American Academy of Actuaries Offers New Analysis of Immigration's Impact on Social Security
WASHINGTON, Sept. 18, 2024 /PRNewswire/ -- Immigration is a crucial component in assessing Social Security's current and projected financial condition, and the nonpartisan American Academy of Actuaries—the U.S. national profession for actuaries that advises on public policy issues based on objective actuarial science and principles—is providing a deeper understanding of immigration's impact on the program in its new issue paper, Immigration and Social Security.
"In line with the American Academy of Actuaries' public-service mission, this new issue paper is a resource for all who are looking for a clear, detailed, and actuarially informed explanation of immigration's effects on this vital program, which supports financial security for tens of millions of older and disabled Americans," said Sam Gutterman, chairperson of the Academy's Social Security Committee, which developed the paper. "Based on the existing legal framework governing Social Security and immigration policy, this new analysis walks through projections and data to gauge immigration's effects on the overall financial condition of the program and its long-term financial health, such as how immigration affects the U.S. population and its workforce, and revenues and costs to the program."
Major conclusions include that "[i]ncreased immigration can help increase the labor force contributing to Social Security, improve the current 2.7 workers per beneficiary ratio, slightly delay the depletion of the trust funds," and "[b]ecause payroll taxes from new immigrants exceed the benefits they will receive over the next 75 years, a higher rate of immigration would reduce the actuarial deficit." However, it also notes that increased immigration "is not a silver bullet to 'solve' 100% of Social Security's financial problems."
Among the key projections, data, and considerations explored in Immigration and Social Security are immigration's effects on labor markets and mortality and fertility rates, as well as migration patterns, population changes among immigrants, and the uncertainties surrounding the level of future immigration and emigration. Key to the assessment is its recognition of, and the distinctions it makes between, separate categories of immigrants, including between those who become lawful permanent residents vs. those who do not.
According to Academy analysis of the 2024 Social Security Trustees Report published earlier this year, Social Security's combined trust funds are projected to be depleted in 2035, which, absent reforms of current federal law, could precipitate 17% cuts in all scheduled benefits after depletion. A key factor in this projected depletion is the declining worker-to-beneficiary ratio within the Social Security system—a decline that immigration helps mitigate, the new issue paper notes, by increasing the size of the workforce with a generally younger and somewhat more fertile population.
The publication of the issue paper is part of the Academy's public-service mission supporting greater public understanding of key public policy issues and sound public policymaking, to which actuarial expertise contributes. Learn more about Social Security's financial condition and reform options, including by trying the Academy's Social Security Challenge, in which users attempt to address the program's long-term financial challenges by selecting potential reforms, at actuary.org/socialsecurity.
The American Academy of Actuaries is a 20,000-member professional association whose mission is to serve the public and the U.S. actuarial profession. For more than 50 years, the Academy has assisted public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States.
SOURCE American Academy of Actuaries
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