- - An Aggressive Social Security Garnishment Is Underway for Over 1,000,000 Beneficiaries -- but Some May Be Able to Legally Avoid It

Sean Williams, The Motley FoolNovember 8, 2025 at 12:44 AM

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Key Points -

Social Security income represents a financial bedrock for most beneficiaries -- especially retirees.

The Trump administration ended the 10% overpayment recovery rate established during Joe Biden's presidency and has implemented a 50% garnishment rate in its place.

The more than 1 million Social Security beneficiaries who've been overpaid have a trio of legal options at their disposal to potentially waive or reduce how much they'll have to repay.

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For more than 85 years, Social Security has acted as a financial bedrock for aging workers who could no longer provide for themselves, as well as the survivors of deceased workers. Along the way, the program added long-term disability benefits to its umbrella of coverage for America's labor force.

For many of today's Social Security beneficiaries, the income they receive is a necessity to cover at least some portion of their expenses. Nearly a quarter century of annual surveys of retirees by national pollster Gallup show that 80% to 90% lean on their payout as a "major" or "minor" income source.

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But for more than an estimated 1 million Social Security beneficiaries, this necessary payment is anything but guaranteed at the moment.

Donald Trump giving remarks at an artificial intelligence summit.

President Trump speaking to a crowd. Image source: Official White House Photo by Joyce N. Boghosian.

President Donald Trump and his administration have made numerous changes to Social Security

Since taking office on Jan. 20 for his nonconsecutive second term, President Donald Trump and his administration have enacted multiple direct and indirect changes to Social Security.

For instance, the creation of the Department of Government Efficiency (better known as DOGE, and not an actual federal agency), encouraged the Social Security Administration (SSA) to trim its operating expenses and reduce its staff by 7,000 employees to 50,000. This change also resulted in the closure of some Social Security offices. Social Security's administrative expenses make up a very small fraction (usually in the neighborhood of 0.5%) of its annual outlays.

In March, President Trump signed an executive order (EO) to eliminate the use of paper checks as a form of federal payment by Sept. 30. Though more than 99% of beneficiaries were already receiving electronic fund transfers (e.g., direct deposit) when this EO was signed, it nevertheless meant hundreds of thousands of beneficiaries receiving paper Social Security checks likely had to set up an account with a financial institution to continue receiving their funds.

Furthermore, the SSA tightened standards on personal identity verification under the Trump administration to reduce instances of fraudulent activity. For example, direct deposit information can now only be changed with an in-office visit, or online via a "my Social Security" account that offers two-factor authentication.

But the biggest direct change of all comes in the form of Social Security garnishments pertaining to overpaid benefits.

During Joe Biden's presidency, the clawback rate for Social Security overpayments was reduced from 100%, which is the level it sat at for President Trump's first term in office, to just 10%. Keep in mind that this overpayment-recovery rate coincided with the economic hardships workers endured during the COVID-19 pandemic.

In March 2025, the SSA announced plans to reinstate the 100% overpayment-recovery rate that had previously existed under President Trump's first term. But following backlash from the public, the SSA settled on a 50% clawback rate instead, which was announced on April 25.

According to estimates from KFF and Cox Media Group, based on the end of fiscal year 2023 for the federal government (Sept. 30, 2023), close to 2 million beneficiaries had been overpaid. Separate data from the SSA's Office of the Inspector General pegged uncollected overpayments at $23 billion, also as of the end of fiscal 2023.

A seated person counting a fanned assortment of cash bills in their hands.

Image source: Getty Images.

Social Security's aggressive garnishment is underway, but is potentially avoidable

Perhaps the biggest head-scratcher is how Social Security benefits are overpaid in the first place. In some instances, it's an administrative error on the part of the SSA. But in other cases, it's entirely the fault of the recipient for failing to update critical information.

For instance, substantial gainful activity thresholds exist for non-blind workers with disabilities who are receiving a monthly Social Security benefit. In 2025, non-blind workers with disabilities can bring home $1,620 per month in wages and salary without having their disability benefits stopped. If, hypothetically, a worker receiving disability benefits landed a well-paying job and failed to update their income with the SSA, it would result in them receiving benefits they aren't due.

A communication from the SSA on April 25 made clear that overpaid beneficiaries would be notified by mail of how much they owe, and would be given 90 days to rectify their overpayment before the 50% garnishment rate would kick in. This means clawbacks began as early as July 24 and have ramped up ever since.

Considering how important Social Security income is to the financial foundation of most beneficiaries, a 50% monthly payout haircut is no laughing matter. However, a trio of perfectly legal options are available to these more than 1 million beneficiaries, which can remove or reduce their overpayment liability.

The most attractive of these solutions is Form SSA-632, which is better known as "Request for Waiver of Overpayment Recovery." If (italicized to denote how important this clause is) the overpayment wasn't your fault, and you can provide documentation to the SSA that repayment would cause a financial hardship, the SSA may rule in your favor and waive your overpayment liability.

The second approach, which is sort of a middle-ground, is Form SSA-561, or "Request for Reconsideration." This is the form that should be filed with the SSA if you don't believe you've been overpaid and have documentation to prove it. If the SSA agrees with your argument, your liability can be waived.

This form can also be used if you admit that you've been overpaid but don't agree with the amount the SSA is trying to collect. Once again, you'll present documentation that supports your claim, which may be able to reduce how much you'll need to repay.

The third perfectly legal option available to these more than 1 million beneficiaries is Form SSA-634, or "Request for Change in Overpayment Recovery Rate." Similar to the previous option, this would be an admission that you were overpaid. The difference is you're also providing documentation to the SSA that this overpayment would create a financial hardship.

If the agency agrees that repayment would be financially troublesome, it'll aim to work out a 12-month, or even as long as 60-month, payment plan to recover the full amount.

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Source: “AOL Money”