Millions of Americans who count on Social Security benefits could see their monthly payments reduced by an average of about $500 in the coming years. That’s according to a recent report from the Committee for a Responsible Federal Budget.
The report found the trust fund used to pay retirement benefits is expected to run out in 2032. The cut would impact an estimated 63 million Americans according to the nonpartisan committee.
“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.
Federal law prohibits Social Security from paying out more in benefits than it receives in revenue. If the trust fund dries up, it will trigger a cut of 24% for all beneficiaries. That cut would be worth about $500 per person on average, however the actual cut would be different for each individual.
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Based on current benefit levels, the cuts would range from $459 to $556 per month. The states estimated to receive the biggest cuts are:
- Connecticut – $556
- New Jersey – $554
- New Hampshire – $553
- Delaware – $549
- Maryland – $541
- Washington – $531
- Minnesota – $530
- Massachusetts – $527
- Michigan – $523
- Utah – $523
In terms of total estimated benefits that would be lost as a share of the GDP, the top-10 states 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%
The report highlights an ongoing concern for retirees and others who receive Social Security benefits. For years experts have warned of the upcoming budget crisis, but Congress has been unable or unwilling to take action to address the concern.
Recently, the CRFB proposed instituting a benefits cap of $50,000 per person — and $100,000 for married couples — that would help reduce the solvency gap. It would also raise the benefits for the bottom 70% to 80% of beneficiaries.
However, that plan has been criticized by the AARP as it doesn’t address a core concern.
“Proposals that focus on capping Social Security don’t address the problem in front of Congress: ensuring every American gets every dollar they have earned,” said AARP vice president for financial security and livable communities Jenn Jones in a statement. “What’s worse, ideas like this risk becoming a backdoor to broader cuts.”
