Benefits from Social Security are complicated, and you may not fully understand the program until you need to determine how to apply for them. One thing that a lot of people might not know is that when a Social Security beneficiary dies, their family can also get survivor benefits in the form of a lump sum settlement.
This has been in place since 1954, and the amount has always been $255. A long time ago, this amount might have been very helpful to families who were grieving. But now, it’s just a drop in the ocean of rising death costs.
This amount was meant to help grieving families pay for funeral costs, but now that it can’t even cover a simple funeral, it puts more stress on the families. The Social Security Survivor Benefits Equity Act was written by lawmakers who saw how this small amount has affected people over the years and wanted to make things fair.
Kevin Thompson, founder and CEO of 9i Capital Group and an expert in finance, said, “This would be a big step toward bringing the death benefit in line with today’s dollars, taking inflation into account.” This will help pay for some of the costs that come with funerals and other funeral-related plans.
The new Social Security death benefit bill improvement
The new law, which was proposed by Democratic Senator Peter Welch of Vermont and backed by Democratic Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts, would raise the death benefit to $2,900 to keep up with the cost of living today.
Welch said, “Funeral costs should be the last thing on the minds of families who have lost a loved one.” However, the cost of burying a loved one has become very important to many grieving families because benefits meant to help people pay for funerals have not kept up with inflation.
Alex Beene, a teacher of money matters at the University of Tennessee at Martin, backs the new law. “That small payment may have helped people in the past, but now that living costs have gone up so much, that amount seems shockingly low.”
The new payment would be more than 10 times this amount, but it would still only be given once to help people who have lost a loved one. To be honest, it’s a step that makes sense and should have been taken a long time ago.
When the first $255 death payment was approved, the average cost of a funeral was only $700. This made the payment very helpful for families. The National Funeral Directors Association says that the same service today would cost around $6,280.
Thompson says, “People often laugh at how much money the Social Security death benefit is, and it at least needs to be raised to keep up with inflation.” This means that the measure will likely not face much opposition. In these hard times, this will really help families because they often have to raise money to bury their loved ones.
But some people, like Joseph Patrick Roop, president of Belmont Capital Advisors, aren’t sure what will happen with the bill. The bill to increase the Social Security death benefit has gotten a lot of attention, but it still has a long way to go because of political and financial problems.
Bills that want to change or expand Social Security often run into problems, especially since there is a larger debate going on about whether or not Social Security is solvent and how it could be reformed.
If the bill passes, the change could happen as early as 2025, and the $2,900 will be sent right away to the accounts of families who are eligible.
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