The Social Security Administration is the government agency responsible for distributing millions of payments to beneficiaries across the country. The agency recently confirmed the new increase in retirement benefits, although some states will see larger increases than others. Each year, the Social Security Administration adjusts its monthly benefit amounts based on the cost-of-living adjustment (COLA). The cost-of-living adjustment is designed to help seniors maintain their purchasing power even as the cost of goods and services increases. This adjustment is measured by the change in inflation, but will not be officially announced for two months.
Social Security announces different increases for retirees depending on the state
The Senior Citizens League predicted earlier this week that payouts will increase by 2.6 percent COLA next year. That would be the smallest increase that benefit recipients have seen since 2021. However, not every state sees the same benefit increase each month. Some retirees in certain states may receive higher amounts than others because of the way Social Security is calculated. Depending on when you start receiving Social Security benefits and your lifetime earnings, your exact benefit amount may change.
As a result, your monthly payments increase in proportion to your income and the time you wait to apply for benefits. According to a recent Motley Fool study, these features would lead to higher Social security benefits for some states than for others. This is because some states have significantly higher average wages than others, depending on the cost of living adjustment (COLA), which results in higher Social Security benefits. Based on the analysis, the following states had the highest average monthly Social Security checks:
- New Jersey: $2,100
- Connecticut: $2,084
- Delaware: $2,064
- New Hampshire: $2,039
- Maryland: $2,008
- Michigan: $2,005
- Washington: 1,992 USD
- Minnesota: 1,982 USD
- Indiana: 1,952 USD
- Massachusetts: 1,946 USD
Why do some states have higher COLA increases than others?
Alex Beene, a financial literacy professor at the University of Tennessee at Martin, explains why certain regions see larger Social Security increases. He also stressed that this is not due to complicated calculations in the distribution of benefits, but rather to the fact that these states have higher average salaries than the national average, which is reflected in the final Social security benefits recipients receive. Because their current monthly payment amount is higher on average, Social Security recipients in these states are expected to receive the largest COLA increases.
If current cost-of-living adjustment projections hold, the average retiree in New Jersey will receive an additional $54.60 in Social Security benefits. In Massachusetts, the increase would be $50.60. On average, the incomes of the above states were higher; among the top ten are New Jersey, New Hampshire, Maryland, Washington and Massachusetts. The full explanation of why the locations had higher Cost of Living Adjustment (COLA) The increases are a bit more nuanced than just income. Some other retirees with higher incomes also choose to live in the same place after retirement.
For example, The Motley Fool reports that California and Washington, DC are among the states with the highest incomes but also among the states with the lowest average social benefits due to retiree migration. Finally, it is important to highlight that the cost-of-living adjustment is applied to retirement benefits regardless of where you live. Those who do not live in one of the top 10 states can still expect a significant increase in their benefits. According to Alex Beene, “Even if your state is not in the top 10, Social security income will be increased significantly in the following year to take account of rising prices.”
