Here's the Average Social Security Retired Worker's Benefit by State

Social Security is a key source of financial well-being for millions of Americans. In fact, 88% of retired workers depend on Social Security benefits to some degree, and 82% of current workers believe benefits will be a meaningful source of income when they retire, according to Gallup.

Given those statistics, retired workers and current workers alike must know which factors impact their Social Security payments (and which do not). For instance, retired-worker benefits vary dramatically by state, and geography does influence the amount of income Social Security provides, but not because workers in any particular state are awarded higher benefits simply because they live there.

Here are the details.

Image source: Getty Images.

The average Social Security benefit for retired workers varies widely across the 50 states

The Social Security Administration (SSA) publishes monthly snapshots detailing the average benefit paid to different beneficiary groups. For instance, the average retired-worker benefit was $1,838.58 in July 2023, and the average spousal benefit was $891.32.

The SSA also publishes an Annual Statistical Supplement that breaks the data down differently. I recently discussed the average retired worker benefit by age, but the annual report also provides geographic information. The table below shows the average Social Security benefit paid to retired workers across all 50 states (and Washington, D.C.) in Dec. 2022.

Data source: Social Security Administration.

As shown above, the average monthly retired-worker benefit was $1,825.14 in Dec. 2022, slightly lower than the current average of $1,838.58. But the table is still useful in identifying broad geographic trends. Here are a few interesting observations:

• The five states in which retired workers get the biggest Social Security checks are Connecticut, New Jersey, Delaware, Maryland, and New Hampshire.
• The five states in which retired workers get the smallest Social Security checks are Mississippi, Louisiana, Arkansas, New Mexico, and Kentucky.
• The five states (or territories) in which retired workers get Social Security checks that most closely align with the national average are Hawaii, North Carolina, Florida, Oregon, and Washington, D.C.

So here's the all-important question: What causes the discrepancy between retired-worker benefits in different states? Some readers may find the answer somewhat unsatisfying as random chance plays a large role. But there is an indirect connection between the state of residence and Social Security benefits.

Why Social Security benefits are higher in certain states

Let me be clear upfront: Retired workers in certain states are not awarded bigger Social Security checks just because they live in those states. Geography has no direct impact on the benefit payable to a retired worker. I say "no direct impact" because there is an indirect connection.

The median household income varies from state to state, and lifetime earnings is one of the most important variables in the Social Security benefits formula. The benefit paid to a retired worker is based on the average inflation-adjusted wages they received during the 35 highest-earning years of their career. Therefore, it stands to reason that any state with an above-average median household income would also have retirees with above-average Social Security benefits.

Data from the U.S. Census bureau confirms that connection. Three of the five states in which retired workers get the biggest payouts (Maryland, New Jersey, and New Hampshire) rank among the five states with the highest median household income. Connecticut is close behind at No. 9, and while Delaware is a bit of an outlier at No. 20, the median household income in the state is still above average.

The corollary is also true. Three of the five states in which retired workers get the smallest payouts (Mississippi, Louisiana, and Arkansas) rank among the five states with the lowest median household income. And the other two (New Mexico and Kentucky) occupy the next two spots on the list, meaning they are sixth and seventh from the bottom, respectively.

12 states (soon to be 11) tax Social Security benefits

Geography can affect Social Security income in another way, but the impact is downstream of the actual payment, so it would not show up on the chart detailing the average retired-worker benefit across all 50 states.

Currently, 38 states do not tax Social Security benefits, nor does Washington, D.C., but another 12 states do tax benefit income, though taxpayers may be exempted if their adjusted gross income falls below certain thresholds. That said, Missouri (one of the 12 states that taxed benefits in the 2023 tax year) recently approved legislation that will end the taxation of Social Security income beginning in the 2024 tax year.