Thirty-six percent of working age Americans expect to heavily rely on the already cash-strapped Social Security program as a "major source" of income once they retire, the highest percentage in 15 years, according to a new Gallup poll.
The number of young people from ages 18 to 34 expecting to rely on Social Security as a big part of their retirement income has doubled in 10 years. In 2005 and 2006, just 13 percent of young workers expected Social Security to provide a major source of retirement income, but Gallup reports that for the 2014-2015 period, that number has increased by 13 percentage points to 26 percent.
Fifty-nine percent of retirees told Gallup they already rely on Social Security as a major source of income.
And as even more baby boomers begin to make their way into full retirement, concerns exist that an impending retirement crisis could result in a decrease in payouts, leaving younger workers with much smaller safety nets once they hit retirement.
Social Security's revenue shortfall, according to the St. Louis Federal Reserve, "mainly reflects a rising elderly dependency ratio: that is, the number of elderly persons (65+ years) relative to the number of working-age persons (20-64 years)."
"As more and more baby boomers retire, the number of persons receiving Social Security benefits will increase rapidly relative to the number of persons paying taxes to fund those benefits," the St. Louis Federal Reserve noted.
In December 2014, the Congressional Budget Office offered its prediction for the future of Social Security: "CBO projects that under current law, the DI trust fund will be exhausted in fiscal year 2017, and the OASI trust fund will be exhausted in 2032. If a trust fund's balance fell to zero and current revenues were insufficient to cover the benefits specified in law, the Social Security Administration would no longer have legal authority to pay full benefits when they were due. In 1994, legislation redirected revenues from the OASI trust fund to prevent the imminent exhaustion of the DI trust fund. In part because of that experience, it is a common analytical convention to consider the DI and OASI trust funds as combined. Thus, CBO projects, if some future legislation shifted resources from the OASI trust fund to the DI trust fund, the combined OASDI trust funds would be exhausted in 2030."
Gallup found that 48 percent believe Social Security will be a minor source of income, while 14 percent don't expect to rely on the program at all for retirement funds. The top source of income for working age Americans when they retire is still expected to be their 401(k) plans, though.
The increasing expected reliance on Social Security can in part be traced to a decline in the percentage of workers who have a traditional employer paid pension plan to fall back on. Just 25 percent of workers said they expect to rely heavily on a traditional pension plan, down from 36 percent in 2001.
And while 401(k) balances are growing, confidence that these accounts will provide a major source of income remains lower than it was in 2001.
Twenty-one percent of Americans believe that part-time work will provide a major source of income when retired, up from 10 percent in 2001.
The poll was conducted April 9-12 among a random sample of 1,015 adults with a margin of sampling error of plus or minus four percentage points.
