Social Security's Lifeline: How Unauthorized Immigrants Help Fund Benefits For 68 Million Americans

Social Security is a cornerstone of financial stability for millions of Americans, with 68 million beneficiaries receiving monthly payments. While this program is vital for many retirees, disabled individuals and their families, a surprising contributor helps keep it afloat: unauthorized immigrants.

Though ineligible for Social Security benefits themselves, unauthorized immigrants contribute billions annually to this program. According to the Institute on Taxation and Economic Policy, this group paid $25.7 billion in Social Security taxes in 2022. These funds effectively subsidize the program, supporting millions of American beneficiaries.

This unique situation arises because many undocumented workers pay taxes using fabricated or borrowed Social Security numbers. They may earn wages through legal employment channels, but they cannot collect the benefits their contributions help fund without a change in their immigration status.

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Why does this matter? 

Social Security is growing ever closer to its looming depletion date, largely due to demographic trends. With baby boomers retiring in large numbers, birth rates declining and longer life expectancies, the system is experiencing a strain it can't keep up with. Without intervention, the trust fund supporting Social Security retirees is expected to run out by 2033. At that point, tax revenue will only cover 79% of scheduled payments, meaning retirees will face a 21% cut to their benefits. 

Immigration, including unauthorized workers, may play a large role in mitigating this issue. Younger workers, many immigrants, enter the labor force and contribute payroll taxes that sustain the program. With declining birth rates, immigration is expected to become the sole driver of population growth by the year 2040, according to the Congressional Budget Office. 

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"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," Shai Akabas, director of economic policy at the Bipartisan Policy Center, told The New York Times.

With President Donald Trump promising mass deportation across the United States, Social Security could be impacted. Mass deportations and restrictive immigration policies could reduce the labor force and their payroll tax contributions. Economists estimate that the deportation of 11 million undocumented workers could cut $20 billion from Social Security's annual cash flow. 

The program's financial health also hinges on net immigration rates. The Social Security Administration released a report that shows how immigration levels affect the long-term funding gap. Increasing 100,000 net immigrants annually improves the funding gap by 0.09% of the taxable payroll. Likewise, a decline in immigrants worsens the shortfall. 

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Even though they lack legal status, many undocumented workers still comply with tax laws. According to The New York Times, it's estimated that at least half of undocumented workers file their federal tax returns, typically using Individual Taxpayer Identification Numbers (ITINs). ITINs allow those without Social Security Numbers to report their income. These tax contributions don't just help fund Social Security, but they also support Medicare, unemployment insurance and other programs. 

Some undocumented workers file taxes to demonstrate good moral character, which may strengthen future immigration cases. Sarah Lora, a Lewis & Clark Law School professor, told The New York Times that "there is almost a reverence for the tax system" among undocumented taxpayers seeking integration into American society.

Unauthorized immigrants' tax contributions highlight their role in supporting critical public programs. Understanding this relationship is essential for crafting effective solutions as policymakers debate the future of Social Security and immigration.

Their contributions remain a quiet but crucial lifeline for Social Security, benefiting millions of Americans who rely on its support.

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