California has the largest number of Social Security recipients and also receives more dollars in benefits than any other state. Almost 6.3 million state residents collect payments from Social Security's main program for retirees, disabled workers and their families according to recent data from the Social Security Administration. Those payments total around $114.8 billion per year. Social Security retirement benefits are not subject to California's otherwise burdensome state taxes, though state income taxes do apply to payments from corporate and public pensions as well as retirement account withdrawals. This taxation of income sources relied upon by many retirees, along with high state sales taxes, helps make California one of the least tax-friendly states for retirees.
If you are thinking about how to fit Social Security benefits into your retirement plan, consider talking it over with a financial advisor.
Social Security Taxes in California
Like a majority of states, California does not levy state income tax on Social Security retirement benefits. This is good news for California's Social Security benefit recipients, because the state's income tax rates are among nation's highest, ranging from 1% to 12.3%. Although California gives a pass to taxing Social Security benefits, these payments still may be subject to federal income taxes, depending on your other income sources.
In spite of its favorable treatment of Social Security retirement benefits, California's other taxes combine to make it one of the least tax-friendly states for retirees overall. These additional state taxes include levies placed on income from public and private pensions as well as withdrawals from retirement accounts. All these sources of income are taxed as normal income under the state's rules. In addition, California has the country's highest state-level sales tax as well, at 7.25%. Local sales taxes can add up to 3.25% more.
If you’re interested in building a tax-effective retirement strategy, consider using this free tool to find a vetted financial advisor.
California Social Security Payments
As the most populous state, California also has the largest number of Social Security benefit recipients. According to the SSA's 2023 statistical report, a total of nearly 6.3 million state residents received payments in December 2022 from Old Age, Survivors and Disabilities Insurance (OASDI), Social Security's largest program. Beneficiaries of retirement payments included almost 4.8 million retired workers, 228,490 spouses, and 79,402 children. Survivors benefits were paid to 355,097 widows or widowers and parents and 160,623 children. Disability payments went to 539,044 disabled workers, 7,939 spouses and 71,481 children.
Californians also receive more dollars in Security benefits than residents of any other state. California Social Security recipients split a total of nearly $114.8 billion in OASDI payments in 2022. Retirees collected more than $947 billion, survivors got close to $141 billion and disabled recipients received more than $10.5 billion.
More than 1.1 million Californians received benefits from Supplemental Security Income (SSI), a smaller Social Security program that provides assistance to elderly, blind or disabled low-income people. These include 339,560 aged, 14,662 blind and 778,968 beneficiaries in the state. Total SSI payments for all of 2022 came to just under $9.9 billion, with more than $2.4 billion going to aged, more than $141 million to blind and almost $7.4 billion going to disabled Californians.
Social Security Contacts
San Francisco hosts one of Social Security's 10 regional offices. The San Francisco Region of Social Security serves a vast territory stretching across six time zones that in addition to California includes Arizona, Nevada, Hawaii, Guam, American Samoa and the Northern Mariana Islands. Facilities include 162 local offices, half a dozen phone centers, 17 offices for disability determinations and 20 hearing offices, staffed by a total of 6,500 employees.
In order to find the nearest Social Security office, Californians can Social Security's office locator, which provides address and other contact information for the most convenient location using ZIP codes. Californians can also use Social Security's online services, available at SSA.gov. Online services include applying for benefits, future benefits and reviewing work history. Social Security also maintains a toll-free number, 800-772-1213 where callers can receive assistance and referrals for Social Security-related business or questions. You can also use this free tool to match with up to three vetted fiduciary advisors if you are interested in professional guidance.
Bottom Line
California receives a substantial economic benefit in the form of Social Security benefits paid to its residents. Payments totaling nearly $114.8 billion went to about 6.3 million Californians in 2022. Those payments are subject to California's state income tax, the highest in the nation, but the state tax system is otherwise considered unfriendly to retirees thanks to levies placed pension payments and retirement account withdrawals.
Tips
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