It is possible that you will not fully understand Social Security benefits until you need to figure out how to apply for them.
When someone who gets Social Security dies, their family can also get widow benefits in the form of a lump sum. This is something that many people may not know.
The amount has always been $255, and it has been this way since 1954. A long time ago, this amount could have helped families who were in trouble a lot. Now, though, it is just a small part of the rising cost of death.
It was supposed to help sad families pay for funerals, but now that it can not even cover a basic one, it makes things harder for them.
It was lawmakers who wrote the Social Security Survivor Benefits Equity Act. They wanted to make things fair after seeing how this small amount has hurt people over the years.
Kevin Thompson, founder and CEO of 9i Capital Group and a financial expert, said,
“This would be a big step toward bringing the death benefit up to date with today’s dollars, taking inflation into account.” It will help pay for some of the costs that come with funerals and other plans that have to do with them.
The new idea to improve Social Security’s death benefit
Democratic Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts backed the new law, which was proposed by Democratic Senator Peter Welch of Vermont. It would raise the death benefit to $2,900 to keep up with the cost of living now.
When someone close to you dies, Welch said, “Funeral costs should be the last thing on their minds.”
People who have lost a loved one, though, care a lot about how much it costs because benefits that were supposed to help people pay for funerals have not kept up with inflation.
Alex Beene, who teaches money issues at the University of Tennessee at Martin, is in favor of the new law. “That small payment might have helped people in the past, but it seems too low now that living costs have gone up so much.”
The new payment would be more than 10 times this amount, but it would only be given to people who have lost a loved one once. It seems like a sensible move that should have been made a long time ago.
As of the first death payment of $255, a funeral only cost about $700 on average. This meant that the payment was very useful for families. Today, the National Funeral Directors Association says the same service would cost around $6,280.
Thompson says, “The Social Security death benefit is so big that people laugh at it. At the very least, it needs to be raised to keep up with inflation.”
This means that the move probably will not have many opponents. There are hard times right now, and families often have to raise money to bury their loved ones. This will help them.
Ahead of time, Joseph Patrick Roop, CEO of Belmont Capital Advisors, does not know what will happen with the bill.
A lot of people are interested in the plan to raise the death benefit from Social Security, but it still has a long way to go because of political and financial issues.
There is a bigger fight going on about whether or not Social Security is solvent and how it could be reformed, which makes it hard for bills that want to change or expand it to pass.
In the event that the bill is passed, the change could happen as early as 2025. Families who are eligible will receive the $2,900 right away.
