CBO’s Long-Term Projections for Social Security: 2009 Update

by Bruce WebbSummary from Director's Blog CBO’s Long-Term Projections for Social Security: 2009 UpdateFull Report: Long-Term Projections for Social Security: 2009 UpdateThis newest report on the long-range physical condition of Social Security shows a shape not much distorted from last year's but with some changes in the full dates and numbers. Per this report Social Security will be able to pay out "scheduled benefits" until Trust Fund tiredness in 2043 and thereafter will be able to pay out "payable benefits" at a rate starting at 83% of scheduled benefits and then gradually plummeting to 78% by 2083. Even after adjusting for price rises benefits after 2043 will be better than retirees get nowadays in real terms even though they will be a lesser replacement percentage. That is our children's retirement will be materially better than that of their grandparents if not quite custody up with the working life gains of their own grandchildren. And this even if we do not fix Social Security along lines suggested by the Northwest Plan for a Real Social Security Fix.If we did decide to fix Social Security on the income side we are faced with a gap scored by CBO of 1.3% of payroll compared to the 2.0% SSA score. That is where the NW Plan, based as it is on the additional conservative SSA number, would have a day two greater than before tax of around $1.50 for each week for the average income household, under CBO information that would be down to just around a $1.00. (If anyone is paying attention in seeing why CBO and SSA come up with these different scores please consult App. B on pages 33-34.)Important note. CBO figures typically show the 80% likelihood band, meaning there is a 10% chance that outcomes will be additional positive and an equal chance they will be additional negative. That is when examining Figure 1 above note that there is a small chance that Social Security will in fact self-fund without changes even within the 80% band (the medium blue area of overlap) plus a small chance that it would even be overfunded once you add in the higher 10%. Also note that this distribution is somewhat stricter than a lot of where a 90% band would be additional typical.
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