As of this month, approximately 2 million Americans will notice their Social Security benefits cut by half as a result of program changes as the Social Security Administration (SSA) is moving to reclaim overpaid benefits.
This change is part of the Social Security Administration’s broader effort to recover billions in overpayments made in recent years. While the agency is legally obligated to collect any money paid out in error, many senior advocates worry that the current strategy places an unfair burden on retirees, particularly those living on tight, fixed incomes.
Why Are Payments Being Reduced?
The SSA pays out approximately $1.4 trillion annually to about 73 million people who receive either Social Security or Supplemental Security Income (SSI). Overpayments can happen for various reasons, common ones include beneficiaries failing to report changes in income or living arrangements, or the agency itself miscalculating benefits.
When overpayments happen, the SSA is legally required to recover the money—even if the mistake wasn’t the recipient’s fault. Often, people aren’t even aware there was an issue until they receive a letter from the agency asking for the money back, which can come as a shock.
From 10% to 50% Withholding: How We Got Here
Under the Biden administration, the SSA lowered its clawback rate to 10% of a recipient’s monthly benefit, a change intended to ease the financial burden on low-income seniors. This marked a significant shift from earlier policies, when the agency could withhold up to 100% of someone’s check, at times leaving individuals with no income at all.
However, in March, the Trump administration announced it would revert to the more aggressive approach of withholding the full amount of a Social Security check until the overpayment was fully recovered. Following swift backlash from advocates, lawmakers, and seniors, the SSA walked that decision back in April, settling on a 50% withholding rate instead.
Beginning in late July, those affected will see half of their Social Security benefit withheld each month until the overpaid amount is repaid.
Overpayments: A Costly, Ongoing Issue
Although improper payments make up less than 1% of total Social Security payouts, the overall impact is anything but minor. A report from the SSA’s Office of Inspector General in August 2024 revealed that, by the end of fiscal year 2023, the agency had a staggering $23 billion in uncollected overpayments. From 2015 to 2022 alone, nearly $72 billion in improper payments were made, most of them due to overpayments. The SSA now plans to start recovering those funds, beginning this month.
Impact on Seniors Could Be Severe
For some retirees, even a minor reduction in monthly income can be devastating. Shannon Benton, executive director of the Senior Citizens League, expressed concern that the new 50% withholding rate could still be too high for financially fragile recipients.
“Overpayments should be recouped,” Benton said in a recent interview. “But we remain concerned about the impact of any recovery rate on the less financially stable retirees. For some, it won’t matter if it’s 1% or 100%, any amount of clawback could be catastrophic.”
Notices and Appeals: What to Do If You’re Affected
The SSA has said that anyone impacted by these payment reductions should have already received a formal notice. These letters outline how much was overpaid, how much will be withheld each month, and how to appeal the decision.
If you think the overpayment was a mistake, or if repaying it would create financial hardship, you do have options. You have up to 90 days from the date on the notice to file an appeal or request a waiver. In many cases, repayments can be paused or adjusted while your case is reviewed.
It’s also important to note that this 50% withholding rate only applies to Social Security benefits. If you’re receiving Supplemental Security Income (SSI), the clawback remains capped at 10%.
A System Under Pressure
As the SSA works to balance financial accountability with fairness, critics argue the current system still falls short, especially for seniors living on fixed incomes. There’s increasing pressure on the agency to improve communication, offer more flexible repayment plans, and be more transparent when errors occur.
In the meantime, many retirees are left facing smaller checks and a lot of unanswered questions about how the overpayments happened in the first place.