Here's How Big Social Security Cuts Could Be Without Reforms

Specifically, the program’s trustees project that the Old-Age and Survivors Insurance Trust Fund — which funds retirement benefits — will deplete its reserves in the fourth quarter of 2033. That is when today’s 58-year-olds reach the normal retirement age and today’s youngest retirees turn 71, according to the CRFB report.

“Once the reserves are depleted, the law limits benefits to incoming revenue, which essentially mandates a 21% across-the-board benefit cut for the program’s 70 million beneficiaries,” the authors warn.

As noted, this equates to a $16,500 nominal benefit cut for a typical dual-income couple who retired at the time of trust fund depletion, or a $12,400 nominal reduction for a typical single-income couple.

More Detail on the Potential Cuts

The actual size of the benefit cut would vary across retirees depending on their age, work history and lifetime incomes.

“For example, a low-income, dual-income couple retiring in 2033 — as defined by the Social Security Trustees — would see a $10,000 cut to their benefits,” the authors warn. “A high-income, dual-income couple would see a cut of $21,800.”

Also troubling is the projection that, while retirees will experience a 21% across-the-board cut to their benefits in 2033, this automatic cut will grow over time. It could reach 31% by 2098, due to the widening gap between the program’s benefits and revenues.

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