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Social Security's Actuaries May Be Overestimating Future Births — and That Makes a Shaky Forecast Shakier

If the Trustees' birth-rate assumptions are too optimistic, the program's long-run financing gap is wider than the official projections suggest.

Written by Graham Vale · Bureau Finance · Jun 1, 2026

The Number That Drives Everything Else

Social Security is, at its core, a transfer mechanism: payroll taxes collected from current workers fund benefits paid to current retirees. The long-run math therefore depends on how many workers will exist relative to how many retirees they must support — a ratio that demographers call the old-age dependency ratio.

Fertility is the primary input to that ratio over a multi-decade horizon. If the Social Security Trustees — the six cabinet-level officials and agency heads who oversee the program's finances — are using birth-rate assumptions that are too optimistic, every downstream projection is skewed in the same direction: toward solvency that does not actually exist.

According to reporting by MarketWatch, that is precisely the concern now being raised about the Trustees' methodology.

What the Trustees Project, and Why It Matters

Each year, the Trustees publish a report that includes a 75-year actuarial projection of Social Security's finances. The report is the authoritative document for policymakers, budget analysts, and anyone pricing long-dated fiscal risk in U.S. government obligations.

The most recent projections already show a financing shortfall: the combined Old-Age and Survivors Insurance and Disability Insurance trust funds are projected to be depleted within roughly a decade under current law, at which point incoming revenues would cover only a portion of scheduled benefits. That baseline is already uncomfortable. A fertility assumption that is too high makes it worse.

Why Birth Rates Are Hard to Forecast — and Easy to Misread

Demographers distinguish between the total fertility rate (TFR) — the average number of children a woman is expected to have over her lifetime — and actual birth counts in a given year. The U.S. TFR has been below the replacement level of approximately 2.1 since the early 1970s, and it has continued to decline in recent years without a structural reversal.

Forecasters can be misled by tempo effects: births that are delayed rather than foregone can temporarily depress annual counts, creating the appearance of a fertility decline that partially reverses when delayed births occur. If the Trustees' models interpret recent low birth counts as a tempo effect that will self-correct, they may be projecting a rebound that does not materialize.

The consequence is not trivial. Demographic assumptions compound. A TFR assumption that is 0.1 or 0.2 too high, sustained over 30 years, produces a meaningfully smaller workforce and a meaningfully larger financing gap than the official numbers show.

The Fiscal Consequence

Social Security's primary revenue source is the 12.4 percent payroll tax (split between employer and employee) applied to wages up to an annual ceiling. Fewer workers means a smaller taxable wage base. A smaller taxable wage base means lower annual revenues. Lower annual revenues against a growing retiree population means the trust funds are drawn down faster.

There is no plausible immigration or productivity scenario that fully offsets a sustained fertility shortfall of the magnitude some demographers now consider likely. Immigration can supplement the workforce, but it is a partial and politically contingent offset, not a structural solution.

What This Means for Reform Timelines

Congress has historically used the Trustees' projected depletion date as a soft deadline for legislative action. If that date is being calculated from an overly optimistic fertility baseline, the effective deadline is earlier than the official figure suggests — and the menu of reform options narrows as the window shortens.

The options available to close a Social Security financing gap are well understood: raise the payroll tax rate, raise or eliminate the taxable wage ceiling, reduce benefits, raise the full retirement age, or some combination. None of those choices becomes easier the longer they are deferred. A demographic miscalculation does not change the menu; it changes how much time policymakers have to order from it.

Key takeaways

The Social Security Trustees produce annual projections that depend heavily on assumptions about future fertility rates; if those assumptions are too high, the long-run deficit is understated.
U.S. birth rates have been declining for years, and there is no structural evidence of a reversal sufficient to close the program's financing gap.
A lower fertility trajectory reduces the future payroll-tax base — the primary revenue source for Social Security — by shrinking the ratio of working-age contributors to benefit recipients.
Errors in demographic inputs compound over decades, meaning a modest overestimate today can translate into a materially larger funding shortfall by mid-century.
Policymakers relying on Trustees' projections to calibrate reform timelines may be working from a more favorable baseline than the underlying data supports.

FAQ

What are the Social Security Trustees, and why do their projections matter?

The Social Security Trustees are six officials — including the Secretaries of Treasury, Labor, and Health and Human Services — who oversee the program's finances and publish an annual report projecting its long-run fiscal position. Their 75-year actuarial projections are the standard reference for policymakers and budget analysts assessing Social Security's solvency.

What is the total fertility rate, and why does it affect Social Security?

The total fertility rate (TFR) is the average number of children a woman is expected to have over her lifetime. It is a key input to long-run workforce projections. Because Social Security is funded primarily by payroll taxes on current workers, a lower TFR means a smaller future workforce, a weaker revenue base, and a larger financing gap relative to the retiree population.

When are the Social Security trust funds currently projected to be depleted?

Under current law and the most recent Trustees' projections, the combined Old-Age and Survivors Insurance and Disability Insurance trust funds are projected to be depleted within approximately a decade, after which incoming revenues would cover only a portion of scheduled benefits. If the fertility assumptions underlying those projections are too optimistic, the actual depletion date could be earlier.

Could higher immigration offset a lower birth rate?

Immigration can increase the working-age population and expand the payroll-tax base, providing a partial offset to lower domestic fertility. However, immigration levels are subject to policy changes and political uncertainty, and most analysts treat it as a supplement to — not a substitute for — structural demographic balance in the program's long-run financing.

What policy options exist to close a Social Security financing gap?

The main levers are: raising the payroll tax rate (currently 12.4 percent, split between employer and employee), raising or eliminating the taxable wage ceiling, reducing scheduled benefits, increasing the full retirement age, or some combination. Each option involves distributional trade-offs, and the range of politically viable choices narrows the closer the program gets to trust fund depletion.

Citations

Another dire problem for Social Security: Trustees may be calculating the birth rate wrongSocial Security Trustees may be calculating the birth rate wrong, creating a more dire financing outlook than official projections reflect.
MarketWatch Top Stories RSS FeedSource feed for lead research identifying the Social Security birth-rate methodology story.
The 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust FundsThe Trustees' annual report is the authoritative source for Social Security's 75-year actuarial projections, including fertility-rate assumptions and trust fund depletion dates.