The Significance And Use Of Long‐Range Actuarial Cost Estimates For The Social Security System

This paper describes the methodology underlying the actuarial cost estimates for the Social Security program and the assumptions needed therefor. With this as a background, the use to which these estimates is made in developing legislation is described, with emphasis on the current financing problems. Finally, various possible solutions to these problems are discussed. These solutions involve either increasing the income of the program or decreasing the rate of growth of its outgo. Increased income could be derived by increasing the payroll tax rates, by injecting general revenues (either directly or indirectly, such as taxing Social Security benefits and putting the proceeds in the trust funds or financing part of all of the Hospital Insurance program from general revenues and moving some of its payroll tax rate to the cash‐benefits program), or by covering government employees who are not now covered. The growth of outgo could be reduced by changes in the cost‐of‐living adjustments of benefits, by gradually increasing the normal retirement age, or by gradually decreasing the relative benefit level