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The trust funds that Social Security relies on to help pay benefits are shrinking.
Based on Social Security Administration estimates from August, the trust fund dedicated to retirement benefits is expected to run out by 2032, when those benefits would have to be reduced by 24%. The annual report of the Social Security trustees, which measures these times, is expected to be released this month.
In a new report, the Committee for a Responsible Federal Budget finds that a 24% reduction in benefits immediately after the trust fund is depleted would result in an average monthly reduction of $500 for retirees.
But in 29 states, the reduction in monthly benefits will be even greater, according to the nonpartisan organization, which focuses on educating the public about fiscal policy issues.
Connecticut beneficiaries will see the highest monthly benefit reduction of $556, according to the CRFB report. The rest 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
‘There is no situation that can be saved’
A total of 63 million current beneficiaries will be affected by the 24% reduction in the Social Security retirement system, according to the CRFB. That includes 54 million retired workers and 9 million receiving survivor or dependent benefits.
Nationally, an average of 17.7% of the population will be affected by the benefit cuts. That reduction would be between 10% and 23% of each state’s population, according to the CRFB. The six counties that will see the highest shares of affected residents are:
- Maine, 22.9%
- West Virginia, 22.4%
- Vermont, 22%
- Delaware, 21.1%
- Montana and New Hampshire, each with 21%
To be sure, cuts in Social Security benefits are inevitable. If Congress acts before the target termination date, overall benefit cuts can be avoided. However, to improve the solvency of the system, lawmakers may choose to implement targeted benefit cuts, tax increases or a combination of the two.
“What we are showing is what will happen if there are no changes in the law or policies,” said Marc Goldwein, senior vice president and senior director of policy at CRFB.
Although shrinking the retirement fund will result in reduced benefits by law, Congress could redistribute money to the disability fund or make other changes to temporarily improve solvency to pay benefits, Goldwein said. It is also possible that management can decide how the reduction in profits is distributed.
“There is a lot of uncertainty in the law,” he said.
“No state is immune from the potentially dangerous consequences of default,” the Committee for a Responsible Federal Budget said in a report. “With less than seven years until Social Security is considered bankrupt, policymakers need to make changes to the system as quickly as possible to protect against these conditions.”
The CRFB report is based on 2024 Social Security Administration beneficiary data and 2024 gross domestic product (GDP) data from the Bureau of Economic Analysis. If the deficit is reached by 2032, the results may differ based on changing demographic and economic trends, according to the CRFB.
The coming days of Social Security cuts come as the number of people age 50 and older grows, according to AARP’s new longevity report. Currently, 36.3% of the population is over 50 years old in the US, according to the report, while 29 states have populations older than the US average.
States with the oldest populations include Maine, New Hampshire, Vermont, West Virginia, Florida and Delaware, according to AARP.
