Social Security is a lifeline for millions of Americans—today, nearly 64 million people benefit from it, with almost 90% of those aged 65 and over relying on it for their monthly payments. But here’s the problem: the program is running into some serious financial troubles.
In the years ahead, Social Security is expected to pay out more in benefits than it takes in. This is due to a surge in retirements, meaning fewer workers are paying into the system while more people are drawing from it. It’s a bit of a financial snowball effect that’s making things tough.
But there’s more to the story—Social Security’s finances aren’t just struggling due to a simple mismatch between revenue and expenses. A former Social Security employee, Avram Sacks, has spoken out about another issue that’s making matters worse: overpayments.
The Overpayment Problem
Sacks, who worked with the Social Security Administration (SSA) for years, discovered that the agency was often making overpayments. Sometimes, it’s just simple mistakes, but in other cases, fraud might be involved. He noticed that the problem had only grown worse since he started his career back in 1987.
In fact, a 2024 report revealed that between 2015 and 2022, SSA made almost $72 billion in incorrect payments—most of which were overpayments. And while the agency can ask for that money back, getting it back isn’t always easy. As of the end of 2023, there was still over $23 million in unpaid overpayments.
The Urgent Need for Change
Social Security is already facing a tough road ahead. The program’s trust funds are projected to run out of money by 2035, and if that happens, benefits could be cut by about 25%. That’s a big deal, especially for those who rely on Social Security for their primary income. In fact, among retirees aged 65 and older, nearly 1 in 4 men and women rely on Social Security for 90% or more of their income.
To make matters worse, most Americans don’t have enough savings to cover a major reduction in benefits. For example, the median retirement savings for people aged 65-74 was just $200,000 in 2022. When you apply the typical withdrawal strategy (the 4% rule), that’s only about $8,000 in income per year.
What’s Being Done?
The SSA has been slow to fix the overpayment issue, but there are some signs of progress. The agency is reviewing its overpayment procedures, and in 2023, it started developing a new system to gather earnings data from payroll providers. This could help reduce the chances of overpayments for people who are working while receiving benefits.
While fixing overpayments alone won’t solve Social Security’s funding problems, it’s an important step in the right direction. It could help ensure that more money stays in the system and is available to those who truly need it.
The bottom line? Social Security is facing some tough challenges, but by addressing overpayments and other issues, we can help preserve this essential program for future generations of retirees.