Kudos to the American Academy of Actuaries (AAA) for reinserting the following caveat language in its Social Security Challenge tool.
“The following should be noted when interpreting results from the Social Security Game:
- The 75-year actuarial balance calculation used in the game does not consider significant revenue shortfalls expected to occur after the end of the 75-year projection period, and thus possible solutions illustrated in this game are generally not sufficient to achieve “sustainable solvency,” a concept discussed in the Trustees Report.
- The possible solutions assume immediate adoption of System changes, rather than gradual implementation. If changes to the System are gradually implemented, the required increases in tax revenue or benefit decreases will need to be larger than noted in the game to achieve actuarial balance.
- The success of reforms will depend on how well actual future experience compares with the assumptions made by the trustees and the Social Security actuaries. There is no mechanism in current Social Security law to maintain the program’s actuarial balance once it has been achieved. Thus, there can be no guarantee that the System’s long-term problem will be “solved” for any specific length of time by enacting various system changes.”
We discussed the deletion of these important caveats in our post of July 29, 2023.
if only we can get the Academy to stop ignoring the Valuation Date
Creep and its impact on Social Security’s funded status deterioration
since 1983 as discussed most recently in our posts of September 23, 2023 and January 20, 2024.