The Social Security Administration (SSA) has begun withholding half of the monthly overpayments from certain beneficiaries to recover outstanding overpayments. This important change took effect in late July 2025, and it’s expected to impact millions of beneficiaries who had received notifications earlier this year.
Why Overpayments Happen
An overpayment occurs when a person receives more in Social Security than they are entitled to. This can happen for several reasons, including a beneficiary’s failure to report a change in income or an error made by the SSA in calculating a person’s benefits.
Between 2015 and 2022, the SSA lost approximately $72 billion through improper payments as reported by the Office of the Inspector General. Despite efforts to recover the overpayments, about $23 billion in overpayments is yet to be collected as of late 2023. The issue is still widespread, considering that in the same year, the SSA tried to collect overpayments from about 2 million people.
Who Is Affected by the 50% Withholding
The new 50% withholding rate will apply to recipients of survivor, retirement, and disability insurance benefits (Title II) who received notifications of overpayments starting April 25, 2025.
SSI beneficiaries will not be affected by the 50% withholding rate because their repayment rate remains capped at 10%.
What Beneficiaries Can Do
Here are the options you have if you received an overpayment notice:
- Pay back the excess amount online, with a check, or with a credit card.
- File an appeal if you think the overpayment was incorrect or not your fault. You have ninety days to file an appeal.
- If you would experience financial hardship as a result of repaying the overpayment, request a waiver.
- Get a better payment deal on a reduced withholding rate.
Note that if you fail to take any of the options above, the SSA will go ahead and withhold 50% of your benefits immediately after the 90-day notice period.
How the 50% Withholding Rate Could Impact Seniors’ Finances
The plan by the SSA to withhold 50% of benefits of those who received overpayments has been criticized by experts advocating for seniors. The advocates argue that the action will create new burdens for some beneficiaries who are already financially burdened.
Shannon Benton, Executive Director of the Senior Citizens League, warned: “Overpayments should be recouped, but we remain concerned about the impact of any recovery rate on the less financially stable retirees.”
This has occurred before, as reported by the SSA, which acknowledged that in 2023, some retirees were unable to afford basic needs like housing after aggressive repayment recoveries.
Other Social Security Changes Coming Soon
Besides the 50% withholding policy, the SSA is rolling out major changes. Starting September 30, 2025, all Social Security payments will be disbursed electronically. This marks an end to paper checks.
Secondly, following the signing of the Social Security Fairness Act this year, nearly 3 million Americans will receive boosted benefits. Others will receive retroactive payments dating back to January 2024.
Conclusion
As a result of this policy change, millions of Americans may see a significant reduction in their monthly income. Although the exercise is meant to protect the integrity of the agency and the trust fund, the 50% withholding rate will cause many to struggle to make ends meet.
To avoid financial struggles, if you have received an overpayment notice, it is advisable to review the available options. They include appealing, requesting a waiver, or negotiating a lower repayment rate.