Quantifying Uncertainty in the Analysis of Long-Term Social Security Projections

摘要

In recent studies, the Congressional Budget Office (CBO) has projected that within a few decades, the Social Security system will begin paying out more in benefits than it collects in taxes, if benefits are paid as scheduled. That imbalance is not expected to be temporary; even after the baby-boom generation dies off, a permanent and growing imbalance between system outlays and revenues is expected to remain. The CBO studies show the same basic pattern reported in the latest Social Security Administration's (SSA's) annual Trustees' Report,2 even though CBO employs different techniques than does SSA for various components of the projections. However, any projection of this nature requires assumptions about long-run values for inputs (such as mortality improvement, fertility, immigration, productivity, and other variables) that determine future Social Security taxes and benefits. Because the long-term projections are based on assumptions about uncertain inputs, the projected outcomes also are uncertain.