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

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

Social Security Area Population (in mill ions), 1940-2080

Actual and Projected by Alternative

0

100

200

300

400

500

600

1940 1960 1980 2000 2020 2040 2060

Calendar Year

Pop

ulat

ion

in M

illio

ns

High Cost

Intermediate

Low Cost

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

Distribution of the Population be Marital Status ,

Ages 0 through 100, January 1, 2000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 10 20 30 40 50 60 70 80 90 100

Age

Single Married

Widowed

Divorced

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

Distribution of the Population be Marital Status ,

Ages 0 through 100, January 1, 2080Intermediate Alternative

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 10 20 30 40 50 60 70 80 90 100

Age

Single Married

Widowed

Divorced

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

Aged Dependency Ratio, 1940 through 2080 (Ratio of population aged 65 and older to population aged 20 through 64)

Actual and Projected by Alternative

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1940 1960 1980 2000 2020 2040 2060 2080

Calendar Year

High Cost

Low Cost

Intermediate

Fertility

Age-specific central birth rates - Births during the yearto 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 yearCan 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

Historical and Projected Total Fertility Rates

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1915 1935 1955 1975 1995 2015 2035 2055 2075

Calendar Year

Tot

al F

erti

lity

Rat

e

historical

Low Cost

Intermediate

High Cost

Central Birth Rates by Five-Year Age Groups

Central Birth Rates by Five-Year Age Groups:Historical and Intermediate Alternative

(per thousand women)

0

25

50

75

100

125

150

175

200

225

250

275

300

1917 1927 1937 1947 1957 1967 1977 1987 1997 2007 2017 2027

Calendar Year

Cen

tral

Bir

th R

ate 10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

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, 1901-2001

Legal Immigration to the United States, 1901-2001

0

200

400

600

800

1,000

1,200

1,400

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Calendar Year

Imm

igra

nts

in T

hou

san

ds

Ultimate Annual Immigration Assumptions

Ultimate Immigration Assumptions

-400

-200

0

200

400

600

800

1,000

1,200

1,400

Low Cost Intermediate High Cost

Assumption

Imm

igra

tion

in t

hou

san

ds

Legal Immigration Emmigration Net Other-Than-Legal Total Net Immigration

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.

• 2005 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 0by Sex and Calendar Year(based on Period Tables)

40

50

60

70

80

90

1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2100

Calendar Year

Lif

e E

xpec

tan

cy

Male

Female

Life Expectancy at Age 65

Life Expectancy at Age 65by Sex and Calendar Year(based on Period Tables)

10

13

16

19

22

25

1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2100

Calendar Year

Lif

e E

xp

ec

tan

cy

Male

Female

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 assumptionsof the 2005 Trustees Report

Average Annual Rate of Decline in Age-adjusted Central Death Rates

Males Females

Total 0-64 65+ Total 0-64 65+

1900 - 1936 0.6% 1.2% 0.1% 0.8% 1.7% 0.3%

1936 - 1954 1.8% 2.6% 1.4% 2.6% 3.9% 2.0%

1954 - 1968 -0.4% -0.1% -0.5% 0.6% 0.7% 0.6%

1968 - 1982 1.8% 2.4% 1.6% 2.2% 2.3% 2.1%

1982 - 2000 0.9% 1.6% 0.6% 0.2% 1.0% 0.0%

2000 - 2029 0.8% 1.1% 0.7% 0.6% 0.9% 0.5%

2029 - 2079 0.7% 0.9% 0.7% 0.7% 0.8% 0.7%

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

Rates of Improvement for Ages 65 - 84

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

1900-1936 1936-1954 1954-1968 1968-1982 1982-2000 2000-2027 2027-2077

Period

Ann

ual P

erce

nt I

mpr

ovem

ent

Male

Female

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

Rates of Improvement for Ages 85 +

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

1900-1936 1936-1954 1954-1968 1968-1982 1982-2000 2000-2027 2027-2077

Period

Ann

ual P

erce

nt I

mpr

ovem

ent

Male

Female

“We can never insure 100 percent of the population against100 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. RooseveltAugust 14, 1935

“We can never insure 100 percent of the population against100 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. RooseveltAugust 14, 1935

http://www.socialsecurity.gov/OACT/