Projected Social Security shortfalls could leave retirees with noticeably smaller monthly checks by 2032.
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Social Security’s retirement trust fund is projected to be depleted in 2032, when about 78% of scheduled benefits could be paid.That would amount to roughly a 22% benefit cut if Congress does not act before the trust fund’s reserves are depleted.The dollar impact would vary by state because average Social Security benefits differ across the country.
The depletion of the Social Security trust fund’s reserves would affect the whole country at once, but the impact would be deeper in a handful of states.
A report from the Committee for a Responsible Federal Budget (CRFB), a nonpartisan fiscal watchdog, models what would happen if the program’s retirement trust fund hits its projected late-2032 shortfall. Under the report’s 24% benefit cut scenario, retirees would lose $500 a month on average—about what the typical older household spends on food at home.
Meanwhile, the latest Social Security Trustees Report projects that about 78% of scheduled retirement and survivor benefits would be payable after the trust fund’s reserves are depleted, implying a roughly 22% cut.
Why This Matters To You
A cut in benefits would affect every retiree, particularly those who rely on Social Security for most of their monthly income.
Fears about the potential depletion of the Social Security trust fund are already widespread, said Shannon Benton, executive director of the Senior Citizens League. The group’s surveys consistently show that many retirees lean on Social Security for much of their income while doubting Congress will act in time.
“That combination of heavy reliance and low confidence leaves many Americans nearing or in retirement deeply concerned about their financial future,” Benton told Investopedia.
Under the CRFB’s 24% benefit cut scenario, the steepest dollar cuts cluster in the Northeast and a few high-benefit states. Connecticut tops the list at $556 a month, followed by New Jersey ($554), New Hampshire ($553), Delaware ($549), and Maryland ($541).
Those states pay larger average benefits, so the CRFB’s modeled 24% drop takes more off each check. Under that scenario, the monthly cut would top $500 in 29 states.
Measured against the size of local economies, the picture shifts, with more of an economic effect on states with older and lower-income populations.
West Virginia leads with cuts amounting to the highest share of state GDP, 1.9%, followed by Mississippi and Vermont at 1.8%. Nationally, the modeled cuts are equivalent to 1.1% of GDP.
Maine would have the largest share of residents affected, 22.9%, versus a national average of almost 18%.