70-year-old woman's Social Security check suddenly falls to $2,700; told to repay $35,000 within 30 days or face 50% benefit cut

Millions of Social Security recipients face unexpected demands to repay thousands of dollars because of benefit overpayments, sometimes through no fault of their own. One woman in her 70s recently found herself facing a $35,000 bill from the Social Security Administration (SSA), according to CBS News.

The woman received the notice earlier this year. Around the same time, her monthly Social Security payment dropped by about $600 to roughly $2,700 after taxes. The SSA said the reduction was made to "correct [her] benefit amount," but did not initially provide a detailed explanation.

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An August notice later informed her that the agency had overpaid her for four years, dating back to when she began claiming Social Security benefits.

The SSA gave her 30 days to repay the entire $35,000 balance. If she failed to do so, her benefits would be reduced by 50% for two years beginning in December, leaving her with about $1,350 a month.

"I'm alarmed," she told CBS News. "I'm trying to sort out what I should do next at this point because I was already underway with a plan."

These repayment demands, commonly referred to as Social Security clawbacks, happen when the SSA determines that a beneficiary received more money than they were entitled to and seeks to recover the difference.

The agency reported last year that it sends overpayment notices to about 2 million people annually across its various benefit programs.

According to the SSA, overpayments can occur because of "missing or wrong information." Changes in circumstances, including income or marital status, can affect benefit calculations. However, even beneficiaries who report changes promptly can sometimes receive overpayments because of delays or errors within the agency.

Nancy Altman, president of Social Security Works, told CBS News that staffing shortages at the SSA can contribute to delays in processing information reported by beneficiaries.

Martha Shedden, president of the National Association of Registered Social Security Analysts, pointed to another common situation involving people who claim Social Security before reaching full retirement age. These beneficiaries are subject to an earnings limit, meaning their benefits can be reduced if they earn above a certain amount.

"That can go unnoticed due to a delay in the earnings being reported to the SSA," Shedden told CBS News.

Agency calculation errors can also contribute to overpayments. Shedden said the SSA can sometimes miscalculate a person's initial benefit amount, while mistakes can also occur when someone receives multiple types of Social Security benefits.

Regardless of how the overpayment happens, beneficiaries can still be required to repay the money. Altman argued that lawmakers should change the system.

"When an overpayment is made through no fault of the beneficiary, the government should absorb the cost," she said.

In some cases, overpayments can go undetected for years before beneficiaries receive a notice. The SSA generally gives recipients 30 days to respond. If a beneficiary does not challenge the overpayment, the agency can withhold 50% of Social Security benefits—or 10% of Supplemental Security Income (SSI)—until the debt is recovered.

Beneficiaries have two main ways to challenge an overpayment.

The first is to file a Request for Reconsideration (Form SSA-561-U2) within 60 days of receiving the notice. Filing within 30 days can generally prevent collection efforts while the appeal is being considered.

The second option is a Request for Waiver of Overpayment Recovery (Form SSA-632-BK). A beneficiary may request a waiver if the overpayment was not their fault and repaying the money would cause financial hardship. A waiver request can be submitted at any time.

The woman who spoke with CBS News is now working with an adviser to navigate the appeal process. Her efforts have temporarily halted the SSA's collection action, but the situation has left her reconsidering her retirement plans.

She had already begun reducing her workload, expecting her savings and Social Security benefits to support her financially.

"Now I've lost income. Now they want money back," she said. "I don't know what my retirement, if I go forward with it, what it looks like."