Social Security: U.S. states least affected by benefit cuts

Although there has been much talk about cuts in Social Security benefits, there are states where this situation may be less damaging because of the state benefits they offer retirees.

As time goes on, Social Security is left with less money to distribute. In recent years, there has been much talk that Social Security’s trust funds would be depleted after 2030. While this will impact the millions of beneficiaries of this program, there are states that would be less affected by these cuts.

Currently, more than 71 million Americans rely on Social Security benefits, 54 million of whom are age 65 or older. Among older Americans, 37% of men and 42% of women rely on Social Security for at least 50% of their income. Approximately 12% of men and 15% of women rely on their benefits for at least nine dollars out of every 10 they earn. In short, the program is paramount to the livelihood of millions of its beneficiaries.

As of June, the average retired worker receives a monthly payment of $1,837. If estimates are true, there will be a considerable cut in the future to these payments, which, for many, are already short.

The program is on track to exhaust the trusts that fund it by 2034, leaving SSA able to pay only 77% of scheduled benefits in about 10 years. To avoid that outcome, Congress will have to modify the program by raising the retirement age, raising taxes, cutting delayed retirement credits, or even cutting benefits.

Although the benefit cut would affect all Americans who receive an income from Social Security, there are states that, because of their own policies and financial dynamics, would be least affected by this situation.

Utah, Alaska and Texas could withstand any potential Social Security cuts, according to the prognosis of James Allen, a certified financial literacy instructor, certified public accountant and founder of

“But here’s the catch: these states also have robust state aid programs for seniors,” Allen asserts. “So even if Uncle Sam tightens the purse strings, these states have a safety net in place. It’s as if they have built their own financial bunkers against the potential Social Security storm.”

In addition, these states are the three youngest states in the U.S., according to the Population Resources Bureau. Only 13.2% (Texas), 13.1% (Alaska) and 11.7% (Utah) of the population is 65 or older. By comparison, the longest-lived states are Maine and Florida, which exceed 21%.

“They also have a lower percentage of their population receiving Social Security benefits, according to the Social Security Administration,” Allen told GoBankingRates.

These states are joined by Illinois, Iowa, Mississippi and Pennsylvania, U.S. places where they have retirement tax benefits, allowing them to keep more of their Social Security benefits.

While 38 U.S. states, plus Washington DC, do not levy state income taxes on Social Security, these exemptions are enhanced in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Washington and Wyoming, because not only do they exclude retirement funds, these states do not levy state income taxes (this list also includes Texas).

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