10 States Where Retirees Will See the Smallest Social Security Bumps in 2025

Americans have consistently ranked inflation as their top financial concern over the past three years, according to Gallup polls. For Social Security recipients, the yearly cost-of-living adjustment (COLA) serves as a critical factor in maintaining financial stability. As 2025 approaches, many are eager to know what changes lie ahead.

The official announcement about the 2025 COLA will come shortly after the U.S. Labor Department releases its September inflation data on Thursday, Oct. 10, at 8:30 a.m. ET. Following this, the Social Security Administration (SSA) will publish the updated adjustment figures.

While estimates vary, The Senior Citizens League predicts a 2.5% increase, whereas the Congressional Budget Office suggests a 3.1% rise. Either way, this would represent the smallest COLA since 2021. However, the dollar amount of these increases will differ significantly across states, largely due to variations in median Social Security benefits.

States with the Smallest COLAs in 2025

The SSA’s Annual Statistical Supplement offers insights into Social Security benefit distribution across the U.S. Based on the latest data, these 10 states and districts have the lowest median monthly benefits for retired workers:

• Mississippi: $1,673
• Louisiana: $1,674
• New Mexico: $1,696
• District of Columbia: $1,696
• Arkansas: $1,717
• Alaska: $1,733
• Maine: $1,741
• Kentucky: $1,748
• Montana: $1,751
• California: $1,767

The COLA is calculated as a percentage increase in inflation applied to a retiree’s baseline benefit. This means that retirees in states with lower median Social Security benefits will see smaller dollar increases.

For example, a retiree in Mississippi receiving the median benefit of $1,673 would see an increase of about $41.80 per month with a 2.5% COLA. By contrast, someone in New Jersey, where the median benefit is $2,100, would see a $52.50 increase with the same percentage adjustment.

Why Do Retirees in Some States Receive Smaller Benefits?

Social Security benefits are determined by a worker’s lifetime earnings and the age at which they start receiving benefits. The formula considers inflation-adjusted earnings from the 35 highest-earning years of a worker’s career to calculate the primary insurance amount (PIA). The PIA is then adjusted based on when the recipient claims benefits:

• Claiming before full retirement age (67 for those born in 1960 or later) results in smaller payments.
• Delaying claims beyond full retirement age increases the payout.

The discrepancy in benefits across states stems primarily from differences in median income levels. For instance, states like Mississippi, Louisiana, and New Mexico, which rank among the lowest for median incomes according to the U.S. Census Bureau, naturally see lower Social Security benefits.

However, there are anomalies. States like California, Alaska, and the District of Columbia have higher-than-average median incomes but still report lower Social Security benefits. This could be linked to their exceptionally high costs of living, which might compel higher earners to relocate during retirement, leaving behind a population with relatively lower lifetime earnings.

Maximizing Your Social Security Benefits

If you’re approaching retirement, there are strategies to increase your benefits:

• Work for at least 35 years to ensure you maximize your lifetime earnings average.
• Delay claiming Social Security until after your full retirement age to receive higher payouts.
• Stay informed about ways to boost your retirement income through available programs and tax incentives.

A little preparation can make a significant difference, ensuring you’re well-equipped to enjoy a financially secure retirement.

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