Social Security Funds:
Additional Measures Could More Fully Indicate the System's Financial Condition
PEMD-88-11: Published: Feb 5, 1988. Publicly Released: Feb 5, 1988.
- Full Report:
GAO developed actuarial measures that the Social Security Administration (SSA) could use to document the financial condition of the combined Old-Age Survivors and Disability Insurance (OASDI) Trust Fund.
GAO found that: (1) the 1987 SSA trustees' report to Congress indicated that the OASDI Trust Fund was in close actuarial balance, since expenditures were within 5 percent of income averaged over the next 75 years; (2) in about 20 years, as the leading edge of the baby-boom generation reaches 65 years of age, fund expenditures will surpass income; and (3) the year the fund will go out of balance will probably be 1988 or 1989. GAO noted that: (1) calculating the imbalance year would serve as an early indicator of an impending actuarial imbalance and as a measure for assessing proposed changes in benefits, cost-of-living adjustments, or tax rates; and (2) the adjusted actuarial balance it developed would consider assets at the start of the projection period and reflect the favorable effects of a substantial reserve buildup.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: SSA did not include a fund goal at the end of the 75-year period or report actual figures for the imbalance year.
Recommendation: The Commissioner of Social Security should calculate additional measures and report each in the long-range financing section of the summary of the annual trustees' report. SSA should specifically add the: (1) imbalance year; and (2) adjusted actuarial balance.
Agency Affected: Social Security Administration