Can immigration save Social Security?
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As Americans continue to live longer and retire earlier, Social Security’s ability to deliver the full benefits promised to millions of workers is at risk. This is not a problem of the distant future. For the first time in nearly 30 years, Social Security is running a deficit, and this year the federal government will need to dip into the Social Security Trust Fund. Estimates published in the Social Security Administration’s (SSA) 2018 trustees report show that by 2034, the Social Security Trust Fund will run dry and only have enough money to pay retirees 79 cents for every dollar they expect.
There are a host of strategies for addressing this shortfall, including higher payroll taxes and diminished benefits. Increasing the pool of working-age adults in the U.S. economy is another track. Since immigrants authorized to work in the United States pay the same taxes as native-born citizens, increased immigration could help keep the program afloat for baby boomers and later generations by increasing the payroll taxes paid into the system.
The billions of dollars in cash flow that immigrants annually contribute to Social Security is not a panacea, but simulations predict that it would narrow the deficit. As shown in the chart below, shifting from a moderate-immigration path to a high-immigration path can shave 0.24 percentage point off the long-term Social Security funding deficit — closing the long-run shortfall by over 8 percent. For American workers and future retirees, this would be an important step towards long-run solvency and would increase the chances that seniors get the benefits they deserve.