Reforming Social Security: A Legislative Push to Increase Death Benefits by Over $2,000

A new bill is drawing significant attention due to its potential to significantly improve one specific Social Security benefit: the lump sum death payment. If passed, the proposed legislation could increase this payment by over $2,000, helping close the gap between the current benefit and the rising cost of funerals amid inflation.

The Current Social Security Death Benefit

The Social Security death payment has remained stagnant at $255 since 1954, originally designed to assist families with funeral costs. At that time, funerals averaged around $700. However, with inflation and rising expenses, this amount has become insufficient for even a small portion of funeral costs today.

Rising Funeral Costs

When the $255 death benefit was introduced, funeral expenses were relatively modest. Today, according to the National Funeral Directors Association, a basic funeral and cremation service exceeds $6,000, while a standard burial surpasses $8,000.

This drastic increase has left many families struggling to cover funeral expenses, often resorting to personal loans or donations. The proposed increase would modernize the benefit and provide much-needed financial relief during times of loss.

The Proposed Social Security Survivor Benefits Equity Act

To address this growing issue, Senator Peter Welch (D-VT) introduced the Social Security Survivor Benefits Equity Act. Supported by Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA), the bill aims to raise the death benefit to $2,900, better reflecting current funeral costs and inflation.

Kevin Thompson, CEO of 9i Capital Group, emphasized the significance of this change, stating, “This adjustment would align the death benefit with today’s economic realities, accounting for inflation and helping families cover funeral and other related costs.”

Eligibility and Implementation of the New Benefit

If the bill passes, the new $2,900 death benefit would take effect in 2025, adjusting for inflation based on changes in the consumer price index for urban wage earners and clerical workers.

Eligibility requirements would remain unchanged, with the benefit typically going to a surviving spouse or children. To receive the payment, survivors must apply within two years of the deceased’s passing and inform the Social Security Administration to discontinue future payments.

Will the Bill Pass?

Despite the bill’s attention, its passage is uncertain. Joseph Patrick Roop, President of Belmont Capital Advisors, pointed out potential political and financial challenges, explaining, “Proposals to modify or expand Social Security often face obstacles, particularly amid ongoing debates over Social Security’s solvency and reform.”

However, proponents remain hopeful, arguing that the benefit, untouched for 70 years, is overdue for an update to reflect the financial needs of modern American families.

What Happens if the Bill Passes?

Should the bill succeed, the increased death benefit would begin in 2025, ensuring it keeps pace with inflation through cost-of-living adjustments. In addition, eligible survivors—including spouses over 60, disabled spouses over 50, or those caring for minor children—would continue to receive other survivor benefits. Children, stepchildren, and even parents of the deceased may also qualify under certain circumstances.

Existing Survivor Benefits

In addition to the lump sum payment, Social Security provides a range of benefits to eligible family members of the deceased, including:

• Spouses aged 60 or older
• Disabled spouses aged 50 or older
• Spouses of any age caring for the deceased’s minor child
• Children under 18 or disabled children over 18
• In certain cases, financially dependent stepchildren or parents

While the bill primarily focuses on updating the lump sum payment, it seeks to address the financial strain caused by outdated benefits and modern economic conditions.

Political and Financial Challenges

Despite widespread recognition of the need for this update, the bill faces potential political hurdles. Roop noted, “Social Security-related bills often encounter challenges, particularly given the larger debate surrounding the program’s long-term solvency and potential reforms.” Bipartisan support will be essential to overcome these obstacles and advance the bill.

Conclusion

The proposed increase in the Social Security death benefit is a long-overdue adjustment to help families cope with the rising costs of funerals. As funeral expenses continue to rise, the current $255 payment is insufficient to cover even basic costs.

The Social Security Survivor Benefits Equity Act aims to bring this benefit in line with current economic realities, offering families much-needed financial support during difficult times. However, the bill faces significant political challenges, and its future remains uncertain.

Source: Transfer Portal