Trump's mass deportation plan could drain more than $20 billion a year from Social Security

• Donald Trump has vowed to deport millions of immigrants in his second term.
• Recent analysis estimates that his plan could drain billions in Social Security tax revenue.
• Many older Americans rely on Social Security to afford essentials.

President Donald Trump's mass deportation plans could have a significant economic side effect: draining Social Security funding.

As more Americans reach retirement age — many without adequate savings — Social Security can be a financial anchor. The checks average $1,976 monthly, and thousands of older adults told Business Insider they rely on the money to pay for essentials. However, the checks often aren't enough to live on.

Trump's vow to carry out a mass deportation of people living in the US illegally could make matters more difficult because the Social Security fund is largely financed by payroll taxes from American workers. The Social Security Administration told BI that deportations could cut annual cash flow by $20 billion — potentially reducing retirees' benefits over time.

This is because immigrants living in the US illegally, about 8.3 million of whom work, also pay payroll taxes that fund Social Security and Medicare. They are ineligible to claim these benefits themselves.

What's more, the president's deportation agenda is likely to have far-reaching impacts on the immigrant labor force in the US. On January 20, he signed an executive order declaring a national emergency at the US-Mexico border, which allows him to receive Pentagon support for carrying out deportations. He has also taken steps to end birthright citizenship and restrict asylum and other paths to legally entering the country.

Trump's team did not respond to requests for comment.

BI broke down the impact of Trump's deportation plan on retirement benefits and what it means for retirees.

Deportations could limit funding for Social Security and Medicare

Some researchers are concerned that deportations could further constrict the already dwindling pool of Social Security funds. In 2022, immigrants living in the US illegally paid $25.7 billion in Social Security taxes and $6.4 billion in Medicare taxes, per the left-leaning Institute on Taxation and Economic Policy. That same year, the Social Security Administration reported that the total amount of benefits doled out was over $1 trillion.

The $20 billion that the Social Security Administration estimates could be cut from Social Security isn't an astronomically high number, but still one that concerns many economists since the fund is already expected to dry up by the mid-2030s.

Coupled with Americans getting older and having fewer children, this leads in the long run to a shrinking number of working-age adults relative to retirees. That, in turn, means there is a growing reliance on Social Security with fewer people paying into it. Immigration over the last several decades has largely helped keep that ratio in check, as immigrants tend to be younger and have more children, adding to population and labor force growth.

"Social Security works on a pay-as-you-go system, where today's workers pay for the benefits of today's retirees," Delia Furtado, an economics professor at the University of Connecticut, told BI. "This system works well when the population is growing because there are more workers contributing than retirees receiving benefits. However, with fewer births and people living longer, the system is in trouble."

How retirees may be impacted

If Trump's mass deportation plan were to come to fruition, older Americans would likely feel an impact.

If the Social Security fund is depleted or drained earlier than expected, many Americans could lose their main source of income.

Cecelia Menjívar, a professor of sociology at the University of California, Los Angeles, who specializes in immigration policy, said deportations would have a direct impact on both the availability and cost of elder care and Social Security over time.

"When employers don't have enough workers to do the work, they have to shut down," she said.

Menjívar added that mass deportations could also affect the healthcare and eldercare sectors.

A report by the Center of American Progress published in 2021 found that nearly 350,000 healthcare workers were living in the US illegally and working as personal care aides, nursing assistants, and home health aides.

Still, there are complex layers to the US retirement system, some of which would not be as heavily impacted by deportations. For example, Medicare — the main source of health insurance for many older adults — is partially financed by payroll taxes, but also collects revenue from beneficiaries' premiums. This means the program has more funding sources than Social Security.