Social Security is on the fast track to insolvency. According to the nonpartisan Congressional Budget Office, the Old-Age and Survivors Insurance Trust Fund is going to run out of money in 2033.

The reason is simple. More people are living longer, retiring earlier, and spending more time in retirement than ever before. When Social Security was founded in 1935, there were 150 workers per retiree. Just 15 years later, there were only 16 workers per beneficiary. By 1960, it had dropped to just five workers per beneficiary. According to the Social Security Administration, by next year there will be just 2.3 workers for every retiree.

A threadbare security blanket

A recent survey by The Harris Poll found three-quarters of all Americans worry about the program running out of money in their lifetime and fully one-third strongly expect it will do so. It means there are only three options to fix it: raise taxes, cut benefits, or both.

The solution is to manage your finances like Social Security won’t be there for you. Fully fund your 401(k), max out your IRAs, and live below your means. That way you can live comfortably in retirement regardless of whether the program exists or not. All the better for you if it manages to survive, but your well-being won’t be affected if it doesn’t.

Unfortunately, many Americans haven’t saved nearly enough to finance their retirement. Baby Boomers in particular are entering their Golden Years staring down a $900,000 hole in their retirement savings. For them, salvaging Social Security is an absolute priority.

24/7 Wall St. Insights:

• Americans are concerned about the future viability of Social Security, and rightly so. The CBO estimates the trust fund will become insolvent in less than 10 years.
• With Americans expecting Social Security to account for over 40% of their retirement income, knowing where the balance is going to come from is important for your planning.
• There are certain income sources that the majority of Americans will count on for income during their retirement year years and they are among the most critical you can rely upon.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Social Security will be an important income source for most

The Harris Poll data shows Americans believe they will need between 50% and 60% of their pre-retirement income to survive in retirement. Most financial planners , however, will tell you to count on needing between 70% and 80% of your income.

Still, the survey found Americans on average believe 43% of that income will be filled by Social Security. That means the rest will have to come from other sources. 

It is essential that you fill the gap because most people believe they will need 70% of their retirement income just to pay for essentials, like housing, healthcare, and groceries. This isn’t the glamor lifestyle many envisioned for their retirement years, but is the reality most will face. Here are some of the options available to shore up any holes in your retirement savings plan.

Retirement accounts

The biggest source of revenue poll respondents have for additional income beyond Social Security is their retirement accounts, such as 401(k)s, traditional and Roth IRAs, SEP IRAs, etc. Some 52% of Americans will be tapping into these plans for income. It is why it is essential you fully fund your plans while you are still working so it can support you when you need it most.

Savings accounts

The second largest source of income will be savings people have squirreled away. Unfortunately, that’s not likely to last people very long. The Federal Reserve says that although 98% of Americans have checking, savings, or money market accounts with a mean balance of $65,000, the median balance was just $8,000. This is why living below your means is necessary. It will allow you to put away even more money for retirement.

Pensions

The Harris Poll found 29% of Americans would be relying upon a pension to make up a portion of their retirement income. Unfortunately, most employers moved away from defined benefit plans (pensions) to defined contribution plans (401(k)s) years ago. The Bureau of Labor Statistics says just 15% of private-sector workers had access to a pension last year. In 1980, 38% of workers had pensions.

Stocks, bonds, mutual funds

Investment accounts for stocks, bonds, and mutual funds will account for retirement income for between 19% and 24% of Americans. Even though you may be taxed on the gains you make on your investments, funding such accounts after maxing out your tax-advantaged retirement accounts is still a key investment decision to make.

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