At Extreme Investor Network, we understand the importance of personal finance and how unexpected expenses can arise, especially after the passing of a loved one. That’s why we are excited to share some important information regarding the Social Security lump-sum death payment and how proposed changes could potentially help families during a difficult time.
Currently, when a Social Security beneficiary dies, their loved ones may qualify for a one-time $255 lump-sum death payment. However, this amount has not changed in 70 years, since 1954. Inflation has significantly increased the costs of funerals, leaving many families struggling to cover expenses.
In response to this issue, Sen. Peter Welch, D-Vt., has introduced the Social Security Survivor Benefits Equity Act. This bill aims to raise the lump-sum death benefit to $2,900 to better reflect today’s cost of living. The proposed change could help alleviate the financial burden for families following the loss of a loved one.
According to Welch’s proposal, the $255 death benefit was established when funeral costs were much lower. In the 1950s, a full memorial and cremation service cost around $700. Today, the median cost of a funeral with a casket and burial is $8,300, while the average cost for a funeral with cremation is $6,280.
If the bill is passed, the higher $2,900 death benefit would go into effect in 2025 and be adjusted for inflation annually. This adjustment would be based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is used to calculate Social Security’s cost-of-living adjustments.
The proposal has received endorsements from advocacy organizations such as Social Security Works and the Strengthen Social Security Coalition. The bill is co-led by Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., demonstrating bipartisan support for this important change.
In addition to the proposed changes, it’s important to understand what happens to Social Security benefits when a beneficiary passes away. The current $255 one-time lump-sum death payment is available to survivors who meet certain requirements. Survivors, such as a spouse or child, must apply for the payment within two years of the date of death.
Surviving spouses may be eligible for the death payment if they were living with the deceased or receiving Social Security benefits based on their record. If there is no surviving spouse, children of the deceased may qualify for the payment if they were receiving benefits on their parent’s record when they died.
While funeral homes often report a death to the Social Security Administration, survivors should still notify the agency as soon as possible to cancel benefits. Any benefit payments received after the beneficiary’s death must be returned, depending on the timing. However, certain family members may be eligible to receive survivor benefits based on the deceased beneficiary’s earnings record.
At Extreme Investor Network, we believe in providing valuable information to help you make informed decisions about your personal finances. Stay tuned for more updates on this important topic and other financial news to help you navigate the investment world with confidence.