While most people can count on some money from Social Security in retirement, the amount is up in the air until you actually apply. A lot of factors go into determining your Social Security benefit, including how much you earn during your working years and your age at application.
While your state doesn't affect the size of your checks (unless it takes some of your benefit for taxes), it can still be interesting to note how yours stacks up to the rest. Here's what the numbers have to say.
The 10 states with the highest average Social Security benefits
The following 10 states received the highest average Social Security benefits as of December 2020, the most recent month this data is available for:
- New Jersey
- New Hampshire
It's difficult to say what causes residents of these states to qualify for higher checks than residents of other states. Average income in these states could be a factor, since Social Security checks are based on a person's income during their working years. But that's not the only thing that influences your benefit.
How to boost your Social Security checks no matter where you live
There are several things anyone can do to boost their Social Security benefit, regardless of where they live. Working at least 35 years goes a long way because the government bases your Social Security benefit on your average monthly income over your 35 highest-earning years, adjusted for inflation. Working even longer than 35 years could boost your checks further, especially if you earn more now than you did when you first entered the workforce.
Striving to increase your income today can also help your benefits later. You can do this by securing a raise, finding better-paying employment elsewhere, or starting a successful business of your own. The only people this won't help are those already earning $147,000 or more in 2022. That's the maximum you pay Social Security taxes on this year, so any excess won't help your benefit.
Choosing the right claiming age is also key. You must wait until your full retirement age (FRA) to get the benefit you've earned based on your work history. This is somewhere between 66 and 67, depending on your birth year.
You can claim as early as 62, but it'll shrink your benefits up to 25% if your FRA is 66 or 30% if your FRA is 67. You can also delay benefits until you reach your maximum benefit at 70 and your checks will grow up to 24% if your FRA is 67 or 32% if your FRA is 66.
When you don't need your Social Security benefit right away, it's best to delay benefits if you believe you'll live into your 80s or beyond. Most people end up with a larger lifetime benefit this way than they'd get if they claimed early. But if you have a short life expectancy, you're better off claiming right away. You might also have to sign up early if you need the financial assistance to pay your bills.
Moving, even to one of the states above, isn't going to do anything to boost your Social Security benefit. But moving could help stretch your Social Security dollars a little further in some cases.
If you live in a state that taxes Social Security benefits and you move to one that doesn't, this might help you hold onto more of your checks each year. Similarly, if you live in an area with a high cost of living and you move somewhere with a lower cost of living, your Social Security checks might go a little further than they do in your current home.
If you want an accurate idea of how much you'll get from the program, create a my Social Security account. Here, you can view the government's record of your earnings history and estimate your benefits at various ages using its calculator tool. You can also see how changes to your income might affect the size of your checks.
Use this information to determine when you want to sign up for benefits and how much you expect to get from the program. Build this into your retirement plan and review your claiming strategy annually to make sure it still works for you.