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Title: Human Longevity and Implications for Social Title: Human Longevity and Implications for Social Security – Actuarial Status
Authors: Stephen Goss, Karen Glenn, Michael Morris, K. Mark Bye, Felicitie Bell
Published by: Social Security Administration, Office of the Chief Actuary (Actuarial Note No. 158, June 2016)
đź“Ś Purpose of the Document
This report examines how changing human longevity (declining mortality rates) affects:
The age distribution of the U.S. population
The financial status of Social Security
Long-term cost projections for Social Security trust funds
It explains how mortality rates have changed historically, how they may change in the future, and why accurate longevity projections are essential for determining Social Security’s sustainability.
đź“Ś Key Points and Insights
1. Demographic changes drive Social Security finances
Mortality, fertility, and immigration shape the ratio of workers to retirees, known as the aged dependency ratio.
Lower fertility since the baby boom greatly increased the proportion of older adults.
Mortality improvements (people living longer) also steadily increase Social Security costs.
2. Life expectancy improvements are slowing
The report explains that:
Increases in life expectancy historically came from reducing infant and child mortality.
Today, with child deaths already extremely low, gains must come from reducing deaths at older ages, which is harder and slower.
Recent research (Vallin, Meslé, Lee) suggests life expectancy follows an S-shaped curve, not unlimited linear growth, meaning natural limits are becoming visible.
3. Mortality improvement varies significantly with age
The report shows a clear age gradient:
Faster mortality improvement at younger ages
Slower improvement at older ages
This pattern appears consistently in the U.S., Canada, and the U.K.
Future projections must consider:
Whether this age gradient continues
How medical progress will change mortality in each age group
4. Health spending and policy historically reduced mortality
Huge declines in death rates during the 20th century were driven by:
better nutrition
expanded medical care
antibiotics
Medicare & Medicaid
However:
The same level of improvement cannot be repeated.
Health spending as % of GDP has flattened, and per-beneficiary Medicare growth is slowing.
Therefore future mortality improvement will likely decelerate.
5. Mortality reduction varies by cause of death
The report compares:
Cardiovascular disease
Respiratory disease
Cancer
Using Social Security projections and independent Johns Hopkins research, it finds:
Cardiovascular improvements are slowing
Respiratory disease has mixed trends
Cancer improvements remain steady but modest
Cause-specific analysis leads to more realistic projections.
6. Longevity differences by income levels matter
People with higher lifetime earnings:
Have lower mortality
Experience faster mortality improvement
This affects Social Security because:
Higher earners live longer
They collect benefits for more years
This increases system costs over time
7. Recent slowdown since 2009
The report highlights that:
Mortality improvements after 2009 have been much slower than expected, especially for older adults.
If this slowdown continues, Social Security’s long-term costs could be lower than projected, improving system finances.
8. Comparing projection methods
The report evaluates two approaches:
a) Social Security Trustees’ method
Includes:
age gradient
cause-specific modeling
gradual deceleration
Produces conservative and stable long-range estimates
b) Lee & Carter method
Fits age-specific mortality trends mathematically
Assumes no deceleration
Keeps the full historical age gradient
Findings:
Lee’s method produces a more favorable worker-to-retiree ratio until ~2050
After 2050, unrealistic lack of deceleration makes older survival too high
Over 75 years, both methods produce similar overall actuarial outcomes
đź“Ś Final Conclusions
The document concludes that:
Mortality improvements will continue, but more slowly than in the past.
The Social Security Trustees’ current mortality assumptions—moderate improvement with deceleration—are reasonable and well supported by evidence.
Social Security’s financial outlook is highly sensitive to longevity patterns, especially at older ages.
Continued research and updated data (including the slowdown since 2009) are essential for accurate projections.... |