Over One Million Beneficiaries Face Social Security Garnishment — How You Can Help Your Clients Navigate It

For many Americans, Social Security is more than a benefit—it’s a financial cornerstone. Surveys consistently show that 80% to 90% of retirees depend on Social Security in some capacity to cover basic expenses. That means any disruption to these payments can have immediate and serious consequences.

Now, due to recent policy changes under the Trump administration, over one million beneficiaries are seeing up to 50% of their monthly checks withheld due to overpayment recovery efforts. As an NSSA®-certified advisor or financial professional, it’s essential that you understand these changes and how to help clients respond proactively.

What's Changed — And Why It Matters

The Social Security Administration (SSA) routinely issues overpayment notices when beneficiaries receive more than they were entitled to—sometimes due to SSA processing errors, other times due to changes in income or eligibility that went unreported.

During the Biden administration, the clawback rate for these overpayments was capped at 10% of a monthly benefit, offering some breathing room for clients on fixed incomes. That is no longer the case. As of this year, the SSA has reinstated a 50% garnishment rate, meaning half of a client's monthly Social Security payment can be withheld to recover a prior overpayment.

This change is part of a broader initiative from the Trump administration, which also includes reinstating a 15% garnishment on Social Security benefits for delinquent federal student loan borrowers—a policy set to resume this summer and likely to affect hundreds of thousands of older Americans.

What Advisors Need to Know

SSA overpayments can arise in multiple ways:

• Failure to report income: For example, in 2025, clients under full retirement age who receive Social Security retirement benefits are subject to the earnings test. If they earn more than $23,400 annually, the SSA will withhold $1 in benefits for every $2 earned above the limit. If a client fails to report earnings that exceed this threshold, it can trigger a retroactive overpayment notice—sometimes months or even years later—leading to substantial clawbacks.

• SSA calculation errors: Mistakes in earnings records or benefit calculations can also lead to clients receiving more than they should, unbeknownst to them.

Your role is critical in helping clients respond appropriately to overpayment notices and avoid severe financial consequences.

How You Can Help Your Clients

If your client receives a Social Security overpayment notice, there are three primary options you can walk them through:

1. Help Them Request a Waiver

If the overpayment wasn’t their fault and repaying it would create financial hardship, clients can submit Form SSA-632BK to request a waiver. You can assist them in gathering documentation that demonstrates their income, essential expenses, and financial vulnerability. If approved, the client will not be responsible for repaying the overpaid amount.

2. Support an Appeal or Reconsideration

If the client disputes the SSA’s overpayment determination or believes the amount is incorrect, you can help them file Form SSA-561 (“Request for Reconsideration”). This is especially relevant when clients were unaware of any error or if the SSA’s numbers appear inaccurate. An approved appeal can reduce or eliminate the repayment obligation altogether.

3. Negotiate a Manageable Repayment Plan

If a client agrees they were overpaid but cannot afford to lose 50% of their benefit, they can request a modified recovery rate by filing Form SSA-634. With your guidance, they can propose a monthly repayment amount that better aligns with their financial situation. The SSA may allow a longer-term repayment schedule—up to five years in some cases.

Strategic Opportunity for Advisors

Beyond immediate crisis management, this policy shift presents a strategic opportunity to reinforce your role as a trusted advisor. Here’s how:

• Review income reporting practices with all clients receiving Social Security—particularly those on disability benefits.

• Proactively educate clients about how income changes and benefit eligibility updates must be reported to the SSA in real time.

• Incorporate overpayment risk into annual Social Security reviews, especially for clients working part-time or who have other fluctuating income sources.

With over one million Americans affected by these more aggressive clawback measures, your guidance can help clients minimize disruptions to their income and navigate the appeals process effectively. Staying informed—and proactive—will help your clients retain more of the benefits they’ve earned and further position you as their go-to resource for Social Security expertise.