U.S. Social Security Administration Mortality Projections 5/15/2018 U.S. Social Security Administration Mortality Projections Longevity 12 Conference Plenary Session IV September 30, 2016 Karen Glenn, FSA, EA, MAAA Deputy Chief Actuary for Long-Range Estimates Office of the Chief Actuary U.S. Social Security Administration This session is intended to give you an overview of the Social Security program. We will cover the following in this session: Brief history of the program Who can receive benefits and the eligibility requirements Taxation of benefits Future of the program Social Security Statement, and Online Services

5/15/2018 Historical Data For under age 65, we use historical deaths from the National Center for Health Statistics and historical resident population from the Census Bureau For ages 65 and over, we use historical deaths and enrollments of the Medicare population For all ages, we use historical information on cause of death from the National Center for Health Statistics

Projection of Mortality 5/15/2018 Projection of Mortality Mortality is assumed to decline in the future - the rate of decline is in question Three sets of projections (intermediate, low cost, and high cost) Stochastic projections also 2016 intermediate projections of the financial status of the U.S. Social Security program assumed significant declines in age-sex adjusted death rates in the future, as illustrated by: Period life expectancy at birth Period life expectancy at age 65

5/15/2018 Life Expectancy at Age 0

5/15/2018 Life Expectancy at Age 65

Projection of Mortality 5/15/2018 Projection of Mortality Incorporating future mortality improvement results in a new period life table each year Assumptions as to the percent reduction in mortality rates: By age group By cause of death

5/15/2018 Cause of death

Method of Projecting Mortality 5/15/2018 Method of Projecting Mortality Central death rates are the key variables used in the projections Central death rates for the starting year Rate of decline in the central death rates

Central Death Rates for the Starting Year 5/15/2018 Central Death Rates for the Starting Year Annual historical central death rates calculated For 21 age groups, 2 sexes, and 5 causes of death Last year of final data (2013 NCHS and 2013 Medicare) is not used as the starting year Starting year values are determined using the last 12 years of historical central death rates Computed as the values for the most recent year falling on a weighted least square line

Rates of Decline in Central Death Rates 5/15/2018 Rates of Decline in Central Death Rates Historical average annual declines in central death rates are calculated Over the most recent 10 year period For 21 age groups, 2 sexes, and 5 causes of death Ultimate average annual declines in central death rates are determined by the Trustees Reached in the 24th year following the year of the Trustees Report (2040) For 5 age groups and 5 causes of death Male and female rates are set equal

Rates of Decline in Central Death Rates (continued) 5/15/2018 Rates of Decline in Central Death Rates (continued) Formula is used to transition from the average annual declines over the historical period to the ultimate rates of decline Not a linear transition, but rapid About 2/3 transitioned after 5 years About 90 percent after 10 years

Average Annual Rate of Decline in Age-Adjusted Central Death Rates 5/15/2018 Average Annual Rate of Decline in Age-Adjusted Central Death Rates Based on the intermediate assumptions of the 2016 Trustees Report (Using the 2010 Census Resident Population as the standard population for age adjusting)

Historical and Intermediate Projections of Annual Percentage Reduction in Central Death Rates: Ages 65-84 5/15/2018

Historical and Intermediate Projections of Annual Percentage Reduction in Central Death Rates: Ages 85+ 5/15/2018

Other Considerations Death rates by marital status 5/15/2018 Other Considerations Death rates by marital status Differential mortality between the disabled and non-disabled Mortality differential by earnings levels

How Have Our Projections Done? 5/15/2018 How Have Our Projections Done? Period life expectancy at birth and at age 65 Each year, we look at projected values compared to actual values Beginning with 1974 Trustees Report for life expectancy at birth Beginning with 1980 Trustees Report for life expectancy at age 65

How Have Our Projections Done? One Example 5/15/2018 How Have Our Projections Done? One Example In the 1982 Trustees Report, we projected unisex life expectancy at age 65 to be 18.9 years in 2010 Actual value in 2010? 18.9 Cherry-picking? Maybe!

Additional Information in Actuarial Notes and Studies 5/15/2018 Actuarial Study #120 (Life Tables for the U.S. Social Security Area) Actuarial Note #158 (Human Longevity and Implications for Social Security Actuarial Status) See https://www.ssa.gov/OACT/pubs.html This session is intended to give you an overview of the Social Security program. We will cover the following in this session: Brief history of the program Who can receive benefits and the eligibility requirements Taxation of benefits Future of the program Social Security Statement, and Online Services