A new report from the Committee for a Responsible Federal Budget (CRFB) warns that Social Security retirement benefits could be slashed by 24% on average—amounting to roughly $500 per month—if Congress does not intervene before the program's trust fund is projected to run dry in late 2032. The analysis, released this week, provides a state-by-state breakdown of potential losses, underscoring the widespread impact of inaction.
The warning comes just weeks ahead of the Social Security Administration's (SSA) next annual trustees report, which will update the solvency timeline for tens of millions of beneficiaries. Last year's report projected the Old-Age and Survivors Insurance (OASI) trust fund could pay full benefits through 2033, but that date was later pulled forward to the fourth quarter of 2032 after a tax change reduced revenue from benefit taxation.
State-by-State Impact
According to the CRFB report, Connecticut faces the steepest average monthly cut at $556, followed by New Jersey ($554), New Hampshire ($553), Delaware ($549), and Maryland ($541). In 29 states, the average reduction would exceed $500. California stands to lose the most in total benefits—$33.4 billion—while Florida would lose $26.6 billion and Texas $23.7 billion.
A 24% cut would reduce benefits by an estimated $345 billion annually for current recipients, equivalent to about 1.1% of U.S. GDP. In 40 states, the loss would exceed 1% of state GDP, with West Virginia, Mississippi, and Vermont expected to see the largest relative hits.
Mechanics of the Shortfall
Social Security's trust fund is not a vault that empties and ends payments; rather, it covers the gap between payroll tax income and promised benefits. When reserves are exhausted, benefits will continue to be paid from ongoing tax revenue, but they would automatically be reduced unless Congress boosts funding, trims payments, reallocates funds, or changes program rules.
The 2025 trustees report estimated the OASI fund can pay full scheduled benefits until 2033, then drop to 77% of scheduled payouts from ongoing income. The disability trust fund is expected to remain solvent through at least 2099. The combined old-age, survivors, and disability fund—though a legal fiction unless Congress acts—is projected to be depleted in 2034, paying 81% of scheduled benefits thereafter.
Congressional and CBO Projections
Molly Dahl, who leads long-term analysis at the Congressional Budget Office (CBO), told the Senate Budget Committee in March that the OASI trust fund will run out in fiscal 2032 without action, triggering automatic benefit cuts. The CBO's payable-benefits scenario projects an average cut of 28% per year from 2033 to 2036, following a smaller reduction in 2032.
Karen P. Glenn, chief actuary of the SSA, emphasized the limited room for maneuver, stating, "The math is simple." Lawmakers could raise program income by about a third, cut scheduled benefits by about a quarter, or adopt a combination of both.
Broader Economic and Political Context
The CBO attributes rising Social Security costs to an aging population, lower birth rates, longer benefit payouts, and wage growth above the payroll tax cap. Outlays are projected to rise from 5.2% of GDP in 2026 to 6.0% by 2056, while revenue remains near 4.5% of GDP.
The timeline has been shortened by recent legislation. The 2025 trustees noted that the Social Security Fairness Act worsened the combined fund outlook by boosting benefits for some workers. Subsequently, the SSA's actuary found that the One Big Beautiful Bill Act would reduce tax revenue from benefits, pushing OASI depletion from early 2033 to late 2032.
Congress retains the ability to block automatic cuts, and past behavior suggests lawmakers may act before benefits are reduced. However, timing is critical: acting early allows gradual adjustments, while waiting necessitates larger cuts or tax hikes that are harder to protect current retirees from. CRFB President Maya MacGuineas has called for a bipartisan commission, warning that "time is slipping away" with the retirement fund now less than seven years from depletion.
Medicare's Hospital Insurance fund is also under pressure, with the 2025 trustees projecting depletion in 2033, leaving 89% of scheduled benefits payable thereafter. The Social Security disability fund remains in better condition, but that does not resolve the retirement fund's shortfall.
The CRFB report concluded bluntly: "No state would be spared." The cuts would not be limited to a handful of retirees or states but would affect every beneficiary across the nation.
