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 as well as to those living with disabilities. However, when a Social Security beneficiary dies, their family members can also get survivor benefits through a lump sum death payment.

For years, that amount has remained at $255 and has stayed that way since 1954.

This is despite inflation pushing costs up for Americans on everything from groceries, housing and healthcare. Funeral costs, too, have surged, which means for many, the lump sum payment is barely a dent in covering any death-related expenses, according to the lawmakers behind the Social Security Survivor Benefits Equity Act.

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

This week, Democratic Vermont Senator Peter Welch proposed the law, which would boost the death benefit to $2,900 to better reflect today’s inflation levels.

Independent Senator Bernie Sanders of Vermont and Democratic Senator Elizabeth Warren of Massachusetts also signed on to co-lead the bill.

“Funeral costs should be the last thing on the minds of grieving families when they lose a loved one,” Welch said in a statement. “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 top of mind for many mourning families.”

The price of a full funeral and cremation service used to cost just $700 when the original $255 lump sum death payment was approved, but now the same service costs an average of $6,280, according to the National Funeral Directors Association.

And if you’re paying for a funeral with a casket, expect that fee to skyrocket to roughly $8,300.

Thompson said the bill is likely to pass since it’s been 70 years, and no inflation adjustment has been made for the death payment since the 1950s.

“People often snicker at the amount of money the Social Security death benefit, and it at least needs to be increased to be in line with inflation,” Thompson said. “This will help families tremendously during these trying times as families quite often have to raise money to bury their loved ones.”

Still, not everyone is too certain about the bill’s future.

“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,” Joseph Patrick Roop, the president of Belmont Capital Advisors, told Newsweek. “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 is passed, the higher $2,900 amount would begin in 2025 based on the consumer price index for urban wage earners and clerical workers.

Currently, survivors are eligible for the death payment if they meet certain qualifications.

You must apply within two years of your spouse or parent’s death.

The benefit typically goes to a surviving spouse, but if there isn’t one, that money can go to the children of the person who died.

Survivors also typically have the responsibility of alerting Social Security that their loved one died. This stops any future Social Security payments from wrongfully getting sent out.

Survivor benefits are also available to spouses aged 60 or older, spouses 50 or older with disabilities, or a spouse taking care of the deceased’s child.

For children, those survivor benefits are typically available to those under age 18, or 18 and older with a disability. Stepchildren and grandchildren can also qualify under special circumstances, along with parents of the deceased if they relied on the person for at least half of their financial support.

But for those who merely receive the lump sum death payment, the amount can leave a lot to be desired, experts say.

“While that small payment may have assisted beneficiaries in past decades, the dramatic cost in living makes that amount seem shockingly low by today’s standards,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.

“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, is one that should have been made long ago.”

Story Written by Suzanne Blake, Newsweek

Story Link: https://www.newsweek.com/social-security-benefit-increase-more-2000-under-new-bill-1960431