Social Security benefit cuts could average $500 a month for retirees if trust fund runs dry, report finds
Ascent/pks Media Inc. | Photodisc | Getty Images The trust funds that Social Security relies on to help pay benefits are running low. Based on
Ascent/pks Media Inc. | Photodisc | Getty Images 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 'No state would be spared' 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. watch now
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