Social Security: Actuarial Analysis and Projections

The Trustees Report

Each year, the Social Security Board of Trustees publishes a report projecting the financial status of the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds over a 75-year horizon. The Office of the Chief Actuary at the Social Security Administration performs the underlying analysis. Projections depend on demographic assumptions (fertility rates, mortality improvement, net immigration), economic assumptions (GDP growth, inflation, real wage growth, unemployment), and programmatic assumptions (disability incidence and recovery rates, retirement age patterns). Three scenarios (low-cost, intermediate, and high-cost) illustrate the sensitivity of projections to these assumptions.

Key Actuarial Measures

The actuarial balance measures the long-term financial status of the program as the difference between the summarized income rate and the summarized cost rate over the 75-year projection period. The trust fund ratio (assets divided by annual expenditures) indicates how many years of benefits the fund could pay without additional income. The open group unfunded obligation measures the present value shortfall between projected income and projected costs. These metrics inform policy discussions about potential reforms, including benefit adjustments, revenue changes, and modifications to retirement ages.