Social Security Administration

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In December 2023, Gallup released the results of its latest survey of Americans’ expectations of Social Security. Gallup has been conducting these surveys in essentially similar form for many years, and their latest results qualitatively resemble previous ones. They show a slight uptick in Americans’ optimism that Social Security will make good on future benefit promises, producing Gallup’s headline finding: “Americans More Upbeat About Future Social Security Benefits.”

Unfortunately, the optimism expressed by Gallup’s respondents is at odds with the reality of Social Security’s deteriorating finances, as evidenced by the worsening actuarial shortfall documented in its trustees’ annual reports. Never before have Americans had greater reason for concern that they will not receive the benefits Social Security is promising. The reason Americans are feeling blithe about Social Security’s future is not because of its actual condition, but because elected officials and media figures avoid a subject whose harsh realities contradict their preferred political narratives.

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Another recurring feature of the Gallup surveys is to question respondents as to whether they would prefer that Social Security solvency be restored by raising taxes or by “cutting” or “curbing” benefits. Whenever the question is phrased in such a way, Americans express a preference for raising taxes, a preference that increased in the latest poll. The rising preference for raising taxes may partially reflect the bigger-government tilt of young adults, combined with the large number of baby boomers on the verge of claiming benefits. However, a portion of that expressed preference has been present in every survey, and it is worth understanding why.

All Social Security survey responses tend to be extremely sensitive to the wording of questions and to background understanding of the program. For example, a previous Gallup poll showing majority opposition to proposals to “curb” benefits for middle- to high-income workers was contradicted by a contemporaneous poll finding that 59% of respondents favored slowing the rate of benefit growth for middle- to high-income workers. When proposals to moderate future benefit growth are accurately described as such, they tend to draw much more support than when proposals are described as “cutting” or “curbing” benefits. Language such as “cut” or “curb” implants the mistaken notion that such proposals would reduce benefits from current levels.

Author(s): Charles Blahous

Publication Date: 9 Feb 2024

Publication Site: Discourse Magazine

Solvency And Sustainability Of Social Security

October 8, 2022October 8, 2022 Mary Pat Campbell

Link:https://www.lifehealth.com/solvency-and-sustainability-of-social-security/

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2021 Costs Exceed Income

As seen from subtracting the total cost shown in Table 2 from the total income shown in Table 1, Social Security paid out $56.3 billion more in benefits and expenses than it collected in income.

Because Social Security has trust funds, the total costs of 2021 were still met. However, the trust funds declined in 2021 by the $56.3 billion that costs exceeded income. At the end of 2020, the trust funds totaled $2,908.3 billion, and at the end of 2021, the trust funds totaled $2,852.0 billion.

Solvency

As highlighted in the Academy’s issue brief An Actuarial Perspective on the 2022 Social Security Trustees Report, the 2022 Trustees Report contains key solvency facts about the system:

Social Security costs continue to be projected to exceed the income of the program, until the trust funds are projected to become depleted during 2035.
If changes to the program are not implemented before 2035, 80% of scheduled benefits would be payable after depletion of the trust funds in 2035, declining to 74% by 2096.

Author(s): Amy Kemp, MAAA, ASA, EA

Publication Date: October 2022

Publication Site: Advisor Magazine

Status of the Social Security and Medicare Programs

June 9, 2022June 9, 2022 Mary Pat Campbell

Link: https://www.ssa.gov/OACT/TRSUM/index.html

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• The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2034, one year later than reported last year. At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 77 percent of scheduled benefits.
• The Disability Insurance (DI) Trust Fund, which pays disability benefits, is no longer projected to be depleted within the 75-year projection period. By comparison, last year’s report projected that it would be able to pay scheduled benefits only until 2057.
• The OASI and DI funds are separate entities under law. The report also presents information that combines the reserves of these two funds in order to illustrate the actuarial status of the Social Security program as a whole. The hypothetical combined OASI and DI funds would be able to pay scheduled benefits on a timely basis until 2035, one year later than reported last year. At that time, the combined funds’ reserves will become depleted and continuing tax income will be sufficient to pay 80 percent of scheduled benefits.
• The Hospital Insurance (HI) Trust Fund, or Medicare Part A, which helps pay for services such as inpatient hospital care, will be able to pay scheduled benefits until 2028, two years later than reported last year. At that time, the fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90 percent of total scheduled benefits.
• The Supplemental Medical Insurance (SMI) Trust Fund is adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each year to meet the next year’s expected costs. Due to these funding provisions and the rapid growth of its costs, SMI will place steadily increasing demands on both taxpayers and beneficiaries.
• For the sixth consecutive year, the Trustees are issuing a determination of projected excess general revenue Medicare funding, as is required by law whenever annual tax and premium revenues of the combined Medicare funds will be below 55 percent of projected combined annual outlays within the next 7 fiscal years. Under the law, two such consecutive determinations of projected excess general revenue consitute a “Medicare funding warning.” Under current law and the Trustees’ projections, such determinations and warnings will recur every year through the 75-year projection period.

Publication Date: accessed 9 June 2022

Publication Site: Social Security Administration

Social Security: Benefit Terminations and the Trust Fund Running out

September 7, 2021September 7, 2021 Mary Pat Campbell

Link: https://marypatcampbell.substack.com/p/social-security-benefit-terminations

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Through the mechanism of the Trust Fund, Congress can put off having to act on the fundamental demographic problem that they can’t do much about. They hope they can run the Magic Money Machine to cover all the goodies they want, and in 2034, the Boomers will mostly be over age 80. Maybe another pandemic will deal with them….
(and nobody cares about us Gen Xers. In 2034, I won’t even be eligible for Social Security old age benefits.)
Nobody expects the Social Security benefits to be cut in 2034, or whatever other magic date when the Trust Fund runs out. The only thing the current Trust Fund mechanism requires is cuts… only if Congress doesn’t actually pass legislation to “fix” the issue.
They have been doing ad hoc “fixes” to Medicare and other parts for years so as to avoid massive cuts.

Author(s): Mary Pat Campbell

Publication Date: 6 September 2021

Publication Site: STUMP at substack

Diverse Population Uses Nursing Homes Less

February 25, 2021February 25, 2021 Mary Pat Campbell

Diverse Population Uses Nursing Homes Less

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Eight states have seen the biggest drops in nursing home use: Florida, Georgia, Louisiana, New Jersey, New Mexico, North Carolina, South Carolina, and Tennessee. Many of these states have experienced fast growth in their minority populations or have more generous state allocations of Medicaid funds for long-term care services delivered in the home.
Growing diversity is actually the second-biggest reason for lower nursing home residence, accounting for one-fifth of the decline, according to the study, which was funded by the U.S. Social Security Administration and is based on U.S. Census data.

Publication Date: 25 February 2021

Publication Site: Squared Away Blog

Mortality with Meep: Digging into CDC report on mortality in the first half of 2020

February 22, 2021 Mary Pat Campbell

Link: https://marypatcampbell.substack.com/p/mortality-with-meep-digging-into

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It is better to provide death rates by age ranges for year-to-year comparisons.
When you calculate a period life expectancy, you’re incorporating the mortality rates for all the ages above the current age, and it doesn’t really capture how specific age ranges were affected. I can use these life expectancies to make estimates about the death rates, but I’m not going to – I’m trying to keep the calculations simple so that other people can follow my spreadsheets and check what I’m doing.
With age-adjusted death rates, you can capture overall mortality levels, but again, you don’t know which age ranges were affected the most.
I believe period life expectancy is used for these types of reports because people are more comfortable thinking about number of years to live, or age at death, than they are thinking about rates.

Author(s): Mary Pat Campbell

Publication Date: 22 February 2021

Publication Site: STUMP

Vesting Requirements and Key Benefit-Formula Features of State and Local Government Pension Plans

February 2, 2021 Mary Pat Campbell

Link: https://www.ssa.gov/policy/docs/ssb/v81n1/v81n1p1.html

Excerpt:

This article provides a quantitative analysis of some key features of state and local pensions, including vesting requirements, the FAS period, and the benefit formula multiplier. This analysis focuses on public pensions in states that account for large numbers of noncovered public-sector workers. Among its unique contributions is the weighting of the summary statistics by population—in this instance, by the active membership in each benefit tier. This weighting mechanism is of special importance for occupation groups such as teachers, whose number of benefit tiers are underrepresented relative to active members, and public safety workers, whose tiers are overrepresented relative to active membership.
The findings in this article provide supporting evidence of a benefit retrenchment across state and local pensions, at least in states where noncovered employment is most common. Benefit tiers that are not open to new hires tend to have shorter vesting periods, shorter FAS periods (resulting in higher FASs), and higher benefit multipliers. As states have sought to reduce pension expenses, they have tightened eligibility requirements by increasing vesting periods, and have lowered benefits by increasing the FAS period and reducing the benefit formula’s multiplier.
This is not particularly surprising, given the recent economic conditions and plan funding levels that have led to pension reforms. However, the analysis shows that those changes have not affected all types of state and local workers equally. Changes in the FAS period, for example, affect public safety workers and local-level general government employees more than they affect teachers.

Author: Glenn R. Springstead

Publication Date: February 2021

Publication Site: Social Security Administration, Social Security Bulletin