January 2015 Update: Social Security Enrollment

It’s been 7 months since my last SS update, so first a quick refresher. SS is a broad program best known for the retired worker program…..where you pay in a portion of your paycheck each week, and in return, will hopefully get a monthly check once you reach~65….for the rest of your life. As of January, there were 39.1M retirees collecting an average of $1,331 per month, which pencils out to $52B per month, or $625B per year. This population is growing at about 1.1M per year…that is new retirees less deaths of existing enrollees = 1.1M per year.

Moving on…the second largest piece of SS is Disabled Workers, with 8.9M people receiving an average of $1,165 per month. The balance is about 10 smaller categories of children, spouses, widows etc…. of retirees and disabled workers. Each month, the government releases a report here that details the new monthly totals, their average monthly benefit, and even the Male/Female split if that interests you.

Any one report isn’t all that useful, but by compiling them and tracking the monthly and annual changes, one can squeeze some useful, or at least interesting data out of them. I track them for two primary reasons. First, SS is a huge part of the cash deficit, …$773B over the last 12 months ending in January, good for 20% of cash outlays, and growing at 5% per year. Supposedly, at some  point over the next 5 years, we should start hitting the meat of the Baby Boomers, resulting in a notable increase in enrollment and cost….I want to see it in real time.

Second, as you will see in the charts below, there is a noticeable correlation between the state of the economy and the SS enrollment rate. In the “Great Recession”, we saw enrollment rates more than double from 2007 to 2009. Again, this series gives us a real time window into the decisions millions are making…. It may or may not be a leading indicator, but it is certainly worth watching because if we have another spike, whether from the boomers retiring or a recession, it will have a noticeable affect on the deficit.

First up…just the retired workers chart:

2015-02-24 SS-Retired Workers

Here we can see the relationship between the economy and the rate of SS enrollment with a spike in the 2000-2002 time frame and again in 2008. Since then, it has remained elevated, but is slowly trending down over the last ~1.5 years. It’s still pretty bad…at over 1.1M per year, but really no material change since my last report, so i guess that’s a good thing. If…or when we see this swing back around and start heading toward 1.5M….you can be sure trouble’s a’brewin.

Next, we look at the whole program:

2015-02-24 SS-SS-ALLHere’s what you need to know….During the spike we saw in 2009+, most of the categories, especially disability and retired workers were growing in unison, leading to a peak growth rate of over 1.6M per year. However, since then, with the exception of retired workers, everything has more or less stabilized, including disabled workers which had been growing as much as 400k per year at one point. This leaves retired workers as the primary driver in program enrollee growth. So it’s no surprise that the trend is more or less the same…a continued decline in the annual enrolment rate that is still quite a bit higher than the historical trend.

Put it all together, and the truth is…not a whole lot to see here, and that’s a really good thing. If this chart starts to get interesting, there’s a good chance it will be because the deficit is zooming back toward $1T as revenues collapse and expenses spike higher…..just like the good ‘ol days 🙂

US Daily Cash Deficit 2/20/2015

The US Daily Cash Deficit for Friday 2/20/2015 was $3.7B pushing the February 2015 deficit through 20 days to $139B.

2015-02-20 USDD

Revenues are still looking ok at +$22B, with outlays more or less flat. Refunds, excluding the $10B of timing, are more or less on pace with last year. For the year, 2015 has $100B of individual tax refunds vs $99B last year…..so we aren’t seeing a drop off due to Obamacare  or anything like that, at least not yet. We have 5 business days left, and are more or less on track to hit a $200B deficit +/-10B or so. Through 52 days, revenue is up 4.6%, a bit worse than I had expected, and outlays are flat versus my expectation of 2-3% growth.

US Daily Cash Deficit 2/17/2015

The US Daily Cash Deficit for Tuesday 2/17/2015 was $18.6B as strong post holiday revenues were overwhelmed by $37.5B of interest payments.

2015-02-17 USDD

For the most part, our timing issues are behind us, giving us a fairly clean YOY comparison. Revenue is up a healthy $19B….About $8B of that is lower refunds….primarily timing related. I don’t really see a material slowdown in refunds due to “obamacare”…yet. Last refunds over the last 8 days of the month ran at about a $6.5B clip per day….if 2015 runs even $1B per day under that it could open up a big gap by the end of the month.

Outlays stand at +$5B, which is basically flat after pulling out the $6B of interest that slipped from January to February. Put it together and despite the $103B deficit, we seem on track to put a good month in the books as revenue is growing and outlays are flat. If we stay on this course, we have a chance to slide in under a $200B deficit, but it is really going to come down to refunds.

Shifting down to the second row of charts, 2015 revenue is looking ok…at +4%, with outlays pretty much flat.

US Daily Cash Deficit 2/9/2015

The US Daily Cash Surplus for Monday 2/9/2015 was $2.2B bringing the February 2015 deficit through 9 days to $37B.

2015-02-09 USDD

Thanks to $19B of refunds that went out 2/10/2014, depressing recognized revenues, 2015 has pulled back ahead in revenues, and refunds are essentially now even as well with 2014 at $31B and 2015 at $32B. Last year ended up at $128B for the month….I am not expecting 2015 to keep pace, but you never know. Through 6 days, revenue is up about $4B on what looks like bonafide growth, and outlays are up $6B on timing. To put it in perspective, we seem like we are on track for a $200B+ deficit for the 7th February in a row in a row.

US Daily Cash Deficit 2/6/2015

The US Daily Cash Deficit for Friday 2/6/2015 was $9.5B bringing the February 2015 deficit through 6 days to $39B.

2015-02-06 USDD

As expected, refunds dominate the chart, with 2015 back out to a $14B lead that is holding back net revenues in a big way. As it stands, revenue is down and outlays are up…..but adjusted for timing and pulling refunds out, it’s not so bad….yet. Withheld taxes show a glimmer of hope at +7% and $4B. While dwarfed by refund noise so far, this is by far the largest revenue source, so establishing a solid growth base here would be a positive development. For the year, this category is at +3.6% after a not so great January, but the year is young.