Social Security Trust Fund Projections (2000-2010 Reports) under alternative assumptions

In the Spring of each year, the Social Security Trustees issue an "Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds."

Each of these reports includes a table and a chart illustrating the recent history and long-term projections of the Trust Fund Ratio -- the Fund's assets divided by its costs -- indicating the "health" of the Fund. The figures are calculated for three different "cost" projections -- Low-Cost, Intermediate-Cost, and High-Cost. (See below for more details.) Few people are aware of these different scenarios, because the only one publicly displayed and commented upon is the Intermediate Cost projection, whose "bankruptcy" sometime around 2040 is the constantly stated reason for "fixing" Social Security.

There is a strong negative correlation between Social Security's overall finances -- the Trust Fund's income and its net increase (see the graphic presentation of this correlation). This is reflected in the fact that the three scenarios portrayed in the long-term projections correspond to (approximately) three levels of the unemployment rate:

The fact that the Low-Cost projection never goes bankrupt, and, in fact, increases -- dramatically in the more recent projections -- raises the obvious question of whether Social Security might ultimately best be "saved" by keeping a low level of unemployment in the economy, or, if the government fails to carry out its responsibility in that way, to provide the Social Security Trust Fund with "unemployment insurance," rather than crippling or destroying it through privatization or onerous cost/benefit changes.

The table below shows the charts for these projections from each of the Trust Fund reports for the years 2000 through 2010. The same charts were available in earlier reports, but reports earlier than 2001 seem to have disappeared from the web. Each chart is shown with links to its data table, to the report's homepage, and to the chart's location in the report; clicking on a chart will display it in full size. A plain text version of the data from the 2010 report, suitable for importation into a spreadsheet, is available here.

Data             2010             Chart	Data             2009             Chart	Data             2008             Chart
Data             2007             Chart	Data             2006             Chart	Data             2005             Chart
Data             2004             Chart	Data             2003             Chart	Data             2002             Chart
Data             2001             Chart	Data N/A         2000         Chart was cached	Pre-2000 Not available

The Trustees' Report describes the three cost assumptions this way (formatting added):

To deal with this last point of probabilities, the report offers a "stochastic projections" Appendix E, which offers a probability distribution plot of the Cost/Asset ratio (Figure VI.E1. Annual Trust Fund Ratios), indicating the probability that the ratio will lie to the left of variously-labeled probability lines. Here are examples of the plots from the last six reports (2005-2010), with the year annotations providing links to the originals, the charts themselves providing links to full-size images.

2010	2009	2008
2007	2006	2005

There is a clear trend here, implying a growing sense of declining financial health of the Trust Fund. The probability lines are moving to the left (earlier problems), and down (lower financial health). Note particularly the change in vertical scale from a 2008-and-earlier maximum of 600 to a post-2008 maximum of 500. This implies a belief (a.k.a. projection) that the possibility of the low unemployment economy implicit in the "Low-cost" Trust Fund Ratio plot line number "I" (above) is shrinking every year. If so, it again is worth noting that the focus in "fixing" Social Security should be on "fixing" unemployment, rather than tampering with the social contract long embodied in the Social Security system.