Ascent/PKS Media Inc. | Photodisk getty images
The trust fund that Social Security relies on to help pay benefits is running low.
Based on Social Security Administration projections from August, the trust fund dedicated to retirement benefits is projected to run out in 2032, when those benefits would need to be reduced by 24%. The annual Social Security Trustee Report, which assesses these timelines, is expected to be released this month.
In a new report, the Committee for a Responsible Federal Budget found that an immediate 24% benefit cut if the trust fund were depleted would result in an average monthly cut of $500 for retirees.
But in 29 states, the cuts to monthly benefits would be even greater, according to the nonpartisan organization, which focuses on educating the public about fiscal policy issues.
Connecticut beneficiaries will receive the highest average monthly benefit cut of $556, the CRFB reports. The remainder of the top 10 are:
- New Jersey, with an average monthly deductible of $554
- New Hampshire, $553
- Delaware, $549
- Maryland, $541
- Washington, $531
- Minnesota, $530
- Massachusetts, $527
- Michigan, $523
- Utah, $523
‘No state will be spared’
According to the CRFB, an estimated 24% cut to Social Security’s retirement program would affect a total of 63 million current beneficiaries. This includes 54 million retired workers and 9 million who receive either survivor or dependent benefits.
Nationally, benefit cuts would affect an average of 17.7% of the population. According to the CRFB, these cuts would amount to between 10% and 23% of each state’s population. The six states that will have the highest numbers of affected residents are:
- Maine, with 22.9%
- West Virginia, 22.4%
- Vermont, 22%
- Delaware, 21.1%
- Montana and New Hampshire, each with 21%
Of course, cuts to Social Security benefits are not inevitable. If Congress acts before the estimated reduction date, overall benefit cuts may be avoided. However, to increase the program’s solvency, lawmakers may choose to implement targeted benefit cuts, tax increases, or a combination of the two.
“What we’re showing is what will happen if there is no change in law or policy,” said Mark Goldwein, senior vice president and senior policy director of the CRFB.
Goldwein said that while the retirement fund shortfall would result in benefits being cut by law, Congress could reallocate money from the disability trust fund or make other changes to temporarily improve the solvency of paying benefits. It’s also possible that the administration could decide how to allocate the benefit cuts.
“There is a lot of legal ambiguity,” he said.
A responsible federal budget committee report said, “No state will escape the potentially devastating effects of bankruptcy.” “With less than seven years until Social Security is projected to go bankrupt, policymakers need to make changes to the program as quickly as possible to protect against these scenarios.”
The CRFB report is based on 2024 Social Security Administration data on beneficiaries and 2024 state gross domestic product data from the Bureau of Economic Analysis. According to the CRFB, if bankruptcy were to occur in 2032, the effects could vary depending on changing demographic and economic trends.
According to a new AARP report on longevity, Social Security’s impending depletion dates are approaching as the population of individuals age 50 and older continues to grow. According to the report, currently 36.3% of people in the US are over the age of 50, while 29 states have a population higher than the US average.
According to AARP, states with larger aging populations include Maine, New Hampshire, Vermont, West Virginia, Florida and Delaware.
