A recent bill is set to potentially reform the Social Security payout system in the United States, promising a notable increase in benefits to approximately $2,000 for some beneficiaries. This change, targeted at disabled individuals and retired seniors who receive monthly Social Security checks, aims to address the growing financial challenges these groups face. For decades, the lump sum death payment for surviving family members of deceased Social Security claimants has remained a stagnant $255, unaffected by rising costs of living, which include significant expenses for essentials such as groceries, housing, and healthcare.
The legislation, known as the Social Security Survivor Benefits Equity Act, seeks to substantially increase this lump sum death benefit to $2,900 to better align with contemporary inflation rates. This measure has been introduced by Democratic Senator Peter Welch of Vermont, with support from independent Senator Bernie Sanders and Democratic Senator Elizabeth Warren. Senator Welch emphasized the unfair burden posed on families grappling with funeral costs in a time of grief. With average funeral costs currently estimated by the National Funeral Directors Association at $6,280 for cremation services and around $8,300 for funerals with caskets, the existing benefits fall woefully short of covering these expenses.
Financial expert Kevin Thompson from 9i Capital Group applauds the proposed adjustment as a logical step towards updating the death benefit to reflect inflation-adjusted value, potentially alleviating financial strain for families confronting the high costs associated with funerals. Notably, the death benefit's amount has not seen an adjustment since the 1950s, making this proposed change a significant potential legislative milestone in the history of Social Security benefits.
However, not everyone is optimistic about the bill's chances of passing. Joseph Patrick Roop, president of Belmont Capital Advisors, voiced concerns about political and financial roadblocks that such a bill might face. The ongoing debates surrounding the sustainability and reform of the Social Security system often present hurdles for legislation aiming to alter or broaden the program. Should the bill pass, the increased death benefit could take effect in 2025, determined based on the consumer price index for urban wage earners and clerical workers.
Eligibility for the death payment under current regulations requires survivors to file an application within two years of the death of a spouse or parent. Typically, surviving spouses receive the payment; however, if there is no spouse, the deceased's children may qualify. Furthermore, survivors must inform Social Security of the claimant's death to prevent fraudulent claims. In addition to the lump sum death benefit, survivor benefits extend to spouses aged 60 or older, spouses 50 or older with disabilities, or those caring for the deceased’s child. Generally, children under 18 or disabled persons older than 18 are eligible for ongoing benefits. In unique situations, other dependents such as stepchildren, grandchildren, or financially dependent parents of the deceased might also qualify.
Despite these proposed changes, some experts caution that beneficiaries relying solely on the lump sum payout might not find the adjustment sufficient. As the nation awaits the outcome of this legislative effort, many see it as a critical step towards updating the Social Security system to meet the modern financial realities faced by American families.
