,110	13,422	71	52
	2030	11,455	234	2,304	13,992	71	53
	2035	12,004	270	2,538	14,812	73	55
	2040	12,672	282	2,649	15,603	76	57
	2045	13,588	305	2,701	16,594	80	58
	2050	14,192	316	2,739	17,248	82	59
	2055	14,670	334	2,777	17,780	84	60
	2060	14,830	340	2,803	17,972	85	60
	2065	15,133	353	2,830	18,316	87	61
	2070	15,322	364	2,851	18,536	88	61
	2075	15,286	363	2,855	18,504	87	61
	2080	15,559	371	2,857	18,787	89	61
	2085	15,749	382	2,865	18,996	89	62
	2090	15,707	383	2,880	18,970	89	62

---

1

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

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

The disability prevalence rate is the ratio of the number of disabled-worker beneficiaries in current-payment status to the number of persons insured for disability benefits. Figure V.C6 illustrates the historical and projected disability prevalence rates on both a gross basis and on an age-sex-adjusted basis (adjusted to the age-sex distribution of the 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, 1970-2090

[Rate per thousand persons insured for disability benefits]

[D]

Age-sex-adjusted prevalence rates have increased primarily because: (1) termination rates have declined, (2) incidence rates at younger ages have increased relative to rates at older ages, and (3)  incidence rates have increased substantially for women to parity with men. Gross prevalence rates have increased more than age-sex-adjusted prevalence rates ever 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 three factors: (1) the age distribution of the general population, (2) the age distribution of the disability insured population, and (3) incidence rates by age and gender. As these factors gradually stabilize, the declining death termination rate continues to have a small influence toward higher disability prevalence rates.

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

Under the intermediate assumptions, the projected age-sex-adjusted disability prevalence rate grows from 45.6 per thousand disability insured at the end of 2014 to 49.9 per thousand at the end of 2090. As mentioned above, the Office of the Chief Actuary projects that the growth in prevalence will slow relative to the historical period.

Under the low-cost and high-cost assumptions, the age-sex-adjusted disability prevalence rate decreases to 38.3 per thousand and increases to 61.8 per thousand insured workers at the end of 2090, respectively.

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

The projection of the number of auxiliary beneficiaries relies on the projected number of disabled-worker beneficiaries. In the short-range period (2015-24), the Office of the Chief Actuary projects incidence and termination rates for each category of auxiliary beneficiary. After 2024, 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 are the sum of covered wages and covered self-employment net earnings. The Office of the Chief Actuary projects covered wages for component sectors of the economy (i.e., private, State and local, Federal civilian, and military) based on the projected overall growth of sectoral and total wages in the U.S. economy. The projections of covered wages also reflect changes in covered employment due to a relative increase in non-covered undocumented immigrants and to the mandatory coverage of new hires in the Federal civilian sector. The office projects covered self-employment net earnings based on the growth in net proprietors’ income in the U.S. economy.

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

The ratio of taxable payroll to covered earnings (the taxable ratio) fell from 88.3 percent for 1984 to 82.5 percent for 2000, mostly due to much higher increases in wage levels for very high earners than for all other earners. From 2000 to 2010, the taxable ratio varied with the business cycle, rising during economic downturns and falling during recoveries. Specifically, the taxable ratio rose to 85.5 percent for 2002, declined to 82.3 percent for 2007, rose to 85.0 percent for 2009, and was 83.1 percent for 2013.

For the 2015 report, the Trustees assume a level for the taxable ratio at the end of the short-range period (2024) of 82.5 percent for the intermediate assumptions, 81.0 percent for the high-cost assumptions (or 1.5 percentage points lower than the intermediate assumptions), and 84.0 percent for the low-cost assumptions (or 1.5 percentage points higher than the intermediate assumptions). These are the same assumptions that the Trustees made for the end of the short-range period (2023) for the 2014 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.⁷ 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 of receipts.

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.⁸ It also shows the contribution and benefit base for each year through 2015.

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, combined1				Self-employed2
		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 3	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
20104	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 and later	5	12.40	10.60	1.80		12.4000	10.6000	1.8000

---

1

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

2

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.

3

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.

4

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).

5

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 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 OASI and DI benefit payments.) Benefits are taxed for beneficiaries with adjusted income (including half of benefits and all non-taxable interest) exceeding specified threshold amounts. The threshold amounts are $25,000 for single filers, $32,000 for joint filers, and $0 for those married but filing separately.

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

For the long-range period, the office estimates the income to the trust funds from taxation of benefits by applying projected ratios of taxation of OASI and DI benefits to total OASI and DI scheduled benefits. The income thresholds used for benefit taxation are, by law, constant in the future, while income and benefit levels continue to rise. Accordingly, projected ratios of income from taxation of benefits to the amount of benefits increase gradually. Ultimate tax ratios for OASI and DI benefits used in the projection rely on estimates from the Office of Tax Analysis in the Department of the Treasury.

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 2008 initial entitlements and more recent actual earnings levels by age and sex for covered workers.

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

9. Scheduled Benefits

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

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

10. Illustrative Scheduled Benefit Amounts

Table V.C7 shows, under the intermediate assumptions, future benefit amounts payable upon retirement at the normal retirement age and at age 65, for various hypothetical workers attaining age 65 in 2015 and subsequent years. The illustrative benefit amounts in table V.C7 are presented in CPI-indexed 2015 dollars—that is, adjusted to 2015 levels by the CPI indexing series shown in table VI.G6. As a point of comparison, Table V.C7 also shows the national average wage index (AWI) for 2015 and subsequent years in CPI-indexed 2015 dollars.

The normal retirement age was 65 for individuals who reached age 62 before 2000. It increased to age 66 during the period 2000-05, at a rate of 2 months per year as workers attained age 62. Under current law, the normal retirement age will increase to age 67 during the period 2017-22, also by 2 months per year as workers attain age 62. The illustrative benefit amounts shown in table V.C7 for retirees at age 65 are lower than the amounts shown for retirees at normal retirement age because the statute requires an actuarial reduction for monthly benefits taken before normal retirement age to reflect the expected additional years benefits will be collected. For example, those who collect benefits starting in 2027 at age 65 will receive benefits for two more years than if they instead claim benefits at the normal retirement age (age 67) unless they die between the ages of 65 and 67.

Table V.C7 shows five different pre-retirement earnings patterns. Four of these patterns assume the earnings history of workers with scaled-earnings patterns⁹ 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 1992‑2011. These earnings levels differ by age. The career-average level of earnings for each scaled case targets a percent of the AWI.

For the scaled medium earner, the career-average earnings level is about equal to the AWI (or $47,820 for 2015). For the scaled very low, low, and high earners, the career-average earnings level is about 25 percent, 45 percent, and 160 percent of the AWI, respectively (or $11,955, $21,519, and $76,512, respectively, for 2015). The steady maximum earner has earnings at or above the contribution and benefit base for each year starting at age 22 through the year prior to retirement (or $118,500 for 2015).

Table V.C7.—Annual Scheduled Benefit Amounts for Retired Workers
With Various Pre-Retirement Earnings Patterns
Based on Intermediate Assumptions, Calendar Years 2015-90

			Benefits in 2015 dollars1 with retirement at normal retirement age
Year attain age 652		Age at retirement	Scaled very low earnings3	Scaled low earnings4	Scaled medium earnings5	Scaled high earnings6	Steady maximum earnings7	National Average Wage Index in 2015 dollars8
	2015	66:0	$8,868	$11,602	$19,115	$25,342	$30,834	$47,820
	2020	66:2	9,441	12,372	20,405	27,004	33,063	52,942
	2025	67:0	10,485	13,723	22,623	29,964	36,887	56,656
	2030	67:0	11,219	14,680	24,199	32,057	39,504	60,082
	2035	67:0	11,895	15,564	25,664	33,996	41,921	63,711
	2040	67:0	12,613	16,507	27,211	36,051	44,418	67,481
	2045	67:0	13,360	17,485	28,825	38,184	47,071	71,605
	2050	67:0	14,181	18,556	30,590	40,521	49,884	75,965
	2055	67:0	15,044	19,687	32,448	42,985	52,813	80,460
	2060	67:0	15,936	20,851	34,368	45,530	55,864	85,130
	2065	67:0	16,859	22,061	36,363	48,171	59,108	89,974
	2070	67:0	17,820	23,316	38,432	50,911	62,472	94,960
	2075	67:0	18,808	24,609	40,561	53,734	65,946	100,263
	2080	67:0	19,860	25,985	42,828	56,736	69,638	105,883
	2085	67:0	20,973	27,440	45,229	59,916	73,549	111,880
	2090	67:0	22,161	28,996	47,792	63,311	77,722	118,315
			Benefits in 2015 dollarsa with retirement at age 65
	2015	65:0	$8,496	$11,124	$18,324	$24,288	$29,424	$47,820
	2020	65:0	8,709	11,396	18,804	24,900	30,356	52,942
	2025	65:0	9,084	11,893	19,608	25,965	31,723	56,656
	2030	65:0	9,719	12,725	20,973	27,782	33,988	60,082
	2035	65:0	10,308	13,489	22,235	29,461	36,075	63,711
	2040	65:0	10,932	14,306	23,582	31,243	38,221	67,481
	2045	65:0	11,579	15,153	24,980	33,093	40,516	71,605
	2050	65:0	12,287	16,080	26,508	35,114	42,941	75,965
	2055	65:0	13,038	17,061	28,124	37,255	45,461	80,460
	2060	65:0	13,812	18,070	29,786	39,459	48,088	85,130
	2065	65:0	14,611	19,120	31,513	41,748	50,883	89,974
	2070	65:0	15,445	20,208	33,307	44,122	53,784	94,960
	2075	65:0	16,301	21,328	35,152	46,569	56,774	100,263
	2080	65:0	17,213	22,519	37,118	49,171	59,952	105,883
	2085	65:0	18,177	23,781	39,199	51,927	63,318	111,880
	2090	65:0	19,206	25,131	41,419	54,870	66,911	118,315

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1

Annual amounts are the total for the 12-month period starting with the month of retirement, adjusted to be in 2015 dollars by using the CPI indexing series from table VI.G6.

2

Attains age 65 on January 1 of the year.

3

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

4

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

5

Career-average earnings at about 100 percent of the AWI. Such a worker would have career-average earnings at approximately the 56th percentile of all new retired worker beneficiaries.

6

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

7

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

8

Average Wage Index from table VI.G6, adjusted to be in 2015 dollars by using the CPI indexing series from table VI.G6.

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

11. Administrative Expenses

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

12. Railroad Retirement Financial Interchange

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

Calculation of the financial interchange with the Railroad Retirement reflects trends similar to those used in estimating the cost of OASDI benefits. The annual short-range net cost for the OASI and DI Trust Funds averages about $5 billion and the long-range summarized net cost for the OASI and DI Trust Funds is 0.04 percent of taxable payroll.

13. Military Service Transfers

Beginning in 1966, the General Fund of the Treasury reimbursed the OASI and DI Trust Funds annually for the cost (including administrative expenses) of providing additional benefit payments resulting from noncontributory wage credits for military service performed prior to 1957. The 1983 amendments modified the reimbursement mechanism and the timing of the reimbursements, and required a reimbursement in 1983 to include all future costs attributable to the wage credits. The amendments also require adjustments to that 1983 reimbursement every fifth year, beginning with 1985, to account for actual data.

 

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1

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

2

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

3

Age-adjusted covered worker rates are adjusted to the 2012 age distribution of the Social Security area population.

4

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

5

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

6

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

7

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.

8

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

9

Actuarial Note 2014.3 has more details on scaled-earnings patterns.
See www.socialsecurity.gov/OACT/NOTES/ran3/an2014-3.pdf.