The cost-of-living adjustment (COLA) to Social Security payments in 2025 is set to be 2.5%, which is the smallest percentage increase since 2021. The average monthly payout for a retired worker will then go up to $1,967, which is an extra $49 per month.
It is important to note that Social Security’s yearly COLAs keep benefits affordable by making sure that payments rise at the same rate as inflation. Next year, all retired workers will get an equal percentage increase in their Social Security payments.
However, people in some states will get bigger COLAs. Read on to find out which ten states will see the biggest rises in payments for retired workers.
Retirement Social Security benefits are based on lifetime income
To get Social Security payments as a retiree, you need to show proof of your total income and be at least 62 years old.
At first, each worker’s main Primary Insurance Amount (PIA) is figured out by using a method that takes their highest-paid 35 years of work and adjusts it for inflation.
The amount of money a retired worker will get from Social Security if they apply at full retirement age (FRA) is called the PIA.
Second, the PIA has been changed to take into account both early and late entries. Before the FRA, workers who file for Social Security got less money—less than 100% of their PIA.
Late retirement credits are given to workers who apply for Social Security after FRA. These credits increase their payments and let them get more than 100% of their PIA.
As a warning, you should never wait to file because those points stop building up after age 70. It is important to remember that the state of residence is never directly looked at.
But since the median income varies from state to state, it does have an indirect affect on how much Social Security is paid out. And because of this, the typical benefit for retired workers in each state is different.
Which states will receive the largest COLAs in Social Security checks next year?
The Social Security Administration puts out a data supplement every year that breaks down information about benefits by things like age, gender, and location.
The list below comes from the report on data for 2024. As of December 2023, it shows the ten states where retired workers get the most money each month.
- New Jersey: $2,100
- Connecticut: $2,084
- Delaware: $2,064
- New Hampshire: $2,039
- Maryland: $2,008
- Michigan: $2,004
- Washington: $1,992
- Minnesota: $1,982
- Indiana: $1,952
- Massachusetts: $1,946
The ten states above will give the biggest nominal-dollar COLAs to retired workers in 2025. This is because they already get the most basic benefits. It is important to note that the amounts I am talking about are nominal amounts, not percentage points.
All beneficiaries will get the same percentage increase, but the raise in real dollars will depend on how much they are currently getting. For example, retirees in New Jersey will get an average raise of $52.50 per month ($2,100 times 2.5% and $1,946 times 2.5%).
This is on top of the 2.5% COLA that all Social Security recipients in both states will get the following year.
Why does the median Social Security check vary between states?
These five states—New Jersey, New Hampshire, Maryland, Washington, and Massachusetts—are among the top ten in terms of family income.
The U.S. Census Bureau also says that the median income is higher than the national rate in three states: Connecticut, Delaware, and Minnesota.
Chance is another reason why retired workers in some states get bigger Social Security benefits. If someone moves after retirement, their benefit has nothing to do with the typical income in the state where they used to live.
Why do Michigan and Indiana score lower than the national average when it comes to median income but among the top ten states when it comes to median Social Security checks?
This also explains why California and Washington, D.C., have some of the lowest median Social Security payments but some of the highest median incomes.
Because of the very high cost of living in both areas, workers who can afford to move may choose to do so when they retire.
