Social Security benefits for retirees vary based on the state of residence, reflecting indirect effects from local economic conditions. The eagerly awaited annual cost-of-living adjustment (COLA) for 2026 will be announced by the Social Security Administration on October 15, contingent on the conclusion of the federal government shutdown. Current projections from The Senior Citizens League suggest a 2.7% increase in benefits for next year.
2026 COLA Boost Overview
All retirees will experience the same percentage increase in their Social Security payments. However, the dollar amount of that increase will diverge depending on the state of residence. This unique aspect can lead retirees in certain states to receive substantially larger COLAs.
Understanding COLA Determination
The calculation for Social Security’s COLAs is influenced by the Consumer Price Index (CPI) during the third quarter, specifically from July to September. For instance, a 2.5% CPI increase was recorded in the third quarter of 2024, leading to a 2.5% pay raise for beneficiaries in 2025. The calculated adjustment is added to the previous benefit amount, considering any Medicare premiums and tax withholdings.
Top 10 States for Median Social Security Benefits
Based on the Social Security Administration’s Annual Statistical Supplement, here are the 10 states with the highest median Social Security benefits for retired workers, reflecting data as of December 2024:
| State | Median Retired-Worker Benefit |
|---|---|
| New Jersey | $2,172 |
| Connecticut | $2,159 |
| Delaware | $2,139 |
| New Hampshire | $2,121 |
| Maryland | $2,084 |
| Michigan | $2,067 |
| Washington | $2,061 |
| Minnesota | $2,053 |
| Massachusetts | $2,021 |
| Indiana | $2,016 |
The Link Between Income and Benefits
While Social Security benefits are computed based on lifetime earnings and claim age, there is a correlation between state income levels and benefit sizes. States such as New Jersey, Connecticut, and Massachusetts rank among the highest for median income, which corresponds to higher median Social Security benefits.
Interestingly, states like Michigan and Indiana feature substantial Social Security benefits despite having lower median incomes. This can be attributed to retirees from higher-income states choosing to retire in these areas or possibly delaying their benefit claims.
Final Thoughts
Retirees should recognize that while state of residency does not directly influence Social Security benefits, it can indirectly affect the dollar amount received. Individuals in states with higher median incomes tend to enjoy larger benefits, enhancing their financial stability. Additionally, relocating may influence state income tax obligations concerning benefits.
