Millions of Social Security recipients face 50% benefit cuts starting this July. This is due to new government rules, under the Trump administration, aimed at aggressively recovering past overpayments. Letters were sent in April, and the 90-day response window ends in late July.
Why Is This Happening?
The SSA estimates $72 billion was incorrectly paid out from 2015 to 2022, largely due to administrative errors and outdated recipient information. The Trump administration prioritized recovering these overpayments to reduce waste and improve fiscal accountability.
To do this, the SSA and DOGE changed an important rule from the Biden administration that limited how much could be taken back to just 10%. At first, Trump’s team increased this to 100%, but after groups and lawmakers complained, the SSA set the amount to 50%.
Starting this month, money will be withheld at this new 50% rate until the overpaid money is paid back, unless the person who received the money takes action.
What You Can Do If You Get A Notice
Anyone who got an overpayment letter in April has until late July to file one of these three requests:
- Ask for a second look (Form SSA-561) if you believe the overpayment amount is wrong.
- Ask for a lower amount to be withheld (Form SSA-634) if you truly cannot afford a 50% cut from your check.
- Ask for a waiver (Form SSA-632) if you can show that paying back the money would cause you serious financial hardship.
If you don’t respond within the 90-day window, your payments will automatically be cut from 50% starting in late July.
A Hard Reality for Many Retirees
For older adults who live on a fixed income, suddenly losing 50% of their Social Security money can be very damaging. The SSA states that the average monthly Social Security payment for retired workers is about $1,900. With the new rule, people who are affected could lose nearly $950 every month until they pay back what they owe.
Many seniors say they didn’t even know they had been overpaid in the first place. For those living on fixed incomes, losing half of their monthly Social Security benefit without clear warning has raised serious concerns about how they’ll cover essential expenses like rent, food, and utilities.
Will This Fix Social Security?
The SSA estimates the new 50% recovery rate could save $7 billion over the next ten years. While that amount might sound big, it’s only a tiny part (0.2%) of the money Social Security is expected to be short of in the future. In simple terms, this change in policy will barely help solve the bigger, long-term money problems facing the program.
Based on the latest predictions, the Social Security OASI Trust Fund, which pays benefits to retired workers, their spouses, and survivors, will run out of money by 2033. After that, if Congress doesn’t do anything, Social Security will only be able to pay about 77% of the benefits it’s supposed to.
That would mean a roughly 23% cut across the board for everyone in just eight years.
A Bigger Look at Government Reforms
The creation of the Department of Government Efficiency is one of the main ways the Trump administration plans to make federal spending more controlled. DOGE’s involvement in getting back overpayments is likely just the start of bigger changes meant to find and stop waste across many government agencies.
However, some critics argue that older adults should not be the ones to suffer because of these changes.
Steps to Take If You Received a Social Security Overpayment Notice
If you get a letter from the SSA this spring, do not ignore it. The deadline to act is coming very quickly, and once the 90-day period ends, your benefit check could be cut in half with very few options to fix it. Even if you believe the overpayment was a mistake or that you can’t afford to pay it back, the SSA provides ways to appeal or ask for help.