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Analyzing the Varied Benefits Received by the Beneficiary of Social Security Across U.S. States

Beneficiary of Social Security (Photo: Tododisca)

Analyzing the Varied Benefits Received by the Beneficiary of Social Security Across U.S. States

Here's the Average Social Security Retired Worker Benefit by Age | The Motley Fool

Benefits Received by the Beneficiary of Social Security (Photo: The Motley Fool)

Variations in Social Security Benefits Among States: Geography Plays Minor Role for the Beneficiary of Social Security

According to a Motley Fool article, the disparity in Social Security benefits for retirees, including the beneficiary of Social Security, across states isn’t mainly tied to geography, though some states offer more substantial benefits. Social Security is crucial for millions of Americans, with 88% of retired workers relying on it to some extent, and 82% of current workers expecting it to be a key income source in retirement (Gallup).

Given these stats, both current and retired workers, including the beneficiary of Social Security, should understand the factors affecting their Social Security payments. While geography does play a role in benefit amounts, it’s not solely because residents of certain states receive higher benefits. The average benefit for retired workers varies widely across states. The Social Security Administration (SSA) provides monthly snapshots, e.g., the average retired-worker benefit for the beneficiary of Social Security was $1,838.58 in July 2023, and the average spousal benefit was $891.32. The SSA also releases an Annual Statistical Supplement, offering different data perspectives, including geographic information.

Data shows the average Social Security retired worker benefits by state, including the beneficiary of Social Security, as of December 2022. Here are some key observations:

  1. Variation by State: There is a significant variation in the average benefits received by retired workers across different states.
  2. Highest Benefits: States like Connecticut, New Jersey, and Delaware have the highest average benefits, with amounts exceeding $2,000 per month. Washington, D.C., also falls into this category.
  3. Lowest Benefits: Mississippi, Louisiana, and Arkansas have the lowest average benefits, with amounts below $1,700 per month.
  4. Geographic Patterns: There is a general geographic pattern, with states in the Northeast and Mid-Atlantic regions tending to have higher average benefits, while states in the South often have lower averages.
  5. National Average: The national average for retired worker benefits across all states in December 2022 was approximately $1,825.14 per month.

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Understanding the Connection Between State Median Income and Social Security Benefits

Social Security benefits aren’t higher in specific states due to geography, but rather due to the indirect link between median household income and lifetime earnings, including the beneficiary of Social Security. The benefits retirees receive depend on the average inflation-adjusted wages during their top 35 earning years. States with above-average median incomes tend to have retirees with higher Social Security benefits. Data from the U.S. Census confirms this relationship, as states with higher median incomes typically have larger benefit payouts.

Conversely, states with lower median incomes correspond to smaller benefits for the beneficiary of Social Security. Additionally, some states tax Social Security benefits, affecting income differently across locations. However, geography indirectly impacts Social Security income, mainly through state income tax policies.

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