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Social Security’s Lump Sum Death Benefit (LSDB)
Current Social Security rules allow for a one-time death benefit ($255) to be paid to a decedent’s spouse, minor children living in the same home, or a child who has developed a disability at age 21 or younger. If the spouse is not living in the decedent’s home, they would also be eligible if they are eligible for benefits based on the decedent’s record. In all cases, an application must be made for the benefit within two years of the decedent’s passing.
What’s interesting about this benefit is that it has been in effect since the enactment of the original Social Security legislation of 1935, although it was initially set as a percentage of covered earnings and later modified to be a multiple of the decedent’s monthly Social Security benefit amount. In 1954, the LSDB was capped at $255 and later (1974) fixed at the current $255, which is where it stands today.
Senate Bill S.5178 has been introduced to change the fixed amount to a benefit more representative of today’s economics. The bill, introduced by Sen. Peter Welch, D-Vt. and co-led by Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass would raise the fices benefit amount to $2,900. CNBC’s Lorie Konish provides more detail in a post on msn.com, which you can read in full here…