Social Security Made a Big Change in July Due to President Trump's Agenda. Another Big Change Is Coming in September.
Key Points
President Trump's efforts to rid the federal government of fraud, waste, and abuse have led to changes at the Social Security Administration.
The Social Security Administration increased its overpayment recovery rate to 50% earlier this year and started garnishing benefits in late July.
The Social Security Administration will stop disbursing benefits as paper checks and transition fully to electronic funds transfers in late September.
President Trump wants to eliminate fraud, waste, and abuse from entitlement programs like Social Security. Some issues he has highlighted have no basis in fact -- Trump has falsely claimed millions of individuals over 100 years old get Social Security benefits simply because they have not been marked deceased in the database -- but his goal undoubtedly has merit.
Social Security accounts for 22% of government spending, and the program is projected to run a $3.3 trillion deficit over the next 10 years. The Social Security Trust Fund (the account that pays beneficiaries) is likely to be depleted during that period, at which point benefits will be cut automatically unless Congress solves the funding problem.
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The Trump administration has made several changes to Social Security. None will dent the 10-year deficit, but two could negatively impact (or at least surprise) retirees. The Social Security Administration (SSA) increased its overpayment collection rate in July, and it will stop issuing paper checks to beneficiaries in September.
Here are the important details.
Image source: Official White House Photo.
The Social Security Administration started garnishing benefits more aggressively in July
The SSA sometimes makes mistakes when paying benefits, and the most common errors are overpayments. When the SSA determines someone has been paid too much, the agency attempts to recover the money by garnishing benefits. It sends a notification by mail and allows 90 days for the person to appeal the decision. There are three ways to appeal, as explained below:
- Recipients who do not think they have been overpaid can appeal the decision and request a reconsideration by filing a Form SSA-561.
- Recipients who cannot afford the payments detailed in the mailed notice can request a lower rate of withholding by filing a Form SSA-634.
- Recipients who cannot afford to repay any portion of the outstanding balance can request a waiver of overpayment recovery by filing a Form SSA-632.
The SSA under the Biden administration recouped excess payments by withholding 10% of Social Security benefits. But the Trump administration increased the overpayment recovery rate to 50% earlier this year and started garnishing benefits in late July. That means retired workers who have been paid too much will have half of their future benefits withheld until the balance is zero.
Social Security spent $1.3 trillion in fiscal 2022, but overpayments accounted for only $7 billion (about 0.5%) of outlays. Assuming the percentage remains similar in future years, a higher overpayment recovery rate will have no impact on the $3.3 trillion deficit the Social Security program is projected to run in the next decade. But it could leave retired workers in a difficult financial position, so anyone impacted by the recent change should consider the appeal options above.
The Social Security Administration will stop paying benefits as paper checks in September
President Trump, as part of his focus on modernizing federal systems and preventing fraud, signed an executive order in March 2025 requiring the SSA to disburse money electronically rather than with paper checks. Importantly, paper checks are 16 times more likely to be lost or stolen, and they cost three times more than electronic funds transfers.
"Reducing paper checks has been a long-standing bipartisan goal that our administration is finally putting into action. Thanks to President Trump, this will help reduce fraud and theft. It will also remove delays that prevent hardworking Americans from receiving their vital payments," according to U.S. Treasury Secretary Scott Bessent.
The SSA will stop issuing paper checks on Sept. 30, 2025. The change will impact less than 1% of current beneficiaries, but anyone who still receives paper checks should update their bank account information through the my Social Security portal. Alternatively, individuals without bank accounts can choose to receive prepaid debit cards.
As a final thought, the U.S. Treasury says electronic funds transfers will save about $0.35 per benefit payment. With about 70 million people receiving benefits, the savings related to the discontinuation of paper checks will total about $300 million annually. So, this change will essentially have no impact on the projected 10-year deficit of $3.3 trillion.
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