Social Security Cuts Would Hit One State Hardest

Some Americans are bracing for the impact of potential Social Security cuts as the retirement benefits program remains in jeopardy.

Economists anticipate that by 2033, Social Security will be insolvent if nothing changes. That means the Social Security Administration would not be able to pay full benefits to everyone at their retirement age.

Some lawmakers have proposed cuts to the program, which could significantly hamper current seniors' ability to live in retirement. However, not all states would be equally impacted by any such cuts.

Some of the states that would see the most severe impacts include California, Florida, Texas, New York and Pennsylvania, based on the number of recipients alone, but the specific challenges seniors are up against in these states vary.

California, which has more than 6.2 million Social Security recipients, would by far see the greatest effects. Compared to other states, it has at least 1.3 million more beneficiaries depending on their monthly payments.

California also sees the highest dollar amount of benefits, totaling more than $837 million as of December 2022. That amount comes to double that of any other state's Social Security benefits.

Kevin Thompson, a certified financial planner and the founder and CEO of 9i Capital Group, anticipates the Social Security cuts having far-reaching consequences— including potential means testing as a way to evaluate your qualification for Social Security.

"At a certain income level, benefits may be cut or even eliminated if means testing were to come into effect," Thompson told Newsweek.

While one can make the argument that means testing would still allow the most at-risk seniors to be supported during retirement, California also has one of the highest costs of living in the country. This could complicate matters for seniors trying to make it on a lower Social Security check.

"The fact California's cost of living remains one of the highest in the country, the impact to the senior population could be detrimental," Thompson said.

While Florida and Texas haven't yet reached the same costs of living crises, New York also boasts some of the highest prices in the country. Seniors often already struggle to afford groceries and housing with Social Security benefits, and a slash to the program could exacerbate the situation.

Social Security Payments Increased This Year

Despite ongoing conversations about Social Security benefits getting slashed, each year seniors generally get a boost to their benefits.

The increase in monthly payment comes courtesy of the cost-of-living adjustment, which shifts seniors' benefits based on inflation the year before.

The COLA for 2024 was 3.2 percent, adding around $50 to each senior's specific benefit amount. But after a COLA of 8.7 percent in 2023, many seniors have complained that this increase was not enough to cover the inflation they're facing in their everyday lives.

"Whether the annual COLA is appropriate for a specific retiree to ensure equal purchasing power as the prior year is highly specific to the life situation of the individual retiree, both in terms of expenses and other sources of income," Jonathan Price, the national retirement practice leader at employee benefits consulting firm Segal, previously told Newsweek.