Social Security is approaching a critical financial inflection point. Without action from Congress, the trust fund that issues Social Security payments to retirees and survivors is projected to deplete its reserves in 2032. The stakes are especially high in New York, where 3.8 million people receive Social Security, contributing about $84 billion to the state annually.
As Congress faces decisions about the future of Social Security, AARP New York released new research prepared by The New School’s Health Equity Lab that examines the economic impact of past reductions in Social Security payments and warns what similar changes could mean for current workers and future retirees.
The report, “Social Security in New York State: What the 1983 Benefit Cuts Cost New Yorkers, and What Future Cuts Would Mean” Social Security in New York State: What the 1983 Benefit Cuts Cost New Yorkers and What Future Cuts Would Mean concludes that if New York’s Social Security beneficiaries had received 19% more in Social Security payments in 2025, the state would have recorded an estimated $26.2 billion in additional economic output, as a result of nearly $17.5 billion in additional Social Security benefits.
The Wealth Equity Lab’s analysis also models what could happen if policymakers respond to Social Security’s funding challenges with reforms similar to those enacted in 1983.
In a scenario that raises the full retirement age to 70 and increases the maximum taxable share of Social Security payments from 85% to 100%, a typical New York State worker retiring at age 65 in 2040 could receive $433 less each month and $84,335 less in lifetime Social Security payments compared to retiring under current rules.
“Social Security is the foundation of financial security for millions of seniors across the country, and New York residents have earned their Social Security through a lifetime of hard work,” said Beth Finkel, AARP New York state director.
“Congress must act to protect and strengthen Social Security for current and future generations without cutting the payments people have earned. This report shows that cuts to Social Security would make it harder for older New Yorkers to live independently and with dignity, while harming communities and local economies across our state.”
The cost of past changes to Social Security in New York
In 1983, Congress enacted important changes to Social Security, including gradually raising the full retirement age from 65 to 67, taxing Social Security payments for some beneficiaries, and delaying a cost-of-living adjustment (COLA).
The Wealth Equity Lab estimates that those changes reduced retirees’ Social Security payments by an average of 19%. If those reforms had not been implemented, research estimates that current New York retirees would receive, on average, almost $350 more per month, or more than $4,000 more per year.
Those missed Social Security payments have implications beyond the budgets of individual households. Because Social Security income is spent on housing, groceries, health care and other goods and services, the analysis concludes that lower payments also translate into reduced economic activity throughout New York.
The research estimates that if Social Security benefits had been 19% higher in 2025, New York could have had:
– $26.2 billion in additional economic activity statewide
– $8 billion in New York City
– $4.7 billion on Long Island
– $3.6 billion in the Mid-Hudson region
“Our research at the Wealth Equity Lab has consistently shown how important Social Security is to the financial well-being of America’s seniors and the communities where they live,” said Teresa Ghilarducci, director of The New School’s Wealth Equity Lab.
“Social Security provides a critical source of income that helps millions of people pay for everyday needs, while supporting local businesses and economies. As policymakers consider the future of Social Security, it is important to understand the far-reaching impact that changes to Social Security can have on families and communities.”
What future changes to Social Security could mean for New York residents
Social Security faces a significant long-term funding challenge. The 2026 Social Security trustees project that the Old-Age and Survivors Insurance Trust Fund, which funds Social Security retirement and survivor benefits, will deplete its reserves in 2032 if Congress does not act.
From then on, the income received by the fund would be sufficient to pay 78% of the scheduled benefits. That makes the decisions facing Congress today increasingly urgent.
For many New York residents, cuts to Social Security would have an immediate impact on their household budgets. A 2025 AARP survey found that 57% of state residents age 45 and older expect Social Security to be their only or a major source of income in retirement.
Among those who said a cut of about 20% would affect them, 61% said they would buy less or cheaper groceries, while 37% said they would have to work more and consider moving to less expensive housing.
Wealth Equity Lab research examines the potential consequences of addressing that shortfall through policies that reduce or delay Social Security payments.
Under the scenario modeled by the researchers, which raises the full retirement age to 70 and increases the maximum taxable proportion of Social Security benefits from 85 to 100%, a typical New York State worker retiring at age 65 in 2040 could receive $433 less per month and $84,335 less in lifetime benefits compared to retiring under current rules.
New York residents who retire later could also see reductions. Under the modeled scenario, a New York state worker retiring at age 67 in 2040 could receive $196 less per month, while workers retiring at age 68 could still see reductions in lifetime Social Security payments.
The researchers conclude that the effects of such changes could spread throughout New York’s economy. Reduced Social Security revenue means less money available for recipients to spend in their communities, which could impact businesses, jobs and economic activity across the state.
