Social Security’s retirement trust fund is facing a financial shortfall, with a 23% cut to benefits projected to start in 2033 if nothing changes.
The latest annual report from the Social Security trustees reiterated that the program needs fixes to stay solvent.
But here’s something that might surprise you: Immigration could be part of the solution.
What the trustees report says
The latest trustees report projects that higher levels of net immigration will improve Social Security’s financial outlook over the next 75 years.
- If the U.S. averages about 1.7 million immigrants each year through 2099, Social Security’s long-term funding gap would be about 3.4% of taxable payroll.
- If immigration is lower, averaging just 1.25 million people a year, the gap would be bigger, at 3.82%.
- And if the average drops all the way to 833,000 per year, the funding gap would become even larger, at 4.28%.
In short, more immigration means Social Security’s finances stay stronger.
Here is a breakdown of the specific ways that immigration can strengthen the program’s finances, according to a recent report by Alicia H. Munnell, a Social Security expert and senior advisor for the Center for Retirement Research at Boston College.
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1. Higher birth rates create future contributors
Declining birth rates pose a long-term threat to Social Security. Fewer babies today means fewer workers tomorrow. But it’s not a problem Americans have to tackle alone. As Munnell writes:
“The important thing to remember is that producing our own babies is not the only alternative; increasing immigration is a direct way to raise the worker-to-retiree ratio and improve the finances of Social Security.”
Immigrant families tend to have more children than native-born Americans. These American-born children of immigrants become tomorrow’s workers and taxpayers.
The current fertility rate in the U.S. is 1.63 children per woman. Immigrant families can help push that average higher, creating more future contributors to support retirees.
2. Young workers help balance the system
As we detailed in “Here’s How Much the Social Security Cut Could Cost You in 2033,” the number of people aged 65 and older in the U.S. has increased significantly in recent years. As a result, there were 2.9 workers for every Social Security recipient in 2010, but only 2.7 workers per recipient in 2024.
In other words, as baby boomers retire in droves, more workers must pay into the system to balance out the rising cost of benefits to current retirees.
Munnell notes that immigrants typically arrive at young ages. That means every young immigrant who gets a job will start contributing Social Security payroll taxes immediately but won’t collect benefits for many years.
3. Some contribute without collecting
Another consideration, Munnell points out, is that some immigrant workers pay into Social Security through payroll taxes yet can’t claim benefits later.
This can include temporary immigrants and those without legal status who contribute to Social Security.
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