Social Security benefit cuts could average $500 a month for retirees if trust fund runs dry, report finds

The trust funds that Social Security relies on to help pay benefits are running low.

Based on Social Security Administration estimates 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 trustees report, which gauges these timelines, is expected to be released this month.

In a new report, the Committee for a Responsible Federal Budget finds that an immediate 24% benefit cut once that trust fund runs out would result in an average monthly reduction of $500 for retirees.

But in 29 states, the monthly benefit reductions would be even higher, according to the nonpartisan organization, which focuses on educating the public about fiscal policy issues.

Connecticut beneficiaries would see the highest average monthly benefit cut of $556, according to CRFB's report. The remainder of the top 10 are:

• New Jersey, with $554 in average monthly reductions
• New Hampshire, $553
• Delaware, $549
• Maryland, $541
• Washington, $531
• Minnesota, $530
• Massachusetts, $527
• Michigan, $523
• Utah, $523

A total of 63 million current beneficiaries would be affected by the projected 24% cut to Social Security's retirement program, according to CRFB. That comprises 54 million retired workers and 9 million who receive either survivor or dependent benefits.

Nationally, an average of 17.7% of the population would be affected by the benefit reductions. Those cuts would range between 10% to 23% of each state's population, according to CRFB. The six states that would see the highest shares of affected residents are:

• Maine, with 22.9%
• West Virginia, 22.4%
• Vermont, 22%
• Delaware, 21.1%
• Montana and New Hampshire, each with 21%

To be sure, Social Security's benefit reductions are not inevitable. If Congress acts ahead of the projected depletion date, the across-the-board benefit cuts can be avoided. However, to shore up 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 would happen if there's no changes to the law or to policy," said Marc Goldwein, senior vice president and senior policy director at CRFB.

While the retirement fund depletion would lead to benefit cuts by law, Congress could reallocate money from the disability trust fund or make other changes to temporarily improve solvency to pay benefits, Goldwein said. It's also possible that the administration could decide how the benefit cuts are allocated.

"There's a lot of legal ambiguity," he said.

"No state would be spared from the potentially devastating effects of insolvency," the Committee for a Responsible Federal Budget said in the report. "With less than seven years until Social Security is projected to be insolvent, 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 insolvency is reached in 2032, the effects may differ based on changing demographic and economic trends, according to CRFB.

Social Security's looming depletion dates come as the population of individuals ages 50 and over is growing, according to a new AARP report on longevity. Currently, 36.3% of people are over age 50 in the U.S., according to the report, while 29 states have populations older than the U.S. average.

States with significantly older populations include Maine, New Hampshire, Vermont, West Virginia, Florida and Delaware, according to the AARP.