Social Security payments in the United States aren’t the same for everyone. While some retirees may receive more than $24,000 per year, others have to settle for significantly smaller amounts.
This variation is due to several personal factors and, in many cases, geographical location. Below, we’ll discuss the states where the highest average payments are recorded and offer some key strategies to maximize your benefits, regardless of where you live.
Variation in Social Security payments by state
Social Security payments are influenced by a variety of factors, but the state you live in is not one of them. This means that just because you reside in a particular state, it doesn’t automatically translate into higher or lower checks. What does change is the average amount received in each state, which is determined by the work history and earnings of the residents there.
As of December 2022, retirees in states like Connecticut, New Jersey, Delaware, New Hampshire, Maryland, Washington, Minnesota, Michigan, Massachusetts, and Utah were those receiving the highest average Social Security checks. However, it’s essential to note that this doesn’t mean every retiree in these states is getting a large payment. Some people receive less than the average, while others living in different states might receive more than the average for those leading states.
What determines the amount of Social Security benefits?
The amount you receive from Social Security depends on your work history and the rules set by the Social Security Administration (SSA), not on where you live. These benefits are calculated based on your lifetime earnings, adjusted for inflation. Other factors like how long you’ve worked and the age at which you choose to claim your benefits also play a role in determining the size of your payments.
Moving to a state where the average benefit amount is higher won’t guarantee you a larger check. If you’re aiming to increase your benefits, it’s better to focus on strategies that can help boost your earnings over time.
States with the highest Social Security payments
Let’s take a look at the ten states where retirees, on average, receive the highest Social Security payments. Remember, these are averages, and individual amounts can vary depending on personal work history and when benefits are claimed.
- Connecticut
- New Jersey
- Delaware
- New Hampshire
- Maryland
- Washington
- Minnesota
- Michigan
- Massachusetts
- Utah
Strategies to maximize your Social Security benefits
While you can’t control the average payment in your state, you can apply some strategies to ensure you receive the most possible based on your work history. Here are three key approaches to help you optimize your Social Security benefits.
Work at least 35 years
The SSA calculates your Social Security benefits based on your highest 35 years of earnings. If you work fewer than 35 years, the missing years are considered “zero-income years,” which will lower the average used to determine your benefit.
Therefore, working at least 35 years is crucial to avoid having years with no earnings drag down your future payments. If you work more than 35 years, your lower-earning years will be replaced by your higher-earning ones, which can increase the total amount you receive. This strategy is especially beneficial if your income has risen throughout your career.
Boost your earnings during your working years
The amount of money you receive in each Social Security check is directly linked to the income you earned during your working years, as long as those earnings were subject to Social Security taxes. This is one of the reasons why states with the highest payments tend to be those with higher median household incomes.
Increasing your earnings during your working life will help you receive higher Social Security payments, as long as your income doesn’t exceed the taxable maximum. For 2024, this limit is set at $168,600.
While earning more than this amount still benefits you financially, it won’t lead to a higher Social Security check since income over this limit isn’t subject to Social Security taxes.
Choose the right age to claim your benefits
The age at which you choose to begin receiving benefits has a significant impact on your monthly payments. The SSA assigns each person a full retirement age (FRA), which is based on the year of birth. For most current workers, this age is between 66 and 67.
If you opt to claim your benefits before reaching your FRA, your payments will be permanently reduced. In fact, you could receive up to 30% less if you start collecting at age 62, the earliest possible age for claiming benefits. On the other hand, if you delay your benefits beyond your FRA, you can increase your monthly payments by up to 32%, with the maximum increase occurring if you wait until age 70.
Deciding when to claim your benefits
The decision of when to start claiming your benefits should be based on your current financial situation and your life expectancy. If you’re facing health challenges or need the money sooner rather than later, claiming before your FRA might be the best option. However, if you’re in good health and can afford to wait, holding off until you reach age 70 can result in a larger monthly check.
Ultimately, understanding the factors that influence Social Security payments and applying the right strategies can help you maximize your benefits, regardless of where you live. While moving to a state with higher average payments may seem like a quick fix, focusing on your earnings history, working longer, and choosing the right time to claim will have a far greater impact on the size of your monthly checks.
