Mandatory Spending
Function 650 - Social Security
Lengthen by Three Years the Computation Period for Social Security Benefits
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
| Billions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2015-2019 | 2015-2024 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change in Outlays | 0.0 | -0.1 | -0.4 | -1.2 | -2.3 | -3.8 | -5.7 | -7.9 | -10.4 | -13.1 | -4.0 | -44.9 |
Note: This option would take effect in January 2016. Estimates are relative to CBO’s August 2014 baseline projections.
As required by law, the Social Security Administration calculates retirement benefits on the basis of a worker’s wage history using the worker’s average indexed monthly earnings, or AIME. The current formula computes the AIME on the basis of a worker’s earnings that are subject to Social Security taxes during his or her highest 35 years of earnings.
This option would lengthen the AIME computation period to 36 years for people who turn 62 in 2016, to 37 years for people who turn 62 in 2017, and to 38 years for people who turn 62 in 2018 and beyond. (All years mentioned in this option are calendar years.) The option would not change the number of years used to compute AIME amounts for disabled workers; only retirement benefits would be affected.