The Shrinking Death Benefit
Social Security pays a Lump Sum Death Benefit (LSDB) which used to be the equivalent of nearly $7,000.
Today the payment is $255.
What happened?
In 1935 the LSDB paid 3.5% of the individual's covered earnings, maxing out at $315.
In 2023 dollars that is $6,977.
In 1939 the LSDB was changed to pay out 6x the Primary Insurance Amount (PIA), which is the monthly benefit amount at full retirement age. The maximum payment ever made by this rule was $273.60.
In 2023 dollars that is $5,800.
In 1950 the LSDB was changed to pay out only 3x the PIA since monthly benefits had increased almost 80%. The average LSDB payment was $147.81.
In 2023 dollars that is $1,858.
In 1954, the LSDB was capped at $255. The maximum PIA had reached $85, and congress decided to set this as the max LSDB.
In 2023 dollars that is $2,814.
The $255 cap is still in place today.
In 2023 dollars that is $255.
By the way, the average funeral expenses range from $5,000 to $10,000.
Do you know how you'll cover these expenses since you can't count on Social Security?
A first step is to understand and take inventory of your family's assets. Download your free Estate Map below to get started.