If you checked your bank account recently and noticed your Social Security payment was lower than expected, you’re not alone. Many retirees across the country are seeing a decrease in their monthly benefits — a concern highlighted in a recent AOL report. Since Social Security is a key income source for millions of Americans, even a slight reduction can cause significant financial stress.
Here’s a breakdown of the most common reasons your check may have shrunk, and what you can do about it.
-
A Modest or No COLA Increase
Social Security gets reviewed every year to see if payments need an increase to keep up with rising prices, this is called the Cost-of-Living Adjustment, or COLA. But just because prices are going up doesn’t mean your check will go up by much. If inflation was mild during the months the government used to calculate the increase, your raise might be tiny, or you might not get one at all.
So even if your payment didn’t technically drop, it might feel like it did, especially if your everyday expenses have climbed faster than your benefits. It’s a good idea to see how this year’s COLA stacks up against previous years.
-
Higher Medicare Premiums
One of the major reasons for a decreased in Social Security payment is an increase in Medicare Part B premiums. These premiums are usually deducted straight from your monthly check, so if the cost of Medicare increased this year, you’ll see less money hitting your account.
If you think this might be the reason, take a look at your most recent Medicare statement or Social Security notice to see what’s being deducted.
-
Changes in Tax Withholding
If you’ve asked to have federal taxes taken out of your Social Security payments, any change in the withholding rate can shrink your monthly check. This could be because the Internal Revenue Service (IRS) updated its tax tables or because you made a change yourself during tax time.
Even small changes can make a difference over the months, so if your check seems less than usual, it’s worth taking a second look at your tax forms or checking in with a tax professional to be sure.
-
Payback for Overpayment
The Social Security Administration (SSA) sometimes finds that it has paid out too much in past months or even years. When this happens, they begin to recover the overpaid amount by deducting from future checks.
This can come as a shock, especially if you didn’t realize you were overpaid in the first place. If you receive a notice about this, read it closely and don’t hesitate to call the SSA for clarification.
-
You’re Still Working
If you have not reached Full Retirement Age (FRA) and still earning a salary, your benefits might be temporarily reduced. The SSA has earnings limits/earnings cap, and if your income exceeds certain limits, they may withhold part of your benefit.
The good news? Once you reach FRA, those reductions stop, and the SSA will recalculate your benefit to reflect what was withheld.
-
Reductions from the state
Not all states tax Social Security benefits, but some do. In addition, other deductions like court-ordered payments or legal obligations can come out of your check depending on where you live or if your financial situation changed recently.
If you’ve moved or had a legal update, this might be worth looking into.
-
Garnishments for Debts
While most creditors can’t touch your Social Security, the government can still take a chunk out of it if you owe certain debts such as back taxes, defaulted student loans, or unpaid child support.
If your payment suddenly dropped and you’re not sure why, take a look at your mail or email. You might have received a notice about a garnishment from a federal agency.
-
Recalculation or Mistake
Sometimes the SSA updates your benefits based on new information, like earnings records, marital status, or past work history. While these updates usually result in minor changes, errors can happen too.
If nothing else seems to explain the lower payment, give the SSA a call to ask if a recalculation or mistake might be the cause.
Looking Ahead
Be sure to follow verified information from the SSA website for any changes to your Social Security benefits.
Data and analysis in this article were drawn from a report originally published on AOL.com.