A new analysis from the Committee for a Responsible Federal Budget (CRFB) warns that Social Security's retirement trust fund is projected to become insolvent in 2032, triggering an automatic 24% across-the-board benefit cut for retirees, spouses, survivors, and dependents unless lawmakers act.
The report, released Wednesday, estimates that the reduction would affect 63 million Americans nationwide and slash average monthly benefits by about $500.
In 29 states, average monthly cuts would exceed $500, with retirees in Connecticut, Delaware, Maryland, New Hampshire, and New Jersey facing some of the largest reductions.
CRFB notes that Social Security's retirement program has paid out more than it collects in revenue for the past 16 years, relying on trust fund reserves to cover the gap.
Once those reserves are exhausted, federal law prohibits the program from paying more in benefits than it receives in revenue.
According to the analysis, more than 15% of residents would be directly affected in 47 states. The highest shares of impacted populations would be found in Maine, West Virginia, Vermont, Delaware, Montana, and New Hampshire.
The economic effects would also be significant. A 24% benefit cut would reduce payments by an estimated $345 billion nationally, equal to roughly 1.1% of U.S. gross domestic product.
In 40 states, the losses would exceed 1% of state GDP, with West Virginia, Mississippi, Vermont, South Carolina, and Maine among the hardest hit.
In total dollar terms, California would experience the largest reduction in benefits at approximately $33 billion annually, followed by Florida ($27 billion), Texas ($24 billion), New York ($20 billion), and Pennsylvania ($16 billion).
CRFB said no state would escape the consequences of insolvency and urged policymakers to pursue reforms quickly.
The group argued that while restoring long-term solvency will require difficult choices involving taxes and benefits, delaying action increases the risk of abrupt cuts for all beneficiaries regardless of age or income.
"With less than seven years until Social Security is projected to be insolvent, policymakers need to enact changes to the program as quickly as possible," the report concluded.