Fast Facts & Figures About Social Security, 2005

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Average Indexed Monthly Earnings
Disability Insurance
Full Retirement Age
Hospital Insurance
Old-Age, Survivors, and Disability Insurance
Old-Age and Survivors Insurance
Primary Insurance Amount
Social Security Administration
Supplemental Security Income

General Information, 2005

Cost-of-living adjustment

Cost-of-living adjustment, 2005: 2.7%

Tax rates

Tax rates, 2005 (in percent)
Program Employer and
employee, each
Total 7.65 15.30
OASI 5.30 10.60
DI 0.90 1.80
HI 1.45 2.90

Average wage index

Average wage index, 2003–2005
Year Dollars Increase from
previous year
(in percent)
2003 34,064.95 2.4
2004 (estimated) 35,157.10 3.2
2005 (estimated) 36,599.68 4.1

Maximum earnings subject to Social Security taxes

Maximum earnings subject to Social Security taxes, 2005 (in dollars)
Program Amount
OASDI 90,000
HI No limit

Taxes payable

Taxes payable, 2005 (in dollars)
Type of earner Total OASI DI
Average earner 2,269 1,940 329
Maximum earner 5,580 4,770 810
Self-employed maximum earner 11,160 9,540 1,620

Quarters of coverage

Quarters of coverage, 2005 (work credits):
  • $920 in earnings equals 1 quarter of coverage (that is, 1 credit)
  • $3,680 is the maximum earnings needed for 4 quarters of coverage (4 credits) in a given year

Retirement earnings test

Retirement earnings test, 2005 (in dollars)
Period Annually Monthly
Ages 62–64 ($1 for $2 withholding rate) 12,000 1,000
Calendar year attaining full retirement age ($1 for $3 withholding rate) a 31,800 2,650
After calendar year attaining full retirement age or older No limit No limit
a. Test no longer applies beginning in the month in which retirement age is reached.

Age for full retirement benefit

Age for full retirement benefit
Applicable to workers who
were born in year—
Full benefit at age—
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943–1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67

Benefit formula bend points

Benefit formula bend points (for workers who in 2005 attain age 62, become disabled, or die before age 62)

Primary insurance amount (PIA) equals:
   90% of the first $627 of AIME, plus
   32% of AIME over $627 through $3,779, plus
   15% of AIME over $3,779

Maximum family benefit equals:
   150% of the first $801 of PIA, plus
   272% of PIA over $801 through $1,156, plus
   134% of PIA over $1,156 through $1,508, plus
   175% of PIA over $1,508

Disability thresholds

Disability thresholds, 2005

Substantial gainful activity:
   $830 per month for nonblind persons
   $1,380 per month for blind persons

Trial work period:
   $590 per month

Maximum Social Security benefit

Maximum Social Security benefit for worker retiring at full retirement age (65 and 6 months) in 2005: $1,939 per month

Trust fund operations

Trust fund operations, 2004–2005 (in billions of dollars)
Calendar year and trust fund Income Outgo Fund
at end
of year
2004 (actual)
Total 657.7 501.6 1,686.8
OASI 566.3 421.0 1,500.6
DI 91.4 80.6 186.2
2005 (estimated)
Total 689.9 526.6 1,850.1
OASI 594.3 440.2 1,654.7
DI 95.6 86.4 195.4

OASDI administrative expenses

OASDI administrative expenses: Costs were 0.8% of contributions in calendar year 2004.

Benefit payments

Benefit payments as a percentage of gross domestic product, 2003–2004
Calendar year Total OASI DI
2003 4.26 3.63 0.63
2004 4.18 3.55 0.64


Workload, fiscal year 2004 (in millions)
Type of filing Number
OASI claims 3.4
DI claims 2.4
SSI applications 2.2

Supplemental Security Income

Supplemental Security Income, 2005

Federal payment standard:
   $579 individual, $869 couple

Resource limits:
   $2,000 individual, $3,000 couple

Poverty thresholds

Poverty thresholds, 2002–2004 (in dollars)
Family unit 2002 2003 2004
Aged individual 8,628 8,825 9,060
Family of two, aged head 10,885 11,133 11,418
Family of four 18,392 18,810 19,484
SOURCE: U.S. Census Bureau.

Income of the Aged Population

Size of Income, 1962 and 2003

Median annual income for married couples and nonmarried persons (aged 65 or older) has increased markedly since 1962 (the earliest year for which data are available). Even after adjusting for inflation, median income has risen 94% for married couples and 95% for nonmarried persons.

Median income of the aged, by marital status (in 2003 dollars)
Bar chart. Median income has risen for married couples from $17,517 in 1962 to $33,932 in 2003. Likewise, it has risen for nonmarried persons from $6,885 in 1962 to $13,432 in 2003.

Receipt of Income, 1962 and 2003

Social Security benefits—the most common source of income in 1962—are now almost universal. The proportion of the aged population with asset income—the next most common source—is similar to that in 1962. Over the 41-year period, receipt of private pensions has tripled, and receipt of government pensions has increased by almost 50%. The proportion of couples and nonmarried persons aged 65 or older who received earnings was smaller in 2003 than in 1962.

Percentage of the aged receiving income, by source
Bar chart linked to data in table format.

Shares of Aggregate Income, 2003

In 1962, Social Security, private and government employee pensions, income from assets, and earnings made up only 84% of the total income of the aged, compared with 97% in 2003. Although private pensions still accounted for only a small proportion of total income in 2003, they more than tripled their share over this period—from 3% to 10%. The share from earnings declined from 28% to 25%.

Aggregate income, by source, 2003
Pie chart showing the proportion of total income of the aged from six different income sources. The largest share is from Social Security at 39% followed by earnings at 25%. Asset income accounts for 14% of total income, private pensions make up 10%, and government employee pensions 9%.  Finally, 3% of total income is received from other sources.

Reliance on Social Security, 2003

In 2003, 90% of married couples and nonmarried persons (aged 65 or older) received Social Security benefits. Social Security was the major source of income (providing at least 50% of total income) for 65% of aged beneficiaries, and it was the only source of income for 21%.

Percentage of the aged receiving Social Security benefits, by relative importance of benefits to total income
Bar chart described in the text. In addition, 34% of aged beneficiaries received 90% or more of their income from Social Security.

Poverty Status Based on Family Income, 2003

The aged poor are those with income below the poverty line. The near poor have income between the poverty line and 125% of the poverty line. Nonmarried women and minorities have the highest poverty rates, ranging from 18% to 24%. Married persons have the lowest poverty rates, with 5% poor and 3% near poor. Overall, 10% are poor and 7% near poor.

Poverty status, by marital status, sex of nonmarried persons, race, and Hispanic origin
Bar chart linked to data in table format.
a. Beginning with data for 2002, respondents for the Current Population Survey may identify themselves in more than one racial group. The "White alone" and "Black alone" categories reflect respondents who reported only one race.

OASDI Program

Covered Earnings, 1937–2004

People contribute to Social Security through payroll taxes or self-employment taxes (FICA and SECA), as required by the Federal Insurance Contributions Act. The maximum taxable amount is updated annually based on increases in the average wage. Of the 157 million workers with Social Security taxable earnings in 2004, 6% had earnings that equaled or exceeded the maximum amount subject to taxes, compared with 3% when the program began and a peak of 36% in 1965. About 85% of earnings in covered employment were taxable in 2004, compared with 92% in 1937.

Percentage of earnings in covered employment and percentage of workers with maximum taxable earnings, selected years
Line chart. In 1937, 92% of earnings were in covered employment. That percentage fell gradually, reaching a low of 71.3% in 1965. It then rose steadily, peaking at 88.9% in 1985, then fell back slowly to about 85% in 2004. The percentage of workers with maximum earnings shows an inverse pattern. Only 3.1% of workers had maximum earnings in 1937, rising steadily and reaching a high of 36.1% in 1965. The percentage fell to 15% in 1975, then to 6.5% in 1985 -- about where it was in 2004.

Insured Status, 1970–2005

The percentage of persons aged 20 or older who are insured for benefits has steadily increased over time. The percentage permanently insured (with enough covered work experience to qualify for retired-worker benefits at retirement age—40 quarters for persons born in 1929 or later) rose from 50% in 1970 to 69% in 2005. The percentage fully insured increased from 77% to 87% in 2005. To be fully insured, a worker must have at least one quarter of coverage for each year elapsed after age 21 (but no earlier than 1950) and before the year in which he or she attains age 62 or becomes disabled. To be currently insured for disability at age 20 to full retirement age (FRA), the worker must be fully insured and have at least 20 quarters of coverage during the last 40 quarters. (Requirements for currently insured status are somewhat different for persons younger than age 31.)

Insured workers as a percentage of the corresponding population, selected years
Year Population aged 20 or older Population aged 20–FRA
Millions Percentage
Millions Percentage
insured for
1970 135.2 50 77 113.2 62
1975 147.5 50 80 122.9 65
1980 162.0 53 83 133.3 70
1985 175.1 57 84 144.1 73
1990 186.0 63 86 151.9 76
1995 194.7 66 87 160.5 78
2000 204.7 69 88 169.2 79
2003 216.3 68 87 179.7 78
2004 216.9 69 87 180.3 79
2005 219.0 69 87 182.0 79
SOURCE: Social Security Administration, Office of the Chief Actuary.
NOTE: The population in the Social Security area includes residents of the 50 states and the District of Columbia, residents of outlying areas, federal civilian employees and armed forces abroad and their dependents, crew members of merchant vessels, and certain other U.S. citizens residing abroad.

Insured Status, by Sex, 1970 and 2005

Although men are more likely than women to be insured, the gender gap is shrinking. The proportion of men who are insured has remained essentially stable, with 92% fully insured and 83% insured for disability. By contrast, the proportion of women who are insured has increased dramatically—from 63% to 84% fully insured and from 41% to 75% insured for disability.

Percentage of population fully insured and insured for disability benefits, by sex
Bar chart linked to data in table format.
SOURCE: Social Security Administration, Office of the Chief Actuary.

New Benefit Awards, 2004

Benefits were awarded to nearly 4.5 million persons: of those, 42% were retired workers and 18% were disabled workers. The remaining 40% were survivors or the spouses and children of retired or disabled workers. These awards represent not only new entrants to the benefit rolls but also persons already on the rolls who become entitled to a different benefit, particularly conversions of disabled-worker benefits to retired-worker benefits at age 65 and 4 months.

New awards, by type of beneficiary
Beneficiary Number
Total 4,459 100
Retired workers and dependents 2,318 52
Workers 1,883 42
Spouses and children 435 10
Disabled workers and dependents 1,277 29
Workers 796 18
Spouses and children 482 11
Survivors of deceased workers 863 19
New awards, 2004
Bar chart described in the text.

New Awards to Workers, 1960–2004

Awards to retired workers have increased considerably since 1960 but proportionately much less than awards to disabled workers. The patterns of growth have also differed. The number of awards to retired workers climbed steadily—from 1 million in 1960 to 1.7 million in 1985. Over the next 10 years, it tapered off slightly, rose to almost 2 million in 2000, then declined to 1.9 million in 2004. Disabled-worker awards increased gradually—from 208,000 in 1960 to 592,000 in the mid-1970s—before falling to 377,000 in 1985. The number then rose, reaching 796,000 in 2004.

New awards to retired and disabled workers, selected years
Line chart linked to data in table format.

Beneficiaries in Current-Payment Status, December 2004

Almost 47.7 million beneficiaries were in current-payment status, that is, they were being paid a benefit. The majority of those beneficiaries (63%) were retired workers, and 13% were disabled workers. The remaining 24% were survivors or the spouses and children of retired or disabled workers.

Beneficiaries in current-payment status
Beneficiary Number
Total 47,688 100
Retired workers and dependents 33,004 69
Workers 29,952 63
Spouses and children 3,052 6
Disabled workers and dependents 7,950 17
Workers 6,198 13
Spouses and children 1,752 4
Survivors of deceased workers 6,734 14
Beneficiaries, by type
Pie chart illustrating the Percent data from the previous table. In addition, showing that 10% of beneficiaries in current-payment status were spouses and children of retired and disabled workers.

Average Benefit Amounts, 2004

Benefits payable to workers who retire at the full retirement age and to disabled workers are equal to 100% of the PIA (subject to any applicable deductions). At the full retirement age, widow(er)s' benefits are also payable at 100% of the insured worker's PIA. Nondisabled widow(er)s can receive reduced benefits at age 60. Disabled widow(er)s can receive benefits at age 50. Spouses, children, and parents receive a smaller proportion of the worker's PIA than widow(er)s.

Average monthly benefit for new awards and for benefits in current-payment status (in dollars)
Beneficiary New awards Current-payment
status, December
Total 782 872
Retired workers 961 955
Spouses 359 478
Children 447 465
Disabled workers 968 894
Spouses 245 232
Children 255 265
Nondisabled widow(er)s 772 920
Disabled widow(er)s 593 583
Widowed mothers and fathers 689 689
Surviving children 639 625
Parents 768 810

Beneficiaries, by Age, December 2004

Of all OASI beneficiaries with benefits in current-payment status, 93% were aged 62 or older. Among DI beneficiaries (disabled workers and their spouses and children), 88% were under age 62.

Beneficiaries, by age
Two pie charts linked to data in table format.

Disabled-Worker Beneficiaries, by Age, 1960–2004

The average age of disabled-worker beneficiaries in current-payment status has declined substantially since 1960, when DI benefits first became available to persons younger than age 50. In that year, the average age of a disabled worker was 57.2 years. The rapid drop in average age in the following years reflects a growing number of awards to workers under 50. By 1995, the average age had fallen to a low of 49.8, and by 2004, it had risen slightly, to 51.5.

Average age of disabled workers, selected years
Line chart linked to data in table format.

Beneficiaries, by Sex, December 2004

Of all adults receiving monthly Social Security benefits, 43% were men and 56% were women. Eighty percent of the men and 58% of the women received retired-worker benefits. About one-fifth of the women received survivor benefits.

Adult beneficiaries, by type of beneficiary and sex
Two pie charts linked to data in table format.
NOTE: Percentages may not add to 100 because of rounding.

Average Monthly Benefit, by Sex, December 2004

Among retired and disabled workers who collected benefits based on their own work records, men received a higher average monthly benefit than did women. For those with benefits based on another person's work record (spouses and survivors), women had higher average benefits.

Average benefit (in dollars)
Beneficiary Men Women
Total 1,050 792
Retired workers 1,076 826
Spouses 273 481
Disabled workers 1,002 765
Spouses 186 233
Nondisabled widow(er)s 736 922
Disabled widow(er)s 417 588
Mothers and fathers 594 696

Women Beneficiaries, 1940–2004

The proportion of women among retired-worker beneficiaries has quadrupled since 1960. The percentage climbed steadily from 12% in 1940 to 47% in 1980, leveling off at 48% in 1990. The proportion of women among disabled-worker beneficiaries has more than doubled since 1957, when DI benefits first became payable. The percentage rose steadily from 20% in 1957 to 35% in 1990 and 46% in 2004.

Women beneficiaries as a percentage of retired workers and disabled workers, selected years
Line chart linked to data in table format.

Women with Dual Entitlement, 1960–2004

The proportion of women aged 62 or older who are receiving benefits as dependents (that is, on the basis of their husband's earnings record only) has been declining—from 57% in 1960 to 32% in 2004. At the same time, the proportion of women with dual entitlement (that is, paid on the basis of both their own earnings record and that of their husbands) has been increasing—from 5% in 1960 to 28% in 2004.

Women aged 62 or older, by basis of entitlement, selected years
Area chart described in the text. In addition, the percentage of women who are entitled solely on their own earnings records as retired or disabled workers has remained fairly steady over this period at about 38%.

SSI Program

Beneficiaries, 1974–2004

The SSI program began in January 1974 with 3.2 million persons receiving federally administered SSI payments. That number rose to 4 million in 1975 and remained at about that level until the mid-1980s, then rose through the mid-1990s. In 2004, it stood at just under 7 million.

Persons receiving federally administered SSI payments, selected years
Line chart described in the text. In addition, the number of recipients for 1974 was 3.2 million.

Payment Amounts, by Age, December 2004

The average federally administered SSI payment was $428. Payments varied by age group, ranging from an average of $506 for beneficiaries under 18 to $352 for those 65 or older. The maximum federal benefit rate in December 2004 was $564 for an individual, $846 for a couple, plus any applicable state supplementation. This maximum amount is reduced by any countable income.

Average monthly payment for federally administered SSI payments
Bar chart described in the text. In addition, beneficiaries aged 18-64 received an average payment of $447.
NOTE: Amounts exclude retroactive payments.

Federally Administered Payments, December 2004

Nearly 7 million persons received federally administered SSI payments. The majority received federal SSI only. States have the option of supplementing the federal benefit rate and are required to do so if that rate is less than the income the beneficiary would have had under the former state program.

Type of SSI payment
Pie chart. In December 2004, 64% of the nearly 7 million SSI beneficiaries received only a federal SSI payment, 32% received federally administered state supplementation along with their federal SSI payment, and 4% received only federally administered state supplementation.
a. Excludes state-administered state supplementation. SSA administers state supplementation for 25 states. These recipients have countable income that exceeds federal SSI limits but are still eligible for federally administered state supplementary payments.

Basis for Eligibility and Age of Beneficiaries, December 2004

Seventeen percent of SSI beneficiaries received benefits on the basis of age, the rest on the basis of disability. Twenty-eight percent of the beneficiaries were aged 65 or older. In the SSI program—unlike the OASDI program—a disabled beneficiary is still classified as "disabled" after reaching full retirement age. DI beneficiaries are converted to the retirement program when they attain full retirement age.

Distribution of SSI beneficiaries, by basis for eligibility and age
Two pie charts. The first pie chart shows the percentage distribution in December 2004 of SSI beneficiaries by basis for eligibility: 82% are disabled, 17% are aged, and 1% are blind. The second pie chart shows the same group distributed by age: 14% are under 18, 58% are aged 18-64, and 28% are 65 or older.

Beneficiaries Aged 65 or Older, 1974–2004

The proportion of SSI beneficiaries aged 65 or older has declined from 61% in January 1974 to 28% in December 2004. The overall long-term growth of the SSI program has occurred because of an increase in the number of disabled beneficiaries, most of whom are under age 65.

Percentage of SSI beneficiaries aged 65 or older, selected years
Line chart described in the text.

Beneficiaries, by Sex and Age, December 2004

Overall, 57% of the nearly 7 million SSI beneficiaries were women, but that percentage varied greatly by age group. Women accounted for 70% of the 2 million beneficiaries aged 65 or older, 56% of the 4 million beneficiaries aged 18–64, and 35% of the 1 million beneficiaries under age 18.

SSI beneficiaries, by sex and age
Bar chart linked to data in table format.

Other Income, December 2004

Fifty-seven percent of SSI beneficiaries aged 65 or older received OASDI benefits, as did 31% of those aged 18–64 and 7% of those under age 18. Other types of unearned income, such as veterans' pensions or income from assets, were reported most frequently among those under age 18 (19%) and those aged 65 or older (15%). Earned income was most prevalent (6%) among those aged 18–64.

Other income of SSI beneficiaries, by source and age
Bar chart linked to data in table format.

OASDI, SSI, or Both

All Beneficiaries, December 2004

About 52.2 million people received a payment from Social Security. Most (45.2 million) received OASDI benefits only, about 4.5 million received SSI only, and 2.4 million received payments from both programs.

All beneficiaries receiving OASDI, SSI, or both
Beneficiaries receiving
OASDI, SSI, or both
All beneficiaries 52,234
Total receiving
OASDI 47,688
OASDI only 45,246
SSI 6,988
SSI only 4,546
Both OASDI and SSI 2,441
NOTE: SSI includes federal SSI payments and federally administered state supplementation.
Number receiving benefits (in millions)
Bar chart described in the text.

Beneficiaries Aged 65 or Older, December 2004

Benefits were paid to 34.5 million people aged 65 or older. About 1.1 million received both OASDI and SSI.

Beneficiaries aged 65 or older receiving OASDI, SSI, or both
Beneficiary Number
Total (unduplicated) 34,546
OASDI, total 33,696 a
Retired workers 27,269
Spouses 2,292
Nondisabled widow(er)s 3,983
Disabled workers 82
Disabled adult children 67
SSI, total 1,978 b
Receiving SSI only 850
Receiving both OASDI and SSI 1,128
NOTE: SSI includes federal SSI payments and federally administered state supplementation.
a. Includes 2,800 persons who received dependent parents' benefits, special age-72 benefits, or mother's and father's benefits.
b. Includes 766,500 SSI beneficiaries aged 65 or older who are disabled or blind.
Distribution of beneficiaries aged 65 or older, by program
Pie chart. Of the 34.5 million beneficiaries aged 65 or older in December 2004, 94.3% received only OASDI benefits, 3.3% received both OASDI and SSI benefits, and 2.5% received only SSI benefits.
NOTE: Percentages may not add to 100 because of rounding.

Disabled Beneficiaries Aged 18–64, December 2004

Payments were made to 9.8 million people aged 18–64 on the basis of their own disability. Fifty-nine percent received disability payments from the OASDI program only, 28% received payments from the SSI program only, and 13% received payments from both programs.

Disabled beneficiaries aged 18–64 receiving OASDI, SSI, or both
Beneficiary Number
Total (unduplicated) 9,793
OASDI disability, total 7,019 a
Workers aged 64 or younger 6,116
Disabled adult children 692
widow(er)s 211
SSI disability, total 4,017
Receiving SSI disability only 2,774
Receiving both OASDI and SSI disability 1,243
NOTE: SSI includes federal SSI payments and federally administered state supplementation.
a. Includes 5,776,000 beneficiaries receiving OASDI disability only.
Number receiving disability payments (in millions)
Bar chart described in the text.


OASDI Beneficiaries, December 2004

Over 3 million children under age 18 and students aged 18–19 received OASDI benefits. Children of deceased workers had the highest average payments, in part because they are eligible to receive monthly benefits equal to 75% of the worker's PIA, compared with 50% for children of retired or disabled workers. Overall, the average monthly benefit amount for children was $461.

Children receiving OASDI
Number of children of—
Bar chart linked to data in table format.
Average monthly benefit for children of—
Bar chart linked to data in table format.

SSI Beneficiaries, 1974–2004

In 1974, when the program began, there were 70,900 blind and disabled children receiving SSI. That number increased to 955,000 in 1996, declined to 847,000 in 2000, and is now 993,100. The relatively high average payment to children (compared with payments made to blind and disabled adults) is due in part to a limited amount of other countable income. The spike in average monthly benefits in 1992 is due to retroactive payments resulting from the Sullivan v. Zebley decision.

Children receiving SSI
Number of children under age 18 receiving SSI, selected years
Line chart linked to data in table format.
Average monthly SSI payments to children, selected years
Line chart linked to data in table format.
NOTE: As of 1998, these figures exclude retroactive payments.

Social Security Financing

How Social Security Is Financed

Social Security is largely a pay-as-you-go program. Most of the payroll taxes collected from today's workers are used to pay benefits to today's recipients. In 2004, the Old-Age and Survivors Insurance and Disability Insurance Trust Funds collected $658 billion in revenues. Of that amount, 84% was derived from payroll taxes and 2% from income taxes on Social Security benefits. Interest earned on the government bonds held by the trust funds provided the remaining 14% of income. Assets increased in 2004 because income exceeded expenditures for benefit payments and administrative expenses.

Source and uses of Social Security revenues in 2004
Two pie charts showing the sources and uses of the $658 billion in revenue collected by the Social Security trust funds in 2004. The Sources of Revenues pie has three slices. Payroll taxes: 84%. Interest: 14%. Taxation of benefits: 2%. The Uses of Revenues pie has three slices. Benefit payments: 75%. Increase in trust funds: 24%. Administrative expenses: 1%.
SOURCE: The 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds.

Social Security's Demographic Challenge

The number of retired workers is projected to grow rapidly starting in 2008, when the members of the post–World War II baby boom begin to reach early retirement age, and will double in less than 30 years. People are also living longer, and the birth rate is low. As a result, the ratio of workers paying Social Security taxes to people collecting benefits will fall from 3.3 to 1 today to 2.1 to 1 by 2031. The Trustees Report projects that in 2017, at which time the ratio will be 2.8, there will not be enough workers to pay scheduled benefits at current tax rates.

Ratio of covered workers to Social Security beneficiaries
Line chart. In 1955, there were 8.6 workers supporting each retiree. By 1975, that ratio had declined to 3.2 workers per beneficiary and remains between 3.2 and 3.4 over the next 30 years. Current projections have the ratio starting to decline again in 2008, decreasing at an accelerating rate until it reaches 2.1 workers per beneficiary in 2031. Thereafter, it continues to decline by one-tenth of a percentage point approximately every 15 years, arriving in 2080 at only 1.8 workers per beneficiary.
SOURCE: The 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds.

The Long-Run Financial Outlook

Social Security is not sustainable over the long term at current benefit and tax rates. Within 12 years the program will begin paying more in benefits than it collects in taxes (see the chart below). By 2041 the trust funds will be exhausted. At that point, payroll taxes and other income will flow into the fund but will be sufficient to pay only 74% of program costs. Another way to illustrate the financial shortfall of the Social Security system is to examine the cumulative value of taxes less costs, assuming currently scheduled benefits and tax rates. In present-value terms, the shortfall over the next 75 years is $4 trillion, which is roughly equal to the total U.S. government debt held by the public today.

Social Security income minus costs as a percentage of taxable payroll
Line chart showing Social Security trust fund balance (income minus costs), expressed as a percentage of taxable payroll, from 2005 to 2080. The trust fund balance is about 1.59 percent of taxable payroll in 2005. After a brief upturn, the trust fund balance is projected to decline rapidly. Costs will begin to exceed income in 2017 and the trust fund will become insolvent in 2041. Annual trust fund balances are projected to range between -4.13 and -5.75 percent of taxable payroll from 2037 to 2080.
SOURCE: The 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds.

The Cost of Delay

Each year, Social Security's trustees provide an estimate of the financial status of the program for the next 75 years. In changing from the valuation period of one year's Trustees Report to the next, an additional year with a large imbalance between taxes and benefits is added to the projection. As a result, the estimated cost of meeting Social Security's financial shortfall tends to go up every year.

Social Security's unfunded obligation on January 1 of each year
Bar chart linked to data in table format.
SOURCE: Social Security Administration, Office of the Chief Actuary.