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Social Security Has a Big Immigration Problem -- but It's Probably Not What You Think

A recent survey conducted by the Nationwide Retirement Institute revealed that retirees view inflation and potential Social Security benefit cuts as their biggest concerns. And the Harvard CAPS-Harris poll released last week showed that the top issue for more than a third of Americans surveyed is immigration.

Inflation and Social Security have a strong connection, and that's why retirees receive annual cost-of-living adjustments (COLAs). There's a close tie between immigration and Social Security, as well. Social Security has a big immigration problem -- but it's probably not what you think.

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Image source: Getty Images.

A negative picture of immigration

Watching the news can give a negative picture of immigration. Politicians frequently talk about the influx of illegal immigrants crossing the U.S. southern border. It's such a serious issue that Democratic and Republican senators are working together on a major immigration reform bill.

One key concern with illegal immigration is that it can increase the burden on public services. This is especially the case when undocumented workers don't pay taxes.

Legal migration usually doesn't cause as much worry for Americans. However, the nonprofit Center for Immigration Studies released a report in 2023 that argued legal migration could present problems for Social Security.

The Center for Immigration Studies stated that legal immigrants who come to the U.S. later in life could be "net drains" to the Social Security system. Its report also concluded that lower-earning legal immigrants could take more money from Social Security than they contribute.

Social Security's big immigration problem

However, none of these concerns are major issues for Social Security right now. So what's Social Security's big immigration problem? There isn't enough immigration.

Social Security is funded in part by its two trust funds. The majority of the program's costs, though, are funded by ongoing payroll taxes. This means that the more workers there are in the country, the greater the revenue for Social Security.

A 2019 report from the Bipartisan Policy Center stated, "Immigration strengthens the solvency of the Social Security system by boosting the number of new workers without immediately adding more new beneficiaries." The 2023 Social Security Trustees Report agrees with this, concluding that, "because immigration occurs at relatively young ages," it increases the number of workers well before the number of Social Security beneficiaries increases.