The Social Security Administration (SSA) has announced a Social Security increase for 2022. There is a 5.9% cost of living adjustment for 2022, to be applied to both Social Security (SS) and Supplemental Security Income (SSI) benefits as a cost-of-living adjustment (COLA). This increase will translate to a larger payout in some states compared with others.

Today we’ll look at the states with the highest payouts for Social Security beneficiaries.

States with the largest Social Security raises

The SSA calculates COLAs using inflation data at the national level, but in practice this means higher payouts for higher-earning, higher-paying individuals. This in turn translates to significant differences in average payouts between states.

The states with the largest COLA raises in 2022 are New Jersey, Connecticut, Delaware, New Hampshire, Maryland, Michigan, Washington State, Minnesota, Massachusetts, and New York. Social Security beneficiaries in these states can expect a relatively larger payout from the cost of living increase. You may have noticed that many of these states also tend to be more affluent on average, although some quite affluent states are missing from the list (California, for example). This is no accident, as we will discuss below.

States that benefit the most from Social Security's 1.3% COLA

So, how much do these 10 states stand to benefit from the raise in both Social Security and SSI benefits? Let’s find out. Here’s the list of the 10 states with the highest average monthly Social Security benefit:

• New Jersey: $1,768.61
• Connecticut: $1,757.00
• Delaware: $1,704.26
• New Hampshire: $1,700.75
• Maryland: $1,689.861,617.70
• Michigan: $1,682.68
• Washington: $$1,672.05
• Minnesota: $1,656.27
• Massachusetts: $1,654.24
• New York: $1,654.14

Why is Social Security raised higher in these states?

Why do Social Security beneficiaries in these states get larger raises? We’ve already hinted at one answer, the affluence of the states themselves, but there’s more to it than that. To understand why Social Security delivers a larger payout in some states, we have to look closer at individual factors.

When the Social Security Administration goes to calculate your benefits, they take your 35 highest-earning years, adjusted for inflation, and use them to help with the calculation. While there are other factors that help to determine your maximum Social Security benefit, this is a fairly significant factor.

Now we have the beginning of a better answer for why at least some of these 10 states should receive the largest Social Security payouts: a proportionally larger population of high earners and former high-earners who are now retired.

This could handily explain many of the Northeastern and Eastern states, which indeed have higher incomes than the national median average. However, the list also includes states like Michigan, which has a lower median household income but also a lower cost of living – and are therefore more attractive to retirees from the Eastern and Northeastern states.

Another possible factor may be the claiming age of retired workers. Eligible workers can begin to collect Social Security benefits at 62, but full retirement age for Social Security is 66 for those born between 1943 and 1954, and from then until 70 workers can accumulate an annual delayed retirement credit of 8%. This additional credit stops at 70, so there is no point waiting longer than that to collect Social Security.

It is possible that on average, more people in some of these states are choosing to wait either until full retirement age or longer before retiring and collecting Social Security benefits. This may in turn be connected to other factors, from health to savings, that can plausibly influence workers’ decisions to retire.

Conclusion

Whether or not you reside in one of these top 10 states, it is a good idea to talk with a Certified Financial Planner® about your retirement plans. A Certified Financial Planner® can help you to find options, make the most of your assets, and help you get the most reasonable picture of when to retire and start collecting Social Security benefits.