Social Security Is Garnishing Up to 50% From Over a Million Recipients Due to Overpayments. Here's What You Need to Know.

Key Points

• Social Security may sometimes overpay recipients due to various factors.

• The Social Security Administration has set the new repayment rate to 50% of benefits, up from the 10% rate set by President Biden in 2022.

• Social Security recipients can appeal the repayment and potentially have the amount lowered or removed completely.

• The $23,760 Social Security bonus most retirees completely overlook ›

President Franklin D. Roosevelt signed the Social Security Act into law in August 1935 in the thick of the Great Depression, hoping to provide financial relief for retired or disabled Americans. In January 1940, the first Social Security checks were mailed out, and since then, Social Security has proven to be one of America's most useful and relied-upon social programs.

There are plenty of things to like about Social Security, especially when it comes to keeping retirees relatively financially stable in their later years. However, one issue with Social Security -- even for those who are extremely knowledgeable of the program -- is that there are constant changes.

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Some changes happen occasionally (like revising full retirement ages), while others are consistent (like the annual cost-of-living adjustment). In either case, these changes can be hard to keep up with. One recent change that Social Security recipients need to be aware of is the revision of how Social Security deals with overpayments and how this could potentially affect their monthly benefits.

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Social Security is coming to get its money back

To the surprise of probably nobody, Social Security isn't perfect, and mistakes are bound to happen. One of those mistakes is sometimes overpaying recipients, and when this happens, Social Security can collect the extra payment by taking it back from future payments.

Former President Joe Biden introduced a rule in 2022 that limited how much Social Security could recover for overpayment. Under those rules, Social Security could recover 10% of monthly checks until the overpayment was recovered.

For example, if your monthly benefit is typically $2,000, and you accidentally receive $3,000 for one month, Social Security would withhold $200 for 10 months until it received the $1,000 back.

The Trump administration attempted to revert to the rule where 100% of your check could be garnished because of overpayment, but it was met with significant backlash, and it settled on 50%. With the change, if you typically received $2,000 and accidentally received $3,000, you'd only receive $1,000 in benefits once the mistake was found.

How many people can expect to have benefits withheld?

As of Sept. 30, 2023 (the federal government's fiscal year end), there were around $23 billion in outstanding Social Security overpayments. In total, around a million Social Security recipients were affected by these overpayments.

The SSA started sending out repayment notices to Social Security recipients on April 25, informing them of their repayment options and noting a 90-day grace period before it started garnishing benefits.

Due to logistical constraints like mail delays, backlogs, and outdated contact information, not everyone who this applies to may have received a notification. However, if you know you've received an overpayment, be on the lookout to avoid being caught off guard.

There's a chance to reduce or avoid having your benefits garnished

Needless to say, having your benefits garnished is far from ideal, especially for something that likely wasn't your fault. Thankfully, you can appeal the decision or request a waiver, as long as you can prove the overpayment wasn't your fault and paying it back would put your livelihood at risk.

A key to avoiding repayment is showing documentation that proves your qualified expenses would be higher than the income you have remaining after paying back the overpayment amount.

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