The current law total (employer plus employee) OASDI tax rate is 12.4 percent levied on taxable wages. OASDI tax rate increases begin in 2020.

The progressive payroll tax rate increase is levied at marginal tax rates of 3 percentage points on wages above two-thirds of the taxable maximum, 2 percentage points on wages between one-third and two-thirds of the taxable maximum, and 1 percentage point on wages below one-third of the taxable maximum.

The two flat OASDI payroll tax rate increase of 10 and 20 percent result in payroll tax rates of 13.64 and 14.88 percent.

The taxable maximum is the wage limit above which wage earnings are not subject to payroll taxes. The current (2018) taxable maximum is $128,700 and is scheduled under current law to grow at the same rate as wages.

Under this policy option, the taxable maximum is increased to $150,000 in 2020—an immediate hike of about 15 percent compared to its expected level in the year 2020. The taxable maximum continues to increase at the rate of growth of wages plus 1 percentage point after 2020. OASDI taxes above the current law taxable maximum do not trigger additional Social Security benefits.

This policy option introduces a "donut-hole" in the payroll tax base. Wages above the taxable maximum up to the "minimum threshold" of $250,000 are not subject to payroll taxes. Wage earnings above this "minimum threshold" are subject to additional payroll taxes at the rate of one-half, alternatively the full, OASDI tax rate.

Unlike the current law taxable maximum, this policy's "minimum threshold" is not indexed to wage growth. Eventually, increases in the taxable maximum limit will surpass the "minimum threshold" and the donut-hole will disappear. When that happens, wages earnings above the taxable maximum will be subject to one-half of, alternatively the full, OASDI payroll tax rate. OASDI taxes above the taxable maximum do not trigger additional Social Security benefits.

The Cost of Living Adjustment (COLA) ensures that benefits keep pace with the general increase in prices. The current law price index is the CPI-W—consumer price index for wage and clerical workers calculated by the U.S. Bureau of Labor Statistics.

This policy option changes the wage index used to the CPI-Elderly—based on goods and services purchased by older individuals—or, alternatively, the Chained CPI that adjusts the consumption goods basket according to evolving consumer-spending patterns. The CPI-Elderly grows faster than CPI-W by 0.2 percentage points per year. The Chained CPI grows slower than CPI-W by 0.2 percentage points per year.

The worker's Primary Insurance Amount (PIA) is calculated by applying a progressive formula to the Average Indexed Monthly Earnings (AIME). The latter is calculated using an average of the worker's 35 highest years of earnings. In 2018, the bend-point formula to calculate the worker's PIA adds together three amounts: 90 percent of the first $895 of AIME, 32 percent of AIME between $895 and $5,397, and 15 percent of AIME above $5,397. The dollar thresholds are wage indexed each year.

The PIA is the basis for calculating retirement and auxiliary benefits for the worker and her dependents and survivors.

Under the "progressive" policy option, the 2nd bend point factor is reduced from 32 percent to 25 percent and the 3rd bend point factor is reduced from 15 percent to 8 percent.

Under the "flat reduction" policy option, all bend point factors are reduced by 10 percentage points to 80 percent, 22 percent, and 5 percent. All reductions in bend point factors are implemented in equal percentage point decrements over 20 years beginning in 2020.

Under current law, workers can begin to collect reduced benefits at age 62. The age of retirement with full benefits (FRA), is increasing at the rate of two months for each year later that a person is born. Under the current schedule, FRA for those born after 1960 will stabilize at 67 years. Under this policy option, FRA continues to increase at the current rate to stabilize at the alternative ages specified.

The Social Security simulator allows you to choose the degree to which the economy is open to foreign investment flows. Under the 0% assumption, the economy is entirely closed to foreign investment, all government debt must be domestically held, and so government deficits crowd out domestic investment. Under the 100% assumption, the economy is entirely open to foreign investment, and foreigners have the option of purchasing government debt. The 40% and 70% assumptions are intermediate assumptions.