Beginning July 24, 2025, the Social Security Administration (SSA) will implement a stricter policy to recover overpayments made in previous years.
This means that if they do not act before that date, millions of people may see their monthly paychecks reduced by half.
Who is affected by this measure?
The measure applies to those who received an overpayment notice in April 2025. These letters informed recipients that they had received more money than they were entitled to, as a result of administrative errors or failure to update personal information such as income, marital status, or residence. If they do not respond within 90 days, the 50% cut will be automatically applied.
Why is this policy being implemented?
Between 2015 and 2022, the SSA reported that more than $72 billion was incorrectly paid out. The government hopes to recover some of that money in order to improve the system’s long-term viability. Initially, it proposed withholding 100% of payments, but after receiving criticism from lawmakers and organizations, a 50% limit was imposed.
How much money could you lose?
The average monthly Social Security payment is about $1,900. With this new policy, those affected may lose approximately $950 per month until the entire amount of the overpayment is recovered. For many seniors on fixed incomes, this reduction may result in an inability to cover essential expenses such as rent, food, or medicine.
What can you do if you received a notification?
If you received an overpayment letter, you have until July 24 to file one of these three requests:
Form SSA-561: to appeal if you think the overpayment amount is incorrect.
Form SSA-634: To request a reduction in the percentage withheld if you cannot afford the 50% cut.
Form SSA-632: To request a full waiver if you can demonstrate that repaying the money would cause you severe financial hardship
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What is the long-term impact?
Although the SSA estimates that this policy could recover up to $7 billion over the next ten years, this accounts for only 0.2% of the program’s projected deficit. In other words, this measure has limited impact on addressing Social Security’s structural issues.
If you are a Social Security beneficiary and received an overpayment notice, you must act before July 24, 2025. Otherwise, you could see your monthly payment reduced by half. Consult an advisor or contact the Social Security Administration directly to learn about your options and protect your income.
