Social security cuts: Retirees in 15 states could lose $515+ a month

Beneficiaries living in 15 states could have their monthly benefits reduced by an average of $515 or more due to the exhaustion of the Social Security trust funds, according to new estimates.

The Social Security Board of Trustees expects that the Old-Age and Survivors Insurance Trust Fund will become insolvent in the fourth quarter of 2032. Following the insolvency date, only 78 per cent of the promised benefits can be provided – which is an average reduction of around $500 per month on a national scale.

According to data from the Committee for a Responsible Federal Budget, 29 states would see losses of $500 or more per month. Connecticut tops the list at $556, followed by New Jersey and New Hampshire at $554 each, Delaware at $549 and Maryland at $541. 

Washington, Minnesota, Massachusetts, Michigan, Utah, Virginia, Kansas, Pennsylvania, Rhode Island and Vermont round out the 15 hardest-hit states, with losses ranging from $516 to $531.

The cuts would be different across states because the average monthly benefit varies – the states with higher costs of living will have higher average monthly benefits, so the cut as a percentage will cost the residents more. 

The Social Security gives out the benefit to 63 million Americans, which includes the retirees, spouses, and dependents.

The reason for the deficit is rooted in its structure. During the last 16 years, the outlays for Social Security have been higher than the income received through cash flow; therefore, it had to draw down on the funds in order to give the benefit. 

According to the law, it is not possible to spend more than is received.

A report made recently by the AARP Public Policy Institute estimates that if the taxable payroll had followed the growth of GDP, the benefit could be paid up to 2059, 25 years later than projected now.