CBO's Long-Term Social Security Projections: Changes Since 2017 and Comparisons With the Social Security Trustees' Projections
Report
This report explains the changes to CBO’s long-term Social Security projections since last year and compares CBO’s projections with those of the Social Security Trustees.
Each year, CBO updates its projections of the Social Security system’s finances to incorporate newly available data and information from the research community. The agency also updates its models to incorporate improvements in methods and feedback on its analytical approach. CBO’s latest longterm budget projections were published in June 2018.
Comparison With CBO’s Previous Projections
CBO’s June 2018 projections indicate a slight improvement in the Social Security system’s financial outlook compared with the previous year’s projections:
The projected 75-year actuarial balance, a commonly used measure of the system’s financial condition, has not changed as a percentage of gross domestic product (GDP) since last year, remaining at −1.5 percent of GDP (that is, a deficit of 1.5 percent). As a percentage of taxable payroll, the projected 75-year actuarial balance has improved slightly from −4.5 percent to −4.4 percent (see table below).
Changes to projections of three key inputs have improved the Social Security system’s projected finances: the share of earnings that is subject to Social Security payroll taxes, the labor force participation rate, and interest rates.
Those improvements have been partially offset by including an additional year of deficit, 2092, in the calculation of the actuarial balance. Technical changes also collectively worsen the 75-year outlook.
Changes to the 75-Year Actuarial Balance
As a Percentage of
GDP
Taxable Payroll
March 2017 Projection
-1.5
-4.5
Estimated Effects of Revisions to Factors Improving the Actuarial Balance
Taxable share
*
0.1
Labor force participation rate
*
0.1
Interest rates
*
*
Total
*
0.2
Estimated Effects of Revisions to Factors Worsening the Actuarial Balance
Valuation period
*
-0.1
Technical changes
*
-0.1
Total
*
-0.1
Overall Improvement
*
*
June 2018 Projection
-1.5
-4.4
Comparison With the Social Security Trustees’ Projections
CBO projects larger deficits in Social Security’s finances than do the Social Security Trustees. That difference is largely explained by CBO’s and the trustees’ different projections of several key inputs into estimates of the system’s finances: the population, earnings subject to Social Security payroll taxes, real interest rates (that is, interest rates adjusted to remove the effects of inflation), and components of GDP growth.
