Mass. retirees could lose over $500 a month in Social Security benefits by 2032: Report

Massachusetts retirees could face a steep $527 average monthly reduction in Social Security benefits by 2032 if the federal retirement program exhausts its reserves, according to a recently released analysis.

The Social Security retirement trust fund is projected to be depleted in less than seven years, according to a June 3 report by the Committee for a Responsible Federal Budget. By law, the program cannot pay out more in benefits than it collects in revenue, meaning all retirees are projected to face an immediate 24% benefit cut once the fund is exhausted.

In Massachusetts, this looming shortfall would translate to a total loss of $7.1 billion in benefits, directly impacting 1.2 million residents, according to the report.

The projected $527 monthly cut places Massachusetts eighth in the nation for the highest individual financial impact. Connecticut leads the country with an estimated $556 monthly reduction, while the national average sits at $500. The committee notes that a $500 drop is more than the average retired household spends on groceries each month.

An automatic 24% reduction would affect 16.4% of the Massachusetts population, according to the committee’s data. Nationwide, the cuts would impact roughly 1 in 5 Americans, totaling 63 million people. That demographic includes 54 million retired workers and 9 million survivors and dependents.

The economic ripple effects would also be significant at the state level. The loss of benefits in Massachusetts would equal roughly 0.9% of the state’s gross domestic product. At the national level, a 24% reduction would amount to $345 billion lost annually, or 1.1% of the national gross domestic product, the report states.

For the last 16 years, the cost of the retirement program has exceeded its cash income, forcing the government to rely on trust fund reserves to cover the difference and pay full benefits, the organization explained.

The group stressed that resolving the shortfall will require navigating difficult tradeoffs, but doing so is vital to protect against abrupt financial shocks that would impact all beneficiaries regardless of their age or financial need.

With the insolvency date projected to occur during the terms of the next president and Congress, the report authors said lawmakers must act quickly to secure a program that millions of Americans rely on for financial stability.

“That starts with putting forward a plan,” the report concluded, “because if Social Security becomes insolvent, no state would be spared.”