Feb 21, 2025
Millions of older Americans collect a monthly benefit from Social Security. And for many people, that benefit is their primary or even only source of income.
But with Elon Musk and DOGE tasked with improving processes and cutting waste in programs like Social Security, a lot of people may be worried about the impact on their monthly payments.
Advertisement
While the Tesla CEO’s claims of millions of dead people receiving benefits has been debunked, he and his team could turn their attention to another known issue with Social Security finances.
The reality is that Social Security is facing the strong possibility of benefit cuts once its combined trust funds run out of money in 2035, as per the program’s most recent Trustees Report. Those could prove catastrophic for seniors who rely heavily on that money to make ends meet.
If Musk and crew are able to save Social Security money, it will only help the program’s finances improve. And there’s one key issue DOGE may want to focus on in the near term – overpayments.
An important issue that needs to be addressed
The Social Security Administration (SSA) uses different databases and sources of information to determine who's eligible for benefits each year and what monthly benefit to send out. Unfortunately, though, the agency isn't immune to errors.
An August 2024 report by the SSA’s Office of the Inspector General found that between fiscal years 2015 through 2022, Social Security made almost $72 billion in improper payments, most of which were overpayments. And while this amounts to less than 1% of the total amount of benefits paid during that period, it's a substantial amount nonetheless.
Now Social Security can take steps to try to claw back overpaid benefits. But as of last summer, it had an uncollected overpayment balance of $23 billion.
But the problem with overpayments isn't just a loss for Social Security.
Overpayments can also hurt the people who receive them — namely, when they're forced to pay the money back but no longer have it.
Advertisement
It can take the SSA years to discover that overpayments are being made. By then, recipients could conceivably be up to their ears in extra money they never knew about.
It's estimated that more than 2 million Americans receive overpayments from Social Security each year. But issues can quickly arise when they don't have the funds to repay that money and don’t respond to demand for repayment.
Now it used to be the case that Social Security could withhold 100% of benefits to recoup an overpayment.
Among four policy changes made in March is a 10% cap on the monthly Social Security benefit that will be withheld by default if an overpaid beneficiary doesn't respond to the demand for repayment, the exception being overpayments that resulted from fraud. The duration of repayment plans was also increased from up to 36 months to up to 60 months.
But even this more reasonable approach to recouping overpayments may put some Americans in a very precarious financial situation.
Advertisement
A 2024 survey by the nonpartisan Senior Citizens League found that 27% of beneficiaries get all of their monthly income from Social Security. On top of that, 20% depend on the program for between 76% and 99% of their income. So for people in that boat, losing even 10% of their monthly benefits could make it extremely difficult to pay their basic expenses.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — are you doing the same?
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Robert Kiyosaki says this 1 asset will surge 400% in a year and begs investors not to miss this ‘explosion’
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Could DOGE help prevent Social Security overpayments?
There are flaws in the way Social Security calculates benefit payments that need to be addressed. It's also worth noting that the agency is sorely underfunded, and staffing is reportedly at a near 50-year low.
As Michelle L. Anderson, Assistant Inspector General for Audit and Acting Inspector General, said, "Without better access to data, increased automation, systems modernization, and policy or legislative changes, improper payments will continue to be a major challenge for SSA into the future."
It’s this very issue that Musk and his team may indeed have the power to address. And that wouldn’t necessarily constitute overstepping.
The whole purpose of DOGE is to reduce wasteful government spending, and Social Security overpayments very clearly fall into that category.
If Musk and his team are able to audit the program’s payment system and find ways to prevent excess funds from going out, it can only help Social Security at a time when benefit cuts are looming.
In fact, if there’s one area where Musk has previously excelled, it’s technology. Modernizing Social Security’s databases could help the agency calculate payments more accurately while making up for a lack of human manpower.
So it’ll be interesting to see if Musk is able to work his magic and set Social Security on a more efficient and less wasteful path.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- Inside a $1B real estate fund offering access to thousands of income-producing rental properties — with flexible minimums starting at $10
- Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
