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Your Social Security payout could be cut sooner than expected.
That’s because one of the most hotly debated issues in Washington right now could have massive, unforeseen consequences for the Social Security Trust Fund.
We’re talking about the Deferred Action for Childhood Arrivals - or DACA.
Indeed, the hundreds of thousands of DACA individuals currently in the United States contribute significantly to Social Security via their payroll taxes.
And in their endless squabbling, lawmakers have failed to account for that impact when discussing the fate of the controversial immigration policy.
Here’s how ending DACA could affect your retirement income…
DACA Recipients Contribute Billions to Social Security
Currently, there are 793,026 working DACA individuals in the United States.
An October 2017 study by the national nonprofit Immigrant Legal Resource Center (ILRC) found that, because these immigrants are younger on average than the overall U.S. workforce, they will likely contribute to Social Security for longer than the nation’s American-born, aging population.
So a blow to the status of these particular immigrants would mean a blow to Social Security.
In fact, the ILRC found that their collective deportation would cost Social Security an estimated $31.8 billion over the next decade.
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Moreover, if hardliners in Congress are successful in slashing the American immigration population by half - meaning they would deport 50% of all illegal immigrants stateside, DACA or otherwise – Social Security will lose $2.4 trillion over the next 75 years.
And this wouldn’t just affect Social Security beneficiaries down the line; it would affect current beneficiaries, as well...
DACA Deportations Would Affect Beneficiaries Immediately
Both the Social Security and the Social Security Disability Trust Funds use contributions from today’s workers to pay out current obligations.
Therefore, the reduction in DACA immigrant contributions would reduce the funds immediately available to pay today’s Social Security beneficiaries.
At present, the Social Security Administration (SSA) uses interest from the trust funds to help pay off beneficiaries. But by 2020, the cost of the payouts will become too great, at which point the SSA will have to start dipping into its principal balance to pay beneficiaries.
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And come 2034, the trust funds’ coffers are expected to empty completely, lest something be done in the immediate future to reform Social Security. At this point, Social Security benefits will drop to 77% of what they are today.
Unfortunately, the government’s decision to deport DACA immigrants will only speed this process along.
This means that now is the time to start protecting your finances.
Uncle Sam sure isn’t…
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