When most people make a retirement
plan, they expect to get their promised Social Security benefits, and with
good reason. You pay into the system and are entitled to retirement or
disability benefits once you meet eligibility requirements.
Unfortunately, a looming Social Security cliff could lead to retirees getting
far less than expected. In fact, 63 million current retirement
beneficiaries, around one in five Americans, face an automatic 24% cut to
benefits as early as 2032. This would leave the average retiree with around $500
less each month, costing seniors collecting Social Security around $345 billion
collectively.
As a new analysis from the nonpartisan Committee for a Responsible Federal
Budget explains, Social Security beneficiaries in every state would
feel the pain. However, the report, entitled “No State Spared, Mapping the
Impact of Social Security’s Insolvency,” makes clear that a failure to fix the
Social Security shortfall could hit beneficiaries in certain states more than
others.
So, is your state one of them?
Retirees get closer to the Social Security cliff
Unfortunately, retirees are getting very close to the edge of the
Social Security cliff, as some recent economic changes have resulted in Social
Security’s financial situation getting much worse.
The most recent Social Security Trustees Report, released in June 2026, showed
that the Old-Age and Survivors Insurance (OASI) Trust Fund is expected to run
out of funds in 2032. This is a full quarter earlier than projected last year.
The Trustees estimate this would lead to an automatic 22% benefits cut, while
the Committee for a Responsible Federal Budget estimates a 24% cut would be
necessary.
These cuts would happen automatically because revenue coming in from current
workers is enough to pay a percentage of benefits, but not the entire amount.
Social Security is only allowed to pay benefits from what it collects and from
money in the trust fund.
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Why are Social Security’s finances getting worse?
Social Security’s finances are getting worse because the program is collecting
less revenue and paying out more benefits.
The Social Security Fairness Act repealed provisions limiting some government
and public service workers from collecting full benefits because they were
getting a pension from a job where they didn’t pay Social Security tax. This
change has cost the Social Security Administration billions in extra benefits.
While retirees are getting more money, Social Security is collecting less. The
One Big Beautiful Bill Act provided a new deduction for seniors that resulted in
far fewer retirees owing tax on benefits. Now, as many as 88% of retirees pay no
tax on their Social Security, according to a new analysis from the Council of
Economic Advisers.
That’s good for them, but bad for the program because less revenue collected
means more money has to come from the trust fund to pay benefits. It’s going to
run out sooner because of that.
Retirees in every state feel the pain
The automatic benefit cut is going to hit retirees nationwide, no matter where
they live. In fact, the Committee for a Responsible Federal Budget warns that
the across-the-board monthly cut across all 50 states plus Washington D.C.
ranges from $459 to $556.
Total benefit cuts are actually going to exceed 1% of the Gross Domestic Product
in 40 states, and over 15% of the population would be directly impacted in 47
states. The loss of these benefits could hurt not just seniors, but the many
local businesses that depend on their dollars to stay afloat.
Here’s where retirees are going to be hit the hardest
So, which states face the biggest benefit cuts? According to the CRFB, here are
10 states where retirees face the biggest automatic reduction in benefits:
- Connecticut, where retirees are going to see benefits cut by $556 on
average. - New Jersey, where cuts average $554
- New Hampshire, where cuts average $553
- Delaware, where cuts average $549
- Maryland, where cuts average $541
- Washington, where cuts average $531
- Minnesota, where cuts average $530
- Massachusetts, where cuts average $527
- Michigan, where cuts average $523
- Utah, where cuts average $523
Mississippi residents, on the other hand, face the least drastic change, but
still lose $459 on average based on the Committee’s data.
These states face the biggest reductions because retirees living in them have
larger benefits, on average, due to the fact that wages in these areas tend to
be above the nationwide average.
Is there a way to pull Social Security back from the brink?
So, are lawmakers going to allow Social Security retirees to fall over the cliff
and potentially face financial ruin? Probably not.
We’ve been here before, with Social Security facing a similar financial crisis
in the 1980s. Lawmakers took action then, raising taxes, raising the full
retirement age, delaying a scheduled Cost of Living Adjustment, and doing a
fairly good job ensuring Social Security would remain stable for decades.
Congress may not follow this exact model, but if lawmakers let seniors get hit
with a 24% benefit cut, they are likely to pay a steep political price. Still,
the Committee For a Responsible Federal Budget warns that each year Congress
delays, the problem becomes more expensive and harder to solve. Lawmakers who
want to avoid disaster should take heed of this warning.
Bottom line
Social Security retirees are standing near the edge of a cliff, no question
about it. Losing around $500 per month on average could cause very serious
financial hardship for most seniors. And worries about the program’s future are
not exactly going to make for a stress-free retirement.
The good news is that Congress is likely going to act to avoid the big automatic
benefit cut that’s coming. The bad news is, this could involve a change to full
retirement age or to how COLAs are calculated, which would result in a de facto
benefit cut. So, you still need to be prepared for the fact that your Social
Security benefit may not be exactly as expected.
If you save plenty of money to stretch
your retirement dollars further, withstanding this hit is easier, so work on
making sure your finances are secure even if Social Security does fall off the
cliff.
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Author Details
Christy Rakoczy Bieber
Christy Rakoczy Bieber is an attorney turned personal finance writer who has spent 17 years helping readers understand Social Security: the claiming rules, the policy shifts, and the fine print that can mean thousands of dollars in lifetime income. Her work has appeared in Kiplinger, Forbes, The Motley Fool, and the Wall Street Journal.
