The 2025 cost-of-living adjustment (COLA) for Social Security benefits has been set at 2.5%, marking the smallest percentage increase since 2021. With this adjustment, the average monthly benefit for a retired worker will rise by $49 to a total of $1,967. Social Security’s COLA is designed to protect beneficiaries’ purchasing power by ensuring that payouts keep pace with inflation. While the percentage increase remains the same for all retired workers, those in certain states will see larger nominal increases due to their higher baseline benefits. Let’s explore which states will experience the highest boosts and why Social Security checks vary between states.
How Social Security Benefits are Calculated
Social Security payments for retired workers are primarily based on lifetime income and the age at which they claim benefits. The calculation begins with each worker’s Primary Insurance Amount (PIA), determined by their inflation-adjusted income over the 35 highest-earning years. The PIA represents the amount a worker will receive if they claim Social Security at full retirement age (FRA).
However, the actual benefits can differ depending on when a worker decides to claim. If a worker claims before their FRA, they will receive a reduced amount, less than 100% of their PIA. Conversely, workers who delay claiming beyond FRA receive delayed retirement credits, boosting their benefits beyond 100% of their PIA. Delaying benefits past age 70, however, no longer adds any further credits, so waiting beyond this age isn’t advantageous.
Although a retiree’s state of residence does not directly impact their benefits, state median incomes indirectly affect Social Security payouts. Since states have different median incomes, this results in varying median Social Security benefits across the country.
States with the Highest COLA Increases in 2025
Each year, the Social Security Administration releases data on benefits, breaking them down by state, sex, and age. According to the 2024 statistical supplement, the following ten states have the highest median monthly benefits for retired workers, as of December 2023:
| State | Median Monthly Benefit (2024) |
|---|---|
| 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 |
In these states, retirees will see the largest nominal-dollar COLA increases in 2025 simply because they receive the highest baseline benefits. For instance, the 2.5% COLA will result in an increase of about $52.50 for retirees in New Jersey ($2,100 x 2.5%) and Massachusetts ($1,946 x 2.5%), compared to retirees in states with lower median benefits.
Why Do Social Security Checks Differ Across States?
The variation in Social Security benefits between states largely reflects differences in median income. States like New Jersey, Maryland, and New Hampshire have some of the highest median incomes in the country, which translates to higher lifetime earnings for workers, and consequently, higher Social Security benefits. Other states, such as Connecticut, Delaware, and Minnesota, also have higher-than-average median incomes, which is reflected in their residents’ Social Security checks.
However, median income isn’t the only factor. Migration patterns also play a role. Some retirees move to different states after claiming Social Security, especially to states with a lower cost of living. This explains why Michigan and Indiana make the list for the highest median Social Security benefits, even though they rank below the national average in median income. On the other hand, high-income areas like California and Washington, D.C., have lower median Social Security checks because many retirees in these areas opt to move elsewhere due to the high cost of living.
The 2.5% COLA for 2025 will help protect retirees’ purchasing power, even though it represents a modest increase.
While all Social Security recipients will see a similar percentage increase, those in states with higher baseline benefits will enjoy more substantial nominal increases. Understanding how Social Security benefits are calculated and why they vary by state can help retirees better plan for their financial future.
What is the cost-of-living adjustment (COLA) for 2025?
The COLA for 2025 is set at 2.5%, the smallest percentage increase since 2021.
How much will the average Social Security benefit increase in 2025?
The average monthly benefit for a retired worker will increase by $49, bringing the total to $1,967.
Why do Social Security benefits vary by state?
While state residence does not directly impact benefits, differences in lifetime earnings, which correlate with state median incomes, result in varied Social Security payouts.
