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There’s good news and bad news for Social Security recipients. And since the bad news is actually horrible, I’ll start with that.

I hope you remember Social Security Horror Stories — a series of columns that led to a book written with Social Security expert Larry Kotlikoff, and an appearance on "60 Minutes."

We revealed that the federal agency designed to protect America’s seniors was instead clawing back billions of dollars in overpayments made because of their own benefit miscalculations.

As a result of our work, in November 2023, the then-new Commissioner Martin O’Malley decreed that no more than 10% of a person’s benefit would be withheld, to avoid tragic consequences.

Now Social Security has suddenly changed its mind!

The new interim commissioner just issued this press release:

“As of March 27, the agency will begin mailing notices about the new 100 percent withholding rate, rather than the recent adjustment of just 10 percent. The withholding rate change applies to new overpayments related to Social Security benefits. The withholding rate for current beneficiaries with an overpayment before March 27 will not change and no action is required. The withholding rate for Supplemental Security Income overpayments remains 10 percent.

"People who are overpaid after March 27 will automatically be placed in full recovery at a rate of 100 percent of the Social Security payment. If someone cannot afford full recovery of their overpayment, they can contact Social Security at 1-800-772-1213 or their local office to request a lower rate of recovery.

"Additionally, people have the right to appeal the overpayment decision or the amount. They can ask Social Security to waive collection of the overpayment, if they believe it was not their fault and can't afford to pay it back. The agency does not pursue recoveries while an initial appeal or waiver is pending.”

So that’s the BAD news. Millions of seniors whose benefits were miscalculated many years ago will suddenly lose ALL their benefits! Those who already negotiated to only a 10% benefit reduction appear to be safe.

But for those suddenly cut off completely, their only recourse is to appeal, which will be difficult with big job cuts at the Social Security Administration. We will update these developments at www.SocialSecurityHorrorStories.com.

Amid this new horror, I almost forgot the good news. The Social Security Fairness Act mandated ending the reduction in benefits for those who received public service pensions —WEP and GPO reductions.

(Ironically, failure to compute those reductions resulted in much of the benefit overpayments now being clawed back!)

But the Fairness Act mandated repayment of reductions going back to January 2024. And now those one-time payments for 2024 — some as high as $10,000 — are hitting affected seniors’ bank accounts. And next month they will see increased monthly benefit deposits.

How can Social Security reconcile this situation — clawbacks vs. benefit increases — over basically the same issue?

Social Security legal expert Avram Sachs explains:

“The obvious difference between reverting to the 100% clawback of overpayments, and paying out the back benefits due to those whose benefits were reduced under the Windfall Elimination Provision and the Government Pension Offset is that the extension of 10% withholding to Title II beneficiaries was done by agency fiat, whereas the payment of back benefits due under the repeal of the WEP and GPO, is due to a statutory change: The Social Security Fairness Act, signed into law by President Biden on January 5, 2025.

“There is no statute that requires that clawbacks be limited to 10% of the Title II benefit. Indeed, there aren't even any regulations on the subject. Rather the SSA, at former Commissioner Martin O'Malley's direction, on its own, changed their internal policy guidance manual, the POMS, to allow for 10% withholding to recover overpayments.”

Sachs says the lower withholding is allowed if taking the full amount would "defeat the purpose of Title II, i.e., deprive the person of income required for ordinary and necessary living expenses."

And so, based on the arbitrary decision of a temporary acting commissioner, millions of seniors will lose ALL their benefits — despite the humane exemption previously ordered by O’Malley.

So much for political promises of not interfering with or cutting Social Security! The numbers tell the Savage Truth!

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2025 Terry Savage. Distributed by Tribune Content Agency, LLC.