President Donald Trump came to power trumpeting his “America First” agenda. Yet his immigration policies are anything but. Indeed, the U.S. is composed of immigrants, natives, and their descendants. Stoking fear and anxiety about foreigners belies the inscription on the Statute of Liberty, “Give me…your huddled masses yearning to breathe free.”
Not only are Trump’s immigration policies incompatible with traditional American values, these anti-immigrant measures harm your retirement security. How? Restricting immigration means there are fewer workers to pay into Social Security, further exacerbating the projected budget shortfall for this program.
Social Security is scheduled to go broke in 2034. According to the Social Security trustees annual report, this is when the two funds (one for disability insurance, the other for retirees) run out of money. A big part of the problem is that prudent fiscal decisions aren’t being made as a country to make sure there’s enough in the kitty: “If substantial actions are deferred for several years, the changes necessary to maintain Social Security solvency would be concentrated on fewer years and fewer generations,” the report states.
Translation: We’re putting pressure on future generations. Of course, the insolvency of Social Security doesn’t mean that payments will stop right away. Instead, retirees can expect a reduction in payouts. The official estimate is that Americans will receive 79% of the benefits they expect. That’s a substantial and potentially harmful drop in retirement income for millions of Americans who were banking on more.
There are two possible solutions, both of which currently are politically difficult to implement. First, raising the payroll tax (or eliminating its cap), even at a gradual 0.3% a year, would materially increase the funds coming into Social Security. Some 86% of Social Security’s income comes from these taxes. Or second, slash benefits to the tune of around 20%, which would cause hardship among retirees. Politicians don’t want to anger companies or retirees — so they kick the can down the road.
But it gets worse. The former head actuary of Social Security testified to Congress that “Without…net immigration, the effects of the drop in birth rates after 1965 would be much more severe for the finances of Social Security, Medicare, and retirement plans in general.”
By KABIR SEHGAL and DOUG DAVIS for MARKET WATCH
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