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President Donald Trump’s immigration policies could exacerbate the current funding deficit of Social Security by about 11%, as indicated by a fresh analysis from the Center on Budget and Policy Priorities.
What Happened: The Social Security program, which is already estimated to have sufficient funds to cover only approximately 83% of benefits by 2035, is under increased strain due to the administration’s aggressive deportation policies targeting workers who contribute significantly to the system’s financial health.
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The role of immigrants is crucial in supporting the stability of Social Security through their contributions to payroll taxes. According to estimates from the Social Security Administration (SSA), an influx of about 400,000 more immigrants each year than currently anticipated could decrease the funding gap by approximately 11%. Conversely, a reduction in immigrant numbers could further amplify the existing shortfall.
The report highlights that “immigrants tend to be younger and participate in the labor force at higher rates than individuals born in the U.S.” Without the contribution of immigrants, along with their children born in the U.S., the nation would have experienced a decline of over 8 million individuals in its prime working-age population from 2000 to 2023.
Notably, undocumented immigrants contribute significantly as well, having paid an estimated $25.7 billion in Social Security taxes in 2022, even though they often do not qualify for benefits. A review of SSA actuaries from 2013 noted that these workers made a net positive contribution of approximately $12 billion to the trust fund in 2010.
See Also: Many are using retirement income calculators to check if they’re on pace — here’s a breakdown on what’s behind this formula.
Why It Matters: The Trump administration recently reinstated “National Social Security Month,” with Acting Commissioner Lee Dudek pledging to “safeguard Americans’ hard-earned Social Security benefits.” However, this is occurring alongside budget cuts at the SSA, which former Commissioner Martin O’Malley has warned could lead to disruptions in benefit disbursements.
In the meantime, Congress is evaluating Trump’s tax proposal, which would eliminate taxes on Social Security benefits and implement additional tax cuts. These changes could potentially reduce federal revenue by a staggering $11.2 trillion over the next decade, according to the Committee for a Responsible Federal Budget.
Financial expert Dave Ramsey has recently recommended that Americans begin to regard Social Security as a supplementary income source rather than a primary one, emphasizing concerns that the program’s potential funding issues could lead to reduced benefits within the next ten years.
Source
finance.yahoo.com