Key Takeaways
- The Social Security Administration projects that payroll taxes will only be able to fund 78% of Social Security benefits by 2032.
- That could mean cuts to retirees’ monthly payments.
- A new analysis predicts which states could see the steepest drop.
Individuals planning retirement within the next ten years should note recent Social Security Administration updates that may reduce expected benefit amounts.
A June report from the Social Security Board of Trustees indicates that the OASI trust fund is expected to be exhausted by the third quarter of 2032, resulting in benefits covering only 78% of projected obligations.
The Committee for a Responsible Financial Budget (CRFB) warns that, to prevent expenditures from surpassing revenues, benefit reductions of approximately 22% may be required by 2033.
The magnitude of any reduction varies with individual earnings. The CRFB projects that an average dual‑income couple could lose roughly $16,900 annually, and that nationwide monthly benefit cuts would average about $500.
A MoneyLion analysis, cited by Yahoo Finance, shows that retirees in some states are likely to experience larger reductions. The 15 states with the highest average Social Security payments are projected to encounter the most substantial cuts beginning in 2033. The following list outlines the anticipated monthly losses:
- Connecticut: $556 per month
- New Jersey: $554
- New Hampshire: $554
- Delaware: $549
- Maryland: $541
- Washington: $531
- Minnesota: $530
- Massachusetts: $527
- Michigan: $523
- Utah: $523
- Virginia: $522
- Kansas: $520
- Pennsylvania: $519
- Rhode Island: $519
- Vermont: $516
