Social Security recipients will see cuts of $500 a month in less than 7 years, study shows

Social Security recipients face cuts of about $500 per month in 2032 if the program’s retirement trust fund is depleted, a new report shows.

The nonpartisan Committee for Responsible Federal Budget said benefits for some 70 million recipients, including retirees, spouses and dependents, could see a 24% decline unless Congress steps in to solve the issue.

“With insolvency projected to occur during the terms of the next elected Senators and President, candidates and policymakers must decide how they will secure a program vital to millions of Americans. That starts with putting forward a plan because if Social Security becomes insolvent – no state would be spared,” CRFB said.

For the past 16 years, the cost of Social Security retirement program has exceeded its cash income, forcing it to dip into trust fund reserves to pay benefits, CRFB said. That trust fund will be exhausted in less than seven years.

By law, Social Security can’t pay out more in benefits that it receives in revenue once the trust fund is gone, necessitating the cuts.

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State-by-state cuts

Based on current state-level data, the across-the-board cuts by state would range from $459 to $556. Retirees from Connecticut, Delaware, Maryland, New Hampshire and New Jersey would face the largest monthly reductions, all topping $500.

Top 10 states facing the largest cuts would be:

• Connecticut – $556
• New Jersey  – $554
• New Hampshire  – $553
• Delaware  – $549
• Maryland – $541
• Washington  – $531
• Minnesota  – $530
• Massachusetts  – $527
• Michigan  – $523
• Utah  – $523

In Alabama, the average reduction would be $486 per month. In all, 19% of Alabamians – roughly 978,204 people – would be affected by the cuts. The total amount of benefits lost in the state would be $5.4 billion, 1.6% of the state’s economy.

That cut would make Alabama one of the hardest-hit in terms of economic impact.

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%