Starting in July 2025, millions of American retirees who depend on Social Security benefits could face reduced payments. The Social Security Administration (SSA) has announced a major change in its policy, which will affect those who received overpayments. These beneficiaries will see up to 50% of their monthly payments automatically withheld.
This adjustment in policies is intended to solve the problem of overpayments, a situation SSA has tried to control for years. The measure originated during the Trump administration and represents a significant increase from the previous limit, which was 10%. As the change is implemented, beneficiaries will receive notifications with a 90-day period to appeal or respond before the deductions are applied.
Why do overpayments occur?
SSA has been dealing with overpayments for years, many of which are the result of administrative errors or incorrect income statements. Between 2015 and 2022, the agency distributed nearly $72 billion in improper payments. Although this figure represents less than 1% of the $8.6 trillion (8.6 billones de dólares) paid during that time, the consequences for those affected can be severe.
Many beneficiaries face the risk of seeing their monthly payment reduced if they haven't repaid the amount or replied within the required period. Starting April 25, 2025, SSA began issuing overpayment notices, marking the start of deductions, scheduled for July 24. Affected beneficiaries will have to face a change that could be difficult to manage.
Options available for beneficiaries
If a beneficiary is affected by this policy, there are several ways to try to mitigate the impact. First, it is possible to make a voluntary payment to cover the overpayment amount. This payment can be made by credit card, check, or electronic transfer.
Additionally, beneficiaries can request a waiver if the overpayment was not their fault or if the payment causes them financial hardship. Waiver requests must be submitted on the official Social Security website. Another option is to negotiate a new payment plan to reduce the amount that will be withheld each month or extend the period to pay the amount owed.
The future of Social Security
This adjustment also reflects a broader concern about the future of Social Security in the United States. SSA has announced that the full retirement age (FRA) will increase to 67 years starting in 2026. This change will affect when retirees can collect their full benefits.
Although retirees can choose early retirement at age 62, doing so could reduce their monthly payments by up to 30%. This adjustment aims to reduce SSA's spending, in a context of demographic change. In the 1960s, there were more than five workers for every retiree. Today, that ratio has dropped to 2.7:1 and is expected to continue decreasing, which will put more pressure on the Social Security system.