Social Security trust fund shortfall may mean $500-a-month cuts: Report
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The trust funds that Social Security uses to help pay benefits are dwindling.
Based on Social Security Institution predictions As of August, it is predicted that the trust fund allocated to retirement benefits will be exhausted in 2032 and that these benefits will need to be reduced by 24%. The annual Social Security trustee report measuring those timelines is expected to be released this month.
One new reportThe Committee for a Responsible Federal Budget found that an immediate 24% benefit cut when the trust fund runs out would result in an average monthly reduction of $500 for retirees.
But monthly benefit cuts will be even higher in 29 states, according to the nonpartisan organization focused on educating the public on fiscal policy issues.
Connecticut beneficiaries will see the highest average monthly benefit cut of $556, according to CRFB’s report. Here’s the rest of the top 10:
- New Jersey, with an average monthly discount of $554
- New Hampshire, $553
- In Delaware, $549
- Maryland, $541
- Washington, $531
- Minnesota, $530
- Massachusetts, $527
- Michigan, $523
- In Utah, $523
‘No state will be spared’
According to the CRFB, a total of 63 million current beneficiaries would be affected by the anticipated 24% cut to the Social Security retirement program. Of this figure, 54 million are retired workers and 9 million are survivors or dependents receiving benefits.
Nationally, an average of 17.7% of the population will be affected by welfare cuts. These cuts will range from 10% to 23% of each state’s population, according to the CRFB. The six states that will see the highest share of affected residents are:
- Maine, with 22.9%
- West Virginia, 22.4%
- Vermont, 22%
- in Delaware, 21.1%
- Montana and New Hampshire each have 21%
Of course, SSI benefit cuts are not inevitable. Across-the-board welfare cuts could be avoided if Congress acts before the projected exhaustion date. However, To increase the program’s solvency, lawmakers may choose to implement targeted benefit reductions, tax increases, or a combination of both.
“What we’re showing is what happens if there’s no change in law or policy,” said Marc Goldwein, CRFB’s senior vice president and senior policy director.
Goldwein said that depleting the retirement fund would by law lead to benefit cuts, but Congress could reallocate money from the disability trust fund or make other changes to temporarily increase benefit paying ability. It is also possible for the administration to decide how welfare cuts will be allocated.
“There is a lot of legal uncertainty,” he said.
“No state will be safe from the potentially devastating effects of bankruptcy,” the Committee for a Responsible Federal Budget said in its report. “With less than seven years until Social Security collapses, policymakers need to enact changes to the program as quickly as possible to protect against these scenarios.”
CRFB’s report is based on 2024 Social Security Administration data on beneficiaries and 2024 state gross domestic product data from the Bureau of Economic Analysis. If bankruptcy is reached in 2032, the impacts may vary based on changing demographic and economic trends, according to the CRFB.
Social Security’s impending depletion dates come as the population of individuals age 50 and older grows, according to a new report. AARP report regarding longevity. Currently, 36.3 percent of people in the United States are over the age of 50, while 29 states have populations older than the U.S. average, according to the report.
According to AARP, states with significantly older populations include Maine, New Hampshire, Vermont, West Virginia, Florida and Delaware.
