Social Security 15% Payment Cuts Begin — Here’s How To Legally Avoid It
A significant shift in how the federal government handles Social Security payments will take effect this summer — and for many retirees, it could mean unexpected reductions in their monthly checks.
The Treasury Department is reinstating a garnishment program that targets Social Security benefits for unpaid debts. But here’s the good news: most retirees can still protect their benefits — if they act quickly.
What’s Changing With Social Security Payments This Summer?
For years, Social Security benefits have been largely shielded from most debt collections — especially when directly deposited into bank accounts. However, a revived garnishment initiative, expected to begin later this summer, will change that protection.
Under the program, the U.S. Treasury can withhold a portion of your Social Security payments to cover outstanding federal debts, such as:
- Unpaid federal student loans
- Delinquent taxes
- Defaulted government-backed mortgages
- Other federally owed debts
The garnishment may apply even if you’re already retired and living on a fixed income.
How Much Can Be Garnished?
Generally, up to 15% of your monthly Social Security check can be withheld under the Treasury Offset Program (TOP). While some low-income protections are in place, there’s no universal exemption — and millions of Americans could be impacted.
2 Legal Ways Retirees Can Avoid Garnishment
Fortunately, there are two legal options most retirees can use to shield their Social Security benefits from garnishment:
1. Use a Separate, Dedicated Bank Account
Federal law protects two months’ worth of Social Security benefits from garnishment if they are directly deposited into a bank account. But here’s the catch: if you co-mingle those funds with other income, it can be difficult to prove what is protected.
Best practice:
- Open a dedicated account for Social Security deposits only.
- Avoid using this account for other income or transfers.
This helps ensure clear legal protection if garnishment is attempted.
2. Apply for a Hardship Exemption
Retirees facing financial hardship can apply for a Treasury hardship exemption, which may temporarily pause garnishment if:
- Your income is below federal poverty guidelines
- You rely solely on Social Security for essentials like food, rent, or medical care
To request an exemption, contact the Treasury Department’s Bureau of the Fiscal Service or visit fiscal.treasury.gov.
Who’s Most at Risk?
According to recent data:
- Over 1.2 million seniors currently owe federal student loan debt
- Nearly 3 million Social Security recipients carry tax debt or other federal obligations
- Many are unaware that their benefits could be legally reduced
If you’ve received a notice of garnishment or offset, act immediately. Waiting may result in withheld checks before you can apply protections.
What Experts Recommend
Legal and financial advisors recommend that retirees:
- Review any federal debts in collections
- Check the account receiving Social Security deposits
- Contact the SSA and Treasury if a garnishment notice is received
- Seek nonprofit credit counseling or legal aid if necessary
“For many retirees living month to month, losing even 15% of a Social Security check can be devastating,” said Nancy Altman, president of Social Security Works. “It’s vital to know your rights and act before garnishment begins.”
Stay informed and plan ahead. Social Security remains a lifeline for over 71 million Americans — knowing your payment dates and any upcoming changes is key to staying financially secure.
If you’re unsure about your benefits or need personalized guidance, visit SSA.gov or call 1-800-772-1213.