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A 'Temporary' Social Security Benefit - Now 76 Years Old

Jul 13, 2011

Q: My friends and I have a Social Security round-table discussion once a month at a local coffee shop. At our last get-together, the subject of the Social Security $255 death benefit came up. I was surprised to learn that it is only paid when the deceased was married.

So, why does Social Security discriminate against single people? Don't they realize that we have also burial costs after we die?

A: The so-called "death benefit" has an interesting history. It didn't start out as a death benefit, per se -- at least not in the context it is thought of today. It certainly was never meant to be a "burial benefit" as many people call it.

As part of the thinking that went into the original Social Security Act passed in 1935, Congress realized that many of the new Social Security taxpayers would die before they ever had a chance to collect benefits. Or they would die without having earned enough "quarters of coverage" to be insured for survivor benefits for any dependents. Therefore, they decided to compensate the families of the deceased with some form of reimbursement for the Social Security taxes that they had paid into the system. They set up a one-time benefit they called the "lump sum death payment," and it was originally intended to reimburse the family with an amount equal to 3.5 percent of the money the deceased had paid into the system.

It was supposed to be a temporary benefit, because Congress knew that as time passed, most workers would be paying a sufficient amount of money into Social Security and they would be insured for survivor benefits. In other words, when a taxpayer died, the widow or widower (and any minor children) would get monthly benefits -- so this lump sum payout would no longer be needed.

But as often happens with government programs, once you start paying a benefit, it's hard to take it away. Over the years, there have been any number of proposals to eliminate the lump sum death payment. But as miserly as the benefit is, it's a popular feature of the Social Security program. And politicians soon learned that to tamper with it meant an automatic loss in the next election. So the "temporary benefit" never went away.

But over the years, there have been some relatively minor adjustments to the original law. In 1954, they capped the benefit at $255 -- and it's remained at that level ever since. And in 1983, when Congress was looking for ways to save money in the Social Security system, they restricted the payment of the one-time death payment only to a "spouse who was living with the deceased at the time of death."

And that's where we are today. We have an essentially meaningless "death benefit" paid only to a widow or widower. Perhaps 50 years ago, $255 paid the cost of a funeral. Of course today, it barely covers the price of the flowers. Personally, I think the benefit should simply be eliminated. But your own email suggests why it's so hard to get rid of a Social Security benefit. In fact, you call for an expansion of the benefit. You feel it is "discriminatory" and should be paid in all cases.

But maybe after reading my little history lesson, you and your round-table pals will have a different view? Let me know.

Q: My mom died several years ago at the age or 75, and my dad never received any widower's benefits on her record, although he got the little pittance of a death benefit. Now my 82-year-old dad has died, and we were shocked to learn that no one is due any kind of Social Security benefit on his record. If Social Security were run like a real insurance program, my dad would have been able to name his children as beneficiaries, and we all would have benefited from his many years of forced tax payments.

Is it any wonder that so many people think of Social Security and the rest of government as nothing but a big rip-off?

A: Social Security was never meant to be, and never will be, "run like a real insurance program." As its name implies, Social Security is a social insurance program. It was set up 75 years ago to make sure that workers had a basic income they could rely on in retirement. And Social Security also makes sure that "dependent" spouses and "minor" children would have some income in the event of the worker's death.

The answer to the first question in this column explains why you or your siblings are not eligible for the one-time death benefit. And I can't really imagine that you and your brothers and sisters (you all must be in your 50s and 60s, I presume) were expecting to get monthly benefits on your dad's Social Security record.

People have always been able to buy "real insurance." And if your dad had wanted to provide some form of income for his grown (and if you ask me, greedy) children after he died, he would have purchased life insurance and named you and your siblings as beneficiaries.

Your use of the terms "forced tax payments" and "big rip-off" when referring to Social Security makes me think you are part of the anti-government crowd. And assuming you do want smaller government, I find it puzzling that you seem to be demanding nothing but more and greater benefits from a system you want to see shrunk in size.

If you have a Social Security question, Tom Margenau has the answer. Contact him at thomas.margenau@comcast.net.

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