Will Social Security benefits increase in NJ? See COLA projections

Lori Comstock, NorthJersey.com
Updated ·5 min read
2

This year, almost 68 million American retirees, veterans and dependents per month will lean on Social Security benefits to get by. For nearly 30% of Americans, those monthly benefits are their only source of income.

So you can't blame beneficiaries of Social Security who await the news each year of the annual cost-of-living adjustment, often known as COLA, and how it will affect benefits.

Benefits are initially calculated based on a worker's earnings during employment, but over time, those payments could lose value. To address this, legislation passed in 1973 introduced COLA to counteract the rate of inflation, or essentially the rate at which prices are rising.

The Social Security adjustment varies each year. In 2024, there was a 3.2% boost, and Americans saw an 8.7% boost in 2023.

So how will it stack up for New Jersey beneficiaries, who are, on average, receiving the largest Social Security checks each month?

What is the predicted Social Security COLA for 2025?

Current estimates suggest a 2025 COLA increase of 2.57%, down from a 2.63% increase forecast by the Senior Citizens League, a nonprofit advocacy group. But those estimates will change by the end of September, when calculations are tallied.

COLAs are based on third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, which is calculated by the Bureau of Labor Statistics each month. Data compiled between July and September is what ultimately determines the final COLA amount each year.

If COLA estimates prove correct, Social Security beneficiaries could pocket about $50 extra per month — and for New Jersey residents, potentially closer to $54, on average. Of note is that the increase does not account for potential Medicare Part B hikes, which are automatically deducted from Social Security benefits.

Is Social Security COLA enough to battle inflation?

Despite legislation and tools, like higher Federal Reserve interest rates, some say increases don’t adequately reflect the rise in costs for seniors.

In July, a retirement survey of over 2,000 seniors found that 71% said persistent high prices from inflation have forced them to deplete their savings, reported the Senior Citizens League. Nearly 80% said their monthly budget for essentials — housing, food and medicine — was higher than in 2023, the survey showed. And 63% feared that their retirement income wasn't enough to cover the cost of essentials.

In fact, the 2024 Loss of Buying Power study found that the average payment for retired workers in 2024 is worth about 80 cents on the dollar compared with 2010. The study said the loss of buying power is mostly attributed to fast-rising costs for big-ticket items like housing and transportation.

Today's average monthly Social Security benefits of $1,860 for retired workers would need to rise to about $2,230, or $370 more per month, to be at the monetary value of 2010, the study shows.

Social Security rates in New Jersey

Social Security benefits are determined based on two factors: claiming age and lifetime income. While the state of residence doesn't factor into Social Security benefits, geography does plays an indirect role because the median income varies state by state.

The Social Security Administration published an annual statistical supplement that breaks down benefit data on variables such as age, sex and geography. The 2024 supplement broke down the median monthly Social Security benefit for retired workers as of December 2023. The following states have the highest:

  • New Jersey: $2,100

  • Connecticut: $2,084

  • Delaware: $2,064

  • New Hampshire: $2,039

  • Maryland: $2,008

  • Michigan: $2,005

  • Washington: $1,992

  • Minnesota: $1,982

  • Indiana: $1,952

  • Massachusetts: $1,946

These are simply average numbers, so not every retiree in New Jersey is receiving these benefits monthly. The reason some states receive more than others — and why New Jersey is at the top — is based on several factors, including the length of time working, the earnings you make and the age at which you retire.

Generally speaking, COLAs will be higher in the above states because bigger benefits equal bigger COLAs. For example, the median monthly payment for a retired worker in New Jersey is $2,100. Assuming the COLA in 2025 will be 2.57%, beneficiaries in New Jersey, on average, could pocket an additional $53.97.

Also to consider is that New Jersey is among the top 10 states where the median income is higher than other states, which is why the median monthly income for residents is higher.

Some even consider "random chance" as a reason for certain states receiving larger Social Security benefits, on average. Some people move when they retire, which would break any relationship the person has between their benefit and the median income in their state of residence, according to The Motley Fool, a private financial and investing advice company.

Social Security benefits in New Jersey: a breakdown

Nearly 1.7 million New Jersey residents are beneficiaries of Social Security income, according to the latest data released in May from the Social Security Administration. Those beneficiaries received $3.35 billion in total payments each month in 2023.

Here is a breakdown of who those 1.7 million beneficiaries were:

  • Retired workers: 1,316,238

  • Disabled workers: 162,912

  • Widows, widowers and parents: 86,530

  • Spouses: 46,089

  • Children: 86,735

Among those, about 1.4 million are seniors over the age of 65.

COLA resources, calculators

COLA calculations are on hold until the Labor Department publishes its Consumer Price Index data for September. That is slated to take place on Oct. 10 at 8:30 a.m. ET. In the meantime, check out the following resources to learn your potential Social Security payments:

  • Benefit estimates depend on your date of birth and earnings history. The Social Security Administration's Quick Calculator does not access earnings history, but instead estimates earnings based on the information you input. It's a helpful resource, but be mindful of that.

  • The Social Security Administration suggests that every senior create an online "my Social Security" account, where users can receive personalized future benefit estimates or manage benefits already being received. The free and secure account also gives users access to get a replacement Social Security card, set up direct deposit and check the status of an application, among other tools.

Email: lcomstock@njherald.com; X (formerly Twitter): @LoriComstockNJH or on Facebook.

This article originally appeared on NorthJersey.com: Social Security benefits projected to increase in 2025