Personal Finance
Fixing Social Security requires addressing immigration ‘fraud’
Republican vice presidential nominee, U.S. Sen. JD Vance speaks at a campaign rally at Radford University on July 22, 2024 in Radford, Virginia.
Alex Wong | Getty Images News | Getty Images
Many voters ages 50 and up say two issues — Social Security and Medicare — could decide how they cast their ballots this November.
The presidential candidate who wins on Nov. 5 — either former President Donald Trump or Vice President Kamala Harris — may be tasked with restoring solvency to those programs as they face looming trust fund depletion dates.
Republican vice presidential candidate JD Vance, in a Sept. 12 interview on CNBC’s “Squawk Box,” said that first addressing another issue, immigration, could help the programs’ funding woes.
Vance said Social Security and Medicare are facing a “massive fraud problem” because of undocumented immigrants who are collecting benefits, citing what he said were incidents of fraud related to him by some of his constituents and friends.
“Before we start talking about doing anything to the benefits for Americans who have earned them, let’s deal with the illegal alien fraud in our Social Security and Medicare system,” Vance said. “I think that costs us a lot of money.”
It’s not the first time the Trump-Vance campaign has suggested immigration is hurting the programs that millions of retirees rely on for monthly benefit checks and health-care coverage.
Trump in March said on social media platform Truth Social that Democrats are “killing Social Security and Medicare by allowing the invasion of the migrants.”
Meanwhile, Harris has talked about creating an “earned pathway to citizenship,” which may encourage immigrants to work and contribute to the programs. The Harris campaign did not provide CNBC more details on those plans.
Who is eligible to benefit from Social Security?
The Social Security Administration assigns a unique Social Security number to each individual who is either a U.S. citizen; is lawfully admitted to the country as a permanent resident; is lawfully admitted on a temporary basis with Department of Homeland Security authorization to work; or has a valid non-work reason for needing a Social Security number, according to the agency.
A Social Security number is required for most jobs in the U.S., and employers are typically required to deduct payroll taxes from each employee to fund programs including Social Security and Medicare.
Over many years of work, the employee usually contributes a sufficient amount to be eligible to claim monthly Social Security checks and Medicare benefits when they retire or become disabled.
Documented immigrants — such as those with permanent status and dual intent temporary visas — pay the payroll taxes that contribute to Social Security and Medicare, according to Tara Watson, a senior fellow at The Brookings Institution and author of the book “The Border Within: The Economics of Immigration in an Age of Fear.”
Generally, undocumented immigrants are not eligible for Social Security or Medicare benefits, Watson said, but they may pay in to the programs anyway.
Some undocumented immigrants may use false Social Security numbers to work in jobs that require payroll tax contributions to Social Security and Medicare, and therefore they unofficially contribute to those programs, she said. Others, such as seasonal workers, may not pay payroll taxes.
Many long-term immigrants do receive benefits after contributing to the programs and earning eligibility, Watson said. Immigrants may eventually qualify for Social Security benefits if they are present in the U.S. lawfully and earn the required credits by working and contributing to the program, according to the American Academy of Actuaries.
Undocumented immigrants contributed $33.9 billion in federal social insurance taxes in 2022 toward Social Security, Medicare and unemployment insurance, according to the Institute on Taxation and Economic Policy.
Yet because of their immigration status, those workers are barred from accessing those benefits.
How widespread is Social Security fraud?
There are two common types of Social Security fraud involving immigration: When people who aren’t eligible for a Social Security number either steal one or create a false one so they can try to get a job in the U.S., and when people who aren’t eligible for Social Security or Medicare benefits use a fraudulent name or Social Security number to claim benefit payments.
Committing these kinds of fraud isn’t easy.
But it is possible for some people, including some undocumented immigrants, to carry it out.
Stealing benefits can be difficult, since it requires tapping into someone’s Social Security account and changing their bank account information to access the money, according to Andrew Biggs, a senior fellow at the American Enterprise Institute and former principal deputy commissioner at the Social Security Administration.
After the Social Security Administration started allowing individuals to change their bank deposit information through their online accounts, the agency and the Office of Inspector General began receiving complaints of unauthorized changes, Jeffrey Brown, deputy assistant inspector general at the Social Security Administration Office of the Inspector General, told the House Ways and Means Committee in 2023.
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Audits found $33.5 million in benefits for 20,878 beneficiaries was redirected through unauthorized direct deposit changes between January 2013 and May 2018, according to Brown. However, another $23.9 million for 19,662 beneficiaries was prevented from misdirection by the agency before payments were made.
The investigation, from a 2019 report, did not implicate undocumented immigrants in that activity.
“Our audits found fraudsters may steal identities to work or to claim earnings-related benefits,” Brown said in his written testimony, which did not give demographic information on those committing the fraud.
There have been cases of undocumented immigrants found to be misusing Social Security numbers to fraudulently access benefits.
“There are certainly some immigrants who are getting benefits when they shouldn’t be, but I think it’s a relatively small group of them,” Watson said.
“This is not a problem that I’ve heard specifically that, as [Vance] says, is widespread,” Biggs said, referring to Vance’s comments about social services fraud by undocumented immigrants.
What happens to unclaimed earnings?
The type of fraud in which Social Security numbers can be misused for work purposes may be more common, experts say.
When someone is working using a Social Security number that isn’t theirs, their earnings may be credited to the person whose name matches that number in the agency’s records.
Alternatively, they may be credited to the Social Security Administration’s earnings suspense file.
The earnings suspense file is an electronic holding file for wage items where names and Social Security numbers on Form W-2s do not match the Social Security Administration’s records, an agency spokesperson said via email.
The wage records stay in that file until they can be verified and matched to a worker’s record. Despite the wage records’ unidentified status, the program’s trust funds have received revenues for the wage items placed in the suspense file, the spokesperson said.
A 2023 report from the Social Security Administration Office of the Inspector General showed the earnings suspense file had accumulated $2.15 trillion in wages for tax years 1937 through 2022.
The earnings suspense file includes undocumented immigrants, among other people, Watson said.
She said the existence of the earnings suspense file “gives you an indication that people are putting into the system and not claiming from the system.”
Immigrants in the labor market ‘very much a positive’
Immigration overall is a net positive to Social Security and Medicare, experts say.
Both programs rely on funding from payroll taxes. The experts say that more immigrants means more workers who contribute to both Social Security and Medicare through their paychecks.
“Immigration, in general, has a very positive role,” said Sam Gutterman, chairperson of the American Academy of Actuaries’ Social Security committee.
Neither the Social Security Administration nor the Department of Health and Human Services, which oversees Medicare, provided recent data on the effect of undocumented immigrants on their programs.
When asked about Vance’s statement that undocumented workers are draining Medicare and Social Security, HHS spokesperson Renata Miller said: “These claims are false and they serve as a distraction from the health care concerns that everyday Americans care about. HHS will continue working to lower health care costs so that patients can fill a prescription without rationing pills or going into medical debt.”
The Social Security Administration in an email explained that there are strict rules about who can legally receive benefits and Social Security numbers.
“The Social Security Act does not permit payment of benefits to noncitizens residing in the U.S. if they’re not lawfully present here,” a Social Security spokesperson said. “In order to get a Social Security number for work, by law you need to be a U.S. citizen or have [Department of Homeland Security] authorization. SSA has stringent evidentiary requirements to confirm the authenticity of documents and prevent issuance of numbers to ineligible individuals.”
In a 2013 report, the Social Security Administration said it is difficult to precisely identify the total amount of taxes paid and benefits that may have been received by unauthorized workers.
In that report, the office of the program’s chief actuary said undocumented immigrants paid as much as $13 billion in payroll taxes to the program’s trust funds in 2010, while about $1 billion in benefit payments were attributed to unauthorized work. That resulted in a contribution of roughly $12 billion to the program’s cash flow that year, according to the agency.
“We estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally,” the office of SSA’s chief actuary said.
“We estimate that future years will experience a continuation of this positive impact on the trust funds,” it wrote.
More recently, the Social Security Administration has said immigration tends to be beneficial for the program because those new entrants to the country tend to be working age.
“When they come to the country, they tend to come here for economic opportunity and enter the labor force, and that’s very much a positive,” Stephen Goss, chief actuary of the Social Security Administration, said in testimony before the House Budget Committee in June.
“That actually helps us with having more revenue coming in,” Goss said.
Those workers may eventually work the length of time necessary to qualify for benefits, Goss said.
However, some immigrants pay into the program and never collect benefits, he explained.
And if they have children, that helps to make up for the country’s low birth rate, which also benefits the program, Goss added.
Looming depletion dates are the more pressing issue
In a new report, the American Academy of Actuaries found immigration may “significantly enhance the future financial condition of Social Security, especially in the long term.” The report says immigration may help improve the worker-to-beneficiary ratio and slightly delay the depletion of the program’s trust funds.
However, immigration is “not a silver bullet to ‘solve’ 100% of Social Security’s financial problems,” according to the research, which analyzed the Social Security Administration’s latest annual trustees report.
Both Social Security and Medicare face pressures as the large baby boomer generation retires and taps the programs for benefits.
Absent action from Congress, the trust fund Social Security relies on to pay for retirement benefits is due to run out in 2033, when 79% of benefits will be payable, according to projections from the program’s trustees.
Medicare’s hospital insurance trust fund, also known as Part A, is projected to last until 2036, when 89% of benefits will be payable.
Biggs said the presidential campaigns should focus on policies to address those looming depletion dates that will prompt across-the-board benefit cuts, rather than fraud by undocumented immigrants, which is a much smaller issue for the programs.
Focusing on the undocumented immigrant angle first is a “total sideshow” when it comes to the larger Social Security and Medicare funding issues, Biggs said.
“I think he [Vance] is using it as a deflection because they don’t want to talk about fixing Social Security,” Biggs said.
The Federal Reserve held interest rates steady at the conclusion of its policy meeting on Wednesday.
In what could be Jerome Powell’s last as chair before President Donald Trump’s yet-to-be-confirmed nominee Kevin Warsh takes the helm, central bankers maintained the federal funds rate in a target range of 3.5% to 3.75%.
Inflation has surged since the war with Iran began, leaving policymakers with limited room to act, according to Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting. “We’re in a kind of suspended animation — between Iran and the Fed transition,” Snaith said.
Before the oil shock, inflation was holding above the Fed’s 2% target but not worsening. Now the jump in energy costs could have longer-term inflationary effects, economists say.
For Americans struggling in the face of higher gas prices and overall affordability challenges, the central bank’s decision to keep interest rates unchanged does little to ease budgetary pressures. “The cavalry isn’t coming anytime soon,” Snaith said.
How the Fed decision impacts you
The Fed’s benchmark sets what banks charge each other for overnight lending, but also has a trickle-down effect on many consumer borrowing and savings rates.
Short-term rates are more closely pegged to the prime rate, which is typically 3 percentage points above the federal funds rate. Longer-term rates, such as home loans, are more influenced by inflation and other economic factors.
Credit cards
Most credit cards have a short-term rate, so they track the Fed’s benchmark.
After the Fed cut rates three times in the second half of 2025, the average annual percentage rate has stayed just under 20%, according to Bankrate.
“Without Fed rate cuts, there’s not much reason to expect meaningful declines anytime soon, so carrying a balance will remain very expensive,” said Matt Schulz, chief credit analyst at LendingTree.
Mortgage rates
Fixed mortgage rates, on the other hand, don’t directly track the Fed but typically follow the lead of long-term Treasury rates.
Concerns about how the Iran war will impact the U.S. economy have already pushed the average rate for a 30-year, fixed-rate mortgage up to 6.38% as of Tuesday, from 5.99% at the end of February, according to Mortgage News Daily.
That leaves homeowners with existing low mortgage rates “feeling stuck,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Mortgages, more than any other credit type, work on a churn,” she said, referring to how a dip in rates can boost borrowing activity.
Student loans
Federal student loan rates are also fixed and based in part on the 10-year Treasury note, so most borrowers are somewhat shielded from Fed moves and recent economic uncertainty.
Current interest rates on undergraduate federal student loans made through June 30 are 6.39%, according to the U.S. Department of Education. Interest rates for the upcoming school year will be based in part on the May auction of the 10-year note.
Car loans
Auto loan rates are tied to several factors, including the Fed’s benchmark. Because financing costs remain elevated, new car buyers are taking on longer loans to keep their monthly payments manageable, according to the latest data from Edmunds.
Even so, with the rate on a five-year new car loan near 7%, the average monthly payment on a new car rose to $773 in the first quarter of 2026, an all-time high.
“Car buyers are in a tough spot right now because they’re getting squeezed from both ends: high sticker prices and high interest rates, with neither showing any signs of letting up,” said Joseph Yoon, consumer insights analyst at Edmunds.
“Until the rate picture shifts, buyers will keep stretching loan terms to make payments work, which only adds to the total cost of ownership down the road,” Yoon said.
Savings rates
While the Fed has no direct influence on deposit rates, the yields tend to be correlated with changes in the target federal funds rate. So, although rates on certificates of deposit and high-yield savings accounts have fallen from recent highs, they are holding above the annual rate of inflation.
For now, top-yielding online savings accounts and one-year CD rates pay around 4%, according to Bankrate.
“Yields on high-yield savings accounts and certificates of deposit are down from their peaks of a few years ago, but they’re still strong compared to what we’ve seen for most of the past decade,” Schulz said.
Milan Markovic | E+ | Getty Images
The average tax refund is 11.2% higher this season, compared with about the same period in 2025, according to the latest IRS filing data.
As of April 10, the average refund amount for individual filers was $3,397, up from $3,055 about one year ago, the IRS reported on Friday.
The IRS data reflects about 114 million individual returns received, out of about 164 million expected through Tax Day. Next week’s filing update is expected to include data through the April 15 deadline.
President Donald Trump‘s 2025 legislation, rebranded to the “working families tax cuts,” was a key talking point for Republicans on Tax Day.
With the November midterm elections approaching and Republicans defending slim majorities in Congress, many GOP lawmakers have highlighted Trump’s tax breaks and higher average refunds.
Meanwhile, affordability has been top of mind for many Americans amid rising costs of gas, electricity, food and other living expenses.
For filers who expected a refund this season, nearly one-quarter, or 23%, planned to use the funds to pay down credit card debt, and the same share said they would save the payment, according to the CNBC and SurveyMonkey Quarterly Money Survey, released in April. It polled 3,494 U.S. adults at the end of March.
Who benefited from Trump’s ‘big beautiful bill’
“It’s been a great tax season for the American people,” many of whom have benefited from Trump’s tax breaks, Treasury Secretary Scott Bessent said during a White House press briefing on Wednesday.
More than 53 million filers claimed at least one of Trump’s “signature new tax cuts” — the deductions for tip income, overtime earnings, seniors and auto loan interest — the Department of the Treasury also announced on Wednesday.
Those filers, who claimed the deductions on Schedule 1-A, have seen an average tax cut of over $800, according to the Treasury. Tax cuts can trigger a higher refund or reduce taxes owed, depending on the filer’s situation.
Some filers who itemize tax breaks have also seen benefits from the bigger federal deduction limit for state and local taxes, known as SALT. Trump’s legislation raised that cap to $40,000, up from $10,000, for 2025.
The latest SALT deduction limit change is expected to primarily benefit higher earners, according to a May 2025 analysis of various proposals from the Tax Foundation.
The Treasury has not released data on how many filers have claimed the SALT deduction during the 2026 filing season.
Traders work at the New York Stock Exchange on April 16, 2026.
NYSE
U.S. stocks climbed to record highs on Thursday against a backdrop of war, an oil supply shock and economic forecasts warning of stunted growth amid a protracted conflict.
Many investors may be thinking: Why?
Largely, it’s because the stock market is a barometer of what investors think will happen in the future, rather than an assessment of the present day, according to economists and market analysts.
Investors are essentially shrugging off the Middle East conflict as a blip that will be resolved relatively quickly, they said.
“The stock market isn’t trying to price what’s happening today,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank. “The stock market is always trying to price what the world is going to look like six to 12 months from now.”
Why stocks have been ‘resilient’
The S&P 500, a U.S. stock index, fell about 8% in the initial weeks of the Iran war, from the start of the conflict on Feb. 28 to a recent low on March 30.
But stocks have rebounded since then, erasing all losses since the beginning of the war. The S&P 500 closed at an all-time high on Thursday — about 11% higher than its nadir at the end of March. That followed a record close on Wednesday.
“The market has remained very resilient in the face of the war and has rallied strongly on the prospect that it will be resolved,” said Mark Zandi, chief economist at Moody’s.
A ship waits to pass through the Strait of Hormuz following the two-week temporary ceasefire between the US and Iran, which is conditional on the opening of the strait, in Oman on April 8, 2026.
Shady Alassar | Anadolu | Getty Images
And while investors cheered the possibility of a diplomatic off-ramp to the conflict, the temporary ceasefire has appeared tenuous, with the U.S. and Iran each accusing the other of breaking the agreement.
Nations haven’t been able to reach a peace deal ahead of the ceasefire’s end. Vice President JD Vance said U.S. officials left peace talks in Pakistan over the weekend after the Iranian delegation refused to agree to American demands not to develop a nuclear weapon.
The markets ‘have memory’
Ultimately, the stock market is signaling a collective belief that tensions will ratchet down, the war will end in the near term and oil flows through the Strait of Hormuz will normalize, economists said.
That’s largely because investors have been conditioned to believe that President Donald Trump will back off if the economic pain becomes too intense, economists said — the so-called “TACO” trade, shorthand for “Trump always chickens out.”
“Investors strongly believe — and have been conditioned to believe — he’s going to stand down, find a way to pivot, declare victory and move on,” Zandi said.
Trump has pushed back on the notion of backing down, framing his brinkmanship as a savvy negotiating tactic.
Economists pointed to a recent example of this dynamic: in April 2025 during so-called liberation day, when the Trump administration levied a host of tariffs on U.S. trading partners.
Within days — after the stock market had cratered more than 12% — Trump announced a 90-day pause on those tariffs. Stocks then saw one of their biggest daily rallies in history following Trump’s reversal.
Investors remember that Trump often de-escalates geopolitical shocks — which is why they’ve seized on positive headlines that hint at progress in peace talks, for example, Seydl said.
“The markets have memory,” Seydl said.
AI stocks and the ‘tech boom’
Traders celebrating at the New York Stock Exchange on April 15, 2026, as the S&P 500 closed above the 7,000 level for the first time.
NYSE
There are other factors underpinning market resilience during wartime, economists said.
One is the investors’ enthusiasm for artificial intelligence and technology stocks, which account for almost half of the S&P 500’s market capitalization, Zandi said.
“Those stocks run on their own dynamic independent of anything, including the war in Iran,” Zandi said. “I think we would have been down a lot more and it would have been harder for us to recover had it not been for the very, very optimistic perspectives on AI.”
We’re in the middle of a “tech boom” — and investors are likely to remain optimistic until they think the tech cycle has run its course, Seydl said.
More broadly, stock investors are essentially making a bet on the future earnings growth of a company — and the earnings backdrop has been “pretty solid,” Seydl said.
Consumer spending appears to be stable, for example, economists said. And companies are getting a boost to their after-tax earnings from the GOP’s so-called “big beautiful bill,” which, among other things, made it easier to write off investments upfront and therefore reduce their tax liability, Zandi said.
Going forward
Experts said there will be an economic hit from the Iran war, though.
“Despite the recent news of a temporary ceasefire, some damage is already done, and the downside risks remain elevated,” Pierre-Olivier Gourinchas, director of research at the International Monetary Fund, wrote Tuesday.
A protracted conflict risks deep and global economic pain, he wrote.
Even if the conflict is short-lived — as the broad market expects — stocks are unlikely to march much higher until it’s clear the U.S. is on the other side of the war and its economic fallout, Zandi said.
If investors are incorrect, and President Trump doesn’t back down or quickly extricate the U.S. from the war, the stock market may see a “full-blown correction” or worse, Zandi said. A stock market correction is a decline of at least 10% from recent highs.
“Everyone thinks they know what the script is,” Zandi said. “Now they just need to follow the script. If they don’t, the market will have some real problems.”
The uncertainty provides yet another example of why the average investor with a long time horizon should stick to their investment plan and ignore the noise, experts said.
“Trying to time the market is very difficult if not impossible for the average investor,” Seydl said. “It’s better to take a long-term perspective and ride out bouts of volatility.”
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