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The trust funds that Social Security relies on to pay benefits are running low.
Based on August estimates from the Social Security Administration, trust funds dedicated to retirement benefits are expected to be depleted in 2032, when retirement benefits would need to be cut by 24%. The annual Social Security Administration Board report evaluating these schedules is expected to be released this month.
In a new report, the Committee for a Responsible Federal Budget finds that cutting benefits by 24% immediately after the trust fund is exhausted would cut retirees’ average monthly pay by $500.
But in 29 states, monthly benefit cuts will be even higher, according to a nonpartisan organization focused on educating the public about fiscal policy issues.
Beneficiaries in Connecticut will see the largest benefit cuts, averaging $556 per month, according to the CRFB report. The rest of the top 10 is:
New Jersey, average monthly savings of $554New Hampshire, $553Delaware, $549Maryland, $541Washington, $531Minnesota, $530Massachusetts, $527Michigan, $523Utah, $523
“No nation is immune.”
The expected 24% reduction in the Social Security retirement program will affect a total of 63 million current beneficiaries, according to the CRFB. This includes 54 million retired workers and 9 million receiving survivor benefits or dependent allowances.
Nationally, an average of 17.7% of the population will be affected by benefit cuts. According to the CRFB, the reduction will range from 10% to 23% of each state’s population. The six states with the highest percentage of affected residents are:
Maine, West Virginia 22.9%, Vermont 22.4%, Delaware 22%, Montana 21.1%, New Hampshire, 21% each
To be sure, cuts in Social Security benefits are not inevitable. Across-the-board benefit cuts can be avoided if Congress acts before the expected depletion date. However, to strengthen the program’s solvency, lawmakers may choose to implement targeted benefit cuts, tax increases, or a combination of both.
“What we’re showing is what happens if there is no change in law or policy,” said Mark Goldwein, senior vice president and senior policy director at CRFB.
Goldwein said that while the depletion of retirement funds would lead to legislative benefit reductions, Congress could reallocate funds from the Disability Trust Fund or make other changes to temporarily improve the ability to pay benefits. The administration could also decide how to distribute the benefit cuts.
“There’s a lot of legal ambiguity,” he says.
“No state is immune from the potentially devastating effects of bankruptcy,” the Committee for a Responsible Federal Budget said in a report. “With less than seven years until Social Security is projected to fail, policymakers need to enact program changes as soon as possible to protect against this scenario.”
The CRFB report is based on 2024 data from the Social Security Administration on beneficiaries and 2024 state gross domestic product data from the Bureau of Economic Analysis. According to the CRFB, if insolvency is reached in 2032, the impact could vary depending on changing demographic and economic trends.
As the population of individuals over age 50 grows, Social Security’s exhaustion date approaches, according to AARP’s new report on longevity. According to the report, 36.3% of the U.S. population is currently over 50 years old, and 29 states have populations older than the U.S. average.
States with significantly aging populations include Maine, New Hampshire, Vermont, West Virginia, Florida and Delaware, according to AARP.
