Social Security Update: Map Shows States Expected to Get Lowest Increases

While the cost-of-living adjustment has not been announced for Social Security payments in 2025, economists predicted that the payment increase will be about 2.57 percent, based on inflation levels.
That’s significantly lower than the increases seen this year and in 2023, which were 3.2 percent and 8.7 percent, respectively.
However, the actual increase will depend on many factors, including retirement age and lifetime income. Location can also play a role as certain states tend to have higher incomes and subsequently higher Social Security payments.
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These are the states that have the estimated lowest increases for 2025, according to the Motley Fool, along with their median Social Security payment for December 2023:
Because these states have the lowest median Social Security payment amounts, the cost-of-living adjustment (COLA) will cause their 2025 monthly benefits to increase less on average than in other states.
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While Mississippi would see only a $41.80 increase to the median benefit of $1,673 in the state, New Jersey residents would see an average monthly uptick of $52.50 to the median retiree benefit of $2,100.
“Typically, lower Social Security payments have to do with the state’s median income, and many of the states with the smallest increases share this common element,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
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“COLA adjustments are made percentage-wise to the existing benefit amount, so if you already are on average receiving a smaller monthly payment than other states, the adjustment is going to be in-line with the existing benefit.”
Of course, your exact benefit change will depend on your retirement claiming age and level of earnings, but states that tend to have lower median incomes will generally see residents with lower benefit amounts.
“While this may seem like a problem for recipients in these states, the reality is most have adjusted to the lower monthly payment they’re already receiving, and any adjustment to it would follow their expectations,” Beene said.
The COLA for 2025 will not be announced until more inflation data for September is available on October 10, but current estimates indicate that seniors will get a far smaller increase than in the two years prior.
If the COLA is about 2.5 percent as expected in 2025, it will be the smallest since 2021.
Kevin Thompson, a finance expert and founder and CEO of 9i Capital Group, said the COLA will likely impact the lower-earning states more severely, especially with elevated food prices.
“Prices aren’t coming down, and the COLA isn’t keeping up with these increases,” Thompson told Newsweek. “Items that were once discretionary, such as cellphones, are now becoming essential. Additionally, some states, like New Mexico and Montana, tax Social Security benefits, further reducing the net income for beneficiaries in those states.”
While many Americans rely on Social Security for the bulk of their retirement income, Thompson said the safety net program was never intended to fully fund seniors’ golden years.
“It was designed primarily to provide benefits for older workers, people with disabilities and survivors of deceased spouses,” Thompson said. “However, it has evolved into a crucial public safety net, and for many, it is their only source of retirement income.”