Social Security Benefit to Increase More Than $2,000 Under New Bill

According to News Week, Social Security benefits provide monthly payments to seniors in retirement and those living with disabilities. In cases where a beneficiary dies, their family members may also receive a lump-sum death payment. However, this payment has remained stagnant at $255 since 1954, despite rising inflation and increasing costs of living.

The Proposed Increase to $2,900

This week, Vermont Senator Peter Welch introduced the Social Security Survivor Benefits Equity Act, a bill aiming to raise the death benefit from $255 to $2,900 to better reflect today’s inflation levels. The bill is co-led by Independent Senator Bernie Sanders of Vermont and Democratic Senator Elizabeth Warren of Massachusetts.

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

The Rising Cost of Funerals

When the $255 death payment was first introduced, a full funeral and cremation service cost around $700. Today, that same service averages $6,280, according to the National Funeral Directors Association. For those opting for a funeral with a casket, the cost has risen to approximately $8,300, making the current death benefit woefully insufficient for many families.

“Funeral costs should be the last thing on the minds of grieving families when they lose a loved one,” said Senator Welch. “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.”

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Will the Bill Pass?

Given that the death benefit hasn’t been adjusted for inflation in nearly 70 years, Thompson believes the bill has a strong chance of passing. “This will help families tremendously during these trying times as families quite often have to raise money to bury their loved ones,” he stated.

However, not everyone is as optimistic. Joseph Patrick Roop, President of Belmont Capital Advisors, cautioned that the bill might face political and budgetary challenges. “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,” Roop told Newsweek.

If passed, the new $2,900 benefit would take effect in 2025, adjusted based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Eligibility for the Lump Sum Death Payment

Currently, to qualify for the lump sum payment, survivors must apply within two years of the death of their spouse or parent. Typically, this benefit goes to a surviving spouse, but if there isn’t one, the payment may be made to the children of the deceased.

Survivor benefits are also available to spouses aged 60 or older, spouses aged 50 or older with disabilities, or a spouse caring for the deceased’s child. Children under 18, or those over 18 with disabilities, may also qualify, along with stepchildren, grandchildren, and parents who were financially dependent on the deceased.

Financial expert Alex Beene emphasized that the current $255 payment is outdated, stating, “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.”

The proposed increase would provide a much-needed adjustment, helping families navigate the financial challenges that arise after losing a loved one. “It’s a logical step that, quite frankly, is one that should have been made long ago,” Beene added.