Social Security benefits are complex, and it is frequently impossible to understand all of the program’s complexities until specific situations emerge and must be resolved. Many people may be unaware that when a Social Security beneficiary dies, their family members can receive survivor benefits in the form of a lump sum death payment.
Since its implementation in 1954, the amount has been constant at $255. And, while this money may have been tremendously helpful to mourning families in the past, it is today nothing more than a drop in the bucket in the face of rising death costs.
Since the goal of this sum was to alleviate the burden of funeral expenditures for mourning families, the fact that it is currently unable to fund even a fraction of a modest funeral with it puts families under further hardship.
Lawmakers have noticed the impact of this meager payment throughout the years and have worked together to create the Social Security Survivor Benefits Equity Act in an attempt to balance the scales.
Kevin Thompson, a finance specialist and the founder and CEO of 9i Capital Group, stated, “This would be a significant step toward aligning the death benefit with current inflation-adjusted values. This will help you cover the typical cost of funerals and other arrangements in the case of death.
The new Social Security death benefit bill improvement
Proposed by Democratic Vermont Senator Peter Welch and supported by Senator Bernie Sanders of Vermont and Democratic Senator Elizabeth Warren of Massachusetts, the new proposal would increase the death benefit to $2,900 to match current inflation levels.
According to Welch, “Funeral costs should be the last thing on the minds of grieving families when they lose a loved one.” However, because subsidies designed to help people afford funeral expenditures have not kept up with inflation, the cost of burying a loved one has become a top concern for many bereaved families.”
Alex Beene, a financial literacy lecturer at the University of Tennessee at Martin, supports the new legislation. “While such little payout may have helped beneficiaries in previous decades, the dramatic cost of living makes that sum appear startlingly low by today’s standards.
The new payout would be more than ten times this amount, while remaining a one-time transfer to assist people affected by a loved one’s death. It’s a sensible step that, quite honestly, should have been taken years ago.”
When the original $255 lump sum death payment was approved, the average cost of a funeral was under $700, making the money a significant help to families. The National Funeral Directors Association estimates that the same service would cost $6,280 today.
The plan is popular and should face little opposition since, according to Thompson, “People often snicker at the amount of money the Social Security death benefit is, and it at least has to be adjusted to keep up with inflation. This would greatly assist families during these difficult times, as families frequently have to raise funds to bury their loved ones.”
However, other people, such as Joseph Patrick Roop, president of Belmont Capital Advisors, are concerned about the bill’s prospects. The idea to increase the Social Security death benefit has sparked interest, but its chances of passage remain questionable due to political and fiscal problems.
Bills attempting to expand or modify Social Security frequently meet roadblocks, particularly given the broader debate over Social Security’s sustainability and prospective change.”
If the law passes, the change will take effect as early as 2025, with the $2,900 transferred into qualified families’ accounts without additional delay.
Also See:- Raising the US retirement age – Would lead to significant cuts in Social Security checks