The Social Security Administration is Underestimating Our Life Expectancies
Figuring What Your Social Security Benefit Will Be

(10/24/14)- Social Security recipients will receive a 1.7% increase in their monthly checks starting January 1, 2015. The amount of the increase is based on the consumer price index known as CPI-W. For the average beneficiary it will mean about a $20 monthly increase. This increase, which is called a cost-of-living increase, was 1.5% in 2014 and 1.7% in 2013.

Social Security is financed by a 12.45 % payroll tax on the first $117,000 of a worker’s wages, with half being paid by the worker and the other half being paid by the employer. That wage cap will go up to $118,500 next year.

(7/28/08)- The Social Security Administration has unveiled its new retirement benefits calculator on its Web site or that will easily allow you to get an accurate figure as to what you will receive from Social Security when you retire.

The agency also announced that it expected to go online this fall with an application that will allow you to apply for your benefits without having to go to a Social Security field office.

The benefits estimate calculator will supplement the annual mailing but won't replace it. The online calculator will allow you to enter your most recent earnings, and if possible you can factor in your future earnings. Under the present system the data used to determine what your benefits will be uses your present earnings only.

There currently is a lag time in getting salary information into the Social Security Administration's database. The trustees of the agency have estimated that it will run a surplus until 2017, when it will have to start cashing in the special Treasury notes to help fund the benefits payments.

Under the present system employees and employers pay a combined 12.4% tax, but this amount is expected to rise in the coming years to keep it solvent.

(12/08/99)- The Social Security Administration (SSA) will issue retroactive payments in mid-July 2001 and adjust the regular monthly benefit received in August 2001 for about 45 million Social Security and about 6 million Supplemental Security Income (SSI) beneficiaries. This action is being taken to compensate beneficiaries for a minor shortfall in their monthly benefits paid since January 2000 as a result of an error the Bureau of Labor Statistics made that affected the calculation of the Consumer Price Index (CPI) starting in 1999.

A 12 member advisory panel's report to the Social Security Advisory Board concluded that people are living longer than current actuarial assumptions suggest. This in turn would have implications as to the length of solvency of the Social Security. Since people would in reality be living longer lives than is currently estimated benefits would have to be paid out over a longer period of time for most individuals.

The report was commissioned and issued by the board, which is an independent bipartisan body created by Congress. To see the composition of the board see our article "The Accurate Numbers as to Social Security and Medicare Solvency". For an article about the conflict between "Security and Social Security-Can They Exist in a Balanced Budget" please see our article on this topic.

The panel analyzed the economic, demographic and other technical assumptions used by the trustees of the Social Security program. The board may reject the report of the panel, but the board's chairman, Stanford G. Ross, a Washington attorney stated that the report would help to re-ignite the debate about the solvency of the Social Security program. The Social Security Administration stated that the recommendations "will be carefully considered in future annual reports".

Life expectancy at birth increased to 76.7 years in 1998. The SSA had previously predicted that life expectancy would grow to 79.3 years in 2030 and to 81.5 in 2070. The panel determined that the accurate figures should be 79.3 in 2030 and 85.2 in 2070.

C. Eugene Steuerle, an economist at the Urban Institute headed the panel .The panel concluded that Social Security's long term problems were about 25% greater than the official government estimates. This would mean that payroll taxes would have to be increased by 2.6%, not the 2.07% currently being utilized in the estimates. A worker earning $30,000 would therefore have to pay $780 per year additional taxes rather than the currently estimated $621.

The panel further concluded, "U.S. mortality can fall a long way without encountering biomedical limits". Amongst the assumptions that were questioned by the panel were the assumption that it would take until 2033 for American women to reach the 1995 life expectancy for French women (82 years). It would take until 2029 for American men to reach the 1995 expectancy for Japanese men (77 years).

Next time you look at your payroll you will see that the tax rate deductions for employees remains unchanged in 2000 from the 1999 levels of 6.20% deducted for Social Security and 1.45% deducted for Medicare. The maximum taxable payroll earnings for Social Security is $76,200 and for Medicare it is unlimited. As of January 1, 2000 the maximum Social Security benefit for a worker retiring at age 65 is $1,400.


Allan Rubin
updated October 24, 2014

To e-mail: or

Return to Home