Time’s up for roughly 2 million Americans on the cusp of having their Social Security payments slashed in half.
And it has nothing to do with the looming shortfall in Social Security’s reserves. That’s still eight years down the road.
The reduced benefit payments starting this month are how the Social Security Administration (SSA) is attempting to recoup money it overpaid to some Americans. Social Security will withhold 50% of a beneficiary’s monthly check until the sum of their overpayments is reclaimed.
The SSA issues nearly $1.4 trillion a year to some 73 million Social Security and SSI recipients. An overpayment can occur when a beneficiary doesn’t update a change in income, for example, or when the SSA incorrectly calculates a person’s benefits.
The agency is required by law to try to claw back or reclaim money when overpayments occur.
“Overpayments should be recouped, but we remain concerned about the impact of any recovery rate on the less financially stable retirees,” Shannon Benton, executive director of the Senior Citizens League, told Yahoo Finance.
During the Biden administration, the default withholding rate was dropped to 10% of a beneficiary’s monthly benefit from 100%, dramatically reducing financial hardship on those with overpayments.
In March, however, the Trump administration announced that the agency would again withhold 100% of an individual’s Social Security check until all overpaid funds were paid back. After pushback from advocates and seniors, in April, the rate was reduced to 50%, and the agency said it would begin retrieving incorrect payments made between 2015 and 2022, starting in July.
It’s still a serious problem for many seniors. “For some retirees, it won’t matter if it’s 1% or 100%,” Benton said. “Any amount of clawback could be catastrophic.”
Improper payments accounted for less than 1% of the total benefits paid during that period, but at the end of fiscal year 2023, SSA had an uncollected overpayment balance of $23 billion, according to an August 2024 inspector general’s report. The SSA estimates it made nearly $72 billion in improper payments, most of which were overpayments, from 2015 through 2022.
Read more: When will I get my Social Security check? Payment schedule for 2025.
The withholding is expected to begin with Social Security payments made around July 24. The withholding rate for Supplemental Security Income benefits remains 10%.
Those who fall under this clawback should have received notification. Recipients who received a notice have 90 days to appeal.
If you’ve received overpayments or are facing withholding, you have several options:
You can repay the overpayment online by credit card, online bill pay, or check.
To request smaller monthly repayments, you can fill out a Request for Change in Overpayment Recovery Rate (Form SSA-634) and fax or mail the form to your local Social Security office.
If you can’t afford to pay back at all, and if you feel the error wasn’t your fault or is unfair for some other reason, you can request to waive repayment.
If you don’t agree that you’ve been overpaid, or you believe the overpayment amount is incorrect, you can request a reconsideration.
If you have ongoing problems, contact the Constituent Services staffer of your congressional representative. Regardless of party, all members have staffers who help resolve problems with Social Security benefits.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky.
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