Social Security will be insolvent by 2032 if no action is taken, with a significant impact on Colorado.
Unfortunately, Colorado’s policymakers are likely to take away the wrong lessons from the problem.
Colorado Impacts
According to a report from the Committee for a Responsible Federal Budget, no state will be spared if Social Security becomes insolvent by 2032.
By law, Social Security cannot pay out more in benefits than it receives in revenue if the trust fund is exhausted, leading to an immediate 22 to 24 percent cut in benefits.
For Colorado, this would mean that 898,919 Coloradans, or 15.1 percent of the population, would, on average, face a $515 cut in monthly benefits.
What’s more, the cuts would equate to a 0.9 percent cut to the state’s GDP, or roughly $5.4 billion.
Given that Colorado has one of the fastest-aging populations in the country, the problems are only expected to worsen.
These looming challenges are the fault of the federal government’s overspending, yet individual Coloradans will bear the costs.
It should serve as a warning to Colorado; instead, it is having the opposite effect.
CO vs federal fiscal challenges
The federal government’s massive fiscal challenges expose the absurdity of Colorado’s supposed budget challenges.
Federal politicians have all but stopped worrying about fiscal sustainability, realizing that their incentive is to keep the gravy train running if they hope to gain reelection.
Meanwhile, Colorado’s politicians constantly deflect from their own overspending, claiming the state simply doesn’t have enough money, usually due to the Taxpayer’s Bill of Rights (TABOR) or Trump’s One Big Beautiful Bill Act (OBBBA).
Both the federal and state attitudes assume that spending is the only solution to their respective problems.
But let’s zoom out for a second.
Uncle Sam is the poster child for free-spending gone wild: In 2025, the federal government spent almost $1.9 trillion more than it collected in revenue, allocating 22 percent of its budget (and deficit) or $1.1 trillion to Social Security alone.
Additionally, America’s welfare spending has continued to grow faster than the national GDP since the 1940’s.
Even if the government seized all the wealth of America’s 800 billionaires (and now trillionaire Elon Musk), it would barely sustain about a year of federal spending.
Despite this (and the Federal Reserve’s privileged ability to print money), the US government is still unable to accomplish most of the (overly optimistic) tasks it has taken upon itself.
So when Colorado’s politicians say that ending TABOR or taxing the rich will solve the state’s perceived problems, Coloradans should laugh them out of the gold dome.
If the US government cannot solve these problems with the largest GDP and nominal debt ever, how could Colorado’s government hope to solve any of its problems by throwing more money at them?
Forced fiscal responsibility
Actually, Colorado’s balanced-budget requirement, no public debt requirement, and TABOR are the only things keeping Colorado from devolving into a fiscal basket case, as the federal government is intent on doing.
Even if Colorado eliminated its constitutional safeguards and began spending like Congress, it could not inflate its currency (as the feds do) to pay off its debt, yet this is the level of spending that Colorado’s politicians seem to want and expect.
Americans do not really understand the national debt, and the numbers are now far too large for human brains to even comprehend, but they know that being almost $40 trillion in debt is not a good thing.
Coloradans certainly understand this, which is why TABOR remains so popular: it forces a level of fiscal responsibility that lawmakers would rather do without.
Imagine if the federal government had the same fiscal restrictions Colorado had, politicians would be angry, most Americans would be happy, and Coloradans would be saying, “I told you so.”
Nash Herman is a fiscal policy analyst at Independence Institute, a free market think tank in Denver
