BIG NEWS: Social Security Benefit to Increase More Than $2,000 Under New Bill

According to News Week, Some Social Security benefits could increase by over $2,000 if a new bill passes. Social Security benefits are typically paid monthly to seniors during retirement and to individuals living with disabilities. However, when a Social Security beneficiary dies, their family members can also receive survivor benefits through a lump-sum death payment.

Longstanding Payment Amount Stays Stagnant

For years, this amount has remained at $255, a figure that has not changed since 1954. Despite rising inflation affecting everything from groceries and housing to healthcare, this payment has not kept pace. Lawmakers behind the Social Security Survivor Benefits Equity Act argue that the lump-sum payment barely covers any death-related expenses, especially with the sharp increase in funeral costs.

“This would be a major step in aligning the death benefit with current inflation-adjusted dollars,” says Kevin Thompson, a finance expert and CEO of 9i Capital Group. “This will help offset the average cost of funerals and other arrangements in the event of death.”

Legislative Proposal for Increase

This week, Democratic Vermont Senator Peter Welch proposed legislation to boost the death benefit to $2,900, reflecting today’s inflation levels more accurately. Independent Senator Bernie Sanders of Vermont and Democratic Senator Elizabeth Warren of Massachusetts are also co-leading the bill.

“Funeral costs should be the last thing on the minds of grieving families when they lose a loved one,” Welch stated. “But because benefits designed to help folks afford funeral expenses haven’t kept pace with inflation, the cost of burying a loved one has become a top concern for many mourning families.”

Rising Funeral Costs Highlight the Need for Change

The cost of a full funeral and cremation service has increased significantly; what used to cost around $700 when the original $255 lump-sum death payment was established now averages about $6,280, according to the National Funeral Directors Association. If a funeral with a casket is required, costs can reach roughly $8,300.

Thompson believes the bill is likely to pass since no inflation adjustment has been made to the death payment in 70 years. “People often snicker at the amount of money the Social Security death benefit provides, and it at least needs to be increased to align with inflation,” he said. “This will help families tremendously during these trying times, as they often have to raise money to bury their loved ones.”

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Uncertain Political Landscape

However, not everyone is optimistic about the bill’s chances. “The bill to raise the Social Security death benefit has garnered attention, but its chances of passing remain uncertain due to political and budgetary challenges,” said Joseph Patrick Roop, president of Belmont Capital Advisors. “Bills that aim to expand or adjust Social Security often face hurdles, especially given the broader debate on Social Security’s solvency and potential reform.”

If the new bill passes, the increased $2,900 benefit would take effect in 2025 and would be based on the Consumer Price Index for Urban Wage Earners and Clerical Workers.

Eligibility for Survivor Benefits

Currently, survivors are eligible for the death payment if they meet certain qualifications. They must apply within two years of the deceased spouse or parent’s death. The benefit typically goes to a surviving spouse, but if one is not available, the funds can be directed to the deceased’s children.

Survivor benefits are also accessible to spouses aged 60 or older, spouses 50 or older with disabilities, or a spouse caring for the deceased’s child. For children, survivor benefits are available to those under age 18 or to those 18 and older with disabilities. Stepchildren and grandchildren may qualify under specific circumstances, as can parents of the deceased if they relied on the individual for at least half of their financial support.

Conclusion

Despite the existing lump-sum death payment, experts argue that the amount is inadequate for today’s economic realities. “While that small payment may have assisted beneficiaries in past decades, the dramatic cost of living makes that amount seem shockingly low by today’s standards,” said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin. “The new payment would be over 10 times this amount, while still being a one-time distribution to help those affected by a loved one’s passing. It’s a logical step that, quite frankly, should have been made long ago.”