I am Steve Goss, Chief Actuary at the Social Security Administration -- AMA

Ever since I passed the last of my preliminary exams back in 2011, I've been finding it increasingly difficult to fend off the large number of women that find themselves naturally drawn to me, a problem which only increases with each passing year.

How are you, as a top-level actuary, able to manage your workload at the SSA with politely declining all of their advances?

For better or worse, this has not been a problem (look at the verified picture above).

Hello Mr. Goss, thanks for doing this. I work as an actuary on the health side. A while back I met someone who, upon hearing I was an actuary, said, "So why haven't you guys figured out Social Security yet?" I promptly told him that actuaries have known and been declaring the financial risks for Social Security for years, but that politicians haven't listened. Do you agree with this statement? Do you feel that actuaries' opinions are valued in DC? In your view, what more can actuaries and the actuarial profession do to have our voices heard on Capitol Hill and elsewhere?

edit: want to give a quick shout out to /r/actuary if anyone is interested in learning more about actuaries

Thanks for this question. Yes, we have been aware that the Trust Fund reserves would eventually deplete and we would need further legislative action, ever since the last major changes in 1983. We have posted many proposals from legislators on our web page where legislators have asked for estimates for their preferred approach to extending solvency for Social Security. http://www.socialsecurity.gov/OACT/solvency/index.html

What is the biggest misconception about Social Security that you see in the general population?

That it will go away. Under current law we project that even in the absence of any Congressional action between now and 2033, the combined Social Security Trust Funds would still have 77 cents of tax income coming in for every dollar of scheduled benefits. So the benefits stopping altogether should not be a concern. Past legislative fixes have usually been a combination of some additional revenue and some reduction in scheduled benefits. And such fixes have always been enacted in time to avoid any problem in paying benefits in a timely fashion.

To clarify, that 77/100 figure is for the period between now and 2033, right? And 2033 is the theoretical insolvency point? And by that point legislators are expected to either increase revenues or cut benefits?

Actually prior to 2033, 100% of OASDI scheduled benefits would be payable. The 77% of scheduled benefits being payable is what we would have right at 2033, if the reserves were to deplete at that point due to a lack of Congressional action. After 2033 the percent of scheduled benefits that is payable drifts a little lower reaching 72% by 2088.

Thanks very much for participating!

I understand in advance if you cannot respond to some of these questions due to political concerns.

1. Would removing the income cap on contributions paid to SS be enough to indefinitely postpone the depletion projected the 2033?
2. In your opinion, how reasonable would it be to replace the Social Security benefit for retirees with a market-based solution as George W. Bush proposed? Is the a way to account for the risk that a retiree might "cash out" during a recession? Or alternatively, is that risk overstated?

Please see our website at http://www.socialsecurity.gov/OACT/solvency/provisions/index.html for scores of many provisions that policymakers have suggested.

1. Not quite, but it could make a big contribution. One popular provision is to increase the taxable maximum to get the percent of all earnings that are taxed back to 90% as was the case in 1983.
   
2. This is a huge question that policymakers will continue to discuss and debate. We will continue to provide the best estimates we can for all provisions that policymakers want to consider.

How much has technology changed the actuarial field since you started? Are there certain calculations that are trivial now that used to be quite difficult? Or is rising complexity keeping pace with advancing technology?

Enormously. When I started in 1973 we did not have electronic calculators, and later got mainframe computers with a card reader. Primitive. Now we have workstations that can make remarkable computations instantly. As a result we can often turn around estimates overnight that would have taken weeks in the old days.

As a followup question, how susceptible do you see the actuarial career in the future to being replaced or severely limited by technological advancements?

Not worried. We project into the future. If we could be sure the conditions of the future will be the same as in the past, we could just put a ruler on the past trend and be done. The art of projection is recognizing changes in conditions and realtionships that are are occuring or are likely to occur in the future.

What would your policy recommendations be to congress to fix the problems you just described with social security?

Our Office of the Chief Actuary always asks policymakers what their goals are and we work with them in developing proposals to meet their goals. We do not express preference for any proposals, any more than the home plate umpire would express preference for the Orioles over the Yankees. See our website at http://www.socialsecurity.gov/OACT/solvency/index.html

http://www.socialsecurity.gov/OACT/solvency/index.html

Can someone give me a TL;DR?

We had to look up TL;DR! But look here: http://www.socialsecurity.gov/OACT/solvency/provisions/index.html and click on "Summary List of all Provisions".

These individual provisions are all taken from comprehensive proposals put forth by policymakers. And of course these proposals are all described in their entirety in our letters to policymakers at: http://www.socialsecurity.gov/OACT/solvency/index.html.

Basically, this website gives proposals that have been reviewed or backed by various legislators over the past 20 years to reform SS funding. There are a ton of different proposals that attempt to fix the problem either through changing taxes or changing the distribution, or both.

Is there any one that's greater than the others?

I kind of wanted him to point us that direction but instead got a "RTFM" sort of response. Which is understandable because for political reasons I don't think he can answer the question I asked.

That is exactly right.

When I tell people I'm an actuary, I often get a blank stare or a wild guess as to what that is. What's the most hilarious thing that someone you have met has done/said when you tell them that you're an actuary?

The blank stare is pretty much it! But we usually get to the difference between an introvert versus extravert actuary.

This is my dream comes true!!! Thanks so much for doing this AMA.

I'm an actuarial science/ risk management student trying to get my foot into this field. What skills, software, traits do you think are very important to become a successful actuary?

Most of all think carefully about everything. The great thing about our work is that it encompasses everything in our society. Our office motto "challenge everything".

In your projections of when the OASDI Trust Funds will become depleted, are you applying a PAD to the results? How conservative are these estimates? Does this projection take into account inflation and/or investment earnings?

Our projections of the future cost and income for the Social Security Trust Funds are all based on our best assumptions for the future, working with our Board of Trustees and many reviewers. We believe these are the best estimates possible, given the uncertainties about the future.

Yes, the projections take into account explicit assumptions about the future population and economy.

What do you mean by "investment earnings" in this instance? <puzzled>

Currently the Social Security Trust Funds hold almost $3 trillion in interest bearing securities. These securities have interest rates set at market yields. This investment return is an important part of the income to the Trust Funds.

When an insurance company sells a product, they have to set up a reserve to pay out the claims. This reserve doesn't just sit there as a large pile of cash earning no interest - it's invested (albeit conservatively). I'm a life insurance actuary and that's how it works - I'm not sure if the OASDI Trust Fund functions similarly.

In other words, will it be depleted assuming that the amount earns 0% interest every year? Or will it be depleted assuming it earns 3% interest a year? Or more?

The OASDI Trust Fund is, I believe, solely invested in special Treasury securities, so I suppose there might be some interest income. I see what you mean now. Thanks.

Right - I'm wondering what kind of earned rate is being used in the projection since we're in such a low interest rate environment. Does it continue for many years or is there a forecast for improvement?

It would be very unwise to take a rise of interest rates in the projection. (Or this means the optimistic scenario is used, but that's not a good move)

Which leads me back to my original question - how much of a PAD (provision for adverse deviation) is in the results of the projection?

In a commercial company setting, you have to be concerned with negative risk for fear of going bankrupt. However, for Social Security, policymakers are equally concerned with taxing too much, versus being underfunded. Remember that scheduled benefits for the future are "obligations" that Congress can change when necessary. Congress has changed scheduled benefits and tax rates many times in the past and will do more in the future.

In your estimation, what are the top five lessons all actuaries should always keep in mind?

1. Know the "product" you are evaluating. The actuarial approach depends on the nature of the insurance and the financing approach.
2. Check it out with others before coming to conclusions on assumptions.
3. Challenge everything.
4. Accept criticism gracefully. It is how we learn.
5. Make sure you learn something new every day. I do.

As a 20 something who is just joining the workforce, all I hear about is how Social Security won't be around when I retire. How valid is this concern? If you were in my shoes, would you be worried?

Not at all. Social Security has been around a long time and all in our society have come to expect the benefits to continue. As long as our population wants these benefits to continue you can be assured that our legislators will make appropriate adjustments to maintain the program.

What made you stop taking exams? Why don't you have your FSA?

Actually, things got really busy in the office not long after I started. And as you see, FSA is not as essential in our world. In fact, experience as a Social Security actuary does not count toward EA, as is appropriate, because this largest pension plan in the US is not under ERISA.

Cool, thanks for answering. I expect they didn't give you any study time as well.

Our office does give study time!

Do you think loosening immigration laws would have a positive effect on the future viability of social security?

We actually have done estimates on specific proposals for significant changes in immigration law and policy. You can find these on our website at http://www.socialsecurity.gov/OACT/solvency/index.html.

Most recently we "scored" the effects of the Senate-passed immigration Bill last year for Senator Rubio.

Thanks for this AMA.

In France, social security deficit is atributed to the economic crisis and the increase of life expectency. Is is also the case in United States ? What importance would you give to each issue ?

Actually, our greatest challenge for Social Security is the changing "age distribution" of our population. As the population gets older we have more retirees compared to workers. This is coming up in the next 20 years. But this aging already happened for the disability program as the boomers moved from under age 45 in 1990, to between 45 and 64 in 2010. The interesting part though is that the changing age distribution is not mainly from living longer. It is largely from the drop in birth rates after the baby boom generation. We dropped from 3 to 2 children born per woman on average, and this has a direct effect on the number of working age folks per older retirement age person.

Any thoughts on Basic Income and its potential in the US?

The US Social Security benefit formula is graduated to provide a higher replacement rate for lower income insured workers. For individuals who never worked enough to become insured for a Social Security benefit, SSI benefits are available. In fact some insured workers with very low Social Security benefits receive additional payments from SSI.

On a less serious note, what do you do outside of work? Who's your favorite musician? Favorite sports teams? You ever just go on actuarial discussion forums to see what they think of the job you're doing?

My life is pretty much 4 s's. Sleep, swim, Social Security, in reverse order.

Tie between Monk and Miles. In a different genre a tie between Janis and Jimi.

Not internet forums. We get plenty of feedback in other ways!

Any particular reason you chose the public route to work as an actuary over working in the private sector?

Actually, when I interviewed for this job in grad school, I had never heard of "actuary" before. The opportunity to work on a huge plan affecting the whole country was intriguing. In addition my undergrad majors were math and economics. In the DC area economics is important and has been useful.

What are the biggest frustrations/difficulties about working as a secular department leader in a department/area that gets way too caught up in the modern day political crossfire?

Actually it is not frustrating at all. Our hope is that we can provide objective information to assist policymakers with a great range of views to compare the results of all proposals on an even basis. Our experience is that all political sides appreciate this. We hope to continue in providing this service.

Do unemployment rates have much of an effect on the solvency of social security? It would seem that an increase in unemployment would reduce the total tax revenue to fund social security, but this may be offset by decreasing future liabilities with fewer social security credits being earned.

Economic cycles have not been outlawed. Periods of higher unemployment also result in lower labor force participation, accentuating the drop in employment, earnings and tax revenue. However, recessions are followed by recoveries and these basically average out. If we had permanently higher unemployment, that would be a negative. But we have been assuming that the ultimate average "full-employment" unemployment rate will be about 5.5 percent in the future. The current recovery is almost there.

As expected, the “actuarial deficit” increased a bit, rising to 2.88% from 2.72%. In a nutshell, this rise means if we increased the Social Security tax by that amount, there would not be any problem funding Social Security for the next 75 years.

I know this comes from a dubious source, but is it correct?

That is basically correct. However, our largest shortfall comes after the lower birth-rate generations have fully moved into prime working ages (ages 20-64). At that point the full effect of the changing age distribution from lower birth rates will be felt. The level of shortfall will be larger than 2.88 percent of payroll after 2035. So if we just increased the tax rate by 2.88 percentage points right now, we would be good for the next 75 years, but would fall short thereafter.

According to the figures you summarized (The OASDI will go from 100% of benefits payed out to 77% in 2033, while the DI trust fund will go from 100% to 81% in 2016), is there a way to address that shortfall sans congressional action, given the fondness congress has for can-kicking problem avoidance?

Will the beneficiaries of these programs be informed why they are suddenly receiving a smaller check? And will there just be a universal cut across the board, or will some people be prioritized over others?

More speculative: if you had your druthers, what social safety net programs would you like to see implemented?

Also- what programs do you believe should be getting more attention than they currently are?

Sorry for the barrage of questions. Looking forward to this AMA!

There is really no substitute for Congressional action. The ability to pay benefits is limited by the funds available in our Trust Funds. There is no significant borrowing authority. This is actually a great strength of the funding mechanism. Congressional action would result in a sudden necessity to reduce or delay benefit payments, and Congress has never allowed that to happen. It is highly unlikely any Congress will ever allow a sudden drop in benefits.

It has been said that social security wont be around in another 30-40 years. What is the plan so that tomorrows seniors will have social security benefits?

As long as the American people want this program and convey that desire to their elected representatives, it is likely to persist. Given people will always suffer work-ending impairments, death, and attaining ages where work is no longer as possible, it is hard to imagine that this ever-evolving program will not be desired.

Why do SS taxes show up as a separate line item on my paycheck? Why aren't they integrated into the rest of Federal taxes? I mean, I don't see a separate line item for DOD spending, so why SS?

Great question. The "payroll taxes" withheld from your paycheck are dedicated specifically to the OASI and DI (Social Security) and HI (Medicare) Trust Funds to pay benefits from those programs. These revenues cannot be used for any other purpose.

Do you have any entry-level openings? Also, what do you think of actuarialoutpost.com?

Thanks,

Pikachu

Unfortunately, no. But we are always looking for good candidates for the future! See our website at http://www.socialsecurity.gov/oact/actuaries/actssa.html.