Millions of Americans could see their Social Security benefits reduced by hundreds of dollars per month if Congress fails to address the program’s looming funding shortfall, according to a new analysis that warns benefit cuts would affect retirees in every state by 2032.
The analysis, released by the Committee for a Responsible Federal Budget, estimates that Social Security beneficiaries would face an automatic 24% reduction in monthly payments if the program’s Old-Age and Survivors Insurance trust fund becomes insolvent at the end of 2032. The average retiree would lose roughly $500 per month in benefits under that scenario.
The report found that “no state would be spared” from the cuts, which would affect between 10% and 23% of residents depending on the state. Among the largest are Connecticut, where beneficiaries would lose an average of $556, New Hampshire at $553, and Delaware at $549. Maryland retirees would see an average reduction of $541 per month.
The warnings come as Social Security faces growing financial pressure from an aging population and a shrinking ratio of workers paying into the system compared with beneficiaries drawing retirement benefits. Social Security has relied on trust fund reserves in recent years because benefit obligations have exceeded payroll tax revenue.
The depletion of the trust fund would not mean Social Security stops sending checks altogether. Payroll tax revenue would continue to flow into the program, allowing benefits to continue at a reduced level. Under the latest projections, ongoing revenue would recover roughly three-quarters of scheduled benefits after the trust fund is exhausted.
The Social Security Administration’s most recent trustees report projected that the retirement trust fund would be able to pay full benefits through 2033 before reserves are depleted, while more recent analyses have suggested insolvency could occur by the end of 2032.
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More than 69 million Americans receive Social Security benefits, and many retirees depend on the program as a primary source of income. A survey cited in the report found that nearly three-quarters of retirees rely on Social Security for more than half of their income, while roughly four in 10 depend on it entirely.
Lawmakers have long debated potential solutions, including raising payroll taxes, increasing or eliminating the cap on taxable earnings, reducing future benefits, or adopting a combination of revenue increases and spending changes.
