How big a role should Social Security play in your retirement?

By Jason Notte/MainStreet.com

Social Security is still a huge part of U.S. workers' retirement plans, but they aren't happy about it.

As a Bankrate survey points out, Americans are getting a bit more pragmatic about Social Security's role in their eventual retirements. Just 13 percent expect it to account for all or most of their retirement income. Meanwhile, another 14 percent expect it to account for half their retirement income. About 25 percent believe they won't get anything. That's one in four firmly believing it just won't exist by the time they get to their retirement.

"The average Social Security payout is only around $15,000 per year, so people are realistic to think they'll need to supplement that income," says Sheyna Steiner, senior investing analyst at Bankrate.com. "But despite all the gloom and doom about the future of Social Security, most Americans are optimistic that they'll get at least something from the program."

Surprisingly, Millennials account for a whole lot of that optimism. About 63 percent of them think Social Security will fund at least some of their retirement several decades from now. They're not wrong. Usually, folks concerned about Social Security read and stop after the part where they admit that the program will cost more than the tax revenue paying for it by 2019 and will run out of reserves in 2033.

When you do that, you labor under the misguided notion Social Security will stop making payments entirely in 2033. If you read on you discover that Social Security will be able to keep paying 77 percent of all benefits due after that time and 72 percent of those benefits after 2088. This also assumes that absolutely nothing will be done to bolster Social Security until that time. Keep in mind that the retirement age for full benefits shifted from 65 to 67 for those born after 1959 and could easily do so again for future generations just to keep Social Security afloat.

Claiming Social Security benefits early -- and you can still claim those benefits at 62 -- is going to be a dicier proposition. A 62-year-old already reduces their benefits to 70 percent of what they could have had if they'd held out until 67. That number will likely only shrink as the years wear on.

That could make it even more difficult to avoid some of the thornier implications of early withdrawal. Social Security benefits are taxed based on all your other income. That's generally a mix of your adjusted gross income, nontaxable interest and half of your Social Security benefits. When that income fluctuates, so does the taxable portion of your Social Security benefits, according to financial advisors Palisades Hudson in Scarsdale, N.Y.

Retirees who collect Social Security benefits early also tend to combine them with them with taxable withdrawals from IRAs or other retirement accounts. But you don't have to withdraw all that much for your marginal tax rate to increase, thanks to your Social Security benefits.

Looking ahead, it may not be such a bad idea to use that estimated 77 percent reduction in Social Security benefits in 2030 as a guideline you can adjust as the government takes (or avoids) action. Retirees can estimate just how much of a bite that will take out of their Social Security checks and save accordingly, though Steiner says low-income retirees will likely be hit hardest by those reductions in benefits if they come to pass.

"I think it should definitely be a pillar of their retirement plan, but it's really uncertain what the future of Social Security will be," Steiner says. "Most people will still probably get some benefits, but that uncertainty will probably make them save more for retirement."