A 22% Social Security Cut Hits Retirees in New Jersey Hardest: $6,040 a Year, Starting in 2032
New Jersey retirees already face some of the steepest taxes in the country, but a looming Social Security shortfall could force a painful choice between staying in the Garden State and making ends meet.
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There’s a lot to love about living in New Jersey — and a lot not to like.
New Jersey has some of the highest property and income taxes in the country. For workers who earn large wages, those costs may be manageable. But for retirees on Social Security, the Garden State can be a tough place to call home.
Making matters worse is that Social Security recipients in New Jersey could soon see their benefits shrink by more than $6,000 a year. Here’s why, and how seniors can plan.
Social Security cuts may be coming for everyone
It’s not just New Jersey seniors who may see their Social Security benefits reduced. The program is looking at potentially implementing sweeping cuts as early as 2032.
The reason is that the program’s trust fund is expected to run dry at that point, and Social Security won’t be able to cover its costs on incoming payroll tax revenue alone. If Congress can’t find a way to shore up Social Security’s finances, cuts may be inevitable.
The Social Security Trustees project a possible 22% cut once there’s no more trust fund to tap. That percentage could still wiggle based on how much revenue Social Security receives in the coming years, though.
Meanwhile, the average Social Security benefit in New Jersey is $2,288 per month. If there’s a 22% cut, the typical recipient could lose out on $503 per month, or about $6,040 per year.
As it is, many seniors struggle to stay in the Garden State due to the high cost. If Social Security is actually cut, more older residents could end up fleeing the state.
Now on the one hand, that might open up the housing market for younger buyers who want proximity to major cities like New York City and Philadelphia. But it could also force many seniors into a tough decision.
How to plan for Social Security cuts
Social Security cuts are not guaranteed to happen. Congress has never allowed Social Security to cut benefits before, and there are different reforms that can be implemented to prevent a reduction this time around.
But it’s best to plan for Social Security cuts, no matter where you live. And part of that could mean having an income plan to make up for the lost money.
What you should do is take a look at your monthly Social Security check and figure out what a 22% cut might amount to. Then, explore options for compensating.
Let’s say a 22% cut would reduce your Social Security payments by $500 a month. If you can work part-time and earn the $500, you should be set. If that’s not doable but you’re able to trim $500 in spending from your budget, that works as well.
And if you’re a retiree in New Jersey who’s struggling on Social Security, you may want to consider relocating to a part of the country where costs are more affordable, especially if you intend to keep owning a home. You can always come back to your home town for a week at the shore. But you may find that your Social Security checks can go a lot further in another state.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, The Washington Post, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
