If you’re planning to retire in the next decade, Social Security could become an important part of your financial planning. Current projections from the Social Security Administration (SSA) show that the program’s retirement trust fund faces a significant funding gap in the years ahead.
According to the Social Security Board of Trustees’ June 2026 update, the Old-Age and Survivors Insurance (OASI) trust fund is projected to be depleted in the third quarter of 2032. If no changes are made, incoming revenue would be enough to cover only about 78% of scheduled benefits.
That could result in a substantial reduction in monthly payments. The potential dollar impact would vary by retiree, however, because Social Security benefits are tied to a person’s earnings history.
Outlook
The Social Security trustees’ latest projections point to 2032 as the year when the OASI trust fund’s reserves could run out.
This does not mean Social Security would stop paying benefits. Payroll tax revenue would continue coming into the program. The concern is that the revenue would not be enough to cover all scheduled benefits under current law.
The Committee for a Responsible Federal Budget (CRFB) estimates that benefits could ultimately face a reduction of about 22% if the program’s costs cannot be brought into line with its revenues.
For retirees, the difference could be significant. Social Security is a major source of income for many older Americans, so a reduction could affect household budgets, particularly for people with limited savings or other sources of income.
Payments
The amount a retiree could lose would depend on the size of their current Social Security benefit.
A 22% reduction, for example, would result in a larger dollar loss for someone receiving $2,500 per month than for someone receiving $1,500. That is why states with higher average Social Security payments could see larger average dollar reductions.
The CRFB estimates that the average monthly reduction across the states and Washington, D.C., could be about $500.
The following 15 states have the highest estimated monthly losses in the analysis:
| State | Estimated Monthly Loss |
|---|---|
| Connecticut | $556 |
| 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 |
Leaders
Connecticut ranks first, with an estimated monthly reduction of $556. If that amount were lost every month for a year, it would equal $6,672 in annual income.
New Jersey and New Hampshire follow closely, each with an estimated reduction of $554 per month. Delaware ranks next at $549, followed by Maryland at $541.
Washington and Minnesota are also among the states with the largest estimated reductions, at $531 and $530 per month.
Even Vermont, which has the smallest estimated reduction among the 15 states, could see an average loss of $516 per month. Over a year, that would equal $6,192.
These figures are estimates based on average benefits. They should not be interpreted as predictions of exactly how much any individual retiree will lose.
Impact
A reduction of more than $500 per month could have a noticeable effect on a retirement budget. For some households, that amount could represent money used for housing, food, utilities, transportation or health care.
The potential impact could be larger for couples who both receive Social Security. The CRFB estimates that a typical dual-income couple could potentially lose about $16,900 per year if benefits were reduced as projected.
However, the projected reductions are not guaranteed. They reflect what could happen if the trust fund is depleted and lawmakers do not make changes to Social Security’s financing or benefit structure.
Congress has several possible approaches. Lawmakers could increase payroll tax revenue, change the amount of earnings subject to Social Security taxes, modify benefit formulas or make other adjustments to the program.
Planning
For people nearing retirement, the projections are worth considering as part of a broader financial plan.
One useful starting point is to determine how much of your expected retirement income will come from Social Security. Someone who expects Social Security to provide most of their income may have more exposure to a potential benefit reduction than someone with substantial savings, investment income or a pension.
It can also be useful to review your expected expenses and retirement savings. Healthcare, housing and everyday living costs can vary significantly from one household to another.
The age at which you claim Social Security is another factor to consider. Delaying benefits can increase the eventual monthly payment for eligible retirees, although the best claiming strategy depends on individual circumstances.
The key is to avoid treating any single projection as a certainty. Social Security’s financial outlook could change as the economy, employment, wages and legislation change.
Future
The projected depletion of the OASI trust fund in 2032 gives lawmakers several years to address the program’s long-term finances. The eventual outcome will depend on the policy decisions made before that point.
For retirees in the 15 states listed above, the potential dollar reduction is relatively high because average Social Security payments are higher in those states. Connecticut has the largest estimated reduction at $556 per month, while all 15 states have estimated losses above $500.
Still, these numbers represent projections rather than confirmed cuts. No individual retiree can know their exact future reduction based solely on their state.
For those approaching retirement, the most practical response is to understand how dependent their household budget is on Social Security and consider other sources of retirement income. Keeping track of changes to the program can also help households adjust their plans as policymakers respond to the funding challenge.
FAQs
When could Social Security reserves run out?
The OASI trust fund is projected to be depleted in 2032.
How much could benefits be reduced?
Benefits could potentially be reduced by about 22%.
Which state faces the biggest loss?
Connecticut has the highest estimated loss at $556 monthly.
Are the projected cuts guaranteed?
No. They depend on future Social Security funding decisions.
Can Congress prevent the cuts?
Yes. Lawmakers can change taxes, benefits or program rules.
