This spring, Gallup reported that increasing numbers of Americans of all ages say that they'll rely more on Social Security payouts when they retire. Unfortunately, if Congress doesn't act to shore it up, Social Security could be insolvent by 2034.
That's according to new number crunching of the official SSA 2017 Trustees Report by Yahoo Finance, which finds that some key aspects of the system will be in trouble in as few as 17 years: "Insolvency is on track for 2028 for the disability fund and 2034 for seniors." It is important to note that "insolvent, however, does not mean empty; it means that the funds would not be able to completely fulfill its debts to the public. It's not as bad as a $0 check sent to American seniors, but the stakes are still high."
The stakes are even higher if Americans really are expecting to rely more on these payouts instead of using them as supplemental funds. According to Gallup, "25 percent of those aged 18 to 29 plan to rely on Social Security in their retirement" as a "major source" of income. That's up significantly from 2007, when the share was only 13 percent.
And 43 percent of those aged 50-64 say it will be "a major source" of their retirement income, up from 38 percent in 2007.
Gallup concurs that Social Security is in trouble, reporting that: "Experts estimate the Social Security trust fund will run out by the mid-2030s, meaning that, without payroll tax increases or economic growth exceeding expectations, benefits would need to be cut."
And cut significantly, according to Yahoo Finance: "A 23 percent cut takes the average Social Security benefit payout from around $1,400 to $1,080. This would be a significant blow."
Just over 50 percent of Americans who haven't retired yet expect to be "comfortable" and have enough money in retirement.
Many millennials especially don't yet have a clear picture of how they will fund their golden years. When asked by Natixis U.S. Investment survey, they reported that they will stop working at an average of 59 years old, "six years earlier than Baby Boomers, who expect to retire at age 65."
At that point, they expect to live in part on savings, in part on money from the government and in part on money from their parents: 76 percent of young people surveyed said Social Security and other benefits will be an important source of revenue for them after they stop working, and 68 percent of them expect an inheritance.
Unfortunately, for many of them, they haven't been able to save much, the inheritance may never materialize and, unless they put pressure on their elected representatives to patch up the holes in the system, Social Security could disappoint them too.
As Gallup concludes, "if the Social Security system isn't fixed, many of today's workers may be in for a shock."