While a cost-of-living adjustment has not been made for 2025 Social Security benefit payments, economists predicted the payment increase will be about 2.57%, depending on inflation levels. That is well below the increases seen this year and in 2023, which were 3.2% and 8.7%, respectively.
However, the actual increase will depend on various factors, including retirement age and lifetime income. Location can also be an important factor, as some states tend to have higher incomes and, consequently, higher Social Security payments.
Estates That Have the Lowest Estimated Increases for 2025
So, regarding the available projections and data, here are the states with the lowest expected COLA increments for Social Security benefits as soon as the next one is applied, from January 1, 2025:
- 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
Given that These states have the lowest median Social Security payment amounts, the cost of living adjustment (COLA) will cause your benefits per month for 2025 to grow less on average than in other states. While Mississippi would see only a $41.80 increase in the state’s median benefit of $1,673, New Jersey residents would see an average monthly increase of $52.50 in the median retiree benefit of $2,100.
“Typically, the lowest 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,” said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin.
“COLA adjustments are made as a percentage of the existing benefit amount, so if you are already receiving a lower monthly payment on average than other states, the adjustment will be in line with the existing benefit.”
Of course, the exact change in your benefit will depend on your retirement age and income level, but states that tend to have lower median incomes will generally have residents with benefit amounts minors.“While this may seem like a problem for recipients in these states, the reality is that most have adjusted to the lower monthly payment they already receive, and any adjustment would follow their expectations,” Beene said.
Social Security COLA 2025 — Announcement Dates
The COLA for next year 2025 will not be announced until more inflation data is available for the month of September, October 10, but current estimates indicate that seniors will receive a much lower increase than in the previous two years. If the COLA is around 2.5%, as expected in 2025, it will be the lowest since 2021. Kevin Thompson, financial expert and founder and CEO of 9i Capital Group, said “COLA will likely hit lower-income states more severely, especially with high food prices.”
“Prices are not going down and COLA is not keeping up with these increases,” Thompson said. “Items that were once discretionary, like cell phones, are now becoming essential. Additionally, some states, such as New Mexico and Montana, tax Social Security benefits, further reducing the net income of recipients in those states.”
While many U.S. citizens rely on Social Security for the majority of their retirement income, Thompson said “the safety net program was never intended to fully fund seniors’ golden years.”
