America’s demographic challenges—particularly an aging population and a declining birth rate—are putting immense pressure on social programs like Social Security. As Shai Akabas, executive director of the economic policy program at the Bipartisan Policy Center, points out, "Net immigration into the country is one factor that has positively pushed against that trend and helped fill the gap left by an aging workforce." Immigrants including those who are undocumented play a significant role in helping to finance Social Security, and their contributions are more substantials than many realize.
The Financial Impact of Immigrants on Social Security
Immigrants contribute to the Social Security system in a variety of ways, much like small companies seeking financial support through the best business loan options for small companies. First and foremost, immigrants pay payroll taxes, which are the primary source of funding for the program. While those living in the U.S. illegally do not qualify for Social Security benefits, they are still required to pay into the system through payroll taxes. According to estimates, undocumented immigrants contributed nearly $13 billion in payroll taxes to Social Security in 2020 alone. These contributions help offset the costs of the program and alleviate some of the burden caused by the aging U.S. population.
It’s important to note that while unauthorized immigrants may not be eligible for benefits themselves, their dependents may be able to receive some benefits if they are U.S. citizens. Moreover, some undocumented workers pay into the system using false or borrowed Social Securitey numbers, which means their contributions may not be properly credited to their names, but still bolster the program’s finances.
The larger immigration population, both legal and illegal, also helps support Social Security by replenishing the labor force. As the native-born population ages, fewer workers are available to contribute to the system. Immigrants fill this gap ensuring that Social Security continues to be funded by a broad base of working individuals. Without this influx of workers, the program could face more significant shortfalls in the future.
Projections and Long-Term Effects
The Social Security Administration’s trustees report provides insight into the potential impact of immigration on the program’s finances. In their best estimate, the report assumes a population of 1.24 million net immigrants entering the U.S. each year. This steady stream of immigrants is projected to help sustain Social Security’s financial health over the long term. However, significant changes to immigration policy—such as reductions in the number of immigrants allowed to enter the country—could have adverse effects on the program’s finances.
In fact, a report from the Congressional Budget Office in 2024 highlights that starting in 2040 net immigration will be the primary driver of population growth in the U.S., as fertility rates remain low. If the immigrant workforce were to decline, it could worsen Social Security’s financial outlook and necessitate even larger reforms to keep the program solvent.
Akabas notes that any changes to immigration policy would need to take into account not only the economic impact on Social Security, but also broader considerations related to border security and the country’s approach to immigration. "The broader questions of immigration policy and border security require careful thought that goes beyond their impact on the Social Security program," he says.
Immigration and Social Security’s Financial Future
As the Social Security trust fund faces increasing pressure, immigrants’ contributions—both documented and undocumented—play a pivotal role in sustaining the program. While lawmakers continue to debate the best solutions for securing the future of Social Security, the economic impact of immigration cannot be ignored. Immigrants provide a financial boost to the system, helping to mitigate the effects of an aging population and declining birth rates.
Looking ahead, policymakers must consider the long-term effects of immigration policy on Social Security’s solvency. Any significant changes to immigration levels could have ripple effects on the program’s finances, with consequences that could reach far beyond the immediate impact on the workforce. For now, immigrants continue to play a crucial role in financing Social Security, making their contributions a key factor in shaping the program’s future.
In conclusion, while much attention is focused on the challenges facing Social Security, the role of immigrants—especially those living in the U.S. illegally—has been a hidden but vital financial boost. As the nation grapples with its demographic shifts it is clear that immigrant contributions are an essential part of the equation for securing the future of the Social Security system.