This group of Social Security recipients face losing $16,900 a year in benefits

Barring Congressional action, Social Security is only six years away from insolvency. At that point – late 2032, according to the latest estimates – benefits will be cut by an estimated 22% to ensure the program’s costs don’t exceed revenue.

To put it into perspective, that date is when today’s 61-year-olds will reach their full retirement age and when today’s youngest retirees turn 68.

The cuts would be particularly brutal for a specific group. According to the Committee for a Responsible Federal Budget, a typical newly retired dual-earning couple could lose $16,900 in benefits annually once key Social Security trust funds are exhausted in late 2032.

Later that year, the Medicare Hospital Insurance trust fund is projected to also become insolvent, cutting spending by 11%, which would further impact millions of seniors.

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Projected cuts vary widely depending on couples’ ages, marital status and work history, the committee noted.

Low-income couples with a single earner face cuts of up to $7,700. Low-income dual earning households would lose up to $10,200. Medium-income single earner couples would face cuts up to $12,700 while dual earners would see some $16,900. High-earning single-income couples would be cut $16,800 annually while dual-income high earners would lose as much as $22,300 a year.

“While the absolute size of these cuts would be smaller for low-income couples than high-income couples, they would also be a larger share of total incomes for low-income retirees and hence more financially disruptive,” CRFB’s analysis noted.

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While couples would be hit hard, no one will be spared from the cuts.

Cuts to average monthly benefits would top $500 in 29 states, with largest hits for retirees in Connecticut, Delaware, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, Utah and Washington. More than 15% of the population would be directly impacted in 47 states, with the largest shares of the population impacted in Delaware, Maine, Michigan, Montana, New Hampshire, Pennsylvania, South Carolina, Vermont, West Virginia and Wisconsin.

Total benefit cuts would top 1% of Gross Domestic Product in 40 states with the largest economic impact in Alabama, Arkansas, Idaho, Maine, Michigan, Mississippi, Montana, South Carolina, Vermont and West Virginia.

The latest projections from the Social Security Board of Trustees show that the reserves of the Old-Age and Survivors Insurance Trust Fund are set to run out in the fourth quarter of 2032. After that point, Social Security would only be able to pay 78% of promised benefits.

Social Security is largely financed through dedicated payroll taxes and taxes on benefits. Any shortfall is covered by its existing trust funds.

For the past 16 years, Social Security payments have exceeded its cash income, forcing it to dip into fund reserves to pay benefits. By law, it can’t pay out more in benefits than it receives in revenue, so once the trust fund is gone, cuts will follow.