Social Security Retired-Worker Benefits Are Increasing the Most in These 10 States in 2024

As of December 2022, the average Social Security benefit for the — at the time — more than 48 million retired workers was $1,825.14 per month, or about $21,902 on an annual run-rate basis. Though this is a relatively modest monthly payout, Social Security income is, nevertheless, a necessity for most retired workers.

According to the Center on Budget and Policy Priorities, the mere existence of Social Security has reduced the poverty rate in seniors aged 65 and older by nearly three-quarters (an estimated 38% to 10%). Including children and adults below the age of 65, it’s a program that lifts well over 21 million people out of poverty each year.

Given the role Social Security plays in providing a financial foundation for America’s workforce, it’s no surprise that the program’s October-announced cost-of-living adjustment (COLA) is the most-anticipated event of the year.

A person counting a fanned pile of assorted cash bills.

Image source: Getty Images.

What is Social Security’s COLA, and how big of a “raise” can beneficiaries expect in 2024?

Social Security’s COLA is the tool America’s top retirement program uses to account for the inflation that its beneficiaries have faced. If the price for a regularly purchased basket of goods and services increases, benefits should also rise to avoid any loss of purchasing power. COLA is the mechanism that calculates “raises” for beneficiaries, based on inflation. Note, “raise” is in quotation marks to reflect that this is an increase in benefits to match inflation. A true raise from an employer may outpace the prevailing inflation rate.

The program’s COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). However, only readings from the third quarter (July September) of the current and previous year are used in the calculation. If the average reading from the third-quarter CPI-W in the current year is higher than the same period in the previous year, inflation has occurred and beneficiaries are due a “raise.”

On Oct. 12, 2023, the Social Security Administration (SSA) announced that its more than 66 million beneficiaries, including workers with disabilities and survivor beneficiaries, would receive a 3.2% cost-of-living adjustment in 2024. Although this is a sizable drop-off from the 8.7% COLA passed along in 2023, it’s still modestly above the 2.6% average COLA over the past two decades.

For the average retired worker, a 3.2% cost-of-living adjustment is going to increase their monthly check by $59 per month to an estimated $1,907 in January 2024. Meanwhile, workers with disabilities and survivor beneficiaries can expect an extra $48 and $47 per month, respectively, come January.

Social Security checks are increasing the most for retired workers in these 10 states

However, there can be milewide differences in the size of Social Security checks depending on where beneficiaries live.

Recently, the SSA released its Annual Statistical Supplement for 2023. This supplement contains a veritable treasure chest of data on new benefits awarded, withheld benefits, and specific breakdowns of where every dollar in current benefits is headed, based on age and geographic data. Although the program’s 3.2% cost-of-living adjustment is universal to all beneficiaries, the nominal-dollar increase in checks is more pronounced in certain states.

Below you’ll find the 10 states where retired-worker Social Security checks are expected to see the biggest increase in 2024. The average retired-worker benefit per month, as of December 2022, is listed after each state, along with the expected average increase, factoring in a 3.2% COLA.

  1. Connecticut: $2,020.41 ($64.65 increase expected)
  2. New Jersey: $2,020.14 ($64.64 increase expected)
  3. Delaware: $1,998.21 ($63.94 increase expected)
  4. New Hampshire: $1,994.48 ($63.82 increase expected)
  5. Maryland: $1,960.40 ($62.73 increase expected)
  6. Washington: $1,933.04 ($61.86 increase expected)
  7. Minnesota: $1,924.20 ($61.57 increase expected)
  8. Michigan: $1,917.84 ($61.37 increase expected)
  9. Massachusetts: $1,910.33 ($61.13 increase expected)
  10. Utah: $1,900.65 ($60.82 increase expected)
Two Social Security cards placed atop a messy pile of one hundred dollar bills.

Image source: Getty Images.

Why are Social Security benefits markedly higher in some states than others?

If you’re wondering why retired-worker beneficiaries in Connecticut and New Jersey are averaging nearly $200 more per month than the typical Social Security beneficiary, look no further than earnings history for the answer.

When broken down to the basics, the SSA uses four factors to determine how much an eligible worker will receive each month from Social Security:

The factor above that appears to be having the biggest impact on Social Security benefits in the aforementioned 10 states is earnings history. If a worker earns more on an inflation-adjusted basis during the 35 years the SSA takes into account, they’ll receive a larger Social Security check.

According to data from the U.S. Bureau of Labor Statistics, which was compiled by Forbes Advisor, the average annual salary across the country is $59,248. A total of 17 states sport an annual average wage above the national average, including Massachusetts ($76,600), Washington ($72,350), New Jersey ($70,890), Maryland ($69,750), Connecticut ($69,310), Minnesota ($63,640), New Hampshire ($62,550), and Delaware ($62,260). Workers who consistently earn more throughout their years in the labor force are likely to receive a larger benefit check from Social Security.

To add to the above, high earners may be able to save more of their income and invest for the future, relative to the average worker. Having ample emergency savings, as well as a healthy nest egg, can allow high earners the liberty of waiting to take their Social Security benefit. For every year an eligible beneficiary waits to take their payout, beginning at age 62 and continuing through age 69, their monthly benefit can grow by as much as 8%.

It’s also possible that cost-of-living is playing a role. States that are cheaper to live in, such as Michigan, can allow Social Security dollars to stretch further during retirement. Retirees moving to lower cost-of-living states might explain why retired workers in the Wolverine State are pulling in Social Security checks that are well above the national average.

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