New Bill Could Increase Social Security Benefit by Over $2,000: A Look at the Social Security Survivor Benefits Equity Act

A new legislative proposal is gaining attention for its potential to significantly increase one specific Social Security benefit: the lump sum death payment. If passed, the bill could raise this amount by more than $2,000, addressing the growing gap between the current benefit and inflation-adjusted funeral costs.

The Current State of the Social Security Death Benefit

For nearly 70 years, the Social Security death benefit has remained stagnant at $255. Introduced in 1954, this payment was designed to help families offset the cost of funeral expenses. At that time, funeral services averaged around $700. However, with today’s rising costs, this modest payment has become insufficient for covering even a fraction of the expenses associated with burying a loved one.

Skyrocketing Funeral Costs

When the $255 death payment was first introduced, the average cost of a funeral was around $700. Today, according to the National Funeral Directors Association, a basic funeral and cremation service costs more than $6,000, with a traditional burial climbing to over $8,000. This sharp increase in costs has left the current death benefit insufficient to cover even a fraction of these expenses.

Many families find themselves scrambling to raise funds for funeral arrangements, often turning to crowdfunding or personal loans. The proposed increase would provide a much-needed update to this outdated payment, offering greater financial relief in times of loss.

The Proposed Social Security Survivor Benefits Equity Act

In response to these concerns, Senator Peter Welch (D-VT) has introduced the Social Security Survivor Benefits Equity Act. Co-led by Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA), the bill seeks to increase the lump sum death benefit to $2,900. This figure is designed to better reflect the current cost of living and inflation.

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

Eligibility and Timing of the New Benefit

If passed, the new death benefit would begin in 2025, with adjustments tied to the consumer price index for urban wage earners and clerical workers. The eligibility criteria would remain similar, with the surviving spouse or, in the absence of a spouse, the children of the deceased, typically receiving the payment.

Survivors are required to apply for the lump sum benefit within two years of the death and notify the Social Security Administration to stop any future payments being issued under the deceased’s name.

Will the Bill Pass?

While the bill has gained attention for addressing an important issue, its passage is far from certain. Joseph Patrick Roop, president of Belmont Capital Advisors, highlighted the political and budgetary challenges that could hinder the bill’s progress. “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 explained.

Nonetheless, proponents of the bill are optimistic. They argue that after 70 years without any adjustment, it’s time for a change that reflects the current economic realities facing American families.

What Happens if the Bill is Passed?

If the bill passes, the new death benefit of $2,900 would go into effect in 2025. The amount is based on the consumer price index for urban wage earners and clerical workers, ensuring that the benefit keeps pace with inflation.

In addition to this increase, the bill also includes provisions for survivors who qualify for other Social Security benefits. These benefits can extend to spouses aged 60 or older, spouses aged 50 or older with disabilities, and spouses taking care of the deceased’s children. Children of the deceased may also be eligible for survivor benefits if they are under 18 or disabled. Stepchildren, grandchildren, and even parents of the deceased can qualify under certain circumstances.

Broader Survivor Benefits Still Apply

Beyond the lump sum death benefit, Social Security offers a range of survivor benefits for eligible family members. These benefits are available to:

• Spouses aged 60 or older
• Spouses aged 50 or older who are disabled
• Spouses of any age caring for a deceased’s minor child
• Children under 18, or over 18 if disabled
• Parents or stepchildren in certain cases, depending on financial dependency

The new bill, however, focuses solely on the lump sum payment, aiming to bridge the gap between outdated benefits and current economic realities.

Political and Financial Hurdles

While many agree on the necessity of this update, the bill still faces potential political 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,” said Joseph Patrick Roop, president of Belmont Capital Advisors. The bill’s success will depend on overcoming these obstacles and securing bipartisan support.

Conclusion

The proposed increase in the Social Security death benefit is a long-overdue adjustment aimed at supporting families in times of grief. With funeral costs continuing to rise, the current $255 benefit is no longer adequate for covering even the most basic expenses. The Social Security Survivor Benefits Equity Act seeks to bring this benefit in line with modern costs, providing families with the financial support they need during difficult times. However, the bill faces significant political challenges, and its future remains uncertain.

Whether the bill passes or not, the conversation around Social Security reform continues to grow, highlighting the need for further adjustments in the face of rising costs and changing economic conditions.

By: newsweek.com