Nearly 1 million Alabamians will be hit with significant cuts to their Social Security benefits in six years if the program continues its path to insolvency.
According to a recent report by the Committee for a Responsible Federal Budget, the cuts would affect 978,204 Alabamians. The average retiree’s monthly benefit cut in Alabama would be $486.
The cuts would be 1.6% of Alabama’s economy. The total amount of benefits lost would be $5.4 billion.
According to the report, the trustees for Social Security and Medicare just released their annual reports, “showing a significant deterioration in the financial states of both trust funds.”
“They project that the Old-Age and Survivors Insurance (OASI) trust fund – which funds retirement benefits – will be insolvent in 2032, and the theoretically-combined Social Security Old-Age, Survivors, and Disability Insurance trust fund will run out in 2034. Medicare Hospital Insurance (HI), meanwhile, is estimated to face insolvency in 2033,” the report states. “Insolvency of these programs would result in steep across-the-board cuts. When the Social Security retirement fund runs out of reserves, beneficiaries will face an abrupt 22% cut; Medicare insolvency would lead to an 11% cut in payments.”
The Committee for a Responsible Federal Budget’s No State Spared report estimates the state-by-state impact of a similarly-sized cut if it occurred today.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement, “Washington is sleepwalking into a retirement crisis, allowing our nation’s most important trust funds to go insolvent at the expense of over 70 million beneficiaries who count on these programs.”
“In just six years – during the next Senate class’s term – Social Security’s retirement fund will run out of money. Medicare will run out just half a year later. Today’s youngest retirees will be turning 68 when Social Security runs dry and 69 when Medicare does. Yet our leaders have no plan to prevent the abrupt 22% benefit cut or 11% payment cut that would ensue,” MacGuineas said. “Politicians have known about and neglected these programs for 40 years now. But the problem is much worse now. Thanks to decades of inaction, solutions like eliminating the taxable maximum or progressive price indexing benefits are no longer close to enough to restore solvency. And thanks mainly to the tax cuts in the “One Big Beautiful Bill” and worsening demographics, Social Security’s projected shortfall is a full 16% worse than last year’s. Medicare’s shortfall is 33% worse.”
MacGuineas said, “Instead of talking about solutions to these real funding problems, leaders in Washington instead demagogue each other over the issue, with both sides promising not to touch the programs.”
“Unfortunately, that promise is a tacit endorsement of the across-the-board cuts that will happen at exhaustion – an unacceptable outcome. No state would be spared from the consequences of failure to save these programs from insolvency – each and every member of the House and Senate has constituents that rely on the programs,” MacGuineas said.
The national debt is $39 trillion.
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