Retirees in These 10 States Get the Biggest Social Security Benefit Checks

Social Security benefits are often the largest source of income in retirement, so workers need to understand which variables affect their monthly payments. But misleading or incomplete information can make that task challenging.

For instance, the average retiree's benefit in Connecticut is about $195 per month (or $2,340 per year) above the national average. But simply moving to Connecticut would have zero effect on the benefit paid to a retired worker.

Read on to find out which states have retirees receiving the highest Social Security payments, along with some thoughts as to why.

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The 10 states with the biggest (and smallest) Social Security retirement benefits

Below are the 10 states in which the average retired worker received the biggest Social Security benefit as of December 2022, according to the Social Security Administration (SSA). For context, the average retirement benefit was $1,825.14 across all 50 states at the time.

1. Connecticut: $2,020.41
2. New Jersey: $2,020.14
3. Delaware: $1,988.21
4. Maryland: $1,960.40
5. New Hampshire: $1,944.48
6. Washington: $1,933.04
7. Minnesota: $1,924.20
8. Michigan: $1,917.84
9. Massachusetts: $1,910.33
10. Utah: $1,900.65

Detailed below are the 10 states in which the average retired worker received the smallest Social Security benefit as of December 2022.

1. Mississippi: $1,688.52
2. Louisiana: $1,690.27
3. Arkansas: $1,718.97
4. New Mexico: $1,723.77
5. Kentucky: $1,730.48
6. Maine: $1,734.24
7. Montana: $1,739.22
8. Alaska: $1,758.52
9. South Dakota: $1,766.67
10. West Virginia: $1,769.54

To explain why there are disparities across states, let's review how payments are calculated in the first place.

Determining retirement benefits

Workers are eligible for retirement benefits when they turn 62. At that point, the SSA calculates their primary insurance amount (PIA), the benefit they will receive if they start Social Security at full retirement age (FRA), which is 67 for anyone born in 1960 or later.

The PIA is updated for any cost-of-living adjustment (COLA) applied to benefits between the time workers reach eligibility and the time they actually start Social Security.

The finalized benefit also depends on claiming age. Workers who start collecting before FRA will receive less than 100% of their PIA, but workers who start Social Security after FRA will receive more than 100% of their PIA. There is no benefit to delaying past age 70.

Here's an overview of the process.

• Step 1: Lifetime earnings are indexed to account for changes in general wage levels during the course of a worker's career. Doing so ensures future benefit payments reflect any living standard increases they realized during their lifetime.
• Step 2: The indexed earnings from the 35 highest-paid years of work are converted to a monthly average, known as the average indexed monthly earnings (AIME).
• Step 3: The Social Security benefits formula is applied to the AIME to determine the PIA for each worker, and the benefit is finalized to account for early or delayed retirement.

Readers will notice that geography never enters the equation. That means the state of residence has no direct impact on retiree benefits. 

Why average benefits are higher in some states

So why are there state-by-state discrepancies in average retiree benefits? Overall, they result from several variables that would be impossible to completely tease apart, but differences in median household income are probably the driving force behind those discrepancies.

I say that because states with above-average benefits generally have above-average median household incomes, and states with below-average benefits generally have below-average median household incomes. 

Below are the 10 states and territories with the highest median household income over the last 12 months, according to the U.S. Census Bureau. For context, the national median household income was $74,755 during that period.

1. District of Columbia: $101,027
2. New Jersey: $96,346*
3. Maryland: $94,991*
4. Massachusetts: $94,488*
5. Hawaii: $92,458
6. California: $91,551
7. Washington: $91,306*
8. New Hampshire: $89,992*
9. Colorado: $89,302 (above-average benefits)
10. Utah: $89,168*

The six states marked with an asterisk also rank among the 10 states with the biggest retiree benefits. And Colorado has an above-average Social Security payout, while the District of Columbia and Hawaii are within a few dollars of the national average.

That pattern holds on the opposite side of the benefit spectrum. Here are the 10 states with the lowest median household income over the last 12 months, according to the Census Bureau.

1. Mississippi: $52,719*
2. West Virginia: $54,329*
3. Louisiana: $55,416*
4. Arkansas: $55,432*
5. Kentucky: $59,341*
6. Oklahoma: $59,673 (below-average benefits)
7. Alabama: $59,674 (below-average benefits)
8. New Mexico: $59,527*
9. South Carolina: $64,115
10. Missouri: $64,811 (below-average benefits)

The six states marked with an asterisk rank among the 10 states with the smallest retiree benefits, and three other states have below-average Social Security payouts, as indicated.

Here's the big picture: Lifetime earnings are a fundamental part of the benefits formula, so median household income is a fairly accurate predictor of Social Security payouts. It is not a perfect indicator, though, because it does not account for (1) the impact of early or delayed retirement, or (2) the fact that some workers move to different states when they retire.