New Report Warns Future Social Security Cuts Could Cost New Yorkers Thousands Each Year, Billions in Economic Activity

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Published September 30, 2026

Research prepared by The New School Wealth Equity Lab for AARP New York finds past payment reductions cost today’s average New York retiree more than $4,000 annually; similar future changes could reduce lifetime payments by more than $84,000

To read “Social Security in New York State: What the 1983 Benefit Cuts Cost New Yorkers, and What Future Cuts Would Mean” click here.

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NEW YORK, NY — Social Security is a financial lifeline for millions of New Yorkers and a major economic engine for the state. Each year, approximately $84 billion in Social Security payments flow to 3.8 million New Yorkers, supporting spending in communities across the state. Social Security is now approaching a critical inflection point. But without action from Congress, the trust fund that pays retirement and survivor payments is projected to exhaust its reserves in 2032.

As Congress faces decisions about the future of Social Security, AARP New York today released new research prepared by the Wealth Equity Lab at The New School examining the economic impact of past reductions in Social Security payments and what similar changes could mean for today’s 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,” finds that had New York Social Security recipients received 19 percent more in Social Security payments in 2025, the state would have seen an estimated $26.2 billion in additional economic output, resulting from nearly $17.5 billion in additional Social Security payments.

The Wealth Equity Lab’s analysis also models what could happen if policymakers respond to Social Security’s financing challenges with reforms similar to those enacted in 1983. Under a scenario that raises the full retirement age to 70 and increases the maximum taxable share of Social Security payments from 85 percent to 100 percent, 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 with retiring under present rules.

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“Social Security is the foundation of financial security for millions of older Americans, and New Yorkers have earned their Social Security through a lifetime of hard work,” said Beth Finkel, State Director of AARP New York. “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 also hurting communities and local economies across our state.”

The Cost of Past Social Security Changes to New York

In 1983, Congress enacted significant changes to Social Security, including gradually raising the full retirement age from 65 to 67, taxing Social Security payments for some recipients, and delaying a cost-of-living adjustment. The Wealth Equity Lab estimates that those changes reduced retirees’ Social Security payments by an average of 19 percent. Had those reforms not been implemented, the research estimates that today’s New York retirees would receive nearly $350 more per month, or more than $4,000 more annually, on average.

Those lost Social Security payments have implications beyond individual household budgets. Because Social Security income is spent on housing, groceries, health care and other goods and services, the analysis finds that lower payments also translate into reduced economic activity throughout New York.

The research estimates that if Social Security payments had been 19 percent higher in 2025, New York could have seen:

$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 older Americans and the communities where they live,” said Teresa Ghilarducci, Director of the Wealth Equity Lab at The New School. “Social Security provides a critical source of income that helps millions of people afford everyday necessities while supporting local businesses and economies. As policymakers consider Social Security’s future, it is important to understand the far-reaching impact that changes to Social Security can have on families and communities.”

What Future Social Security Changes Could Mean for New Yorkers

Social Security faces a significant long-term financing challenge. The 2026 Social Security Trustees project that the Old-Age and Survivors Insurance Trust Fund, which pays Social Security retirement and survivor payments, will exhaust its reserves in 2032 if Congress does not act, at which point incoming revenue would be sufficient to pay 78 percent of scheduled payments. That makes the decisions Congress faces today increasingly urgent.

For many New Yorkers, cuts to Social Security would have an immediate impact on household budgets. A 2025 AARP survey found that 57 percent of New Yorkers age 45 and older expect Social Security to be their only or a major source of retirement income. Among those who said a roughly 20 percent cut would affect them, 61 percent said they would buy fewer or cheaper groceries, while 37 percent said they would have to work more and 37 percent said they would consider moving to a less expensive home.

The Wealth Equity Lab’s 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 share of Social Security payments from 85 percent to 100 percent, a typical New York State worker retiring at age 65 in 2040 could receive $433 less per month and $84,335 less in lifetime payments compared with retiring under present rules.

New Yorkers retiring 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 experience reductions in lifetime Social Security payments.

The researchers find that the effects of such changes could extend throughout New York’s economy. Reduced Social Security income means less money available for recipients to spend in their communities, potentially affecting businesses, jobs and economic activity across the state.

Full report: “Social Security in New York State: What the 1983 Benefit Cuts Cost New Yorkers, and What Future Cuts Would Mean”

About AARP 

AARP is the nation's largest nonprofit, nonpartisan organization dedicated to empowering Americans 50 and older to choose how they live as they age. With a nationwide presence, AARP strengthens communities and advocates for what matters most to the more than 100 million Americans 50-plus and their families: health security, financial stability and personal fulfillment. AARP also works for individuals in the marketplace by sparking new solutions and allowing carefully chosen, high-quality products and services to carry the AARP name. As a trusted source for news and information, AARP produces the nation's largest circulation publications, AARP The Magazine and AARP Bulletin. To learn more, visit www.aarp.org/about-aarp/, www.aarp.org/español or follow @AARP, @AARPenEspañol and @AARPadvocates on social media.

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