Why do Social Security beneficiaries only receive a lump sum benefit of $255?
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Listener Rhonda Stevens wrote:
Why is the amount you receive from the Social security office when your spouse has died still only $255? It’s been that amount for years; one would think it would increase.
If your loved one dies, Social Security will give you a one-time lump sum payment of $255 — an amount that’s remained the same since 1954. But if it were adjusted for inflation, that benefit should now be worth more than $3,000.
“Social Security benefits are extremely important. Two-thirds of seniors rely on them for half of their income. A third rely on them for virtually all of their income,” said Nancy Altman, president of Social Security Works.
Qualifying spouses, children and dependent parents also receive monthly Social Security survivor benefits, but the original Social Security Act of 1935 didn’t provide these payments. So the lump-sum death benefit was designed to give survivors some financial respite back then. That benefit equaled 3.5% of the deceased worker’s covered earnings, which were earnings subject to the Social Security payroll tax.
By 1954, the amount had been capped at $255, with some recipients getting a smaller benefit based on Social Security’s calculation methods. But in 1974, the lowest possible payment using these methods reached $255. In other words, the minimum became the maximum, and now all qualifying survivors receive that amount.
The lump-sum payment is now considered a “burial benefit.” But that $255 isn’t enough to help families with funeral costs. In 1960, the cost of a funeral was about $700. In 2023, the median cost was nearly 12 times that amount, reaching $8,300.
Members of Congress just haven’t fought to increase the lump sum benefit, which is why it’s remained the same for years, said Shannon Benton, executive director of The Senior Citizens League.
“I think, in a nutshell, they think there are just such bigger problems,” Benton said.
Some presidential administrations have even proposed restricting the benefit or eliminating it altogether.
Over the past several decades, knowledge about the payment has fallen to the wayside. “The lump-sum death benefit has never been a benefit that people really focused on or knew about,” Altman said.
Periods of economic turmoil have led lawmakers to concentrate on other issues. Altman pointed out that in the 1970s, the U.S. underwent stagflation, a combination of rising prices, high unemployment and declining economic growth. Then, when Ronald Reagan became president, his administration pushed for lower taxes and less government spending, Altman said.
“The bottom line is that there was all this pressure to cut spending, and so that’s why there wasn’t this increase,” Altman said.
But some lawmakers are trying to change that.
In 2024, a constituent named John wrote to Democratic Senator Peter Welch of Vermont, calling for a higher lump-sum death benefit.
In his letter to Welch, he wrote: “There is only one thing I want before I die. That is to have enough money to give my son to bury me so he doesn’t have that costly burden. I live on Social Security alone and Social Security only pays $255 for burial. $255 has been the same amount for as far back as I can remember. The cost of food, housing, burial and everything I can think of keeps going up. Why not the Social Security burial benefit?”
Inspired by John’s story, Welch introduced the Social Security Survivor Benefits Equity Act in late 2024. The bill would raise the lump sum from $255 to $2,900, and index the benefit to inflation. A representative for Sen. Welch’s office said that the lawmaker plans to reintroduce the bill this September.
“You can’t sell flowers for $255 anymore. Everything is so expensive. I think that the higher amount would certainly help survivors pay for funeral costs,” Benton said.