An Aggressive Social Security Garnishment Is Underway for Over 1,000,000 Beneficiaries -- Here's How You Can Legally Avoid It

In May, nearly 53 million retired workers brought home a Social Security check, with the average payout making history by cresting $2,000 for the first time ever. Though this is a relatively modest amount of monthly income, it's imperative to the financial well-being of most aging Americans.

For more than 20 years, national survey-taker Gallup has polled retirees annually to gauge their reliance on Social Security income. Without fail, 80% to 90% of retirees have consistently responded that their monthly check was a necessity, in some capacity, to make ends meet.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

For beneficiaries, nothing is more important than knowing how much they're going to receive each month and having their payout keep pace with the inflationary pressures they're contending with on a year-to-year basis.

But based on a new policy recently implemented under President Donald Trump, more than 1 million beneficiaries can expect their Social Security checks to shrink by up to 50%. With so many beneficiaries reliant on Social Security income to cover their expenses, this is income some can't afford to lose.

President Trump speaking with reporters. Image source: Official White House Photo by Andrea Hanks, courtesy of the National Archives.

The Trump administration aims to claw back Social Security overpayments

Since Trump took office for his nonconsecutive second term, he's overseen a number of critical changes to America's leading retirement program. This includes beefing up personal identification methods, signing an executive order to eliminate paper Social Security checks, and creating the Department of Government Efficiency (DOGE), which encouraged the Social Security Administration (SSA) to slash 7,000 jobs and shutter some of its locations to reduce its administrative expenses.

But what's making headlines above all else are the two Social Security garnishments that the Trump administration has improved.

For instance, by "sometime this summer," a 15% monthly garnishment is expected to be reinstated for the roughly 452,000 delinquent federal student loan borrowers who are currently receiving a Social Security benefit. Federal student loan payments ceased in March 2020 during the height of the pandemic and haven't recommenced.

Between 2017 and 2023, the number of federal student loan borrowers aged 62 and above surged by 59% to roughly 2.7 million, based on data from the Consumer Financial Protection Bureau.

But a 15% monthly garnishment is peanuts compared to the 50% garnishment rate that's currently underway for beneficiaries who were overpaid. Keep in mind that "beneficiaries" encompass retired workers, survivors of deceased workers, and workers with disabilities.

Under the Joe Biden administration, Social Security clawbacks for overpayments were reduced to 10% per check, which is down from the 100% clawback rate that existed when President Barack Obama was in office, as well as during Donald Trump's first term.

Based on statements from then-acting SSA Commissioner Kilolo Kijakazi in 2023, the agency overpaid more than 1 million beneficiaries in fiscal 2022 (the federal government's fiscal year ends on Sept. 30) and over 980,000 recipients in fiscal 2023. With the garnishment rate slashed to just 10% under President Biden and having no new overpayment data published since fiscal 2023, it's likely safe to assume that more than 1,000,000 beneficiaries are still making good on their overpayments.

Image source: Getty Images.

Beneficiaries may be able to legally avoid or reduce their Social Security garnishment

Social Security overpayments can occur for a number of reasons. Sometimes, these errors are entirely the fault of the SSA and result in beneficiaries receiving too much per month. But they can also be caused by a recipient not updating their income.

For example, non-blind workers with disabilities can earn up to $1,620 per month in wages and salary without having their long-term Social Security disability benefit stopped in 2025. If a worker with disabilities began collecting $3,000 in monthly income and didn't report this income change to the SSA, their federal tax filing would show they received Social Security disability benefits they weren't due, thusly resulting in an eventual clawback from the SSA.

For the more than 1,000,000 beneficiaries who've received a letter from the SSA informing them they've been overpaid, there are options.

The most desirable of these options is to request and be approved for an overpayment waiver (Form SSA-632BK, "Request for Waiver of Overpayment Recovery"). If the overpayment wasn't your fault and repaying the added benefits you received would lead to financial hardship -- you'll often need to supply documentation of your income and qualified expenses -- there's the possibility that the SSA will grant your request and waive your need to refund the overpayment.

Along these same lines, beneficiaries can also file Form SSA-561, which is officially known as a "Request for Reconsideration." This route is taken by beneficiaries who don't agree with the SSA's decision that they've been overpaid and essentially want to appeal, as well as those who admit they've been overpaid but don't agree with the amount presented by the SSA. If your appeal is granted, you won't have to refund a dime to America's leading retirement program. Your appeal may also reduce how much you'll have to repay.

The third option available to beneficiaries who've received a notice informing them of eventual clawbacks due to overpayment is to negotiate a different payment rate. Going this route is an admission that you've been overpaid but that removing 50% from your check on a monthly basis would create a financial hardship.

Filing Form SSA-634 ("Request for Change in Overpayment Recovery Rate") with the SSA requires you to explain your financial situation, which includes documentation of your income and qualified expenses. Though the SSA typically aims to recover an overpayment within 12 months, some payment plans extend payments up to 60 months (five years) out.

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

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.