In April 2015, Gov. Chris Christie of New Jersey made some strong recommendations about the need for changes to Social Security. One facet of his 12-point plan was to increase the full retirement age for future retirees. However, that idea wasn’t nearly as alarming as his second recommendation, which was a form of means-testing that would start reducing Social Security benefits for retirees with income of more than $80,000 per year and completely eliminate these benefits for retirees with more than $200,000 in income annually.

While many agree that changes need to be made to the Social Security system to restore long-term solvency, the second part of Christie’s proposal failed to take into account the ripple effects that his plan would have on middle-class retirees. Christie cited Warren Buffett as an example of someone who doesn’t need Social Security, yet Buffett is hardly representative of the folks who would be affected by this means-testing proposal—particularly those individuals who are closer to the middle or at the bottom of the sliding scale of benefit decreases.

How Are Retirees Choosing To Take Their Benefits?
In order to more fully understand the side effects of a proposal like this on retirees across the country, it’s important to understand what most are doing with their Social Security elections. In particular, when are they starting to collect? We can then look at different income groups and study their spending patterns to infer what might happen if more affluent retirees were to lose a significant portion of their income in retirement.

In the nation as a whole, more than 95% of both men and women are collecting Social Security benefits at full retirement age or younger. This means nearly all Americans are starting to collect benefits between ages 62 and 66. If we break down the numbers by each age, approximately 40% of the population is taking benefits as soon as they are eligible, at age 62, according to the Social Security Administration.

So what is causing retirees to take their benefits so early? Many financial planners know that a strategy that involves some element of postponing benefits until a later age to earn delayed retirement credits (8% per year from full retirement age to age 70) may be extremely beneficial to securing long-term financial stability. Therefore, retirees could be drawing benefits early for several reasons:

•  Lack of education: Perhaps they do not truly understand the impact of taking benefits early instead of taking them later.

•  Fear: They might think, “I should collect now before the system is broke!”

•  Financial need: Applicants have not saved enough for retirement and might go into credit card debt if it weren’t for their Social Security income.

•  Their underestimation of life expectancy: Applicants think they won’t live into their 80s, even though statistics by the Society of Actuaries show that a 65-year-old, non-smoking female has an 80% chance of living to age 80 and a 40% chance of living to age 90.