Social Security Lowers Benefit Clawback Rate to 50%, but Concerns Persist

The Social Security Administration (SSA) has reduced its default benefit clawback rate from 100% to 50% for certain recipients, following criticism of the financial hardship the full withholding imposed. However, experts warn the revised policy may still have severe consequences for vulnerable beneficiaries.

Effective for overpayment notices issued on or after April 25, the updated policy applies to Title II benefits, which include retirement, survivors, and disability insurance. Supplemental Security Income (SSI) benefits remain subject to a 10% withholding rate.

Woman counting money | Source: Pexels

Overpayments occur when beneficiaries receive more than they are entitled to, often due to delays in processing or unreported changes in personal circumstances. The SSA typically demands immediate repayment and, if no alternate arrangements are made within 90 days, initiates automatic withholding from monthly checks—now capped at 50% under the revised rule.

“Obviously, it’s better not to lose all of your income,” said Kate Lang, director of federal income security at Justice in Aging. “But…losing half of that income is going to be devastating and can still result in people becoming homeless.”

A worried couple | Source: Pexels

Previously, under the Biden administration, the default withholding rate was reduced to 10%. In recent months, the SSA had increased that to 100%, drawing strong backlash. “In the last 100 days, we’ve gone from as low as 10% to 100 and now to 50,” noted Richard Fiesta, executive director of the Alliance for Retired Americans. He called the 100% rate “ridiculously draconian and cruel.”

Though beneficiaries may request reconsideration or negotiate repayment terms, successful outcomes are not guaranteed. Lang emphasized the variability: “Those employees have a lot of discretion in what they decide.”