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.

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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

  1. 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

 

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