In a negative development for retirees, beginning in July 2025, many Americans relying on Social Security will see reduced monthly benefit payments.
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The Social Security Administration (SSA) aims to recover overpayments, leaving beneficiaries frustrated and worried.
The SSA announced it will reduce payments to recover funds overpaid in previous years.
Overpayments occur when beneficiaries neglect to report income changes or due to SSA miscalculations.
From 2015 to 2022, the SSA issued approximately $72 billion in erroneous payments, predominantly overpayments.
As of last fall, $23 billion remained uncollected.
The agency plans to withhold 50% of benefits from affected recipients starting late July, a step up from the prior 10% withholding policy, USA Today reports.
Originally, there was a plan to withdraw 100% of monthly benefits, which faced backlash due to financial hardships it could impose.
Criticism led to a policy adjustment, but the new withholding rate is still a significant hike for many.
“Innocent people can be badly hurt,” stated former Social Security chief Martin O’Malley.
The SSA’s plan involved issuing recovery notices by April 25, 2025.
Beneficiaries can dispute these if they believe the overpayment wasn’t their fault or it presents a financial burden.
Furthermore, the agency allows for waiver requests to alleviate some of the strain on those affected.
The SSA faces a looming funding crisis as the worker-to-beneficiary ratio declines.
Social Security’s reserves may be depleted by the mid-2030s, reducing benefits.
The political debate continues as policies affect funding sources, especially concerning mass deportations and tariffs that influence the workforce and cost-of-living adjustments.
“Mass deportations will reduce the workforce paying into Social Security (including undocumented immigrants, who paid billions in Social Security taxes and don’t receive benefits),” commented James Downie, an opinion editor for MSNBC, cited by The Mirror.
Social Security change coming in July: Agency begins taking back 50% of overpayments https://t.co/2mz6kXaWSt
— USA TODAY (@USATODAY) June 30, 2025
The full retirement age will increase to 67 in 2026.
Claiming early results in permanent cuts, while waiting boosts the payout by up to 32%.
As Americans grapple with the potential depletion of funds, questions of policy, fair play, and financial security become more pressing than ever.
