Social Security beneficiaries will lose an average of $500 per month in benefits if the program’s trust fund is depleted in less than seven years, as predicted, according to a new analysis.
For the last 16 years, the cost of Social Security’s retirement program has exceeded the amount it receives from taxes collected from paychecks, forcing it to dip into its trust fund reserves to cover the shortfall. Without any changes, that retirement trust fund will be exhausted in 2032, according to the the Social Security Trustees.
At that point, everyone’s benefits could see a 24% decline, the Committee for a Responsible Budget estimates. Nationally, that equals a $500 average monthly loss, which is more than what the average retired household spends on groceries each month, it said. Households with a person over 65 spent an average of $5,251 on food at home in 2024, or $438 per month, according to the 2024 Consumer Expenditure Survey. Adjusted for inflation, this figure would equal $461 in 2026, CRFB said.
“No state would be spared from the potentially devastating effects of insolvency,” CRFB warned in its report.
How many people will be affected?
Nearly 70 million Americans, or about one in five people, receive Social Security benefits. That includes retirees, surviving spouses and dependents.
Between 10% and 23% of each state’s population would be affected, CFRB estimates.
Which states would see the largest?
Beneficiaries in 29 states would see an even deeper than average $500 reduction, CRFB said.
The top 10 losers, it said, are:
- Connecticut $556
- New Jersey $554
- New Hampshire $553
- Delaware $549
- Maryland $541
- Washington $531
- Minnesota $530
- Massachusetts $527
- Michigan $523
- Utah $523
Which states would see the most people affected?
Between 10% and 23% of each state’s population would be affected by Social Security benefits cuts, CRFB said.
States with the highest percentage of residents facing benefits reductions are:
- Maine 22.9%
- West Virginia 22.4%
- Vermont 22.0%
- Delaware 21.1%
- Montana 21.0%
- New Hampshire 21.0%
- South Carolina 20.6%
- Wisconsin 20.2%
- Michigan 19.8%
- Pennsylvania 19.8%
How might state economies be affected?
If Social Security benefits were cut by 24% today, it would amount to $345 billion this year, or 1.1% ofgross domestic product (GDP), CFRB estimates.
Individual state impacts range from 0.2% to 1.9% of GDP, with cuts exceeding 1% of GDP in 40 states, CFRB said. States that have older populations and lower per-person incomes would be impacted the most, it said.
The top 10 states most affected are:
- West Virginia 1.9%
- Mississippi 1.8%
- Vermont 1.8%
- South Carolina 1.7%
- Maine 1.7%
- Michigan 1.6%
- Montana 1.6%
- Arkansas 1.6%
- Alabama 1.6%
- Idaho 1.5%
“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,” CFRB said.
