For most retirees, their Social Security check is more than just income. It's a financial foundation that many would struggle to make do without.
When the Social Security Act was signed into law nearly 90 years ago, its purpose was to provide for aging workers who could no longer do so for themselves. In 2023, the program was responsible for lifting an estimated 22 million people above the federal poverty line, 16.3 million of which were adults aged 65 and over, according to an analysis from the Center on Budget and Policy Priorities. In other words, Social Security is doing exactly what it was intended to do.
There's pretty much nothing of greater importance for beneficiaries than knowing how much they'll take home each month from America's leading retirement program.
But beginning later this month, a Social Security policy adjustment instituted under President Donald Trump can vastly change the monthly payout for more than 1,000,000 beneficiaries.
President Trump addressing reporters. Image source: Official White House Photo by Shealah Craighead, courtesy of the National Archives.
Donald Trump's first five months in office have been marked by multiple Social Security changes
Since President Trump was inaugurated on Jan. 20, there have been numerous changes to Social Security:
- Trump signed an executive order that'll eliminate the use of paper checks by Sept. 30, 2025.
- Personal identification methods were improved to reduce fraudulent activity. For instance, updating direct deposit information will need to be done in-person or online via a "my Social Security" account with two-factor authentication.
- Former Fiserv CEO Frank Bisignano was confirmed as the new head of the Social Security Administration (SSA).
- Based on suggestions by the Department of Government Efficiency (DOGE), which was created by the executive order of President Trump, the SSA is cutting 7,000 jobs and shuttering some of its offices to lower its administrative expenses.
But arguably the two biggest adjustments have to do with garnishments of Social Security payouts to select beneficiaries.
For instance, by "sometime this summer," according to a Trump administration official, a 15% garnishment is set to be reinstated on an estimated 452,000 retired-worker beneficiaries who are delinquent on their federal student loans.
The other eye-popping change was the reinstatement of higher clawbacks on Social Security overpayments. In March, the SSA announced plans to reinstate a 100% clawback rate in instances where beneficiaries were overpaid, which would have been a sizable increase from the 10% clawback rate instituted during Joe Biden's presidency.
However, backlash over the 100% garnishment rate coerced the SSA to lower its recovery rate to 50% of monthly benefits in an April announcement.
Image source: Getty Images.
Donald Trump's administration is targeting Social Security overpayments
Based on data from KFF and Cox Media group, nearly 2 million beneficiaries closed out fiscal year 2023 (the federal government's fiscal year ends on Sept. 30) owing money to the SSA via overpayment.
Furthermore, the SSA's Office of the Inspector General reported a whopping $23 billion in uncollected overpayments at the end of September 2023. Collecting these overpayments fits with the Trump administration's theme of making federal programs more efficient and cutting down on perceived fraud.
You might be wondering how these overpayments occur in the first place. Sometimes it's entirely the fault of the SSA due to various miscalculations, which results in beneficiaries receiving more than they're entitled.
Other times it's the result of the recipient themselves not updating their information. For instance, non-blind disabled workers have the ability to earn up to $1,620 per month in wages and salary in 2025 without having their Social Security disability benefit halted. But if a disabled worker begins earning more than $1,620 per month and fails to update their income with the SSA, it can result in an overpayment (i.e., funds they shouldn't have received due to their income being above the threshold).
Though it's been known since April 25 that the SSA, under the Trump administration, would more aggressively seek clawbacks of overpayments, there hadn't been a definitive timeline on when these garnishments would begin... until now.
New communication from the SSA states:
When we determine an individual receiving Title II benefits is overpaid, we send them a notice requesting a full and immediate refund and inform them of their right to request reconsideration or a waiver of recovery. We usually provide 90 days for the individual to request a lower rate of withholding, a reconsideration, or waiver.
With an effective date of April 25 on the SSA's communication, it means the 90-day grace period is up as of July 24. The north of 1,000,000 beneficiaries who still owe the SSA following an overpayment can have up to half of their monthly check garnished starting on or shortly after July 24 until the overpayment is settled.
Image source: Getty Images.
There are multiple ways to legally avoid or reduce a Social Security garnishment due to overpayment
Based on the latest national survey of retirees by Gallup, a combined 86% rely on Social Security as a "major" or "minor" income source. Though clawbacks apply to all forms of beneficiaries (retirees, survivors of deceased workers, and workers with disabilities), garnishing up to 50% of monthly benefits could spell financial trouble for those who've been overpaid.
The silver lining, if there is one to be found among beefed-up clawback rates, is that the SSA offers beneficiaries three ways to completely remove or potentially reduce how much they have to pay back -- and they're all completely legal.
The ideal outcome for beneficiaries who've received too much from Social Security would be an overpayment waiver. Form SSA-632BK ("Request for Waiver of Overpayment Recovery") is a request to forgive the overpayment. If the overpayment wasn't your fault (this part tends to be important) and it would create a financial hardship to repay the added benefits you received, the SSA may approve your request and waive any liability. Just keep in mind you'll likely need to supply documentation demonstrating that repayment would, indeed, create a financial hardship.
Overpaid beneficiaries can file Form SSA-561 ("Request for Reconsideration"), as well. This approach can work two different ways. For some, it's a way to appeal the claim they've been overpaid. You'll need to present evidence to the SSA that you haven't been overpaid, and if you reconsideration is successful, the SSA will waive any liability.
SSA-561 can also be used by individuals who admit they've been overpaid, but disagree with the amount they'll need to pay back. If the SSA agrees, the amount you'll owe can be reduced.
The third legal option available to beneficiaries is to file Form SSA-634 ("Request for Change in Overpayment Recovery Rate"). This is the preferred option for individuals who admit they've been overpaid, but who believe a 50% garnishment rate would create a financial hardship.
Similar to the first option (SSA-632BK), it would require you to provide documentation of your income and qualified expenses to demonstrate your financial hardship. The SSA will aim to work with you on a reduced garnishment rate that settles your overpayment within 12 months, but the agency has been known to extend payment plans out to 60 months.
With less than three weeks left before garnishments can begin, don't miss your opportunity to legally avoid or reduce what you'll owe if you're one of the more than 1,000,000 recipients who were overpaid.
