In July, Social Security doled out traditional benefits to nearly 70 million (combined) retired workers, workers with disabilities, and survivors of deceased workers.
President Donald Trump signed an executive order in March to modernize Social Security payments, which will permanently change the program.
Trump has overseen a flurry of Social Security changes since his inauguration, including adjusting a key garnishment rate.
Since the first benefit check was mailed in January 1940, Social Security has been providing a financial foundation for the American public. Though it was initially conceived as a program that would financially support aging workers who could no longer provide for themselves, it’s expanded to include workers with disabilities, as well as survivors of deceased workers. In July, nearly 70 million people received a traditional Social Security payout.
But Social Security isn’t static. Although the Social Security Act requires 60 votes in the upper house of Congress to effect major changes, various adjustments are made to the program by the Social Security Administration (SSA) on a near-annual basis.
Following Donald Trump’s inauguration for his second nonconsecutive term a little over seven months ago, a flurry of changes to the Social Security program were announced. While some Social Security adjustments ebb and flow depending on the political party controlling the White House, one of these shifts is set to change Social Security forever come Sept. 30.
President Trump signing a bill. Image source: Official White House photo by Shealah Craighead, courtesy of the National Archives.
The big change in question comes courtesy of an executive order (EO) signed by President Trump on March 25. This EO (“Modernizing Payments To and From America’s Bank Account”) set Sept. 30 as the compliance deadline to end the issuance of paper checks by the federal government. Though Social Security isn’t the only government program affected by the EO, it means paper Social Security benefit checks are less than a month away from being a thing of the past.
The good news is that most Social Security beneficiaries aren’t receiving a paper check now, and therefore won’t be directly impacted by this EO. But for the 0.8% of beneficiaries (more than 500,000 recipients) who do still receive paper checks, a “judgment day” for payments is rapidly approaching.
The SSA offered three reasons why transitioning to digital payments and away from paper checks makes sense:
Paper checks are considerably costlier than electronic fund transfers (EFTs). Whereas a paper check costs the U.S. government about $0.50 to issue, an EFT costs less than $0.15. This should reduce payment issuance costs for Social Security by more than $2 million annually.
EFTs offer a faster way to get benefits into the hands of recipients. While a paper check can take days to arrive in a beneficiary’s mailbox, EFTs can be deposited and cleared much quicker.
Digital payments are safer than paper checks. According to the SSA, paper checks are 16 times more likely to be lost or stolen than electronic payments.
Based on President Trump’s EO and updates from the SSA, the 500,000-plus beneficiaries still receiving a paper check will have to either set up direct deposit with a bank or credit union, or use a Direct Express card, which is a prepaid debit card to which federal benefits can be deposited.
Image source: Getty Images.
While the end to paper Social Security checks is a direct result of President Trump’s EO, he’s overseen other changes to America’s leading retirement program since taking office.
On day one, he signed an EO creating an office dubbed the Department of Government Efficiency, better known as DOGE. The purpose for DOGE was to locate government inefficiencies on Capitol Hill and save the federal government money. Based on DOGE’s findings, the SSA chose to downsize its workforce by 7,000 to 50,000 employees, as well as shutter some of its physical locations to reduce operating expenses.
Donald Trump also oversaw the nomination (and eventual confirmation) of Frank Bisignano as the newest SSA commissioner. Bisignano had served as the CEO of global financial technology (“fintech”) company Fiserv for nearly five years before taking on the role at the SSA. He seems like the perfect individual to lead the agency as it shifts toward digital payments.
Furthermore, the SSA implemented changes in personal identification methods that are consistent with the president’s stated desire to reduce instances of fraud. As of April 2025, most beneficiaries are no longer allowed to change their direct deposit information or apply for retirement or survivor benefits over the phone. These changes must be made in person at a Social Security office, or online via a “my Social Security” account with two-factor authentication. These changes were made to reduce the possibility of Social Security scams.
Lastly, President Trump has overseen a change to the overpayment recovery rate from the Joe Biden era.
At the end of the federal government’s fiscal 2023 (Sept. 30, 2023), $23 billion in Social Security overpayments remained uncollected. Whereas Biden had lowered the garnishment rate to 10% for overpayments during his presidency, the Trump administration set the clawback rate for overpayments at 50% in April. Though this is considerably higher than the Biden-era overpayment recovery rate, it’s lower than the 100% garnishment rate during Trump’s first term and during Barack Obama’s administration.
While more changes may be brewing, none permanently alters the Social Security program quite like the EO to end paper checks.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
