Navigating Social Security benefits can be challenging, especially when it involves knowing which options are available to family members when a beneficiary passes away. One lesser-known benefit is the Social Security lump-sum death payment, a one-time payment of $255.
This payment, designed to help grieving families cover funeral costs, has not been adjusted since its introduction in 1954. Given inflation and the rising cost of funerals, lawmakers are now considering the Social Security Survivor Benefits Equity Act, which proposes increasing the death benefit to $2,900. Here’s a breakdown of the proposed changes and their potential impact on families.
Social Security Death Benefit
The lump-sum death benefit, set at $255 since 1954, was originally intended to offset funeral expenses, which were significantly lower at the time. Back then, the average funeral cost was around $700, making the benefit meaningful support. But with today’s average funeral costs at approximately $6,280 according to the National Funeral Directors Association, the original payment now falls short.
Finance expert Kevin Thompson of 9i Capital Group comments that aligning the death benefit with inflation-adjusted dollars would significantly aid families, helping offset funeral costs in a time of need. Many families find themselves under financial strain after a loved one’s passing, with the current payment barely contributing to the total costs.
New Proposal
Democratic Vermont Senator Peter Welch, along with Senators Bernie Sanders and Elizabeth Warren, introduced the new legislation to increase the lump-sum death benefit to $2,900. This adjustment aims to keep pace with inflation and provide real support to families dealing with funeral expenses.
Welch emphasizes that the last thing grieving families should be worried about is paying for a funeral. Yet, due to stagnant benefits, funeral costs have become a primary concern for many families. Financial literacy expert Alex Beene, who supports the new measure, notes that $255 was a meaningful amount in the past, but rising living costs now render it inadequate. Increasing the death benefit to $2,900, he says, makes logical sense and aligns with current economic realities.
Why This Change Matters
The proposed increase in the Social Security death benefit would offer families much-needed financial relief. As Thompson explains, “People often snicker at the amount of money the Social Security death benefit provides, and it at least needs to be increased to be in line with inflation.” For many, raising the benefit would reduce the need for families to raise funds to cover burial expenses, which often adds stress during an already difficult time.
However, there are concerns about whether the bill will pass smoothly. Joseph Patrick Roop, president of Belmont Capital Advisors, highlights potential political and budgetary obstacles. Social Security adjustments, even for a relatively small change, can be challenging due to concerns over Social Security’s long-term funding and solvency. This may complicate efforts to pass the new measure.
Possible Timeline
If the Social Security Survivor Benefits Equity Act passes, the increase could go into effect as early as 2025. Eligible families would receive $2,900 as a one-time death benefit payment, deposited directly into their accounts without delay. This amount would help families cover a more meaningful portion of funeral expenses, lifting some of the financial burdens that accompany the loss of a loved one.
While the increase is not a complete solution to funeral costs, it represents a significant improvement over the outdated $255. This change has bipartisan support, and many families are hopeful it will bring meaningful relief when they need it most.
FAQs
What is the current Social Security death benefit?
The current death benefit is $255.
When was the last adjustment to the death benefit?
The last adjustment was in 1954.
What is the proposed new death benefit amount?
The proposed amount is $2,900.
When would the new death benefit take effect?
If passed, the change could start in 2025.
Why is there debate over the new death benefit proposal?
Concerns over Social Security funding and budget impact pose challenges.
