Successive Generations Living Longer Than Before

I was reading a recent article in the New York Times on estimating longevity in the context of the Social Security Trust Fund. Your Kids Will Live Longer Than You Thought ran in the NY Times on November 10, 2015.  The article discusses statistics and probabilities, explaining how life expectancies are calculated.  Looking at the Social Security projections of life expectancy, the article notes that SSA is likely too conservative in their longevity projections.

The Technical Panel on Assumptions and Methods established by the Social Security Advisory Board, an independent government agency that advises Social Security’s trustees on matters including actuarial assumptions, says Social Security is systematically underestimating future declines in mortality rates, and therefore underestimating the likely life spans of young Americans.

So this is a good news-bad news scenario. Good news for those who get more years of life, bad news for Social Security.  “[O]ne quirk of Social Security is that a piece of obvious good news (People will live longer than we thought!) is bad news from the narrow perspective of paying for retirement benefits (The government will have to pay benefits longer!).”  So how to handle Social Security’s too conservative projections? The Congressional Budget Office “tweaked” them by increasing them.