Population Projections: Social Security Administration Alice Wade, Office of the Chief Actuary Population Projections: Social Security Administration Alice Wade, Office of the Chief Actuary

Population Projections Done annually by the Office of the Chief Actuary, Social Security Administration By sex By single year of age (0 – 100+) By marital status For Social Security Area For all years through 2080 Three sets of projections (intermediate, low cost, and high cost) Stochastic population projections also

Purpose of Population Projections Used in estimating the financial status of the Old Age, Survivors, and Disability Insurance (OASDI) program. First step in the process is projecting workers paying into a Social Security program and beneficiaries receiving benefits from the program. Used in estimating the financial status of the Hospital Insurance program. Why not use projections from Census ?

Population Projections Need: Starting Population –By age, sex, marital status Fertility Assumptions –Tells us how many children are born each year Mortality Assumptions (Life Table) –Created by actuaries and demographers to project population –Tells us what percent of population will be alive next year Net Immigration Assumptions –Tells us how much population changes due to immigration minus emigration Other

Population Results: Social Security Area population Distribution of the population by marital status and age Aged dependency ratio (ratio of population ages 65 and older to population ages 20-64)

Social Security Area population

Distribution of the population by marital status and age: Jan. 1, 2000

Distribution of the population by marital status and age: Jan. 1, 2080

Aged dependency ratio (ratio of population ages 65 and older to population ages 20-64)

Fertility Age-specific central birth rates - Births during the year to mothers at the specified age divided by the midyear female population at that age. Births from National Center for Health Statistic; resident population from Census Bureau. Total fertility rate - Sum of the age-specific central birth rates during the year Can be interpreted as the number of children born to a woman if she were to survive her childbearing years and experience the age- specific birth rates throughout her childbearing years.

Projecting Total Fertility Rate and Birth Rates by Age Review history of total fertility rate. Expert judgement in determining ultimate total fertility rate. –Average over the last 50 years of the 75- year projection period. –1.95 assumed for intermediate projections, 1.7 assumed for high cost assumptions, and 2.2 assumed for low cost assumptions. Gradually project from the last historical year to the ultimate. Break out the total fertility rates into central birth rates by age.

Society Changes Over Last 50 Years That Impacted Birth Rates Increased availability and use of birth control methods. Increased female participation in the labor force. Increased postponement of marriage and childbearing among young women. Increased prevalence of divorce. Decreased death rates among children (requiring fewer births for a desired family size). Increase in the percent of women remaining childless. Shift in the perception of the status of children within their families from economic assets to economic liabilities.

Total Fertility Rate in the U.S. Historical and Projected

Central Birth Rates by Five-Year Age Groups

Immigration Legal immigration – Annual number of persons lawfully admitted for permanent residence in the U.S. Legal emigration – Annual number of citizens or persons lawfully admitted for permanent residence that leave the U.S. on a permanent basis. Net other immigration – Annual net number of persons entering the country and are not lawfully admitted for permanent residence.

Projection of Net Immigration Review historical data – limited data available for legal emigration and net other than legal immigration. Expert judgment in determining an assumed total number entering the country each year for each of the three categories. Break out the total annual numbers into single years of age by sex.

Legal Immigration,

Ultimate Annual Immigration Assumptions

Immigration by age and sex Legal immigration – Use the average by age and sex over the last 10 fiscal years of data (from INS) Legal emigration - Based on estimates of foreign- born emigration between the 1980 Census and the 1990 Census. Net other than legal immigration – Unpublished estimates from Census. Average age of legal immigration: 29 males, 31 females. Average age of net other than legal immigration: 21 males, 22 females

Mortality For under 65, use deaths from the National Center for Health Statistics and resident population from the Census Bureau For 65 and over, use deaths and enrollments of the Medicare population.

Projection of Mortality Mortality is assumed to decline in the future - the amount of decline is in question intermediate projections of the financial status of the U. S. Social Security program assumed significant declines in the future, as shown by: Calendar year life expectancy at birth Calendar year life expectancy at age 65

Life Expectancy at Age 0

Life Expectancy at Age 65

Projection of Mortality Incorporating future mortality improvement requires calculation of a new life table each year. Assumptions as to the percent reduction in mortality rates. – By age group – By cause of death

Based on the intermediate assumptions of the 2005 Trustees Report Average Annual Rate of Decline in Age-adjusted Central Death Rates MalesFemales Total Total %1.2%0.1%0.8%1.7%0.3% %2.6%1.4%2.6%3.9%2.0% %-0.1%-0.5%0.6%0.7%0.6% %2.4%1.6%2.2%2.3%2.1% %1.6%0.6%0.2%1.0%0.0% %1.1%0.7%0.6%0.9%0.5% %0.9%0.7% 0.8%0.7%

Historical and Intermediate Projections of Annual Percentage Reduction in Central Death Rates: Age 65-84

Historical and Intermediate Projections of Annual Percentage Reduction in Central Death Rates – Age 85+

“We can never insure 100 percent of the population against 100 percent of the hazards of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family… against poverty-ridden old age…” Franklin D. Roosevelt August 14, 1935 “We can never insure 100 percent of the population against 100 percent of the hazards of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family… against poverty-ridden old age…” Franklin D. Roosevelt August 14,